By Aruna Viswanatha and Robert McMillan
Russian government spies were behind Yahoo Inc.'s notorious 2014
security breach, stealing information about more than a half
billion online accounts, including those used by U.S. military
officials and by employees of firms in banking, finance and
transportation, federal authorities said Wednesday.
The Justice Department announced the indictments of Dmitry
Aleksandrovich Dokuchaev and Igor Anatolyevich Sushchin, officers
of Russia's Federal Security Service, known as the FSB, alleging
they directed and paid for the illegal collection of information in
the U.S. and abroad. It is the first such criminal case to directly
target Russia.
The case is expected to escalate tensions between the U.S. and
Russia over cybercrime and espionage. Congress and federal
investigators are probing what U.S. intelligence agencies have
described as aggressive efforts by Russia to influence the 2016
election, which it has denied.
The House Intelligence Committee has a hearing next week on the
matter, with scheduled appearances by James Comey, director of the
Federal Bureau of Investigation, and James Clapper, former Director
of National Intelligence.
Authorities said the two Russian agents worked with indicted
co-conspirators Alexsey Belan and Karim Baratov to hack into Yahoo
computer systems, starting in January 2014. They gained access to
the content of 6,500 accounts and used information stolen from
Yahoo to target other email providers, including Google.
"The criminal conduct at issue, carried out and otherwise
facilitated by officers from an FSB unit that serves as the FBI's
point of contact in Moscow on cybercrime matters, is beyond the
pale," said Mary McCord, who runs the Justice Department's national
security division
The Russian spies paid the hackers to steal information seen as
useful to Moscow, prying into the accounts of diplomats and
journalists, authorities alleged; company officials were targeted
for economic intelligence.
"Today's indictments shed a light on the close and mutually
beneficial ties between the cyber underworld and Russia's
government and security services, and the extent to which Russia
leverages these cyber activities to multiple ends: commercial,
financial, and geopolitical," said Democratic Sen. Mark Warner.
"Washington did not communicate with Moscow through the channels
available to address issues related to cybersecurity in this case,"
a Russian official said Wednesday about the indictments. "This
fact, as well as the lack of specifics in this case, suggest the
next round of raising the theme of 'Russian hackers' in the
domestic political squabbles in the U.S."
One of the accused, Mr. Baratov, a 22-year-old Canadian and
Kazakh national, was arrested Tuesday in Toronto, authorities said.
The high-school dropout showed off exotic cars, Rolex watches and
expensive cigars on Facebook and Instagram posts. He and the rest
of the accused couldn't be reached for comment.
The other men indicted are believed to be in Russia, which has
no extradition treaty with the U.S. The four men face multiple
criminal counts, including those related to computer fraud. The
Russian agents and Mr. Belan face additional charges, including
economic espionage and theft of trade secrets.
The Obama administration in December imposed sanctions on the
FSB and Mr. Belan in connection with Russia's alleged election
interference.
Earlier this year, Mr. Dokuchaev, one of the alleged spies, was
arrested in Russia and accused of treason, according to Russian
media reports. Justice Department officials said Wednesday they
couldn't confirm the reports.
"The indictment unequivocally shows the attacks on Yahoo were
state-sponsored," the company's assistant general counsel, Chris
Madsen, said in a blog post. Google, a division of Alphabet Inc.,
declined to comment.
Among the targeted U.S. officials, authorities said, were people
in cybersecurity and diplomacy. Other accounts belonged to
employees of U.S. financial services and private-equity firms, a
U.S. airline, a French transportation company, Russian journalists,
a Russian investment bank and a Swiss bitcoin wallet and banking
firm, the indictment said.
Federal prosecutors have been seeking cases against foreign
hackers for cybercrimes but have only brought a handful of cases
that directly name foreign governments.
Last year, the Justice Department unsealed charges against seven
Iranians for alleged attacks on the U.S. financial system, saying
one hacker got military credit for the work and another trained
Iranian intelligence officials.
In 2014, the FBI blamed North Korea for a hack against Sony
Pictures Entertainment that destroyed computer systems and exposed
private email messages. North Korea didn't answer the allegation.
In response, the U.S. toughened sanctions against North Korea's
arms industry.
Yahoo's 2014 data breach was preceded in 2013 by two thefts of
data linked to more than one billion accounts.
The two incursions, among the largest-ever reported thefts of
personal data, presented a major stumbling block to efforts by
Verizon Communications Inc. to acquire Yahoo's core business
assets. Yahoo disclosed both breaches months after Verizon made its
initial bid on the internet company in July 2016. In February, the
companies revised the terms of their deal, with Verizon now paying
$4.5 billion, a $350 million price reduction.
Yahoo executives apparently didn't learn of the 2013 breach
until December 2015. The company, however, found out quickly of the
2014 incident, but wasn't aware of its full extent until last
September. U.S. officials thanked Yahoo for its help Wednesday,
suggesting the company waited to disclose the hacks while U.S.
agents investigated.
The cyber activity began in 2014 and continued until December
2016, the indictment said.
Of presumed interest to Russian intelligence were the hacked
accounts of a diplomat of a country bordering Russia; an
investigative reporter for Kommersant Daily, a Russian-language
business newspaper; and a public affairs consultant who analyzed
Russia's bid for membership to the World Trade Organization, among
others, the indictment said.
The men also allegedly targeted a Nevada gaming official, a
senior officer of a "major U.S. airline," and a China-based
managing director of a U.S. private-equity firm, the indictment
said.
Mr. Belan, who has been on the FBI's most-wanted hackers list
since 2012, was arrested in Europe in 2013 but escaped to Russia
before he could be extradited, the Justice Department said.
Authorities allege he also used the hacks for personal gain: He
searched for credit card numbers and gift card information and sent
out spam.
--Nathan Hodge and David George-Cosh contributed to this
article.
Write to Aruna Viswanatha at Aruna.Viswanatha@wsj.com and Robert
McMillan at Robert.Mcmillan@wsj.com
(END) Dow Jones Newswires
March 16, 2017 02:47 ET (06:47 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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