A Russian computer programmer imprisoned in the U.S. on charges that he
perpetrated a cyber crime spree of extortion and credit card fraud was
indicted in California Wednesday-- adding the Golden State to a growing
list of destinations on the accused hacker's whirlwind tour of U.S.
Alexey V. Ivanov, 20, was slammed with fifteen counts of computer fraud
and extortion for the Southern California portion of a string of
financially-motivated attacks on e-commerce companies and small financial
institutions, aimed at stealing credit card numbers and consumer
information, and strong-arming companies into paying protection money.
The federal indictment charges that Ivanov cracked San Diego-based CTS
Network Services, and then used the ISP's system to attack other sites.
Other victims named in the indictment are Nara Bank in Los Angeles,
TransMark Corporation in Rancho Cucamonga, Calf., and Maryland-based
E-Money, Inc., an online credit card processing company.
"Given the importance of computers in everyday life, hackers and
cyber-extortionists pose one of the most significant challenges to law
enforcement," said United States Attorney John S. Gordon in a statement.
Credit Card Fraud in Reverse
The indictment also charges that Ivanov "and others" attempted to plunder
Sterling Microsystems, an Anaheim, California-based online credit card
processing firm. The Sterling scam hinged on a kind of reverse credit card
fraud, in which Ivanov and his gang allegedly used Sterling's merchant
account to issue credits in amounts ranging from $5,000 to $25,000 to
credit cards under their control. The indictment does not allege that the
fraud was successful.
In February, 2000, Ivanov also allegedly emailed Sterling, and threatened
to damage the company's systems, unless it agreed to hire him as a
computer security consultant.
Notwithstanding his alleged propensity for international financial crime,
Ivanov appears qualified for IT work: A resume he distributed online in
1999 lists work experience with a Russian ISP and a medical center, and
boasts a wide range of computer and networking skills, including
"excellent" programming ability in C, C++ and assembly language dating
back to when he was thirteen years old.
Ivanov is currently held without bail in Rhode Island. His attorney did
not return phone calls.
The Russian will be arranged in Southern California only after dealing
with similar charges already pending in Seattle, Washington and New Haven,
Connecticut. Given the scope of the alleged scam, and the random
geographic distribution of Internet locations, the list of federal
prosecutors waiting in line for the accused hacker could grow even longer.
"Double jeopardy prohibits him for being indicted twice for the same
offense, but he can be indicted separately for each and every company that
he extorted," says former computer crime prosecutor Marc Zwillinger, now
an attorney with Kirkland & Ellis. "If he broke into separate computers,
those are separate offenses in separate jurisdictions."
Controversial FBI tactics
Ivanov's arrest last November was the result of an elaborate sting
operation by the FBI, in which agents used a fake job offer from a phony
company -- 'Invita Security, Inc.' -- to lure Ivanov, along with alleged
crime partner Vasili Gorchkov, into the U.S.
Before they were arrested, the two men were invited to log in to their
computer in Russia from the 'Invita' offices. Meanwhile, FBI agents
secretly monitored their keystrokes, and subsequently used the information
to crack the suspects' computer and download its contents over the
The agents obtained a U.S. search warrant only after cracking the computer
and downloading the information, and never contacted Russian law
enforcement officials. The tactics raised eyebrows with some computer
security experts and attorneys, and the search apparently violates Article
272 of the Russian Criminal Code, which punishes "Unlawful Access to
Computer Information" with up to two years in prison. But the federal
judge overseeing the Seattle case ruled last month that the downloaded
evidence could be used in court, finding that the FBI wasn't subject to
Russian law. By Kevin Poulsen