Posts Tagged: Mega-D


22
Jun 12

PharmaLeaks: Rogue Pharmacy Economics 101

Consumer demand for cheap prescription drugs sold through spam-advertised Web sites shows no sign of abating, according to a new analysis of bookkeeping records maintained by three of the world’s largest rogue pharmacy operations.

Researchers at the University of California, San Diego, the International Computer Science Institute and George Mason University examined caches of data tracking the day-to-day finances of GlavMed, SpamIt, and Rx-Promotion, shadowy affiliate programs that over a four-year period processed more than $170 million worth of orders from customers seeking cheaper, more accessible and more discretely available drugs. The result is perhaps the most detailed analysis yet of the business case for the malicious software and spam epidemics that persist to this day.

Their conclusion? Spam — and all of its attendant ills — will remain a prevalent and pestilent problem because consumer demand for the products most frequently advertised through junk email remains constant.

“The market for spam-advertised drugs is not even close to being saturated,” said Stefan Savage, a lead researcher in the study, due to be presented early next month at the 21st USENIX security conference in Bellevue, Wash. “The number of new customers these programs got each day explains why people spam: Because sending spam to everyone on the planet gets you new customers on an ongoing basis, so it’s not going away.”

The researchers found that repeat customers are critical to making any rogue pharmacy business profitable. Repeat orders constituted 27% and 38% of average program revenue for GlavMed and SpamIt, respectively; for Rx-Promotion, revenue from repeat orders was between 9% and 23% of overall revenue.

“This says a number of things, and one is that a lot of people who bought from these programs were satisfied,” Savage said. “Maybe the drugs they bought had a great placebo effect, but my guess is these are satisfied customers and they came back because of that.”

Whether the placebo effect is something that often applies with the consumption of erectile dysfunction drugs is not covered in this research paper, but ED drugs were by far the largest category of pills ordered by customers of all three pharmacy programs.

One interesting pattern that trickled out of the Rx-Promotion data underscores what made this pharmacy affiliate unique and popular among repeat buyers: A major portion of its revenues was generated through the sale of drugs that have a high potential for abuse and are thus tightly controlled in the United States, including opiates and painkillers like Oxycodone, Hydrocodone, and mental health pills such as Adderall and Ritalin. The researchers noticed that although pills in this class of drugs — known as Schedule II in U.S. drug control parlance — comprised just 14 percent of orders for Rx-Promotion, they accounted for nearly a third of program revenue, with the Schedule II opiates accounting for a quarter of revenue.

“The fact that such drugs are over-represented in repeat orders as well (roughly 50 percent more prevalent in both Rx-Promotion and, for drugs like Soma and Tramadol, in SpamIt) reinforces the hypothesis that abuse may be a substantial driver for this component of demand,” the researchers wrote.

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13
Jun 12

Who Is the ‘Festi’ Botmaster?

Pavel Vrublevsky, the co-founder of Russian payment processor ChronoPay, is set to appear before a judge this week in a criminal case in which he is accused of hiring a botmaster to attack a competitor. Prosecutors believe that the man Vrublevsky hired in that attack was the curator of the Festi botnet, a spam-spewing machine that also has been implicated in a number of high-profile denial-of-service assaults.

Igor Artimovich

Vrublevsky spent six months in prison last year for his alleged role in an attack against Assist, the company that was processing payments for Aeroflot, Russia’s largest airline. Aeroflot had opened its contract for processing payments to competitive bidding, and ChronoPay was competing against Assist and several other processors.

Investigators with the Russian Federal Security Service (FSB) last summer arrested a St. Petersburg man named Igor Artimovich in connection with the attacks. Artimovich — known in hacker circles by the handle “Engel” — confessed to having used his botnet to attack Assist after receiving instructions and payment from Vrublevsky.

As I wrote in last year’s piece, the allegations against Artimovich and Vrublevsky were supported by evidence collected by Russian computer forensics firm Group-IB, which assisted the FSB with the investigation. Group-IB presented detailed information on the malware and control servers used to control more than 10,000 infected PCs, and shared with investigators screen shots of the botnet control panel (pictured below) allegedly used to coordinate the DDoS attack against Assist.

Group-IB’s evidence suggested Artimovich had used a botnet he called Topol-Mailer to launch the attacks, but Topol-Mailer is more commonly known as Festi, one of the world’s largest and most active spam botnets. As detailed by researchers at NOD32 Antivirus makers ESET, Festi was built not just for spam, but to serve as a very powerful tool for launching distributed denial of service (DDoS) attacks, digital sieges which use hacked machines to flood targets with so much meaningless traffic that they can no longer accommodate legitimate visitors.

“Topol Mailer” botnet interface allegedly used by Artimovich.

Group-IB said Artimovich’s botnet was repeatedly used to attack several rogue pharmacy programs that were competing with Rx-Promotion, a rogue Internet pharmacy affiliate program long rumored to have been co-founded by Vrublevsky (security firm Dell SecureWorks chronicled those attacks last year).

Artimovich allegedly used the nickname Engel on Spamdot.biz, an online forum owned by the co-founders of SpamIt and GlavMed, sister rogue pharmacy operations that competed directly with Rx-promotion. In the screen shot below right, Engel can be seen communicating with Spamdot member and SpamIt affiliate “Docent.” That was the nickname used by Oleg Nikolaenko, a 24-year-old Russian man arrested in Las Vegas in Nov. 2010  charged with operating the Mega-D botnet. Continue reading →


5
Dec 11

Chats With Accused ‘Mega-D’ Botnet Owner?

Recently leaked online chat records may provide the closest look yet at a Russian man awaiting trial in Wisconsin on charges of running a cybercrime machine once responsible for sending between 30 to 40 percent of the world’s junk email.

Oleg Nikolaenko

Oleg Y. Nikolaenko, a 24-year-old who’s been dubbed “The King of Spam,” was arrested by authorities in November 2010 as he visited a car show in Las Vegas. The U.S. Justice Department alleges that Nikolaenko, using the online nickname “Docent” earned hundreds of thousands of dollars using his “Mega-D” botnet, which authorities say infected more than half a million PCs and could send over 10 billion spam messages a day. Nikoalenko has pleaded not guilty to the charges, and is slated to appear in court this week for a status conference (PDF) on his case.

The Justice Department alleges that Nikolaenko spammed on behalf of Lance Atkinson and other members of Affking, an affiliate program that marketed fly-by-night online pharmacies and knockoff designer goods. Atkinson told prosecutors that one of his two largest Russian spamming affiliates used the online moniker Docent. He also said that Docent received payment via an ePassporte account under the name “Genbucks_dcent.” FBI agents later learned that the account was registered in Nikolaenko’s name and address in Russia, and that the email address attached to the account was 4docent@gmail.com.

According to my research, Docent also spammed for other rogue pharmacy programs. In fact, it’s hard to find one that didn’t pay him to send spam. In my Pharma Wars series, I’ve detailed how Russian cybercrime investigators probing the operations of the massive GlavMed/SpamIt rogue pharmacy operation seized thousands of chat logs from one of its principal organizers. The chats were later leaked online and to select journalists. Within those records are hundreds of hours of chats between the owners of the pharmacy program and many of the world’s biggest spammers, including dozens with one of its top earners — Docent.

According to the SpamIt records, Docent earned commissions totaling more than $325,000 promoting SpamIt pharmacy sites through spam between 2007 and 2010. The Docent in the SpamIt database also had his earnings sent to the same ePassporte account identified by the FBI. The Docent in the leaked chats never references himself as Nikolaenko, but in several cases he asks SpamIt coordinators to send documents to him at the 4docent@gmail.com address.

The chats between Docent and Stupin show a young man who is ultra-confident in the value and sheer spam-blasting power of his botnet. Below are the first in a series of conversation snippets between Docent and SpamIt co-administrator Dmitry Stupin. Before each is a brief note providing some context.

In the transcript that follows, Stupin tries to woo Docent to join SpamIt. Docent negotiates a much higher commission rate than is usually given to new spamming partners. The typical rate is 30 percent of each sale, but Docent is a known figure in the spamming underground, and argues that his botnet will bring such massive traffic to the SpamIt pharmacies that he deserves a higher 45 or 50 percent cut of the sales. This conversation was recorded on Feb. 1, 2007.

Stupin:  Hello! You have communicated with ICQ 397061228, I am writing regarding your case, Docent.

Docent: Which case?

Stupin:  Do you want to send spam regarding our partnerka [“partnerka” is Russian slang for a mix of private and semi-public affiliate groups that form to facilitate cybercrime activities].

Docent: Which exactly do you mean? I have not yet communicated with this 397061228.

Stupin: Here is the letter which recently came from  you: “It is usual spam,  GI bases, not opt-in. Big volume of emails. I mail a lot of [competing pharmacy] programs, Bulker, Mailien, SRX. I’m a member of most bulk forums. So if you need references, i can provide them. Usual traffic is 2k+ uniques. Also i need bulk-host.”

Docent: Yes, I got it. It’s just nobody IM’d me.

Stupin: ок) What kind of volumes of spam can you deliver? We are soon deploying our own “partnerka” for spam, we just do not have it right now.

Docent: Volumes are huge, 500 million + / day.

Stupin: Wow! Are you not accidentally on [Spamhaus] ROKSO List ?

Docent: Yes, it’s a list of idiots :), with the exception of a couple of people.

Stupin:  We do contract people for our spam campaigns, but only verified people. We are not publicly opened yet.

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1
Jul 11

Where Have All the Spambots Gone?

First, the good news: The past year has witnessed the decimation of spam volume, the arrests of several key hackers, and the high-profile takedowns of some of the Web’s most notorious botnets. The bad news? The crooks behind these huge crime machines are fighting back — devising new approaches designed to resist even the most energetic takedown efforts.

The volume of junk email flooding inboxes each day is way down from a year ago, as much as a 90 percent decrease according to some estimates. Symantec reports that spam volumes hit their high mark in July 2010, when junk email purveyors were blasting in excess of 225 billion spam messages per day. The company says daily spam volumes now hover between 25 and 50 billion missives daily. Anti-spam experts from Cisco Systems are tracking a similarly precipitous decline, from 300 billion per day in June 2010 to just 40 billion in June 2011.

Spam messages per day, July 2010 - July 2011. Image courtesy Symantec.

There may be many reasons for the drop in junk email volumes, but it would be a mistake to downplay efforts by law enforcement officials and security experts.  In the past year, authorities have taken down some of the biggest botnets and apprehended several top botmasters. Most recently, the FBI worked with dozens of ISPs to kneecap the Coreflood botnet. In April, Microsoft launched an apparently successful sneak attack against Rustock, a botnet once responsible for sending 40 percent of all junk email.

Daily spam volume July 2010 - July 2011. Image courtesy Spamcop.net

In December 2010, the FBI arrested a Russian accused of running the Mega-D botnet. In October 2010, authorities in the Netherlands arrested the alleged creator of the Bredolab botnet and dismantled huge chunks of the botnet. A month earlier, Spamit.com, one of the biggest spammer affiliate programs ever created, was shut down when its creator, Igor Gusev, was named the world’s number one spammer and went into hiding. In August 2010, researchers clobbered the Pushdo botnet, causing spam from that botnet to slow to a trickle.

But botmasters are not idly standing by while their industry is dismantled. Analysts from Kaspersky Lab this week published research on a new version of the TDSS malware (a.k.a. TDL), a sophisticated malicious code family that includes a powerful rootkit component that compromises PCs below the operating system level, making it extremely challenging to detect and remove. The latest version of TDSS — dubbed TDL-4 has already infected 4.5 million PCs; it uses a custom encryption scheme that makes it difficult for security experts to analyze traffic between hijacked PCs and botnet controllers. TDL-4 control networks also send out instructions to infected PCs using a peer-to-peer network that includes multiple failsafe mechanisms.

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1
Dec 10

FBI Identifies Russian ‘Mega-D’ Spam Kingpin

Federal investigators have identified a 23-year-old Russian man as the mastermind behind the notorious “Mega-D” botnet, a network of spam-spewing PCs that once accounted for roughly a third of all spam sent worldwide.

According to public court documents related to an ongoing investigation, a grand jury probe has indicted Moscow resident Oleg Nikolaenko as the author and operator of the Mega-D botnet.

Federal agents settled on Nikolaenko thanks to information provided by Lance Atkinson, an Australian man named as a co-conspirator in the “Affking” e-mail marketing and counterfeiting operation that was shuttered in 2008 after investigations by the FBI, the Federal Trade Commission and international law enforcement authorities. The Affking program generated revenues of $500,000 a month using spam to promote counterfeit Rolexes, herbal “male enhancement” pills and generic prescription drugs.

As part of his guilty plea to spam violations, Atkinson provided investigators information on the top spammers who helped to promote the Affking products. Among them was an affiliate who used the online nickname “Docent,” who earned nearly $467,000 in commissions over a six month period in 2007.

Atkinson told investigators that Docent’s commissions were sent to an ePassporte account, under the name “Genbucks_dcent,” that was tied to the e-mail address “4docent@gmail.com.” Records subpoenaed by the grand jury found that the ePassporte account was registered in Nikolaenko’s name to an address in Moscow.

According to court documents, investigators found numerous executable files in Docent’s Gmail inbox. Those files were analyzed by researchers at SecureWorks, an Atlanta based security firm, which found them to be samples of the Mega-D malware.

Update: [Nikolaenko was reportedly arrested in the United States recently. See update at the end, after the jump.]

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