In a first in the rapidly evolving field of cyberspace law, Russia’s counterintelligence service on Thursday filed criminal charges against an FBI agent it says lured two Russian hackers to the United States, then illegally seized evidence against them by downloading data from their computers in Chelyabinsk, Russia.
IGOR TKACH, an investigator with Russia’s Federal Security Service, or FSB, started criminal proceedings against FBI Agent Michael Schuler for unauthorized access to computer information, according to the Interfax news agency.
The agency reported the complaint had been forwarded to the U.S. Justice Department and that the FSB was awaiting a response.
The FBI said Thursday it had no comment on the case, and the Justice Department did not immediately respond to a request seeking comment.
Interfax quoted sources with the FSB as describing the criminal complaint as an effort to restore traditional law enforcement borders.
“If the Russian hackers are sentenced on the basis of information obtained by the Americans through hacking, that will imply the future ability of U.S. secret services to use illegal methods in the collection of information in Russia and other countries,” the news agency quoted one source as saying.
RUSE WAS WIDELY PRAISED
Schuler and other agents were widely praised for an elaborate ruse that led to the arrests of Vasily Gorshkov, 25, and Alexey Ivanov, 20, in November 2000. Court papers described the men as kingpins of Russian computer crime who hacked into the networks of at least 40 U.S. companies and then attempted to extort money.
The pair was lured to the United States after Ivanov identified himself in an e-mail threatening to destroy data at a victimized company, Stephen Schroeder, a now-retired assistant U.S. attorney in Seattle who prosecuted Gorshkov, told MSNBC.com last year.
FBI agents then found Ivanov’s resumé online and, posing as representatives of a fictitious network security company called Invita, contacted him to offer him a job.
Once Ivanov and Gorshkov arrived in Seattle, agents posing as Invita officials asked the men to demonstrate their prowess on a computer outfitted with “sniffer” software to record every keystroke. After arresting the men, the agents used account numbers and passwords obtained by the program to gain access to data stored on the pair’s computers in Russia.
Fearing that an associate would “pull the plug” on the computer in Russia, the agents downloaded evidence before obtaining a search warrant, according to court papers.
In a news release issued last week honoring Agents Schuler and Marty Prewett with the director’s award for excellence, the FBI’s field office in Seattle said the case was the first in the the bureau’s history to “utilize the technique of extra-territorial seizure.” The procedures employed by the agents had been incorporated into the attorney general’s guidelines for law enforcement personnel, it said.
Court papers allege that Ivanov and Gorshkov broke into and obtained financial information from a number of large U.S. companies and penetrated the computer networks of two banks — the Nara Bank of Los Angeles and Central National Bank-Waco, based in Texas.
They also were accused of orchestrating “a massive scheme” to defraud the Internet-based payment company PayPal, based in Palo Alto, Calif., by using “proxy” e-mail addresses from such institutions as public schools and stolen credit-card numbers to buy goods.
Prosecutors have indicated they also believe the Russians are linked to two other high-profile cases: the theft of data on 300,000 credit cards from the CD Universe Web site and another
15,700 credit cards from a Western Union Web site.
Gorshkov was convicted in Seattle in September 2001 of 20 counts of wire fraud, charges that carry a maximum sentence of 100 years in prison. Sentencing was scheduled for January, but court records do not reflect that a punishment had been imposed.
Ivanov also has been indicted in New Jersey and Connecticut, where he currently is in custody and awaiting trial.
In pretrial motions, Gorshkov’s lawyer, Kenneth Kanev, argued that the FBI agents had violated Gorshkov’s Fourth Amendment right against unreasonable search and seizure by secretly obtaining passwords and account numbers.
But U.S. District Judge John C. Coughenour of Seattle ruled that Gorshkov and Ivanov gave up any expectation of privacy by using computers in what they believed were the offices of a public company.
NO EXPECTATION OF PRIVACY
“When (the) defendant sat down at the networked computer … he knew that the systems administrator could and likely would monitor his activities,” Coughenour wrote. “Indeed, the undercover agents told (Gorshkov) that they wanted to watch in order to see what he was capable of doing.”
He also found that the Fourth Amendment did not apply to the computers, “because they are the property of a non-resident and located outside the United States,” or to the data — at least until it was transmitted to the United States.
The judge noted that investigators obtained a search warrant before viewing the vast store of data — nearly 250 gigabytes, according to court records. He rejected the argument that the warrant should have been obtained before the data was downloaded, noting that “the agents had good reason to fear that if they did not copy the data, (the) defendant’s co-conspirators would destroy the evidence or make it unavailable.”
Finally, Coughenour rejected defense arguments that the FBI’s actions “were unreasonable and illegal because they failed to comply with Russian law,” saying that Russian law does not apply to the agents’ actions.
NT VULNERABILITY EXPLOITED
Ivanov, Gorshkov and other unidentified associates used the Internet to gain illegal access to the U.S. companies’ computers, often by exploiting a known security vulnerability in Windows NT, according to court papers. A “patch” for the vulnerability had been posted on the Microsoft Web site for almost two years, but the companies hit by the cyberbandits hadn’t updated their software.
(MSNBC is a Microsoft-NBC joint venture.)
At least one company, Lightrealm Communications of Kirkland, Wash., acceded to a demand that it hire Ivanov as a security consultant after he broke into the Internet service provider’s computers, according to court documents. Ivanov then used a Lightrealm account to break into other companies’ computers, they indicated.
Eastern Europe and nations of the former Soviet Union have become a hotbed for computer crime aimed at businesses in the United States and other Western nations.
When MSNBC.com first reported on the problem of overseas computer crime in 1999, Mark Batts, the special agent in charge of the FBI’s Financial Institution Fraud Unit, said he was not aware of any prosecutions of credit card thieves operating from Eastern Europe and the nations of the former Soviet Union.
The Associated Press and Reuters contributed to this report.