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The United States vs. Gery Shalon

New York Southern District Court, Case No. 1:15-cr-00333-LTS

On November 5, 2015, the U.S. prosecutors filed an indictment charging Gery Shalon, aka “Garri Shalelashvili,” “Gabriel,” “Gabi,” “Phillipe Mousset” and “Christopher Engeham,” with orchestrating massive computer hacking crimes against U.S. financial institutions, brokerage firms and financial news publishers, including the largest theft of customer data from a U.S. financial institution in history (the U.S. Financial Sector Hacks).  Shalon is charged with committing these crimes with Joshua Samuel Aaron, aka “Mike Shields,” in furtherance of securities market manipulation schemes that Shalon and Aaron perpetrated with defendant Ziv Orenstein, aka “Aviv Stein” and “John Avery” in the United States.

As alleged, Shalon also orchestrated computer network hacks and cyberattacks in furtherance of other major criminal schemes, including unlawful internet casinos and illicit payment processors which Shalon operated with Orenstein. Shalon also owned and controlled an illegal U.S.-based Bitcoin exchange known as Coin.mx.  Shalon and Orenstein were arrested in July 2015 by the Israel Police on an indictment that charged the underlying securities fraud, and they remain in custody in Israel pending extradition on those charges.  Also announced was a separate indictment charging Anthony R. Murgio with operating Coin.mx in the United States, and related crimes.  Murgio, who was arrested on a complaint in July 2015, will be arraigned before the Honorable Alison J. Nathan.

Gery Shalon's cybercriminal enterprise
Gery Shalon’s cybercriminal enterprise

The Attorney’s Statement

As set forth in the indictment, these three defendants perpetrated one of the largest thefts of financial-related data in history – making off with the sensitive information of literally thousands of hard-working Americans,” said Attorney General Lynch. “These charges were made possible in large part because those victims came forward and worked with the Department of Justice to hold the perpetrators accountable“.

Today, we have exposed a cybercriminal enterprise that for years successfully and secretly hacked into the networks of a dozen companies, allegedly stealing personal information of over 100 million people, including over 80 million customers from one financial institution alone,” said U.S. Attorney Bharara.  “The charged crimes showcase a brave new world of hacking for profit.  It is no longer hacking merely for a quick payout, but hacking to support a diversified criminal conglomerate. 

Hacking As A Business Model

This was hacking as a business model, the prosecutors said. The alleged conduct also signals the next frontier in securities fraud – sophisticated hacking to steal nonpublic information, something the defendants discussed for the next stage of their sprawling enterprise.  Fueled by their hacking, the defendants’ criminal schemes allegedly generated hundreds of millions of dollars in illicit proceeds.  Even the most sophisticated companies – like those victimized by the hacks in this case – have to appreciate the limits of their ability to uncover the full scope of any cyber-intrusion and to stop the perpetrators before they strike again. If they have been hacked, most likely others have been as well, and even more will be. The best bet to identify, stop and punish cybercriminals is to work closely, and early, with law enforcement. That happened here, and today’s charges are proof of that.

The Largest Theft Of Customer Data

From approximately 2012 to mid-2015, Shalon, working with Aaron and others, orchestrated the U.S. Financial Sector Hacks, stealing personal information of over 100 million customers of the victim companies.  Among these, their network intrusion at one bank resulted in the theft of personal information of over 80 million customers, making it the largest theft of customer data from a U.S. financial institution in history.  Shalon, Aaron and their co-conspirators engaged in these crimes in furtherance of other criminal schemes. 

Securities Market Manipulation

In an effort to artificially manipulate the price of certain stocks publicly traded in the United States, Shalon and his co-conspirators sought to market the stocks, in a deceptive and misleading manner, to customers of the victim companies whose contact information they had stolen in the intrusions.

Illegal Internet Gambling And Payment Schemes

In particular, between approximately 2007 and July 2015, Shalon owned and operated unlawful internet gambling businesses in the United States and abroad; owned and operated multinational payment processors for illegal pharmaceutical suppliers, counterfeit and malicious software (malware) distributors, and unlawful internet casinos; and owned and controlled Coin.mx, an illegal U.S.-based Bitcoin exchange that operated in violation of federal anti-money laundering laws.  Nearly all of these schemes, like Shalon’s securities market manipulation schemes, relied for their success on computer hacking and other cybercrimes committed by Shalon and his co-conspirators.

Through their criminal schemes, between in or about 2007 and in or about July 2015, Shalon and his co-conspirators earned hundreds of millions of dollars in illicit proceeds, of which Shalon concealed at least $100 million in Swiss and other bank accounts.

Shalon, Aaron, Orenstein and their co-conspirators operated their criminal schemes, and laundered their criminal proceeds, through at least 75 shell companies and bank and brokerage accounts around the world.  The defendants controlled these companies and accounts using aliases, and by fraudulently using approximately 200 purported identification documents, including over 30 false passports that purported to be issued by the United States and at least 16 other countries.

The Justice Department is represented by Noah Solowiejczyk and Eun Young Choi.

Aaron is represented by Benjamin Brafman and Jacob Kaplan of Brafman & Associates PC. Orenstein is represented by Alan S. Futerfas. Shalon is represented by Michael L. Soshnick.

U.S. v. Shalon et al., case number 1:15-cr-00333, both in the U.S. District Court for the Southern District of New York.

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