Ne'er-Do-Well News

Amid an Embarrassment of Riches, Ransom Gangs Increasingly Outsource Their Work

There’s an old adage in information security: “Every company gets penetration tested, whether or not they pay someone for the pleasure.” Many organizations that do hire professionals to test their network security posture unfortunately tend to focus on fixing vulnerabilities hackers could use to break in. But judging from the proliferation of help-wanted ads for offensive pentesters in the cybercrime underground, today’s attackers have exactly zero trouble gaining that initial intrusion: The real challenge seems to be hiring enough people to help everyone profit from the access already gained.

One of the most common ways such access is monetized these days is through ransomware, which holds a victim’s data and/or computers hostage unless and until an extortion payment is made. But in most cases, there is a yawning gap of days, weeks or months between the initial intrusion and the deployment of ransomware within a victim organization.

That’s because it usually takes time and a good deal of effort for intruders to get from a single infected PC to seizing control over enough resources within the victim organization where it makes sense to launch the ransomware.

This includes pivoting from or converting a single compromised Microsoft Windows user account to an administrator account with greater privileges on the target network; the ability to sidestep and/or disable any security software; and gaining the access needed to disrupt or corrupt any data backup systems the victim firm may have.

Each day, millions of malware-laced emails are blasted out containing booby-trapped attachments. If the attachment is opened, the malicious document proceeds to quietly download additional malware and hacking tools to the victim machine (here’s one video example of a malicious Microsoft Office attachment from the malware sandbox service any.run). From there, the infected system will report home to a malware control server operated by the spammers who sent the missive.

At that point, control over the victim machine may be transferred or sold multiple times between different cybercriminals who specialize in exploiting such access. These folks are very often contractors who work with established ransomware groups, and who are paid a set percentage of any eventual ransom payments made by a victim company.

THE DOCTOR IS IN

Enter subcontractors like “Dr. Samuil,” a cybercriminal who has maintained a presence on more than a dozen top Russian-language cybercrime forums over the past 15 years. In a series of recent advertisements, Dr. Samuil says he’s eagerly hiring experienced people who are familiar with tools used by legitimate pentesters for exploiting access once inside of a target company — specifically, post-exploit frameworks like the closely-guarded Cobalt Strike.

“You will be regularly provided select accesses which were audited (these are about 10-15 accesses out of 100) and are worth a try,” Dr. Samuil wrote in one such help-wanted ad. “This helps everyone involved to save time. We also have private software that bypasses protection and provides for smooth performance.”

From other classified ads he posted in August and September 2020, it seems clear Dr. Samuil’s team has some kind of privileged access to financial data on targeted companies that gives them a better idea of how much cash the victim firm may have on hand to pay a ransom demand. To wit:

“There is huge insider information on the companies which we target, including information if there are tape drives and clouds (for example, Datto that is built to last, etc.), which significantly affects the scale of the conversion rate.

Requirements:
– experience with cloud storage, ESXi.
– experience with Active Directory.
– privilege escalation on accounts with limited rights.

* Serious level of insider information on the companies with which we work. There are proofs of large payments, but only for verified LEADs.
* There is also a private MEGA INSIDE , which I will not write about here in public, and it is only for experienced LEADs with their teams.
* We do not look at REVENUE / NET INCOME / Accountant reports, this is our MEGA INSIDE, in which we know exactly how much to confidently squeeze to the maximum in total.

According to cybersecurity firm Intel 471, Dr. Samuil’s ad is hardly unique, and there are several other seasoned cybercriminals who are customers of popular ransomware-as-a-service offerings that are hiring sub-contractors to farm out some of the grunt work.

“Within the cybercriminal underground, compromised accesses to organizations are readily bought, sold and traded,” Intel 471 CEO Mark Arena said. “A number of security professionals have previously sought to downplay the business impact cybercriminals can have to their organizations.”

“But because of the rapidly growing market for compromised accesses and the fact that these could be sold to anyone, organizations need to focus more on efforts to understand, detect and quickly respond to network compromises,” Arena continued. “That covers faster patching of the vulnerabilities that matter, ongoing detection and monitoring for criminal malware, and understanding the malware you are seeing in your environment, how it got there, and what it has or could have dropped subsequently.”

WHO IS DR. SAMUIL?

In conducting research for this story, KrebsOnSecurity learned that Dr. Samuil is the handle used by the proprietor of multi-vpn[.]biz, a long-running virtual private networking (VPN) service marketed to cybercriminals who are looking to anonymize and encrypt their online traffic by bouncing it through multiple servers around the globe.

Have a Coke and a Molotov cocktail. Image: twitter.com/multivpn

MultiVPN is the product of a company called Ruskod Networks Solutions (a.k.a. ruskod[.]net), which variously claims to be based in the offshore company havens of Belize and the Seychelles, but which appears to be run by a guy living in Russia.

The domain registration records for ruskod[.]net were long ago hidden by WHOIS privacy services. But according to Domaintools.com [an advertiser on this site], the original WHOIS records for the site from the mid-2000s indicate the domain was registered by a Sergey Rakityansky.

This is not an uncommon name in Russia or in many surrounding Eastern European nations. But a former business partner of MultiVPN who had a rather public falling out with Dr. Samuil in the cybercrime underground told KrebsOnSecurity that Rakityansky is indeed Dr. Samuil’s real surname, and that he is a 32- or 33-year-old currently living in Bryansk, a city located approximately 200 miles southwest of Moscow.

Neither Dr. Samuil nor MultiVPN have responded to requests for comment.

Promising Infusions of Cash, Fake Investor John Bernard Walked Away With $30M

September featured two stories on a phony tech investor named John Bernard, a pseudonym used by a convicted thief named John Clifton Davies who’s fleeced dozens of technology companies out of an estimated $30 million with the promise of lucrative investments. Those stories prompted a flood of tips from Davies’ victims that paints a much clearer picture of this serial con man and his cohorts, including allegations of hacking, smuggling, bank fraud and murder.

KrebsOnSecurity interviewed more than a dozen of Davies’ victims over the past five years, none of whom wished to be quoted here out of fear of reprisals from a man they say runs with mercenaries and has connections to organized crime.

As described in Part II of this series, John Bernard is in fact John Clifton Davies, a 59-year-old U.K. citizen who absconded from justice before being convicted on multiple counts of fraud in 2015. Prior to his conviction, Davies served 16 months in jail before being cleared of murdering his third wife on their honeymoon in India.

The scam artist John Bernard (left) in a recent Zoom call, and a photo of John Clifton Davies from 2015.

After eluding justice in the U.K., Davies reinvented himself as The Private Office of John Bernard, pretending to a be billionaire Swiss investor who made his fortunes in the dot-com boom 20 years ago and who was seeking investment opportunities.

In case after case, Bernard would promise to invest millions in tech startups, and then insist that companies pay tens of thousands of dollars worth of due diligence fees up front. However, the due diligence company he insisted on using — another Swiss firm called Inside Knowledge — also was secretly owned by Bernard, who would invariably pull out of the deal after receiving the due diligence money.

Bernard found a constant stream of new marks by offering extraordinarily generous finders fees to investment brokers who could introduce him to companies seeking an infusion of cash. When it came time for companies to sign legal documents, Bernard’s victims interacted with a 40-something Inside Knowledge employee named “Katherine Miller,” who claimed to be his lawyer.

It turns out that Katherine Miller is a onetime Moldovan attorney who was previously known as Ecaterina “Katya” Dudorenko. She is listed as a Romanian lawyer in the U.K. Companies House records for several companies tied to John Bernard, including Inside Knowledge Solutions Ltd., Docklands Enterprise Ltd., and Secure Swiss Data Ltd (more on Secure Swiss data in a moment).

Another of Bernard’s associates listed as a director at Docklands Enterprise Ltd. is Sergey Valentinov Pankov. This is notable because in 2018, Pankov and Dudorenko were convicted of cigarette smuggling in the United Kingdom.

Sergey Pankov and Ecaterina Dudorenco, in undated photos. Source: Mynewsdesk.com

According to the Organized Crime and Corruption Reporting Project, “illicit trafficking of tobacco is a multibillion-dollar business today, fueling organized crime and corruption [and] robbing governments of needed tax money. So profitable is the trade that tobacco is the world’s most widely smuggled legal substance. This booming business now stretches from counterfeiters in China and renegade factories in Russia to Indian reservations in New York and warlords in Pakistan and North Africa.”

Like their erstwhile boss Mr. Davies, both Pankov and Dudorenko disappeared before their convictions in the U.K. They were sentenced in absentia to two and a half years in prison.

Incidentally, Davies was detained by Ukrainian authorities in 2018, although he is not mentioned by name in this story from the Ukrainian daily Pravda. The story notes that the suspect moved to Kiev in 2014 and lived in a rented apartment with his Ukrainian wife.

John’s fourth wife, Iryna Davies, is listed as a director of one of the insolvency consulting businesses in the U.K. that was part of John Davies’ 2015 fraud conviction. Pravda reported that in order to confuse the Ukrainian police and hide from them, Mr. Davies constantly changed their place of residence.

John Clifton Davies, a.k.a. John Bernard. Image: Ukrainian National Police.

The Pravda story says Ukrainian authorities were working with the U.K. government to secure Davies’ extradition, but he appears to have slipped away once again. That’s according to one investment broker who’s been tracking Davies’ trail of fraud since 2015.

According to that source — who we’ll call “Ben” — Inside Knowledge and The Private Office of John Bernard have fleeced dozens of companies out of nearly USD $30 million in due diligence fees over the years, with one company reportedly paying over $1 million.

Ben said he figured out that Bernard was Davies through a random occurrence. Ben said he’d been told by a reliable source that Bernard traveled everywhere in Kiev with several armed guards, and that his entourage rode in a convoy that escorted Davies’ high-end Bentley. Ben said Davies’ crew was even able to stop traffic in the downtown area in what was described as a quasi military maneuver so that Davies’ vehicle could proceed unobstructed (and presumably without someone following his car).

Ben said he’s spoken to several victims of Bernard who saw phony invoices for payments to be made to banks in Eastern Europe appear to come from people within their own organization shortly after cutting off contact with Bernard and his team.

While Ben allowed that these invoices could have come from another source, it’s worth noting that by virtue of participating in the due diligence process, the companies targeted by these schemes would have already given Bernard’s office detailed information about their finances, bank accounts and security processes.

In some cases, the victims had agreed to use Bernard’s Secure Swiss Data software and services to store documents for the due diligence process. Secure Swiss Data is one of several firms founded by Davies/Inside Knowledge and run by Dudorenko, and it advertised itself as a Swiss company that provides encrypted email and data storage services. In February 2020, Secure Swiss Data was purchased in an “undisclosed multimillion buyout” by SafeSwiss Secure Communication AG.

Shortly after the first story on John Bernard was published here, virtually all of the employee profiles tied to Bernard’s office removed him from their work experience as listed on their LinkedIn resumes — or else deleted their profiles altogether. Also, John Bernard’s main website — the-private-office.ch — replaced the content on its homepage with a note saying it was closing up shop.

Incredibly, even after the first two stories ran, Bernard/Davies and his crew continued to ply their scam with companies that had already agreed to make due diligence payments, or that had made one or all of several installment payments.

One of those firms actually issued a press release in August saying it had been promised an infusion of millions in cash from John Bernard’s Private Office. They declined to be quoted here, and continue to hold onto hope that Mr. Bernard is not the crook that he plainly is.

Who is Tech Investor John Bernard?

John Bernard, the subject of a story here last week about a self-proclaimed millionaire investor who has bilked countless tech startups, appears to be a pseudonym for John Clifton Davies, a U.K. man who absconded from justice before being convicted on multiple counts of fraud in 2015. Prior to his conviction, Davies served 16 months in jail before being cleared of murdering his wife on their honeymoon in India.

The Private Office of John Bernard, which advertises itself as a capital investment firm based in Switzerland, has for years been listed on multiple investment sites as the home of a millionaire who made his fortunes in the dot-com boom 20 years ago and who has oodles of cash to invest in tech startups.

But as last week’s story noted, Bernard’s investment company is a bit like a bad slot machine that never pays out. KrebsOnSecurity interviewed multiple investment brokers who all told the same story: After promising to invest millions after one or two phone calls and with little or no pushback, Bernard would insist that companies pay tens of thousands of dollars worth of due diligence fees up front.

However, the due diligence company he insisted on using — another Swiss firm called Inside Knowledge — also was secretly owned by Bernard, who would invariably pull out of the deal after receiving the due diligence money.

Neither Mr. Bernard nor anyone from his various companies responded to multiple requests for comment over the past few weeks. What’s more, virtually all of the employee profiles tied to Bernard’s office have since last week removed those firms from their work experience as listed on their LinkedIn resumes — or else deleted their profiles altogether.

Sometime on Thursday John Bernard’s main website — the-private-office.ch — replaced the content on its homepage with a note saying it was closing up shop.

“We are pleased to announce that we are currently closing The Private Office fund as we have reached our intended investment level and that we now plan to focus on helping those companies we have invested into to grow and succeed,” the message reads.

As noted in last week’s story, the beauty of a scam like the one multiple investment brokers said was being run by Mr. Bernard is that companies bilked by small-time investment schemes rarely pursue legal action, mainly because the legal fees involved can quickly surpass the losses. What’s more, most victims will likely be too ashamed to come forward.

Also, John Bernard’s office typically did not reach out to investment brokers directly. Rather, he had his firm included on a list of angel investors focused on technology companies, so those seeking investments usually came to him.

Finally, multiple sources interviewed for this story said Bernard’s office offered a finders fee for any investment leads that brokers brought his way. While such commissions are not unusual, the amount promised — five percent of the total investment in a given firm that signed an agreement — is extremely generous. However, none of the investment brokers who spoke to KrebsOnSecurity were able to collect those fees, because Bernard’s office never actually consummated any of the deals they referred to him.

PAY NO ATTENTION TO THE EMPTY BOOKSHELVES

After last week’s story ran, KrebsOnSecurity heard from a number of other investment brokers who had near identical experiences with Bernard. Several said they at one point spoke with him via phone or Zoom conference calls, and that he had a distinctive British accent.

When questioned about why his staff was virtually all based in Ukraine when his companies were supposedly in Switzerland, Bernard replied that his wife was Ukrainian and that they were living there to be closer to her family.

One investment broker who recently got into a deal with Bernard shared a screen shot from a recent Zoom call with him. That screen shot shows Bernard bears a striking resemblance to one John Clifton Davies, a 59-year-old from Milton Keynes, a large town in Buckinghamshire, England about 50 miles (80 km) northwest of London.

John Bernard (left) in a recent Zoom call, and a photo of John Clifton Davies from 2015.

In 2015, Mr. Davies was convicted of stealing more than GBP 750,000 from struggling companies looking to restructure their debt. For at least seven years, Davies ran multiple scam businesses that claimed to provide insolvency consulting to distressed companies, even though he was not licensed to do so.

“After gaining the firm’s trust, he took control of their assets and would later pocket the cash intended for creditors,” according to a U.K. news report from 2015. “After snatching the cash, Davies proceeded to spend the stolen money on a life of luxury, purchasing a new upmarket home fitted with a high-tech cinema system and new kitchen.”

Davies disappeared before he was convicted of fraud in 2015. Two years before that, Davies was released from prison after being held in custody for 16 months on suspicion of murdering his new bride in 2004 on their honeymoon in India.

Davies’ former wife Colette Davies, 39, died after falling 80 feet from a viewing point at a steep gorge in the Himachal Pradesh region of India. Mr. Davies was charged with murder and fraud after he attempted to collect GBP 132,000 in her life insurance payout, but British prosecutors ultimately conceded they did not have enough evidence to convict him.

THE SWISS AND UKRAINE CONNECTIONS

While the photos above are similar, there are other clues that suggest the two identities may be the same person. A review of business records tied to Davies’ phony insolvency consulting businesses between 2007 and 2013 provides some additional pointers.

John Clifton Davies’ former listing at the official U.K. business registrar Companies House show his company was registered at the address 26 Dean Forest Way, Broughton, Milton Keynes.

A search on that street address at 4iq.com turns up several interesting results, including a listing for senecaequities.com registered to a John Davies at the email address [email protected].

A Companies House official record for Seneca Equities puts it at John Davies’ old U.K. address at 26 Dean Forest Way and lists 46-year-old Iryna Davies as a director. “Iryna” is a uniquely Ukrainian spelling of the name Irene (the Russian equivalent is typically “Irina”).

A search on John Clifton Davies and Iryna turned up this 2013 story from The Daily Mirror which says Iryna is John C. Davies’ fourth wife, and that the two were married in 2010.

KrebsOnSecurity sought comment from both the U.K. police district that prosecuted Davies’ case and the U.K.’s National Crime Agency (NCA). Neither wished to comment on the findings. “We can neither confirm nor deny the existence of an investigation or subjects of interest,” a spokesperson for the NCA said.

Chinese Antivirus Firm Was Part of APT41 ‘Supply Chain’ Attack

The U.S. Justice Department this week indicted seven Chinese nationals for a decade-long hacking spree that targeted more than 100 high-tech and online gaming companies. The government alleges the men used malware-laced phishing emails and “supply chain” attacks to steal data from companies and their customers. One of the alleged hackers was first profiled here in 2012 as the owner of a Chinese antivirus firm.

Image: FBI

Charging documents say the seven men are part of a hacking group known variously as “APT41,” “Barium,” “Winnti,” “Wicked Panda,” and “Wicked Spider.” Once inside of a target organization, the hackers stole source code, software code signing certificates, customer account data and other information they could use or resell.

APT41’s activities span from the mid-2000s to the present day. Earlier this year, for example, the group was tied to a particularly aggressive malware campaign that exploited recent vulnerabilities in widely-used networking products, including flaws in Cisco and D-Link routers, as well as Citrix and Pulse VPN appliances. Security firm FireEye dubbed that hacking blitz “one of the broadest campaigns by a Chinese cyber espionage actor we have observed in recent years.”

The government alleges the group monetized its illicit access by deploying ransomware and “cryptojacking” tools (using compromised systems to mine cryptocurrencies like Bitcoin). In addition, the gang targeted video game companies and their customers in a bid to steal digital items of value that could be resold, such as points, powers and other items that could be used to enhance the game-playing experience.

APT41 was known to hide its malware inside fake resumes that were sent to targets. It also deployed more complex supply chain attacks, in which they would hack a software company and modify the code with malware.

“The victim software firm — unaware of the changes to its product, would subsequently distribute the modified software to its third-party customers, who were thereby defrauded into installing malicious software code on their own computers,” the indictments explain.

While the various charging documents released in this case do not mention it per se, it is clear that members of this group also favored another form of supply chain attacks — hiding their malware inside commercial tools they created and advertised as legitimate security software and PC utilities.

One of the men indicted as part of APT41 — now 35-year-old Tan DaiLin — was the subject of a 2012 KrebsOnSecurity story that sought to shed light on a Chinese antivirus product marketed as Anvisoft. At the time, the product had been “whitelisted” or marked as safe by competing, more established antivirus vendors, although the company seemed unresponsive to user complaints and to questions about its leadership and origins.

Tan DaiLin, a.k.a. “Wicked Rose,” in his younger years. Image: iDefense

Anvisoft claimed to be based in California and Canada, but a search on the company’s brand name turned up trademark registration records that put Anvisoft in the high-tech zone of Chengdu in the Sichuan Province of China.

A review of Anvisoft’s website registration records showed the company’s domain originally was created by Tan DaiLin, an infamous Chinese hacker who went by the aliases “Wicked Rose” and “Withered Rose.” At the time of story, DaiLin was 28 years old.

That story cited a 2007 report (PDF) from iDefense, which detailed DaiLin’s role as the leader of a state-sponsored, four-man hacking team called NCPH (short for Network Crack Program Hacker). According to iDefense, in 2006 the group was responsible for crafting a rootkit that took advantage of a zero-day vulnerability in Microsoft Word, and was used in attacks on “a large DoD entity” within the USA.

“Wicked Rose and the NCPH hacking group are implicated in multiple Office based attacks over a two year period,” the iDefense report stated.

When I first scanned Anvisoft at Virustotal.com back in 2012, none of the antivirus products detected it as suspicious or malicious. But in the days that followed, several antivirus products began flagging it for bundling at least two trojan horse programs designed to steal passwords from various online gaming platforms.

Security analysts and U.S. prosecutors say APT41 operated out of a Chinese enterprise called Chengdu 404 that purported to be a network technology company but which served a legal front for the hacking group’s illegal activities, and that Chengdu 404 used its global network of compromised systems as a kind of dragnet for information that might be useful to the Chinese Communist Party.

Chengdu404’s offices in China. Image: DOJ.

“CHENGDU 404 developed a ‘big data’ product named ‘SonarX,’ which was described…as an ‘Information Risk Assessment System,’” the government’s indictment reads. “SonarX served as an easily searchable repository for social media data that previously had been obtained by CHENGDU 404.”

The group allegedly used SonarX to search for individuals linked to various Hong Kong democracy and independence movements, and snoop on a U.S.-backed media outlet that ran stories examining the Chinese government’s treatment of Uyghur people living in its Xinjian region.

As noted by TechCrunch, after the indictments were filed prosecutors said they obtained warrants to seize websites, domains and servers associated with the group’s operations, effectively shutting them down and hindering their operations.

“The alleged hackers are still believed to be in China, but the allegations serve as a ‘name and shame’ effort employed by the Justice Department in recent years against state-backed cyber attackers,” wrote TechCrunch’s Zack Whittaker.

Two Russians Charged in $17M Cryptocurrency Phishing Spree

U.S. authorities today announced criminal charges and financial sanctions against two Russian men accused of stealing nearly $17 million worth of virtual currencies in a series of phishing attacks throughout 2017 and 2018 that spoofed websites for some of the most popular cryptocurrency exchanges.


The Justice Department unsealed indictments against Russian nationals Danil Potekhin and Dmitirii Karasavidi, alleging the duo was responsible for a sophisticated phishing and money laundering campaign that resulted in the theft of $16.8 million in cryptocurrencies and fiat money from victims.

Separately, the U.S. Treasury Department announced economic sanctions against Potekhin and Karasavidi, effectively freezing all property and interests of these persons (subject to U.S. jurisdiction) and making it a crime to transact with them.

According to the indictments, the two men set up fake websites that spoofed login pages for the currency exchanges Binance, Gemini and Poloniex. Armed with stolen login credentials, the men allegedly stole more than $10 million from 142 Binance victims, $5.24 million from 158 Poloniex users, and $1.17 million from 42 Gemini customers.

Prosecutors say the men then laundered the stolen funds through an array of intermediary cryptocurrency accounts — including compromised and fictitiously created accounts — on the targeted cryptocurrency exchange platforms. In addition, the two are alleged to have artificially inflated the value of their ill-gotten gains by engaging in cryptocurrency price manipulation using some of the stolen funds.

For example, investigators alleged Potekhin and Karasavidi used compromised Poloniex accounts to place orders to purchase large volumes of “GAS,” the digital currency token used to pay the cost of executing transactions on the NEO blockchain — China’s first open source blockchain platform.

“Using digital crurency in one victim Poloniex account, they placed an order to purchase approximately 8,000 GAS, thereby immediately increasing the market price of GAS from approximately $18 to $2,400,” the indictment explains.

Potekhin and others then converted the artificially inflated GAS in their own fictitious Poloniex accounts into other cryptocurrencies, including Ethereum (ETH) and Bitcoin (BTC). From the complaint:

“Before the Eight Fictitious Poloniex Accounts were frozen, POTEKHIN and others transferred approximately 759 ETH to nine digital currency addresses. Through a sophisticated and layered manner, the ETH from these nine digital currency addresses was sent through multiple intermediary accounts, before ultimately being deposited into a Bitfinex account controlled by Karasavidi.”

The Treasury’s action today lists several of the cryptocurrency accounts thought to have been used by the defendants. Searching on some of those accounts at various cryptocurrency transaction tracking sites points to a number of phishing victims.

“I would like to blow your bitch ass away, if you even had the balls to show yourself,” exclaimed one victim, posting in a comment on the Etherscan lookup service.

One victim said he contemplated suicide after being robbed of his ETH holdings in a 2017 phishing attack. Another said he’d been relieved of funds needed to pay for his 3-year-old daughter’s medical treatment.

“You and your team will leave a trail and will be found,” wrote one victim, using the handle ‘Illfindyou.’ “You’ll only be able to hide behind the facade for a short while. Go steal from whales you piece of shit.”

There is potentially some good news for victims of these phishing attacks. According to the Treasury Department, millions of dollars in virtual currency and U.S. dollars traced to Karasavidi’s account was seized in a forfeiture action by the United States Secret Service.

Whether any of those funds can be returned to victims of this phishing spree remains to be seen. And assuming that does happen, it could take years. In February 2020, KrebsOnSecurity wrote about being contacted by an Internal Revenue Service investigator seeking to return funds seized seven years earlier as part of the governments 2013 seizure of Liberty Reserve, a virtual currency service that acted as a $6 billion hub for the cybercrime world.

Today’s action is the latest indication that the Treasury Department is increasingly willing to use its authority to restrict the financial resources tied to various cybercrime activities. Earlier this month, the agency’s Office of Foreign Asset Control (OFAC) added three Russian nationals and a host of cryptocurrency addresses to its sanctions lists in a case involving efforts by Russian online troll farms to influence the 2018 mid-term elections.

In June, OFAC took action against six Nigerian nationals suspected of stealing $6 million from U.S. businesses and individuals through Business Email Compromise fraud and romance scams.

And in 2019, OFAC sanctioned 17 members allegedly associated with “Evil Corp.,” an Eastern European cybercrime syndicate that has stolen more than $100 million from small businesses via malicious software over the past decade.

A copy of the indictments against Potekhin and Karasavidi is available here (PDF).

Confessions of an ID Theft Kingpin, Part II

Yesterday’s piece told the tale of Hieu Minh Ngo, a hacker the U.S. Secret Service described as someone who caused more material financial harm to more Americans than any other convicted cybercriminal. Ngo was recently deported back to his home country after serving more than seven years in prison for running multiple identity theft services. He now says he wants to use his experience to convince other cybercriminals to use their skills for good. Here’s a look at what happened after he got busted.

Hieu Minh Ngo, 29, in a recent photo.

Part I of this series ended with Ngo in handcuffs after disembarking a flight from his native Vietnam to Guam, where he believed he was going to meet another cybercriminal who’d promised to hook him up with the mother of all consumer data caches.

Ngo had been making more than $125,000 a month reselling ill-gotten access to some of the biggest data brokers on the planet. But the Secret Service discovered his various accounts at these data brokers and had them shut down one by one. Ngo became obsessed with restarting his business and maintaining his previous income. By this time, his ID theft services had earned roughly USD $3 million.

As this was going on, Secret Service agents used an intermediary to trick Ngo into thinking he’d trodden on the turf of another cybercriminal. From Part I:

The Secret Service contacted Ngo through an intermediary in the United Kingdom — a known, convicted cybercriminal who agreed to play along. The U.K.-based collaborator told Ngo he had personally shut down Ngo’s access to Experian because he had been there first and Ngo was interfering with his business.

“The U.K. guy told Ngo, ‘Hey, you’re treading on my turf, and I decided to lock you out. But as long as you’re paying a vig through me, your access won’t go away’,” the Secret Service’s Matt O’Neill recalled.

After several months of conversing with his apparent U.K.-based tormentor, Ngo agreed to meet him in Guam to finalize the deal. But immediately after stepping off of the plane in Guam, he was apprehended by Secret Service agents.

“One of the names of his identity theft services was findget[.]me,” O’Neill said. “We took that seriously, and we did like he asked.”

In an interview with KrebsOnSecurity, Ngo said he spent about two months in a Guam jail awaiting transfer to the United States. A month passed before he was allowed a 10 minute phone call to his family and explain what he’d gotten himself into.

“This was a very tough time,” Ngo said. “They were so sad and they were crying a lot.”

First stop on his prosecution tour was New Jersey, where he ultimately pleaded guilty to hacking into MicroBilt, the first of several data brokers whose consumer databases would power different iterations of his identity theft service over the years.

Next came New Hampshire, where another guilty plea forced him to testify in three different trials against identity thieves who had used his services for years. Among them was Lance Ealy, a serial ID thief from Dayton, Ohio who used Ngo’s service to purchase more than 350 “fullz” — a term used to describe a package of everything one would need to steal someone’s identity, including their Social Security number, mother’s maiden name, birth date, address, phone number, email address, bank account information and passwords.

Ealy used Ngo’s service primarily to conduct tax refund fraud with the U.S. Internal Revenue Service (IRS), claiming huge refunds in the names of ID theft victims who first learned of the fraud when they went to file their taxes and found someone else had beat them to it.

Ngo’s cooperation with the government ultimately led to 20 arrests, with a dozen of those defendants lured into the open by O’Neill and other Secret Service agents posing as Ngo.

The Secret Service had difficulty pinning down the exact amount of financial damage inflicted by Ngo’s various ID theft services over the years, primarily because those services only kept records of what customers searched for — not which records they purchased.

But based on the records they did have, the government estimated that Ngo’s service enabled approximately $1.1 billion in new account fraud at banks and retailers throughout the United States, and roughly $64 million in tax refund fraud with the states and the IRS.

“We interviewed a number of Ngo’s customers, who were pretty open about why they were using his services,” O’Neill said. “Many of them told us the same thing: Buying identities was so much better for them than stolen payment card data, because card data could be used once or twice before it was no good to them anymore. But identities could be used over and over again for years.”

O’Neill said he still marvels at the fact that Ngo’s name is practically unknown when compared to the world’s most infamous credit card thieves, some of whom were responsible for stealing hundreds of millions of cards from big box retail merchants.

“I don’t know of anyone who has come close to causing more material harm than Ngo did to the average American,” O’Neill said. “But most people have probably never heard of him.”

Ngo said he wasn’t surprised that his services were responsible for so much financial damage. But he was utterly unprepared to hear about the human toll. Throughout the court proceedings, Ngo sat through story after dreadful story of how his work had ruined the financial lives of people harmed by his services.

“When I was running the service, I didn’t really care because I didn’t know my customers and I didn’t know much about what they were doing with it,” Ngo said. “But during my case, the federal court received like 13,000 letters from victims who complained they lost their houses, jobs, or could no longer afford to buy a home or maintain their financial life because of me. That made me feel really bad, and I realized I’d been a terrible person.”

Even as he bounced from one federal detention facility to the next, Ngo always seemed to encounter ID theft victims wherever he went, including prison guards, healthcare workers and counselors.

“When I was in jail at Beaumont, Texas I talked to one of the correctional officers there who shared with me a story about her friend who lost her identity and then lost everything after that,” Ngo recalled. “Her whole life fell apart. I don’t know if that lady was one of my victims, but that story made me feel sick. I know now that was I was doing was just evil.”

Ngo’s former ID theft service usearching[.]info.

The Vietnamese hacker was released from prison a few months ago, and is now finishing up a mandatory three-week COVID-19 quarantine in a government-run facility near Ho Chi Minh city. In the final months of his detention, Ngo started reading everything he could get his hands on about computer and Internet security, and even authored a lengthy guide written for the average Internet user with advice about how to avoid getting hacked or becoming the victim of identity theft.

Ngo said while he would like to one day get a job working in some cybersecurity role, he’s in no hurry to do so. He’s already had at least one job offer in Vietnam, but he turned it down. He says he’s not ready to work yet, but is looking forward to spending time with his family — and specifically with his dad, who was recently diagnosed with Stage 4 cancer.

Longer term, Ngo says, he wants to mentor young people and help guide them on the right path, and away from cybercrime. He’s been brutally honest about his crimes and the destruction he’s caused. His LinkedIn profile states up front that he’s a convicted cybercriminal.

“I hope my work can help to change the minds of somebody, and if at least one person can change and turn to do good, I’m happy,” Ngo said. “It’s time for me to do something right, to give back to the world, because I know I can do something like this.”

Still, the recidivism rate among cybercriminals tends to be extremely high, and it would be easy for him to slip back into his old ways. After all, few people know as well as he does how best to exploit access to identity data.

O’Neill said he believes Ngo probably will keep his nose clean. But he added that Ngo’s service if it existed today probably would be even more successful and lucrative given the sheer number of scammers involved in using stolen identity data to defraud states and the federal government out of pandemic assistance loans and unemployment insurance benefits.

“It doesn’t appear he’s looking to get back into that life of crime,” O’Neill said. “But I firmly believe the people doing fraudulent small business loans and unemployment claims cut their teeth on his website. He was definitely the new coin of the realm.”

Ngo maintains he has zero interest in doing anything that might send him back to prison.

“Prison is a difficult place, but it gave me time to think about my life and my choices,” he said. “I am committing myself to do good and be better every day. I now know that money is just a part of life. It’s not everything and it can’t bring you true happiness. I hope those cybercriminals out there can learn from my experience. I hope they stop what they are doing and instead use their skills to help make the world better.”

Confessions of an ID Theft Kingpin, Part I

At the height of his cybercriminal career, the hacker known as “Hieupc” was earning $125,000 a month running a bustling identity theft service that siphoned consumer dossiers from some of the world’s top data brokers. That is, until his greed and ambition played straight into an elaborate snare set by the U.S. Secret Service. Now, after more than seven years in prison Hieupc is back in his home country and hoping to convince other would-be cybercrooks to use their computer skills for good.

Hieu Minh Ngo, in his teens.

For several years beginning around 2010, a lone teenager in Vietnam named Hieu Minh Ngo ran one of the Internet’s most profitable and popular services for selling “fullz,” stolen identity records that included a consumer’s name, date of birth, Social Security number and email and physical address.

Ngo got his treasure trove of consumer data by hacking and social engineering his way into a string of major data brokers. By the time the Secret Service caught up with him in 2013, he’d made over $3 million selling fullz data to identity thieves and organized crime rings operating throughout the United States.

Matt O’Neill is the Secret Service agent who in February 2013 successfully executed a scheme to lure Ngo out of Vietnam and into Guam, where the young hacker was arrested and sent to the mainland U.S. to face prosecution. O’Neill now heads the agency’s Global Investigative Operations Center, which supports investigations into transnational organized criminal groups.

O’Neill said he opened the investigation into Ngo’s identity theft business after reading about it in a 2011 KrebsOnSecurity story, “How Much is Your Identity Worth?” According to O’Neill, what’s remarkable about Ngo is that to this day his name is virtually unknown among the pantheon of infamous convicted cybercriminals, the majority of whom were busted for trafficking in huge quantities of stolen credit cards.

Ngo’s businesses enabled an entire generation of cybercriminals to commit an estimated $1 billion worth of new account fraud, and to sully the credit histories of countless Americans in the process.

“I don’t know of any other cybercriminal who has caused more material financial harm to more Americans than Ngo,” O’Neill told KrebsOnSecurity. “He was selling the personal information on more than 200 million Americans and allowing anyone to buy it for pennies apiece.”

Freshly released from the U.S. prison system and deported back to Vietnam, Ngo is currently finishing up a mandatory three-week COVID-19 quarantine at a government-run facility. He contacted KrebsOnSecurity from inside this facility with the stated aim of telling his little-known story, and to warn others away from following in his footsteps.

BEGINNINGS

Ten years ago, then 19-year-old hacker Ngo was a regular on the Vietnamese-language computer hacking forums. Ngo says he came from a middle-class family that owned an electronics store, and that his parents bought him a computer when he was around 12 years old. From then on out, he was hooked.

In his late teens, he traveled to New Zealand to study English at a university there. By that time, he was already an administrator of several dark web hacker forums, and between his studies he discovered a vulnerability in the school’s network that exposed payment card data.

“I did contact the IT technician there to fix it, but nobody cared so I hacked the whole system,” Ngo recalled. “Then I used the same vulnerability to hack other websites. I was stealing lots of credit cards.”

Ngo said he decided to use the card data to buy concert and event tickets from Ticketmaster, and then sell the tickets at a New Zealand auction site called TradeMe. The university later learned of the intrusion and Ngo’s role in it, and the Auckland police got involved. Ngo’s travel visa was not renewed after his first semester ended, and in retribution he attacked the university’s site, shutting it down for at least two days.

Ngo said he started taking classes again back in Vietnam, but soon found he was spending most of his time on cybercrime forums.

“I went from hacking for fun to hacking for profits when I saw how easy it was to make money stealing customer databases,” Ngo said. “I was hanging out with some of my friends from the underground forums and we talked about planning a new criminal activity.”

“My friends said doing credit cards and bank information is very dangerous, so I started thinking about selling identities,” Ngo continued. “At first I thought well, it’s just information, maybe it’s not that bad because it’s not related to bank accounts directly. But I was wrong, and the money I started making very fast just blinded me to a lot of things.”

MICROBILT

His first big target was a consumer credit reporting company in New Jersey called MicroBilt.

“I was hacking into their platform and stealing their customer database so I could use their customer logins to access their [consumer] databases,” Ngo said. “I was in their systems for almost a year without them knowing.”

Very soon after gaining access to MicroBilt, Ngo says, he stood up Superget[.]info, a website that advertised the sale of individual consumer records. Ngo said initially his service was quite manual, requiring customers to request specific states or consumers they wanted information on, and he would conduct the lookups by hand.

Ngo’s former identity theft service, superget[.]info

“I was trying to get more records at once, but the speed of our Internet in Vietnam then was very slow,” Ngo recalled. “I couldn’t download it because the database was so huge. So I just manually search for whoever need identities.”

But Ngo would soon work out how to use more powerful servers in the United States to automate the collection of larger amounts of consumer data from MicroBilt’s systems, and from other data brokers. As I wrote of Ngo’s service back in November 2011:

“Superget lets users search for specific individuals by name, city, and state. Each “credit” costs USD$1, and a successful hit on a Social Security number or date of birth costs 3 credits each. The more credits you buy, the cheaper the searches are per credit: Six credits cost $4.99; 35 credits cost $20.99, and $100.99 buys you 230 credits. Customers with special needs can avail themselves of the “reseller plan,” which promises 1,500 credits for $500.99, and 3,500 credits for $1000.99.

“Our Databases are updated EVERY DAY,” the site’s owner enthuses. “About 99% nearly 100% US people could be found, more than any sites on the internet now.”

Ngo’s intrusion into MicroBilt eventually was detected, and the company kicked him out of their systems. But he says he got back in using another vulnerability.

“I was hacking them and it was back and forth for months,” Ngo said. “They would discover [my accounts] and fix it, and I would discover a new vulnerability and hack them again.”

COURT (AD)VENTURES, AND EXPERIAN

This game of cat and mouse continued until Ngo found a much more reliable and stable source of consumer data: A U.S. based company called Court Ventures, which aggregated public records from court documents. Ngo wasn’t interested in the data collected by Court Ventures, but rather in its data sharing agreement with a third-party data broker called U.S. Info Search, which had access to far more sensitive consumer records.

Using forged documents and more than a few lies, Ngo was able to convince Court Ventures that he was a private investigator based in the United States.

“At first [when] I sign up they asked for some documents to verify,” Ngo said. “So I just used some skill about social engineering and went through the security check.”

Then, in March 2012, something even more remarkable happened: Court Ventures was purchased by Experian, one of the big three major consumer credit bureaus in the United States. And for nine months after the acquisition, Ngo was able to maintain his access.

“After that, the database was under control by Experian,” he said. “I was paying Experian good money, thousands of dollars a month.”

Whether anyone at Experian ever performed due diligence on the accounts grandfathered in from Court Ventures is unclear. But it wouldn’t have taken a rocket surgeon to figure out that this particular customer was up to something fishy.

For one thing, Ngo paid the monthly invoices for his customers’ data requests using wire transfers from a multitude of banks around the world, but mostly from new accounts at financial institutions in China, Malaysia and Singapore.

O’Neill said Ngo’s identity theft website generated tens of thousands of queries each month. For example, the first invoice Court Ventures sent Ngo in December 2010 was for 60,000 queries. By the time Experian acquired the company, Ngo’s service had attracted more than 1,400 regular customers, and was averaging 160,000 monthly queries.

More importantly, Ngo’s profit margins were enormous.

“His service was quite the racket,” he said. “Court Ventures charged him 14 cents per lookup, but he charged his customers about $1 for each query.”

By this time, O’Neill and his fellow Secret Service agents had served dozens of subpoenas tied to Ngo’s identity theft service, including one that granted them access to the email account he used to communicate with customers and administer his site. The agents discovered several emails from Ngo instructing an accomplice to pay Experian using wire transfers from different Asian banks.

TLO

Working with the Secret Service, Experian quickly zeroed in on Ngo’s accounts and shut them down. Aware of an opportunity here, the Secret Service contacted Ngo through an intermediary in the United Kingdom — a known, convicted cybercriminal who agreed to play along. The U.K.-based collaborator told Ngo he had personally shut down Ngo’s access to Experian because he had been there first and Ngo was interfering with his business.

“The U.K. guy told Ngo, ‘Hey, you’re treading on my turf, and I decided to lock you out. But as long as you’re paying a vig through me, your access won’t go away’,” O’Neill recalled.

The U.K. cybercriminal, acting at the behest of the Secret Service and U.K. authorities, told Ngo that if he wanted to maintain his access, he could agree to meet up in person. But Ngo didn’t immediately bite on the offer.

Instead, he weaseled his way into another huge data store. In much the same way he’d gained access to Court Ventures, Ngo got an account at a company called TLO, another data broker that sells access to extremely detailed and sensitive information on most Americans.

TLO’s service is accessible to law enforcement agencies and to a limited number of vetted professionals who can demonstrate they have a lawful reason to access such information. In 2014, TLO was acquired by Trans Union, one of the other three big U.S. consumer credit reporting bureaus.

And for a short time, Ngo used his access to TLO to power a new iteration of his business — an identity theft service rebranded as usearching[.]info. This site also pulled consumer data from a payday loan company that Ngo hacked into, as documented in my Sept. 2012 story, ID Theft Service Tied to Payday Loan Sites. Ngo said the hacked payday loans site gave him instant access to roughly 1,000 new fullz records each day.

Ngo’s former ID theft service usearching[.]info.

BLINDED BY GREED

By this time, Ngo was a multi-millionaire: His various sites and reselling agreements with three Russian-language cybercriminal stores online had earned him more than USD $3 million. He told his parents his money came from helping companies develop websites, and even used some of his ill-gotten gains to pay off the family’s debts (its electronics business had gone belly up, and a family member had borrowed but never paid back a significant sum of money).

But mostly, Ngo said, he spent his money on frivolous things, although he says he’s never touched drugs or alcohol.

“I spent it on vacations and cars and a lot of other stupid stuff,” he said.

When TLO locked Ngo out of his account there, the Secret Service used it as another opportunity for their cybercriminal mouthpiece in the U.K. to turn the screws on Ngo yet again.

“He told Ngo he’d locked him out again, and the he could do this all day long,” O’Neill said. “And if he truly wanted lasting access to all of these places he used to have access to, he would agree to meet and form a more secure partnership.”

After several months of conversing with his apparent U.K.-based tormentor, Ngo agreed to meet him in Guam to finalize the deal. Ngo says he understood at the time that Guam is an unincorporated territory of the United States, but that he discounted the chances that this was all some kind of elaborate law enforcement sting operation.

“I was so desperate to have a stable database, and I got blinded by greed and started acting crazy without thinking,” Ngo said. “Lots of people told me ‘Don’t go!,’ but I told them I have to try and see what’s going on.”

But immediately after stepping off of the plane in Guam, he was apprehended by Secret Service agents.

“One of the names of his identity theft services was findget[.]me,” O’Neill said. “We took that seriously, and we did like he asked.”

This is Part I of a multi-part series. Check back tomorrow (Aug. 27) for Part II, which will examine what investigators learned following Ngo’s arrest, and delve into his more recent effort to right the wrongs he’s done.

Porn Clip Disrupts Virtual Court Hearing for Alleged Twitter Hacker

Perhaps fittingly, a Web-streamed court hearing for the 17-year-old alleged mastermind of the July 15 mass hack against Twitter was cut short this morning after mischief makers injected a pornographic video clip into the proceeding.

17-year-old Graham Clark of Tampa, Fla. was among those charged in the July 15 Twitter hack. Image: Hillsborough County Sheriff’s Office.

The incident occurred at a bond hearing held via the videoconferencing service Zoom by the Hillsborough County, Fla. criminal court in the case of Graham Clark. The 17-year-old from Tampa was arrested earlier this month on suspicion of social engineering his way into Twitter’s internal computer systems and tweeting out a bitcoin scam through the accounts of high-profile Twitter users.

Notice of the hearing was available via public records filed with the Florida state attorney’s office. The notice specified the Zoom meeting time and ID number, essentially allowing anyone to participate in the proceeding.

Even before the hearing officially began it was clear that the event would likely be “zoom bombed.” That’s because while participants were muted by default, they were free to unmute their microphones and transmit their own video streams to the channel.

Sure enough, less than a minute had passed before one attendee not party to the case interrupted a discussion between Clark’s attorney and the judge by streaming a live video of himself adjusting his face mask. Just a few minutes later, someone began interjecting loud music.

It became clear that presiding Judge Christopher C. Nash was personally in charge of administering the video hearing when, after roughly 15 seconds worth of random chatter interrupted the prosecution’s response, Nash told participants he was removing the troublemakers as quickly as he could.

Judge Nash, visibly annoyed immediately after one of the many disruptions to today’s hearing.

What transpired a minute later was almost inevitable given the permissive settings of this particular Zoom conference call: Someone streamed a graphic video clip from Pornhub for approximately 15 seconds before Judge Nash abruptly terminated the broadcast.

With the ongoing pestilence that is the COVID-19 pandemic, the nation’s state and federal courts have largely been forced to conduct proceedings remotely via videoconferencing services. While Zoom and others do offer settings that can prevent participants from injecting their own audio and video into the stream unless invited to do so, those settings evidently were not enabled in today’s meeting.

At issue before the court today was a defense motion to modify the amount of the defendant’s bond, which has been set at $750,000. The prosecution had argued that Clark should be required to show that any funds used toward securing that bond were gained lawfully, and were not merely the proceeds from his alleged participation in the Twitter bitcoin scam or some other form of cybercrime.

Florida State Attorney Andrew Warren’s reaction as a Pornhub clip began streaming to everyone in today’s Zoom proceeding.

Mr. Clark’s attorneys disagreed, and spent most of the uninterrupted time in today’s hearing explaining why their client could safely be released under a much smaller bond and close supervision restrictions.

On Sunday, The New York Times published an in-depth look into Clark’s wayward path from a small-time cheater and hustler in online games like Minecraft to big-boy schemes involving SIM swapping, a form of fraud that involves social engineering employees at mobile phone companies to gain control over a target’s phone number and any financial, email and social media accounts associated with that number.

According to The Times, Clark was suspected of being involved in a 2019 SIM swapping incident which led to the theft of 164 bitcoins from Gregg Bennett, a tech investor in the Seattle area. That theft would have been worth around $856,000 at the time; these days 164 bitcoins is worth approximately $1.8 million.

The Times said that soon after the theft, Bennett received an extortion note signed by Scrim, one of the hacker handles alleged to have been used by Clark. From that story:

“We just want the remainder of the funds in the Bittrex,” Scrim wrote, referring to the Bitcoin exchange from which the coins had been taken. “We are always one step ahead and this is your easiest option.”

In April, the Secret Service seized 100 Bitcoins from Mr. Clark, according to government forfeiture documents. A few weeks later, Mr. Bennett received a letter from the Secret Service saying they had recovered 100 of his Bitcoins, citing the same code that was assigned to the coins seized from Mr. Clark.

Florida prosecutor Darrell Dirks was in the middle of explaining to the judge that investigators are still in the process of discovering the extent of Clark’s alleged illegal hacking activities since the Secret Service returned the 100 bitcoin when the porn clip was injected into the Zoom conference.

Ultimately, Judge Nash decided to keep the bond amount as is, but to remove the condition that Clark prove the source of the funds.

Clark has been charged with 30 felony counts and is being tried as an adult. Federal prosecutors also have charged two other young men suspected of playing roles in the Twitter hack, including a 22-year-old from Orlando, Fla. and a 19-year-old from the United Kingdom.