Category Archives: BERND PULCH

SECRET from the FBI – Russian National Charged in $1 Million Trading Account Hack

A Russian national living in New York has been charged for his alleged role in a ring that stole approximately $1 million by hacking into retail brokerage accounts and executing sham trades.

Petr Murmylyuk, aka “Dmitry Tokar,” 31, of Brooklyn, has been charged with one count of conspiracy to commit wire fraud, unauthorized access to computers, and securities fraud.

According to a criminal complaint, beginning in late 2010, Murmylyuk worked with others to steal from online trading accounts. Members of the ring first gained unauthorized access to the online accounts and then changed the phone numbers and e-mail addresses. Once the hackers controlled the accounts, they used stolen identities to open additional accounts at other brokerage houses. They then caused the victims’ accounts to make unprofitable and illogical securities trades with the new accounts that benefitted the hackers.

The affected brokerage houses have reported combined losses to date of approximately $1 million as a result of the fraudulent schemes.

Story Background:

NEWARK, NJ—A Russian national living in New York has been charged for his alleged role in a ring that stole approximately $1 million by hacking into retail brokerage accounts and executing sham trades, U.S. Attorney for the District of New Jersey Paul J. Fishman announced today.

Petr Murmylyuk, aka “Dmitry Tokar,” 31, of Brooklyn, New York, has been charged by complaint with one count of conspiracy to commit wire fraud, unauthorized access to computers, and securities fraud. The U.S. Securities and Exchange Commission (SEC) is also filing a parallel civil action. Murmylyuk is currently in state custody facing charges arising out of a separate investigation conducted by the Manhattan District Attorney’s Office and will appear in Newark federal court to face the conspiracy charge on a date to be determined.

“Hackers continue to find new and advanced ways to steal from the financial sector,” said First Assistant U.S. Attorney J. Gilmore Childers. “Through the illusion of legitimacy, these alleged hackers controlled both sides of securities transactions to game the market and drain their victims’ accounts. Those who use their computer skills for fraud underestimate the combined resolve of law enforcement and the financial services industry to detect and stop these crimes.”

“This investigation highlights the level of sophistication reached by individuals involved in computer intrusions and hacking activities in furtherance of complex economic and financial crimes,” said FBI Newark Division Assistant Special Agent in Charge David Velazquez. “The same level of sophistication must be maintained by federal investigators and prosecutors, together with private sector partners, to stay one step ahead of these individuals.”

According to the complaint unsealed today in Newark federal court:

Beginning in late 2010, Murmylyuk worked with others to steal from online trading accounts at Scottrade, E*Trade, Fidelity, Schwab, and other brokerage firms. Members of the ring first gained unauthorized access to the online accounts and changed the phone numbers and e-mail addresses on file to prevent notice of unauthorized trading from going to the victims.

Once the hackers controlled the accounts, they used stolen identities to open additional accounts at other brokerage houses. They then caused the victims’ accounts to make unprofitable and illogical securities trades with the new accounts—referred to in the complaint as the “profit accounts”—that benefitted the hackers.

One version of the fraud involved causing the victims’ accounts to sell options contracts to the profit accounts, then to purchase the same contracts back minutes later for up to nine times the price. In another version of the fraud, they used the profit accounts to offer short sales of securities at prices well over market price and to force the victim accounts to make irrational purchases. (A short sale is a sale of stock that an investor does not own but rather borrows from a stock lender and must eventually return.)

Murmylyuk and a conspirator recruited foreign nationals visiting, studying, and living in the United States—including Russian nationals and Houston residents Anton Mezentsev, Galina Korelina, Mikhail Shatov, and others—to open bank accounts into which illegal proceeds could be deposited. Murmylyuk and the conspirator then caused the proceeds of the sham trades to be transferred from the profit accounts into those accounts, where the stolen money could be withdrawn.

Fidelity, Scottrade, E*Trade, and Schwab have reported combined losses to date of approximately $1 million as a result of the fraudulent schemes.

Murmylyuk is also accused of placing a telephone call to Trade Station Securities in which he claimed to be “Dmitry Tokar,” through whose brokerage account the ring placed approximately $200,000 in fraudulent securities trades. Murmylyuk was arrested in Brooklyn on November 3, 2011, in possession of a laptop that evidenced the fraud.

Mezentsev, Korelina, and Shatov were previously charged in the District of New Jersey and convicted of conspiracy to commit wire fraud based on their agreement to receive stolen money in the accounts in their names. U.S. District Judge Esther Salas sentenced Mezentsev, Korelina, and Shatov to 27 months, 14 months, and 14 months in prison, respectively, earlier this year.

If convicted, Murmylyuk faces a maximum potential penalty of five years in prison and a $250,000 fine.

U.S. Attorney Fishman praised special agents of the FBI, under the direction of Special Agent in Charge for the Newark Division Michael B. Ward; Immigration and Customs Enforcement-Homeland Security Investigations, under the direction of New Jersey Special Agent in Charge Andrew McLees; and Internal Revenue Service-Criminal Investigations, New York Field Office, under the direction of Acting Special Agent in Charge Victor W. Lessoff, for their work in the continuing investigation.

He also thanked special agents of the FBI in St. Louis and San Francisco and the U.S. Secret Service in Houston, as well as the Manhattan District Attorney’s Office, under the direction of District Attorney Cyrus R. Vance, Jr., for its contributions and cooperation in coordinating the parallel investigations. He also thanked the SEC’s Philadelphia Regional Office, under the leadership of its Regional Director Daniel M. Hawke, and the Justice Department’s Computer Crime and Intellectual Property Section for their assistance in the investigation.

The government is represented by Assistant U.S. Attorney Seth B. Kosto of the Computer Hacking and Intellectual Property Section of the U.S. Attorney’s Office for the District of New Jersey’s Economic Crimes Unit in Newark.

The charges and allegations in the complaint are merely accusations, and the defendant is considered innocent unless and until proven guilty.

This case was brought in coordination with President Barack Obama’s Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.


TOP-SECRET- The NSA Operation REGAL: Berlin Tunnel

Operation code name: PBJOINTLY Product code name: REGAL

The Berlin Tunnel operation was not a unique type of operation that was only run in Berlin. Prior to the Berlin Tunnel, the British ran a number of successful tunnel cable-tap operations in Vienna,[1] which at the time of these operations, was still an occupied city, divided into four sectors just like Berlin. The British cable taps began in 1948, and ran until the occupation of Austria ended, restoring state sovereignty to the country in 1955. The Soviets had a tap near Potsdam on a cable that served the American Garrison in Berlin.[2]

What has made the Berlin Tunnel famous, while the cable-tap tunnels of Vienna and Potsdam have faded into obscurity is the paradox of intelligence operations which results in fame being a measure of failure and obscurity being a measure of success. The Berlin Tunnel’s true claim to fame, therefore, is that it gained front-page notoriety when the Soviets “discovered” it.

The Official CIA history of the tunnel (prepared in August 1967 and declassified in February 2007) theorizes that the amount of publicity given to the Berlin Tunnel was the result of chance rather than of a conscious decision on the part of the Soviet leadership. During the planning phase of the tunnel, a consensus assessment had been reached which postulated that in the event of the discovery of the tunnel, the Soviet reaction would be to “suppress knowledge” of its existence, so as to save face, rather than have to admit that the West had the capability to mount such an operation. The CIA history of the project suggests that this expectation was defeated because the Soviet Commandant of the Berlin Garrison (who would normally have handled an event of this nature) was away from post at the time, and his deputy found himself in the position of having to make a decision about the tunnel “without benefit of advice from Moscow.”[3]

In his academic history of the Berlin Tunnel (Spies Beneath Berlin), David Stafford of the University of Edinburgh points out that, even though the tunnel was a joint American-British project, the British did not share in the limelight of publicity with the Americans when the tunnel was discovered. This was due, he says, to the fact that Soviet First Secretary Khrushchev was on an official state visit to the U.K.. The visit’s culmination, a visit to Windsor Castle and a reception by the Queen, was scheduled for the day following the discovery of the Berlin Tunnel. British participation in the project was officially hushed up by both the British and the Soviets so as not to spoil the success of the state visit.[4] To this day British Intelligence Services are usually tight-lipped when it comes to discussions of the Berlin Tunnel, or any post-1945 intelligence operation for that matter,[5] while the Americans have declassified the in-house history of the project and authorized one of its participants to include a chapter about it in a book on the Intelligence war in Berlin written in cooperation with one of the KGB veterans of that period (Battleground Berlin).

The intelligence fame/obscurity paradox aside, the Berlin Tunnel operation was, in the words of Allen Dulles (then DCI), “one of the most valuable and daring projects ever undertaken” by the CIA.[6]

The Berlin Tunnel, unlike the Vienna tunnels, was a major engineering feat. It stretched 1476 feet/454[7] meters through sandy ground[8] to reach a cable only 27 inches/68.5 cm beneath the surface,[9] on the edge of a major highway. One of the most difficult engineering problems that had to be overcome in the course of the project was to dig up to the cable from the main tunnel shaft without dropping some truck passing over the highway above into the tunnel.[10] This task was handled by the British,[11] who had their experience of Vienna to fall back on.

The total cost of the tunnel project was over six and a half million[12] 1950s dollars, which in 2007 dollars would be over 51 and a quarter million.[13] By way of comparison, the development and delivery of the first six U-2 aircraft, a project contemporary with the Berlin Tunnel, cost 22 million total,[14] or 3.6 million each. That means that the tunnel cost roughly as much as two U-2s.

According to Murphey, Kondrashev and Bailey in Battleground Berlin, the tale of the tunnel began in early 1951, when Frank Rowlett told Bill Harvey how frustrated he was by the loss of intelligence due to the Soviet shift from radio to landline.[15] The assessment process that preceded target selection continued throughout 1952, the year that saw Harvey reassigned to Berlin. Test recordings of the kind of traffic available from the cables were made in the spring and summer of 1953.[16] By August of 1953, plans for the tunnel were being readied for presentation to the DCI, Allen Dulles.[17]

Dulles approved the terms of reference for cooperaton with the British on the Berlin Tunnel in December 1953.[18] The “go” was given to start the construction of the warehouse that would serve as the cover for the tunnel, and construction was completed in August. The American engineering team that actually dug the tunnel arrived to take control of the compound on 28 August. Digging began on 2 September, but, on 8 September, the miners struck water and which necessitated that pumps be brought in. The tunnel reached its distant end on 28 February 1955,[19] and the tap chamber took another month to complete. The complex process of tapping into the three target cables without alerting the Soviets to what was going on was a slow one. It lasted from 11 May through 2 August 1955.[20] Collection of intelligence from the taps, however, began as soon as the first circuits were brought on-line.

During the night of 21-22 April 1956, the Soviets “discovered” the tunnel, and collection ceased. That did not close the project, however. The take from the Berlin Tunnel during the time that it was operational (11 months and 11 days) was so great that processing of the backlog of material continued through the end of September 1958.[21]

The loss of this valuable source was, of course, a blow to US/UK intelligence efforts against the Soviets at the time, but this loss was somewhat compensated for by the prestige that the CIA won in the press following the tunnel’s discovery. The article on the tunnel in the issue of Time magazine (07 May 1956) that followed the tunnel’s discovery said “It’s the best publicity the U.S. has had in Berlin for a long time.”

An urban legend that persistently continues to associate itself with the Berlin Tunnel is that the idea for the tunnel came from Reinhard Gehlen (the German Abwehr-Ost general who surrendered to the Americans and later became the head of the West German BND). Murphy, Kondrashev and Bailey flatly reject this assertion in Battleground Berlin.[22] David Stafford argues credibly against the validity of this legend in his academic history of the Berlin Tunnel. He notes that there is no evidence to support this theory, and “those most closely in the know in the CIA have strenuously denied it,”[23] essentially repeating Murphy, Kondrashev and Bailey. Stafford’s most telling argument against Gehlen’s involvement is that no mention of the Berlin Tunnel is to be found in Gehlen’s memoirs (The Service: The Memoirs of General Reinhard Gehlen, New York: World Publishing, 1972). “Never a modest man,” says Stafford, Gehlen “would surely have bid for some of the credit had he been any way involved. In fact, he does not even refer to it.”[24]

In the section “Recapitulation of Intelligence Derived” from the Berlin Tunnel, the CIA History of the project says that the “REGAL operation provided the United States and the British with a unique source of current intelligence on the Soviet Orbit of a kind and quality which had not been available since 1948. Responsible officials considered PBJOINTLY, during its productive phase, to be the prime source of early warning concerning Soviet intentions in Europe, if not world-wide.”[25] The section goes on to list general types of political, ground-forces, air-force and naval intelligence that the tunnel provided, many of them with glowing comments from consumers.

The debate about the value of the information derived from the Berlin Tunnel has been raging since 1961, when it was discovered that PBJOINTLY was compromised to the Soviets by the British mole George Blake who attended the meeting on the Berlin Tunnel between the British and Americans in London in December 1953. Many widely read books and articles on the tunnel contended that the KGB had used the tunnel to feed the Americans and the British disinformation. Stafford, however, convincingly dispels all suspicions that the Berlin Tunnel was turned into a disinformation counter-intelligence operation by the KGB. Drawing on the information that came to light during the “Teufelsberg” Conference on Cold-War intelligence operations that brought intelligence professionals from both the CIA and the KGB together in Berlin in 1999, Stafford concludes that “[f]ar from using the tunnel for misinformation and deception, the KGB’s First Chief Directorate had taken a deliberate decision to conceal its existence from the Red Army and GRU, the main users of the cables being tapped. The reason for this extraordinary decision was to protect “Diomid”, their rare and brilliant source George Blake.”[26]

Stafford ends his discussion of the legitimacy of the material collected from the Berlin Tunnel with a quote from Blake, who was still living in Moscow at the time of the “Teufelsberg” Conference. “I’m sure 99.9% of the information obtained by the SIS and CIA from the tunnel was genuine.”[27]

By T.H.E. Hill



Confidential – Canada Integrated Terrorism Assessment Centre (ITAC) Occupy Wall Street Bulletins

The following Integrated Terrorism Assessment Centre (ITAC) bulletins were obtained via an information request from the Canadian Security Intelligence Service (CSIS) by Paroxysms.  Most of the documents were also simultaneously released to the Globe and Mail, though the collection released to Paroxysms is more complete and contains several additional bulletins that are not included in the other collection.

Integrated Terrorism Assessment Centre/Centre intégré d’évaluation du terrorisme