Two convicted in computer hacking scheme that led to $30 million in profits
Two defendants, one from Brooklyn, were convicted on all counts for an international computer hacking and securities fraud scheme where they nearly made off with $30 million in profits before being indicted.
Vitaly Korchevsky, a former hedge fund manager, and Vladislav Khalupsky, a securities trader who lives in Brooklyn, were convicted on Friday in front of U.S. District Court Judge Raymond J. Dearie after a four week trial, and each faces up to 20 years in prison at sentencing.
Between Feb. 2010 and Aug. 2015, the pair gained unauthorized access into three business newswires and stole unpublished press releases that contained non-public information, and used that information to make trades that generated $30 million in illegal profits.
“The defendants teamed up with cybercriminal co-conspirators to hack pre- distribution press releases and then traded in the stock market based on that stolen information, making massive profits as a result,” stated U.S. Attorney for the Eastern District of New York Richard P. Donoghue.
The duo hacked the networks of Marketwired L.P., PR Newswire Association LLC, and Business Wire, through a series of cyberattacks. Once they gained access to the networks, they stole press releases about upcoming announcements by public companies concerning earnings, revenues and other non-public information. They stole more than 100,000 press releases in total, according to court documents.
Korchevsky and Khalupsky had to act quickly to properly monetize their ill-gotten press releases before the information became public. The material gained from these press releases contained information about companies that included Hewlett Packard, Home Depot, Panera Bread, and Caterpillar Inc.
“Conspiring with hackers overseas, Korchevsky and Khalupsky worked swiftly to trade on stolen press releases, illegally profiting millions of dollars,” said William F. Sweeney, Jr., assistant director-in-charge of the FBI’s New York field office.
“Such a massive criminal operation called for massive cover-ups, but their attempts to cover their tracks were done in vain,” Sweeney continued. “Devoting much time to the execution of this sneaky scheme, upon sentencing, the defendants will now rightfully face time in prison.”
During the trial, prosecutors were able to successfully convince a jury that the duo used separate phones, computers and hotspots to conduct their illegal scheme and routinely deleted emails or destroyed hardware that contained evidence. Their illegal profits were often routed back to their personal accounts and some went to offshore shell companies through their criminal network.
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