The story of 19 Russian nationals arrested by the FBI in early October and 3 more put on the Most Wanted list, quickly fueled talks about a cyber-threat coming from Eastern Europe. While officials on both sides of the ocean try to stay calm the issue is being fiercely debated online where rhetoric has run high. Obviously, it’s not the first case of Internet forgery. But this one stands out because all detainees are in their early twenties and the good looks of some of the young women involved, is attracting a fan following on the web.
On September 30 the Manhattan US Attorney charged 37 people involved in global bank fraud schemes that used “Zeus Trojan” and other malware to steal 3 million dollars from US bank accounts. A few days later when the FBI publicized the full list of those charged, most of them turned out to be students from the former USSR, who came to the US under J-1 visas.
“The modern, high-tech bank heist does not require a gun, a mask, a note, or a getaway car,” said Manhattan US Attorney Preet Bharara in a statement. “It requires only the Internet and ingenuity. And it can be accomplished in the blink of an eye, with just a click of the mouse.”
Since 1994 there are at least 10 known cases of Russian programmers indicted for their attempts to breach Internet security or hack software. At first, due to the complicated nature of the fraud and strong intellectual skills required to commit it, Russian hackers were treated lightly by the justice system and as heroes by the public. For example, in 2001 when Dmitry Skliarov was charged with copy right infringement of Adobe software after he was able to hack its security codes at DEF COM, a major technology convention, programmers in California protested his arrest and a boycott of Adobe was launched online. The charges were eventually dropped, and Skliarov returned to Russia.
Today cyber crime has become so widespread, resulting in multimillion dollar thefts, that the defendants rarely receive such mercies anymore. In his official statement about the latest arrests Manhattan District Attorney Cyrus R. Vance Jr. said: “This advanced cybercrime ring is a disturbing example of organized crime in the 21st Century – high tech and widespread.”
With the big business nature of the crimes, most defendants, like the Russian 25, are no longer loan hackers, but instead are so-called money mules – individuals who are usually hired to open fake accounts in banks to withdraw the stolen money.
According to the Federal indictment, “the malware known as the ‘Zeus Trojan’ was typically sent as an apparently-benign email to computers at small businesses and municipalities in the United States. Once the email was opened, the malware embedded itself in the victims’ computers, and recorded their keystrokes – including their account numbers, passwords, and other vital security codes.” The mules then had to use fake passports to open new bank accounts, and to collect the money transferred from the accounts of the victims. One defendant, Sofia Dikova, 20, is being accused of securing the fake passports for the ring. She then allegedly used a fake Yugoslavian passport to open a Chase account and was able to withdraw $12,000 that was wired from a victim’s account, according to the complaint.
Arrests were made throughout the year with Britain, Moldova, and Ukraine contributing to the effort. The defendants are charged with bank fraud, money laundering, and falsifying passports. The Russian students, none of whom have previous criminal records, are now facing up to 30 years in prison and fines as high as $1 million, causing some critics to cry that the US attorney is playing too rough.
“They’re just children who at worst were used by people much more sophisticated than they are,” said defense lawyer Sarah Baumgartel.
The Russian Consulate in New York was caught off guard by the arrests. “Initially the FBI had only informed us about one person to be arrested,” said Alex Otchainov, the vice-consul who is handling the situation. “They had to inform us according to the Vienna Convention on the law of treaties.”
According to the Russian Foreign Ministry spokesman Andrey Nesterenko, all of the arrested Russians are feeling well. Most of them were placed in regular cells, while two are staying in solitary confinement due to the shortage of prison space. The alleged hackers are also permitted to communicate with their families via phone and even through the Internet.
Meanwhile, it’s the families back in Russia who are now getting hurt. Parents claim they had no idea about their children’s unlawful online activities. Tatyana Velichko, mother of the 21-year-old Kristina Svechinskaya, whose good looks have made her the face of the case on the Internent, said in a desperate telephone interview widely reported on in the Russian press: “My heart is broken. Last time she called me, she asked that I send her $200 to buy a cell phone. I borrowed $400 and wired to her. Then she told me of a firm that filed for bankruptcy and will pay her $200 if she opens an account for it.”
While Kristina’s pictures on Facebook have made her a sensation, behind those pictures is a tragic story of a girl from Stavropol, a poor Russian province, whose father died of brain cancer 2 years ago.
Parents of those arrested have been bombarding Russian officials with questions, even though there’s not much that can be done from across the world. This crime is considered very serious in the US, and students should have known that, explained Otchainov of the Russian Consulate.
Meanwhile press coverage of the case is spilling across borders with reporters scrambling to cover anything about hackers from Russia. Most recently, the Ukrainian Weekly “2000” published a chilling prison-diary of Yegor Shevelev, the skinny young Russian programmer who was arrested in Cyprus in 2008 and later extradited to the US after spending half a year inside the harsh Greek penitentiary system.
Some are worried about a backlash against Russian students studying abroad. Thousands come to the US every year under the popular Work and Travel program. For that they are given regular J-1 student visas. The program is short, but sometimes students want to stay. For that they need to find a permanent job. With the economic crisis gong on it has become almost impossible.
The case has also raised concern that there’s a whole generation of gifted post-soviet kids who are being trapped into international organized crime. Vitaly, Kristina’s boyfriend of 4 years, told reporters: “I’m sure, somebody just set her up.”
As of now at least two of the defendants Alexandr Sorokin, 23, and Anton Yuferitsyn, 26, pleaded guilty to money laundering. They got only six and ten months in prison, plus $100 and $38,314 in fines respectively.
Dmitry Gornostaev covers this case for the Russian News Agency RIA-Novosti and thinks the bigger players will be appearing in court soon. “The FBI understands they are not dealing with the real web-mobsters,” he said. “This is not the kind of fish they were searching for.”
Even the FSB, the Russian equivalent of the FBI got involved. An anonymous source in the security agency leaked to the news agencies that: “The students were just loose change in this case. The ‘carder’ scheme as it is called in Russia, is not new, but most of the time it is the “droppers” – the front operators for the fraud – are being caught”
Still, the Internet continues to buzz about the Russian hacker ring. With memories of Anna Chapman still fresh, bloggers are now drooling over Facebook pictures of Kristina Svechinskaya. As one anonymous post put it on the web: “Cold war was never this hot.”