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VOL. 47 | NO. 7 | Friday, February 10, 2023

Russian businessman guilty in hacking, insider trade scheme

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BOSTON (AP) — A Russian millionaire with ties to the Kremlin was convicted Tuesday of participating in an elaborate $90 million insider trading scheme using secret earnings information from companies such as Microsoft that was stolen from U.S. computer networks.

Vladislav Klyushin, 42, who ran a Moscow-based information technology company associated with the Russian government, was found guilty on all charges against him, including wire fraud and securities fraud, after a two-week trial in federal court in Boston.

"The jury saw Mr. Klyushin for exactly what he is — a cybercriminal and a cheat. He repeatedly gamed the system and finally got caught. Now he is a convicted felon. For nearly three years, he and his co-conspirators repeatedly hacked into U.S. computer networks to obtain tomorrow's headlines today," Massachusetts U.S. Attorney Rachael Rollins said in an email statement.

Klyushin was arrested in 2021 in Switzerland after he arrived on a private jet and just before he and his party were about to board a helicopter to whisk them to a nearby ski resort. Four alleged co-conspirators — including a Russian military intelligence officer who's also been charged with meddling in the 2016 presidential election — remain at large.

Klyushin's attorney, Maksim Nemtsev, said in an email that he and his client are disappointed but respect the jury's verdict. He said they intend to appeal, adding that the case included "novel theories" that have never before been reviewed or adopted by higher courts.

Klyushin was owner of a Moscow-based information technology company that purported to provide services to detect vulnerabilities in computer systems. It counted among its clients the administration of Russian President Vladimir Putin and other government entities, according to prosecutors.

Klyushin was also close friends with a Russian military officer who was among 12 Russians charged in 2018 with hacking into key Democratic Party email accounts, including those belonging to Hilary Clinton's presidential campaign chairman, John Podesta, the Democratic National Committee and the Democratic Congressional Campaign Committee. Ivan Ermakov, who worked for Klyushin's company, was a hacker in the alleged insider trading scheme, alleged prosecutors. They haven't alleged that Klyushin was involved in the election interference.

Prosecutors say hackers stole employees' usernames and passwords for two U.S.-based vendors that publicly traded companies use to make filings through the Securities and Exchange Commission. They then broke into the vendors' computer systems to get financial disclosures for hundreds of companies — including Microsoft, Tesla and Kohls, Ulta Beauty and Sketchers — before the were filed to the SEC and became public, prosecutors said. Many of the earnings reports were downloaded via a computer server located in Boston, according to prosecutors.

Armed with this insider information, they were able to cheat the stock market, alleged prosecutors, who said Klyushin personally turned a $2 million investment into nearly $21 million, and altogether, the group turned about $9 million into nearly $90 million.

Klyushin's attorney denied that his client was involved in the scheme, telling jurors in his opening statement that the government's case was filled with "gaping holes" and "inferences."

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