BROOKLYN, NY – Former hedge fund manager Vitaly Korchevsky and securities trader Vladislav Khalupsky are facing up to 20 years in prison after being convicted today on all counts related to a brazen international scheme to steal and profit from confidential financial information. The pair colluded with overseas hackers to pilfer pre-release press releases from three major business newswires, netting an estimated $30 million in illegal gains.
The four-week trial, presided over by United States District Judge Raymond J. Dearie, detailed how Korchevsky and Khalupsky exploited vulnerabilities in the networks of Marketwired L.P., PR Newswire Association LLC, and Business Wire. Between February 2010 and August 2015, hackers based in the Ukraine launched sophisticated cyberattacks, even boasting in online chats – one message read, “hacking prnewswire.com” – to gain unauthorized access. They absconded with over 100,000 press releases containing sensitive, non-public financial data.
According to prosecutors, the stolen information wasn’t kept secret. It was immediately funneled to a network of traders, including Korchevsky and Khalupsky, via overseas servers and encrypted email accounts. The pair then used this inside knowledge to make calculated trades *before* the information became public, artificially inflating their profits. The scheme was a calculated gamble that paid off handsomely – until the law caught up.
“The defendants teamed up with cybercriminal co-conspirators to hack pre-distribution press releases and then traded in the stock market based on that stolen information, making massive profits as a result,” stated United States Attorney Richard P. Donoghue. “Today’s verdict sends a powerful message that this Office, together with our law enforcement partners, will work tirelessly to disrupt any scheme, no matter how sophisticated, that threatens the integrity and fairness of our markets.” Donoghue’s office worked in concert with the FBI, the Department of Homeland Security, and the U.S. Securities and Exchange Commission to bring the case to fruition.
Federal Bureau of Investigation Assistant Director-in-Charge William F. Sweeney, Jr. echoed Donoghue’s sentiment. “Conspiring with hackers overseas, Korchevsky and Khalupsky worked swiftly to trade on stolen press releases, illegally profiting millions of dollars,” Sweeney said. “Such a massive criminal operation called for massive cover-ups, but their attempts to cover their tracks were done in vain.” The investigation revealed a complex web of deceit, but ultimately, the evidence proved insurmountable.
The U.S. Secret Service, through its Office of Investigations, played a critical role in unraveling the scheme. Deputy Assistant Director Michael Breslin emphasized that this case exemplifies the agency’s dedication to tackling cyber-enabled financial crimes. “This case represents the core of the U.S. Secret Service’s commitment and strategy to aggressively pursue cyber-enabled financial criminal enterprises through our proven taskforce model of global partnerships,” Breslin stated. Both Korchevsky and Khalupsky now await sentencing, facing a maximum of 20 years behind bars on charges of conspiracy to commit wire fraud, conspiracy to commit securities fraud and computer intrusion, conspiracy to commit money laundering and two counts of securities fraud.
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Key Facts
- Agency: U.S. Secret Service
- Category: Fraud & Financial Crimes
- Source: Official Press Release
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