Vladislav Klyushin portrayed himself as an up by-the-bootstraps businessman, who grew up poor, has been working since he was 13 years old, and built a profitable information technology company that employs more than 100 people. He has a law degree, previously worked as a professor at the Moscow State Linguistic University, and was awarded a Medal of Honor by Russian President Vladimir Putin several years ago.
But behind that facade, federal prosecutors in Boston allege, the 42-year-old millionaire orchestrated an elaborate global hacking and insider trading scheme. They say he conspired with four codefendants — including a former Russian military intelligence officer who served as deputy director of Klyushin’s company and was previously charged with interfering in the 2016 US presidential election — to hack into the servers of two vendors that publicly traded companies use to make filings to the Securities and Exchange Commission.
Between 2018 and 2020, prosecutors allege, Klyushin and his co-conspirators viewed the earnings reports of dozens of companies — including Tesla, Hubspot, Datadog, and Snap — before they were made public, and used that information to make stock trades that led to millions of dollars in illegal profits.
“This is sort of like insider trading on steroids,” said attorney Robert Fisher, a former federal prosecutor, adding that insider trading cases generally involve information related to one company or a sliver of an industry. Hacking into a vendor with access to multiple companies is rarer and much more lucrative, he said; an SEC complaint filed in federal court in Boston alleges the conspirators raked in $82.5 million.
Now, Klyushin, a married father of five, is set to go to trial Monday in federal court in Boston on charges of conspiracy, wire fraud, unauthorized access to computers, and securities fraud, in a case that will be closely watched in diplomatic circles in the United States and Russia, according to legal experts. Klyushin owns a Moscow-based technology company, M-13, that provides media monitoring and cybersecurity testing for private and public entities, including the Russian Federation, and has “significant ties to the Russian government, and, more specifically, to parts of the Russian government engaged in defense and counter-espionage,” prosecutors said in court filings.
In response to defense concerns about whether Klyushin will receive a fair trial, US District Judge Patti B. Saris has agreed to question potential jurors about whether they feel any bias toward Russian nationals, but rejected a request to ask them about their feelings on the war in Ukraine. She also ruled that prosecutors may not mention Putin’s name during the trial.
Klyushin was first arrested in March 2021 after he arrived via a chartered jet in Switzerland, where a helicopter was waiting on the tarmac to whisk him and his family to a nearby luxury ski resort for a planned vacation. Local police swooped in at the request of US authorities. His codefendants were in Russia, a country with no extradition treaty with the United States; Swiss authorities extradited Klyushin to the United States nine months later, rejecting the Russian government’s request to send him home instead.
Last year, Klyushin’s name surfaced as part of a potential prisoner swap for American basketball star Brittany Griner and former US Marine Paul Whelan. Though Griner was released in December in exchange for convicted Russian arms dealer Viktor Bout, Whelan remains imprisoned in Russia, serving a 16-year sentence for espionage. Whelan says he’s innocent and was framed, but he dropped his appeal as his supporters continue to pressure the Biden administration to secure his release.
Meanwhile, Klyushin has been held without bail at the Plymouth County jail since his extradition 13 months ago. A federal judge refused to set bail, saying he’s a serious risk of flight. He owns property in London and Russia and has access to private planes, helicopters, and a 77-foot yacht he purchased for nearly $4 million. Prosecutors say he faces more than 20 years in prison if convicted.
“It wouldn’t be surprising to find that the Russians are trying to trade for him,” said Jamil Jaffer, executive director of the National Security Institute at George Mason University’s Antonin Scalia Law school. He noted that one of Klyushin’s codefendants is Ivan Ermakov, who was charged with interfering with the 2016 US election. “They obviously don’t want information coming out about his association with a known Russian intelligence officer who turns out to be the deputy director of his company.”
The US attorney’s office declined to comment on Klyushin’s case or whether he is being eyed for a prisoner swap. Attorney Maksim Nemtsev, who represents Klyushin, also declined to comment.
Fisher, who was a senior litigation counsel at the Financial Industry Regulatory Authority before becoming a partner at Nixon Peabody, said such cases are complex and can be difficult to prove because hackers “thrive on anonymity,” and it may be challenging to link a particular hacker to an intrusion, especially when they are located in a foreign country that doesn’t cooperate with US investigators.
Klyushin’s lawyers wrote in court filings that they will offer “substantial challenges” to the government’s case and argued that a preliminary review showed he actually lost $3.6 million on transactions involving Tesla stock during the period that prosecutors allege he had inside information.
“Such staggering losses are inconsistent with the government’s theory of Mr. Klyushin having advanced knowledge of material non-public stock information,” Klyushin’s lawyers wrote in a December 2021 memorandum arguing unsuccessfully for his release on bail.
The defense lawyers successfully petitioned the judge in the case to bar the government from presenting evidence that Klyushin’s fugitive codefendant was a former Russian military intelligence officer and was indicted in 2018 in Washington, D.C., and Pennsylvania for two alleged computer hacking schemes, involving the 2016 election and one that allegedly targeted anti-doping agencies and officials.
Klyushin’s attorneys argued in court filings that the government’s case is “entirely circumstantial” and the charges are unfounded.
Boston attorney B. Stephanie Siegmann, a former federal prosecutor who handled a case against an Iranian national that was dismissed by the Obama administration in 2016 as part of a sweeping nuclear deal involving prisoner swaps, said line prosecutors have no say in whether a defendant will be freed as part of an international trade.
“That’s a diplomatic, political decision,” Siegmann said.
But Klyushin’s case will be “closely watched” in Russia because he was charged with someone “who was clearly working with the Russian government in the election disinformation campaign,” said Siegmann, speculating that Russia may try to negotiate Klyushin’s release if he is convicted and sentenced to prison.
Computer hacking and insider trading cases have become a priority for the Justice Department over the past decade, and the case against Klyushin is significant because of the scope of the scheme and his political ties, she said.
“There’s a lot of hacking that is done by the Russians and Ukrainians and there are a lot of criminal organizations involved in that activity in those countries, doing it to make money,” said Siegmann, a partner at Hinckley Allen, where she chairs the law firm’s International Trade & Global Security group. But, she added that it can be difficult to bring a Russian national to trial in the United States because there is no extradition treaty between the two countries.
In Klyushin’s case, US authorities learned about his planned ski trip and moved quickly. A day before his arrival in Switzerland, federal prosecutors filed the criminal charges in Boston under seal and secretly obtained a warrant for his arrest.