A wealthy Russian businessman and his associates made tens of millions of dollars by cheating the stock market in an elaborate scheme that involved hacking into American computer networks to steal inside information about companies including Microsoft and Tesla, a prosecutor told a jury Monday.
Vladislav Klyushin, the owner of a Moscow-based information technology company with ties to upper levels of the Russian government, is on trial in Boston federal court nearly two years after he was arrested after landing in Switzerland on a private plane. to ski. trip.
He is the only Russian national charged in the nearly $90 million scheme to have been arrested and extradited to the US; four accused co-conspirators, including a Russian military intelligence officer who has also been accused of meddling in the 2016 presidential election, remain at large.
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Assistant US Attorney Stephen Frank told jurors that the hack-to-trade scheme gave Klyushin and his associates the kind of profits “real money managers couldn’t even dream of.” Using stolen information about a company’s performance that would dictate its stock price, Klyushin personally turned a $2 million investment into almost $21 million, and together, the group turned about $9 million into almost $90 million, Frank said.
“It wasn’t luck. And it wasn’t due to careful financial investigation either. The defendant cheated,” Frank said.
Klyushin’s lawyer told the jury that the government’s case is full of “enormous holes” and “inferences.” He said his client was financially successful long before he began trading stocks and continued to trade in many of the same companies even after access to the alleged insider information was shut down because hacks were discovered.
“There is nothing illegal about being Russian, about having wealth, about having an IT company that has government contracts,” said lawyer Maksim Nemtsev, referring to the Kremlin contracts.
Russian businessman Vladislav Klyushin is on trial for his alleged involvement in a hacking scheme to obtain insider information on US companies.
Klyushin has close ties to a Russian military officer who was one of 12 Russians charged in 2018 with hacking into Hillary Clinton’s presidential campaign and the Democratic Party and releasing their emails in an attempt to influence the 2016 election. Prosecutors say Ivan Ermakov, who worked with Klyushin at the IT company, was a hacker in the alleged insider trading scheme. US prosecutors have not alleged that Klyushin was involved in election interference.
Klyushin and Ermakov were close friends, according to the prosecutor, who showed jurors photos of the men together and said Klyushin even bought Ermakov an apartment to live in.
Klyushin, who wore headphones to listen to an interpreter while lawyers spoke, has remained behind bars in the United States since he was extradited in December 2021.
He was arrested months earlier in Switzerland minutes after arriving on a private jet and just before he and his group were about to board a private helicopter to take them to a nearby ski resort. He fought extradition to the US and an appeal went to the Swiss supreme court.
Kluyshin faces charges including conspiracy to gain unauthorized access to computers and commit wire fraud and securities fraud. The trial is expected to last a few weeks.
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Klyushin ran M-13, a Moscow-based information technology company that purported to provide services to detect vulnerabilities in computer systems and counted Russian President Vladimir Putin’s administration and other government entities among its clients, according to prosecutors.
Prosecutors allege that hackers deployed malware to harvest the usernames and passwords of employees of two US-based vendors that publicly traded companies use to file filings with the Securities and Exchange Commission. Values. They then broke into the vendors’ computer systems to obtain financial disclosures from hundreds of companies, including Microsoft, Tesla and Kohls, Ulta Beauty and Sketchers, before they were filed with the SEC and made public, prosecutors say.
By obtaining a company’s financial information in advance, the defendants were able to conduct transactions using brokerage accounts, sometimes in their own names, based on whether a company’s stock would likely rise or fall following public disclosure of the information. information, prosecutors said.
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The scheme unraveled after the SEC reported suspicious transactions in the brokerage accounts of several Russian citizens to the FBI in late 2019 and the providers later discovered they had been hacked.
