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Russian national charged in hacking and insider trading plot that made ‘tens of millions of dollars,’ scamming investors, prosecutors say

A Russian national with alleged ties to the office of Russia’s president, Vladimir Putin, was charged by federal prosecutors Monday with participating in a global scam that netted “tens of millions of dollars” using insider information collected by hacking into two US companies with confidential information on publicly traded firms.

Vladislav D. Klyushin remained in Russia for years while allegedly participating in the scam, but Acting US Attorney Nathaniel R. Mendell said at a press conference in Boston Monday that Klyushin visited Switzerland, and while in that country, he was taken into custody in March and eventually was extradited to Boston to face federal charges. The charges were unsealed on Monday.

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“In simple terms, they hacked into US networks, stole inside information, and cheated honest investors out of millions of dollars,’’ Mendell said. He said Klyushin had “extensive ties to the office of the president of the Russian Federation,” the job currently held by Putin.

Klyushin, 41, is scheduled to appear in US District Court Monday and is being prosecuted in Massachusetts because one of the conspirators routed some illegal activity “using IP addresses hosted at a data center located in Boston,” according to prosecutors.

“The integrity of our nation’s capital markets and of its computer networks are priorities for my office,” said Mendell. “Today’s charges show that we, the FBI, and our other law enforcement partners will relentlessly pursue those who hack, steal, and attempt to profit from inside information, wherever they may hide.”

Klyushin is among five defendants, all Russian nationals, who allegedly participated in the hacking and insider trading ring, federal prosecutors said. One of the four at-large suspects is Ivan S. Ermakov, whom Mendell said is already under federal indictment for Russian efforts to influence the 2016 presidential election and hacking of international sports organizations who sanctioned Russian sports teams for illegal drug use.

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Klyushin is charged with conspiring to obtain unauthorized access to computers, and to commit wire fraud and securities fraud, and with obtaining unauthorized access to computers, wire fraud and securities fraud. The four other men face similar charges.

Ermakov, 35, is a former officer in the Russian Main Intelligence Directorate (GRU), a military intelligence agency of the General Staff of the Armed Forces of the Russian Federation, according to Mendell’s office and Albert Murray, special agent in charge of the Washington, D.C., FBI field office.

According to prosecutors, Klyushin, Ermakov, and a third Russian, 33-year-old Nikolai Rumiantcev, worked at M-13, a Moscow-based information technology company whose IT solutions were used by “the administration of the president of the Russian Federation, the government of the Russian Federation, federal ministries and departments, regional state executive bodies, commercial companies, and public organizations.”

The three men also offered investment services in return for as much as 60 percent of the profits, prosecutors said. At one point while running their alleged scam, the group was earning a 66 percent return on the investments they had made in about 149 different companies, prosecutors alleged. The two other defendants were provided the information, which they then used to make individual stock trades, prosecutors allege.

The other defendants were identified by prosecutors as Igor S. Sladkov, 42, and 43-year-old Mikail V. Irzak.

“These individuals used various illegal and malicious means to gain access to computer networks to perpetrate their illegal trading scheme,’' said Murray. “Their crimes have real consequences.”

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Mendell said a Boston-based federal grand jury has been investigating the scam for the past two years, and that Klyushin’s decision to go to Switzerland created a rare opportunity to bring a Russian-based participant in a hack and trade scheme into the US justice system.

“We only managed to have him arrested because he left Russia and traveled to Switzerland of all places,’' Mendell said. “If you are looking for good news this week, you can find some here. US prosecutors and intrepid federal agents made it possible to find Klyushin, extradite him, and bring him here to face charges. That’s a good day.”

The conspirators allegedly hacked into two companies who file confidential financial reports to federal regulators and the marketplace, including earnings reports before they were publicly disclosed, prosecutors said. In court papers, the companies are identified only as Filing Agent 1 (FA1) and Filing Agent 2 (FA2).

Hackers gained entry into FA1 in 2018, and the company did not realize it until 2020, while FA2′s network was invaded in 2017 and went undiscovered until 2020, according to court records. During the years the alleged scam was in operation, participants earned “tens of millions of dollars,” including one trade where they earned $400,000 in one night, according to prosecutors.

The suspects allegedly used “malicious infrastructure” during the hacking that could harvest employees’ user names and passwords, the statement said, and they used the stolen login information to gain access to the filing agents’ computer networks — and the confidential information contained there, prosecutors said.

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“It is further alleged that the co-conspirators distributed their trading across accounts they opened at banks and brokerages in several countries, including Cyprus, Denmark, Portugal, Russia, and the United States, and misled brokerage firms about the nature of their trading activities,” the statement said.

Travis Andersen of the Globe Staff contributed to this report.




John R. Ellement can be reached at john.ellement@globe.com. Follow him @JREbosglobe.