Posts Tagged: Preet Bharara


10
Nov 15

Arrests in JP Morgan, eTrade, Scottrade Hacks

U.S. authorities today announced multiple indictments and arrests in connection with separate hacking incidents that resulted in the theft of more than 100 million customer records from some of the nation’s biggest financial institutions and brokerage firms, including JP Morgan Chase, E*Trade and Scottrade.

jpmchaseProsecutors in Atlanta and New York unsealed indictments against four men and one unnamed alleged co-conspirator in connection with a complex, sprawling scheme to artificially manipulate the price of certain publicly traded U.S. stocks.

The defendants are accused of hacking into JPMorgan Chase in 2014, stealing the names, addresses, phone numbers and email addresses of the holders of some 83 million accounts at the financial institution –a breach that the Justice Department has dubbed the “largest theft of customer data from a U.S. financial institution in history.” Scottrade announced a similar breach of 4.6 million customer records in October 2015. Etrade last month warned 31,000 customers that their contact information may have been breached.

The men allegedly laundered hundreds of millions of dollars from the scheme via a vast cybercrime network that included illegal online pharmacies, fake antivirus or “scareware” schemes, Internet casinos and even a Bitcoin exchange.

Indictments from Atlanta U.S. Attorney John Horn name Gery Shalon, 31, a resident of Tel Aviv and Moscow, who was arrested by Israeli law enforcement in Savyon, Israel in July 2015 and remains in custody there pending extradition proceedings. Another man, Joshua Samuel Aaron, also 31, is a U.S. citizen and resident of Israel, but currently a fugitive. The Atlanta indictments referenced a third, as yet-unnamed accomplice.

Separately, the U.S. Attorney’s Office for the Southern District of New York unsealed its own charges against Shalon and Aaron, as well as a third Israeli citizen, 40-year-old Ziv Orenstein. In addition, prosecutors there announced indictments against Anthony R. Murgio, alleging he fraudulently operated the Florida-based Coin.mx Bitcoin exchange along with Shalon and through it further helped the conspiracy launder its illicit proceeds. Murgio was arrested in July 2015 and is facing prosecution in New York.

According to the Justice Department, between approximately 2007 and July 2015, Shalon owned and operated unlawful internet gambling businesses in the United States and abroad, and that he owned and operated multinational payment processors for illegal pharmaceutical suppliers, counterfeit and malicious software (“malware”) distributors. The government further alleges that Shalon owned and controlled Coin.mx, an illegal United States-based Bitcoin exchange that operated in violation of federal anti-money laundering laws.

“Through their criminal schemes, between in or about 2007 and in or about July 2015, Shalon and his co-conspirators earned hundreds of millions of dollars in illicit proceeds, of which Shalon concealed at least $100 million in Swiss and other bank accounts,” reads a statement issued by Preet Bharara, the United States Attorney for the Southern District of New York. Continue reading →


6
Nov 14

Feds Arrest Alleged ‘Silk Road 2’ Admin, Seize Servers

Federal prosecutors in New York today announced the arrest and charging of a San Francisco man they say ran the online drug bazaar and black market known as Silk Road 2.0. In conjunction with the arrest, U.S. and European authorities have jointly seized control over the servers that hosted Silk Road 2.0 marketplace.

The home page of the Silk Road 2.0 market has been replaced with this message indicating the community's Web servers were seized by authorities.

The home page of the Silk Road 2.0 market has been replaced with this message indicating the community’s Web servers were seized by authorities.

On Wednesday, agents with the FBI and the Department of Homeland Security arrested 26-year-old Blake Benthall, a.k.a. “Defcon,” in San Francisco, charging him with drug trafficking, conspiracy to commit computer hacking, and money laundering, among other alleged crimes.

Benthall’s LinkedIn profile says he is a native of Houston, Texas and was a programmer and “construction worker” at Codespike, a company he apparently founded using another company, Benthall Group, Inc. Benthall’s LinkedIn and Facebook profiles both state that he was a software engineer at Space Exploration Technologies Corp. (SpaceX), although this could not be immediately confirmed. Benthall describes himself on Twitter as a “rocket scientist” and a “bitcoin dreamer.”

Blake Benthall's public profile page at LinkedIn.com

Blake Benthall’s public profile page at LinkedIn.com

Benthall’s arrest comes approximately a year after the launch of Silk Road 2.0, which came online less than a month after federal agents shut down the original Silk Road community and arrested its alleged proprietor — Ross William Ulbricht, a/k/a “Dread Pirate Roberts.” Ulbricht is currently fighting similar charges, and made a final pre-trial appearance in a New York court earlier this week.

According to federal prosecutors, since about December 2013, Benthall has secretly owned and operated Silk Road 2.0, which the government describes as “one of the most extensive, sophisticated, and widely used criminal marketplaces on the Internet today.” Like its predecessor, Silk Road 2.0 operated on the “Tor” network, a special network of computers on the Internet, distributed around the world, designed to conceal the true IP addresses of the computers on the network and thereby the identities of the network’s users.

“Since its launch in November 2013, Silk Road 2.0 has been used by thousands of drug dealers and other unlawful vendors to distribute hundreds of kilograms of illegal drugs and other illicit goods and services to buyers throughout the world, as well as to launder millions of dollars generated by these unlawful transactions,”reads a statement released today by Preet Bharara, the United States Attorney for the Southern District of New York. “As of September 2014, Silk Road 2.0 was generating sales of at least approximately $8 million per month and had approximately 150,000 active users.”

Benthall's profile on Github.

Benthall’s profile on Github.

The complaint against Benthall claims that by October 17, 2014, Silk Road 2.0 had over 13,000 listings for controlled substances, including, among others, 1,783 listings for “Psychedelics,” 1,697 listings for “Ecstasy,” 1,707 listings for “Cannabis,” and 379 listings for “Opioids.” Apart from the drugs, Silk Road 2.0 also openly advertised fraudulent identification documents and computer-hacking tools and services. The government alleges that in October 2014, the Silk Road 2.0 was generating at least approximately $8 million in monthly sales and at least $400,000 in monthly commissions.

The complaint describes how federal agents infiltrated Silk Road 2.0 from the very start, after an undercover agent working for Homeland Security investigators managed to infiltrate the support staff involved in the administration of the Silk Road 2.0 website.

“On or about October 7, 2013, the HSI-UC [the Homeland Security Investigations undercover agent] was invited to join a newly created discussion forum on the Tor network, concerning the potential creation of a replacement for the Silk Road 1.0 website,” the complaint recounts. “The next day, on or about October 8, 2013, the persons operating the forum gave the HSI‐UC moderator privileges, enabling the HSI‐UC to access areas of the forum available only to forum staff. The forum would later become the discussion forum associated with the Silk Road 2.0 website.”

The complaint also explains how the feds located and copied data from the Silk Road 2.0 servers. “In May 2014, the FBI identified a server located in a foreign country that was believed to be hosting the Silk Road 2.0 website at the time. On or about May 30, 2014, law enforcement personnel from that country imaged the Silk Road 2.0 Server and conducted a forensic analysis of it. Based on posts made to the SR2 Forum, complaining of service outages at the time the imaging was conducted, I know that once the Silk Road 2.0 server was taken offline for imaging, the Silk Road 2.0 website went offline as well, thus confirming that the server was used to host the Silk Road 2.0 website.” Continue reading →