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Russian Mafia Net Threat
By Laura Lorek, Interactive Week
July 16, 2001 6:16 AM PT,4586,2784950,00.html

Organized crime rings in Russia and the rest of the former Soviet Union
are increasingly hacking
into U.S. e-commerce and banking Web sites, posing an enormous economic

Hackers have launched computer viruses and disruptive denial-of-service
attacks, but the biggest
danger comes from hackers with ties to organized crime breaking into
computers, FBI officials

Spearheading the organized hacking rings is the Russian Mafia, security
experts say. The Russian
Mafia has infiltrated many businesses in the former Soviet Union, and is
becoming increasingly
sophisticated in computer crimes. 

These groups are penetrating computers in the U.S. and other Western
countries to obtain illegal
profits, said John Collingwood, FBI assistant director for public
affairs, during a briefing at FBI
headquarters in Washington, D.C., recently. 

"For the foreseeable future, we are going to see an explosion in this
area," Collingwood said. "It's
literally a brand new area for us. And it is one where no one is sure of
what the implications will

The FBI said that 40 companies in 20 states have been identified as
targets of what the agency
euphemistically calls Eastern European organized crime groups. More than
1 million credit card
numbers have been stolen by the groups. 

The Russian Mafia is operating in 50 countries, including the U.S., with
representatives in every
major city, according to Jeffrey Robinson, an expert on the Russian
Mafia and author of The
Merger. He said it has created a "wealthy cabal destined to become the
most powerful special
interest group in the world." 

Russian hackers pose one of the biggest threats to the United States'
vibrant e-commerce and
computer industry, said Julie Fergerson, a fraud detective and
co-founder of ClearCommerce, a
security company for e-commerce firms in Austin, Texas. "We are seeing
more and more
sophisticated attacks coming from that part of the world," Fergerson

Security experts said the Russian Mafia hacking rings are often run by
former KGB agents who
recruit hackers in their 20s to do the dirty work. The young hackers
typically answer Internet
advertisements for computer programmers, planted by organized crime
outfits in Moscow, St.
Petersburg and Murmansk. 

The Russian Ministry of Internal Affairs estimated that 5,600 criminal
groups with more than
100,000 members are primarily involved in money laundering, the drug
business and extortion. 

The hackers hired by the Russian Mafia break into e-commerce computers
and steal credit card
and bank account numbers. Some of them even resort to extortion,
pledging to release the data if
companies do not pay them off, security experts said. 

The FBI said such hackers have penetrated U.S. e-commerce computers by
vulnerabilities in unpatched Microsoft Windows NT operating systems.
Microsoft has known
about the holes since 1998 and has posted patches to fix them on its Web
site. But many
companies have still not taken steps to fix the holes, according to the

Authorities said the Russian Mafia members gain access to a company's
computer systems,
download proprietary information - such as trade secrets, customer
databases and credit card
information - and then demand money to patch the system against other

"We are seeing more and more clients being victims of cyberextortion
because it's so easy to
launch a cyberattack," said Ty R. Sagalow, chief operating officer of
AIG eBusiness Risk
Solutions, a company that writes insurance policies against hacking
attacks for companies.
American International Group hires an investigator to look into the
break-in, but under many
circumstances, it will actually pay off the extortionist. 

"If our clients are going to lose money by getting attacked, then we pay
him off," Sagalow said.
"But right after we pay him off, we post a $50,000 reward for
information leading to an arrest." 

Eastern Europe's computer crackers and hackers are the most skillful in
the world, said Joe
Rosetti, senior vice president of Ipsa International, a New York
security company. 

Incidences of Russian hackers breaking into e-commerce sites abound, but
it is unclear whether
they are tied to the Russian Mafia. The FBI would not provide details on
the organized hacking
rings in Eastern Europe because it has an ongoing investigation, a
spokesman said. 

In May, Russian police arrested a gang of suspected hackers led by a
63-year-old man. The
hackers used Internet cafZ*s in Moscow to steal about 300 credit card
numbers from people in
Western countries, the chief of Moscow's police computer crime unit

Last year, a Russian cyberthief known as Maxus stole credit card numbers
from Internet retailer
CD Universe. He demanded a $100,000 ransom, but when this was denied, he
placed 25,000 of
the numbers on a Web site, said Yaron Galant, director of product
development at Sanctum, an
Internet security software company. Maxus has never been caught. 

The Russian Mafia is also selling trade secrets to foreign competitors
of U.S. business, said Paul
Fichtman, president and CEO of Internet Clearinghouse, an international
fraud investigation
company. In addition, organized crime groups are planting employees
inside companies they want
to target, he said. 

"It's a nice tidy business," Fichtman said. "We're seeing it happen on a
regular basis. There is
nothing that cannot be hacked into. Some merchants make it a lot easier
than others." 

Russian law makes it illegal to hack into computer systems. The
government imposes prison
sentences of up to 10 years, plus fines, and has established a special
technical crime department.
But few cases are prosecuted, Ipsa's Rosetti said. 

Hackers often work out of Internet cafZ*s in Russia, experts said.
Street vendors sell Russian
hacking software, and tools and magazines publish articles on how to
break into Web sites.
Russian Web sites also offer hacking tools. 

Law enforcement agencies have trouble tracking down and prosecuting
cybercriminals in foreign
countries, and many businesses are often reluctant to report break-ins. 

"There really is no deterrent for hackers to engage in this activity,"
Rosetti said. 

Senior Writer Brian Ploskina contributed to this report

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