Hired-gun hacking played key role in JPMorgan, Fidelity breaches

Fri Nov 13, 2015 4:15pm EST
 
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By Jim Finkle and Joseph Menn

NEW YORK/SAN FRANCISCO (Reuters) - When U.S. prosecutors this week charged two Israelis and an American fugitive with raking in hundreds of millions of dollars in one of the largest and most complex cases of cyber fraud ever exposed, they also provided an unusual look into the burgeoning industry of criminal hackers for hire.

The trio, who are accused of orchestrating massive computer breaches at JPMorgan Chase & Co (JPM.N: Quote) and other financial firms, as well as a series of other major offences, did little if any hacking themselves, the federal indictments and a previous civil case brought by the U.S. Securities and Exchange Commission indicate.

Rather, they constructed a criminal conglomerate with activities ranging from pump-and-dump stock fraud to Internet casino break-ins and unlicensed Bitcoin trading. And just like many legitimate corporations, they outsourced much of their technology needs.

"They clearly had to recruit co-conspirators and have that type of hacker-for-hire," said Austin Berglas, former assistant special agent in charge of the FBI's New York cyber division, who worked the JPMorgan case before he left the agency in May. "This is the first case where it's that clear of a connection." Berglas, who now heads cyber investigations for private firm K2 Intelligence, said additional major cases of freelance hacking will come to light, especially as more people become familiar with online tools such as Tor that seek to conceal a user’s identity and location.

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This week's indictments accused a hacker referred to as "co-conspirator 1" of installing malicious software on the servers of multiple victims at the direction of Gery Shalon, the alleged mastermind of the scheme now under arrest in Israel. A second indictment charges a man referred to as John Doe, believed to be in Russia, for an attack on online trading firm E*Trade (ETFC.O: Quote).

Officials have not said if the co-conspirator and John Doe were the same person, or even if the FBI knows their true identities.   Continued...

 
Gery Shalon (L), who is accused by U.S. authorities of engaging in a stock manipulation scheme involving U.S. penny stocks, arrives at a courtroom at the Jerusalem Magistrates Court July 22, 2015.   REUTERS/Amir Cohen -