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Question of the Day - 06 September 2007

Q:
In the QoD on 08/22/07, you said the Russian Mafia has been involved in extorting money from online gambling sites. How is this possible? To extort money from someone you have to have something over them don't you?
A:

Russians, for reasons that are beyond the scope of this answer, are among the best and most active computer hackers and crackers in the world.

In the past several years, Russian crackers have claimed credit for hacking into highly secure computers operated by NATO and the U.S. government, including a series of coordinated attacks on the Pentagon. A Russian cracker also took credit for the theft of 300,000 credit-card numbers from CD Universe, an online music store. Hackers not only broke into the computers of Gazprom, the biggest company in Russia and the world's largest natural-gas company, but they also gained control of the system that regulates the flow of natural gas in pipelines.

Russian hackers managed to secretly install a Trojan-horse program in the main computer of Nordea Bank, a Scandinavian financial services company, that logged keystrokes while banking customers entered their passwords (from customer computers unprotected by antivirus programs). The thieves stole more than $1 million from 250 Nordea customers over a 15-month period. The Trojan-horse program was written by a Russian hacker.

When these Russian hackers get caught, some of them are offered a deal they can't refuse: Go to work hacking for the FSB, Russia's Federal Security Service, the offspring of the KGB, or suffer the consequences. Hackers working for the FSB are known to have broken into Moscow's Novaya Gazeta newspaper and deleted a major block of text about Vladimir Putin's questionable campaign financing.

These are just a few of the highest-profile examples.

As for the online gambling sites, a little less than a year ago, three Russian computer criminals were convicted of hacking and extortion offenses in what prosecutors claimed to be more than 50 high-profile attacks in 30 countries, including extorting $4 million from U.K. bookmakers and casinos, over a six-month period between the fall of 2003 till the spring of 2004.

The three hackers, all in their early twenties, launched so-called denial-of-service attacks against the gambling Web sites by flooding their servers with false requests for information from zombie computers. (A zombie is a computer connected to the Internet that has been compromised by a hacker, cracker, virus, or Trojan horse. It can be operated remotely without the knowledge of the owner -- thus the term "zombie." Zombie computers are believed to be used for up to 80% of the spam distributed worldwide.)

The Russians targeted the online race and sports books when a big event was coming up. They sent an e-mail, notifying the site that it was about to come under attack, and threatening to shut it down or, in at least one case, to distribute child pornography in the company's name, if they weren't paid off. They demanded ransom money, usually the equivalent of between $5,000 and $50,000. The e-mail was followed by a trial attack, then by another e-mail with instructions for transferring the money via Western Union to various bank accounts in Riga, Latvia.

A number of Web sites ponied up the ransom money, including Canbet, BoDog, HollywoodSportsbook, BetWWTS, Pinnaclesports, BetCRIS.com, WagerWeb, William Hill, BetFair, and Blue Square. (These are only the cases that became public.)

According to reports, which vary slightly, Canbet either refused to pay the blackmailers or did make several $40,000 payments. Either way, its Web site was blocked during the Breeders' Cup horse race and the company lost more than $200,000 each time it was shut down.

The crackers were hotly pursued by a joint investigation involving the U.K.'s National High-Tech Crime Unit, Interpol, the FBI, and Russia's Interior Ministry and Prosecutor General's Office. They were arrested, tried, convicted, and sentenced to eight years in a Russian gulag, or work camp.

No part of this answer may be reproduced or utilized in any form or by any means, electronic or mechanical, without the written permission of the publisher.

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