BOSTON (Reuters) – A Russian businessman linked to the Kremlin made tens of millions of dollars by circulating classified financial information obtained by hackers on several companies before making it public, a senior official said Monday, an American lawyer at the start of his trial.
Assistant U.S. Attorney Stephen Frank told a federal jury in Boston that Vladislav Klyushin, 42, and his associates earned nearly $90 million in traded stock on the basis of as-yet unspeakable information about hundreds of companies stolen by hackers.
Frank said Klyushin, whose Moscow-based technology company M-13 has worked for the government of Russian President Vladimir Putin, personally turned the $2 million investment into $21 million and brought in other investors in the program.
“The defendant had tomorrow’s news – tomorrow’s headlines – today,” Frank said in his opening statement. And exploited it to achieve profits estimated at tens of millions of dollars.”
But defense attorney Maxim Nemtsev countered by saying that Klyushin really had no reason to cheat, having already achieved financial success through his work, and that the prosecution’s case was based on “shortcomings and flaws”.
“There is nothing illegal about being Russian or having wealth or having an IT company that contracts with the government,” Nemtsev told the jury.
The three-week trial coincides with a low point in US-Russia relations in the wake of Moscow’s invasion of Ukraine in February of last year. And while the case against Klyushin predates the war, his ties to the Kremlin have long intrigued the US authorities.
Klyushin was arrested in Switzerland during a skiing trip in March 2021 and later extradited. He pleaded not guilty to charges of conspiracy, wire fraud, unauthorized computer access and securities fraud.
Prosecutors said Klyushin’s company, M-13, employed a former Russian military intelligence officer who is wanted by the US government for his alleged involvement in hacking schemes to interfere in the 2016 US presidential election.
During Monday’s trial, Frank said the hacker, Ivan Ermakov, and others broke into the networks of two companies that help listed companies file reports with securities regulators, Donnelly FinancialSolutions. (DFIN.N) and Toban Merrill.
From 2018 to 2020, hackers viewed and downloaded the yet-to-be-announced earnings reports of hundreds of companies, including Tesla Inc. (TSLA.O), Microsoft Corp., Kohl’s, Klyushin, and others used to negotiate before word got out, Frank said.
“It wasn’t luck, and it wasn’t due to careful financial research,” Frank said. The defendant cheated.
(Reporting by Nate Raymond in Boston). Editing by Alexia Garamfalfi and Grant McCall
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