Hackers Tied to Global $30M Inside-Trading Charges

NEWARK, N.J. (CN) - A $30 million scheme traded on information two Ukrainian men stole from more than 150,000 unreleased press releases that offered a peek at the financials of publicly traded companies, regulators charged Tuesday.

The case alleges that from February 2010 until this month a network of hackers and traders teamed up to gain money on trades based on advanced peaks at the quarterly and annual earnings of companies such as Align Technology, Caterpillar, Hewlett Packard, Home Depot, Panera Bread and Verisign.

Kiev-based hackers Ivan Turchynov, 27, and Oleksander Ieremenko, 23, spent five years cultivating a network of dozens of traders from their native Ukraine, Russia, France, Malta, Cyprus and the United States by sending them a video advertising their ability steal the releases, according to a criminal complaint unsealed today.

The Securities and Exchange Commission says that the hackers sometimes worked for a flat fee, and at other times collected a percentage of the profits from inside trades.

"This international scheme is unprecedented in terms of the scope of the hacking, the number of traders, the number of securities traded and profits generated," SEC Chair Mary Jo White said in a statement.

Prosecutors said that the hackers targeted PR Newswire, Businesswire and MarketWired.

All told, the criminal complaint accused 32 hackers, traders and foreign nationals and entities of netting more than $100 million in illicit gains.

Federal prosecutors in New Jersey and the Eastern District of New York have brought indictments so far against nine believed to have made more than $30 million.

New Jersey indicted the two hackers, Turchynov and Ieremenko, and three individuals described in court papers as the Dubovoy Group.

Arkadiy Dubovoy, the lead defendant in the New Jersey criminal complaint, is described as the 50-year-old head of a "close-knit group of traders, consisting primarily of [his] family, friends and business associates."

He and his son Igor, 26, are residents of Alpharetta, Ga. The clan's third member, 32-year old Pavel Dubovoy, lives in the Ukraine.

The federal indictment in Brooklyn charges Vitaly Korchevsky, 50, of Glen Mills, Pa.; Vladislav Khalupsky, 45, of Brooklyn, N.Y.; Leonid Momotok, 47, of Suwanee, Ga.; and Alexander Garkusha, 47, of Cummings and Alpharetta, Ga.

Authorities arrested five of the nine people indicted this morning: Arkadiy and Igor Dubovoy, Momotok, Garkusha and Korchevsky.

Prosecutors issued warrants for the arrests of the hackers at the center of the indictment and two of their alleged trader cohorts in the Ukraine on Tuesday.

All of the defendants face up to 65 years behind bars and $6 million in fines for charges of wire fraud, securities fraud, money laundering and related conspiracy counts.

Turchynov and Ieremenko also face counts of computer fraud and aggravated indentity theft that could spell an additional six years imprisonment and $250,000 fine.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit