All language subtitles for American Greed s04e12 Cybercrime

This is the CNBC Original.

In this episode of American Green, a
crime spree on the Internet using stolen

information. It's basically a
supermarket of cybercrime. Where

trade your financial life story.

This is not a victimless crime.

They may think it is, but I was the
victim.

Billions of dollars are at stake.

They followed the money all along.

Fraud migrates to opportunity.

And an unlikely computer genius fights
to control it all.

This was spy versus spy.

It was quite an ego boost.

One evening in November 2009, Julie is
working late in her home office.

Her concentration and focus are
shattered by a disturbing phone call.

So I asked my husband to get the phone,
and it happened to be the manager of a

big box store up in Wisconsin.

And she said, I know this might seem
like a strange call, but there's a woman

the store who says she's you, and she's
opening up a line of credit.

The store is calling because the woman
seems to be buying as many high -priced

items as she possibly can.

Julie's mind is racing. Who is this
woman in the store?

How did she get her personal
information?

And how much damage has she done?

So when she was about the $4 ,700 mark,
she said to them, how many more iPods

can I get before I hit the line of
credit?

Julie is the latest victim of identity
theft, joining the 10 million Americans

whose lives have been turned upside down
by this crime every year.

I was exposed in a way that I've never
been exposed before, and I've worked a

long time to have good credit, and I've
worked a long time to have financial

security for my family, and suddenly
it's out there, and I have no idea who

it, and I have no idea how they're going
to use it.

In 2009, identity thieves cost U .S.
businesses and individuals an estimated

billion.

Credit card numbers and identities like
Julie's are bought and sold by the

thousands on websites called Carter's
Forums.

It's an underground economy run by gangs
that are global, sophisticated, and

highly organized.

At the top of the pyramid are the
godfathers, people like Max Ray Butler.

also known as Iceman.

Butler is a brilliant computer hacker.

His theft ring traffics an estimated 1
.8 million stolen credit cards.

And he leads the feds on a year -long
game of cat and mouse.

In an exclusive interview with American
Greed before entering federal prison,

Butler explains his scheme.

From law enforcement's perspective,
these carding forums are probably...

Another paradigm of crime, like you have
individuals, street gangs, mafias, and

now you've got this open source mafia
where people just go on the Internet and

form little ad hoc collectives and plan
who knows what.

Most people think of a hacker as a
person working by themselves.

Keith Malarski is a special agent with
the FBI who spends years undercover as a

hacker, working to bring down cyber
criminals like Max Butler.

In my own experience, I would always
think back to the movie War Games. And

think of Matthew Broderick sitting in
his room with a computer trying to hack

into something with a modem. But really,
over the years, that's changed now,

where this is really organized crime.

Carter's forums traffic in millions of
stolen identities every year.

It's a multi -billion dollar business
worldwide.

Before he becomes a Don of the digital
underworld, Max Butler grows up near

Boise, Idaho.

I was a computer geek from a young age.

My father worked with computers. He
worked at IBM, and then he worked at a

computer store, and then he started his
own computer store. So I always had

access to machines.

And I started programming when I was
eight and was into video games, and I

quite a geek, really.

Butler begins hacking in his teens.

My colleague, he's breaking into the
network of Boise State University.

Butler says that at this stage, his
hacking is just for kicks.

The administrators that were watching me
and watching my activities, because I

was a very curious person, I would go
into the binary directory.

Well, that caught their attention. Like,
what's this guy doing?

As they started paying attention to me,
I started paying attention to them. We

were kind of watching each other, and
that was like an early sparring match

happened.

But behind the geeky demeanor, there
lurks a history of violence.

In his freshman year in college, Butler
is arrested for choking and threatening

to kill his girlfriend.

He is convicted of aggravated assault
and receives a stiff five -year

In 1995, his prison stint over, the 22
-year -old Butler tries to build a new

life in San Francisco.

Friends told me that...

You can just move computers around
physically and make $30 an hour, let

you actually knew how to use one. And I
did, and I was good, and so I moved

down.

As a teenager, Butler hacked for fun.

Now he can turn hacking into a lucrative
career.

He goes to work as a computer security
consultant.

He was what they call a white hat
hacker.

In fact, he epitomized it.

He made a lot of money doing penetration
tests.

You would pay him to break into your
computer to test your security, but at

same time, he donated his services for
free to nonprofit groups.

Soon, Butler is commanding a fee of more
than $100 an hour.

He goes by the name Max Vision and
enjoys an almost celebrity status among

hacking elite.

I had a really good reputation for
always finding the hold because I was

good at what I did. Then I set up a
website, Max Vision, network security,

whitehats .com.

In fact, he's so good that the FBI
office in San Francisco asks for his

hacking into systems and pointing out
weak spots in security.

I got to do what I loved.

I was already spending most of my waking
hours doing security research. Now I

can actually apply it and give a nice
written report to someone.

Made me feel good. It was a very useful
service. I really helped a lot of

people.

But life is a white hat hacker.

isn't exciting enough for Butler.

He starts to break into private networks
without permission.

He thrived on the ego of it, of beating
these defense systems.

A couple things were really wrong about
that. One, I thought I didn't get

permission. I didn't have permission
from any of the people who I actually

and fixed their systems. I didn't have
permission from the FBI. They didn't

hey, this is a Nokia project.

They didn't actually respond to the
email.

The next time I had contact with him, it
was in person, like, hey, what's going

on? The Air Force, off to a special
investigation in my living room.

Butler is charged with computer fraud.

In May 2001, he is sentenced to 18
months in federal prison.

It is his second time behind bars.

He's only 28 years old.

While Butler sits in prison...

Hacking culture undergoes a dramatic
transformation.

The real migration that we saw beginning
around 2000 was hackers getting into

systems for profit. So their targets are
all monetary, and they're making

enormous amounts of money off of it.

Law enforcement also undergoes a
transformation.

In 2002, in an effort to combat
cybercrime, the National Cyber Forensics

Training Alliance, or NCFTA, is created.

Among its top targets are the Carter's
Forums.

American Greed has given special access
to NCFTA's headquarters in Pittsburgh.

This here is a screenshot of Carter
Planet, which was one of the original

carding forums.

Anything you want to know about credit
cards, social security numbers, dumps or

cashing, you can go in there.

There's a thread here for IDs, so
anything you want to know about

kind of for driver's licenses, you can
go into that form.

As the world of hacking evolves in the
outside world, on the inside, Max Butler

is forging new relationships with
criminals.

We would just walk the yard. As
exercise, we talk about, well,

about what we did and talk about what
could be done.

So we talk about it in a sort of
fanciful way, like, oh, wouldn't that be

Next on American Greed, prison yard
scheming goes active, costing victims

than $80 million.

And Max Butler is reborn as Iceman.

He's this elite hacker, and he's making
over $1 ,000 a day.

In 2002, computer hacker Max Butler is
released from prison, having served 18

months for computer fraud.

Butler used to work as a white hat
hacker, identifying and fixing security

in computer networks.

But now, he's a twice convicted felon.
And, as Max Butler says in an exclusive

interview with American Greed, that
white hat isn't looking so good.

I got desperate and I actually started
going and looking for minimum wage work.

I went to those places where you show up
at 5, 6 o 'clock in the morning and you

do manual labor, move boards around,
whatever, and I couldn't get placed

because there would be a queue, a
seniority, and so I would just end up

there all morning and nobody would even
hire me there.

Former hacker Kevin Polson knows how
hard it can be to rebuild a life after

years in prison.

As a 25 -year -old, Polson was arrested
for computer intrusion and money

laundering. Now he's a husband and
father and senior editor at Wired .com.

Polson is writing a book on Butler.

He was ready to make some money.

He needed the money.

Butler soon finds a way to make some
cash.

Through an old prison buddy, he is
introduced to Christopher Aragon.

Aragon is a former bank robber who is
now learning the dark art of making

counterfeit credit cards.

Aragon tells Butler that they have
complementary skill sets.

Butler was the hacker extraordinaire who
could obtain access to computer

systems. Aragon, who was also quite
computer savvy, was very adept at social

manipulation.

The initial plan is simple.

Butler will target Carter Forums, the
black market websites that traffic in

stolen identities and financial
information.

He'll hack into their computer systems,
steal credit card numbers, and sell them

to Chris Aragon, who will make fake
credit cards.

It's a scam that Keith Malarski, an FBI
special agent who has gone undercover on

Carter forums, has seen many times
before.

So what we have here is a MSR -206,
which is the most popular magnetic

and reader that's out on the market.

A simple laptop.

And the bad guys have designed a program
called The Germ, which will enable you

to take the credit card number and write
it onto the magnetic strip on the back.

So what you do is you take the card, and
then you just swipe it, and it's as

easy as that.

The fake credit cards look legitimate.

You can see the quality on the card here
is very good. The hologram, the

MasterCard hologram is good. And even on
the back, he had raised numbers here,

so when you would feel that as a
security measure, it would pass that.

But the hackers won't use the credit
cards themselves.

Chris Aragon hires teams of young girls
called cashiers, or sometimes mules, to

go on a high -end shopping spree.

you know, girls that he'd met in clubs
or friends of friends and say, hey,

you like to go shopping and show them,
you know, credit cards that you could

just use for whatever, they would all be
excited about it.

Eventually, he would get an organized
team together of false IDs, go into a

complex and just go crazy, buy whatever
they could, fill up a SUV, and then they

would try to, you know, go fence that
merchandise.

Arrogant crew would then use online
auction sites to sell some of the stolen

goods.

So it will appear like a legitimate
product, and they could sell it for a

discount, and then that's how the lower
-end people will make their money.

Butler and Aragon figure the scam will
bring in several hundred thousand

a year.

At some point, money would trickle back
to me. It was never half.

It was... Really, I got scraps.

But I kind of had this idea that maybe I
would get half, but that never worked

out.

To make the scheme more profitable...

Butler needs a steady stream of credit
card numbers.

He goes straight to the motherlode, the
Carter's forums, where hackers like him

buy and sell numbers and identities by
the hundreds of thousands.

He'll be a pirate of pirates.

In 2003, Butler and Aragon spring into
action.

The partners set up their hacking
operation in hotel rooms around San

Where the air is thick with Wi -Fi
signals.

We would choose location based on access
to wireless networks.

He would have it packed with computer
equipment, including a high -end antenna

that could be used for interception of
wireless communications.

Using someone else's Wi -Fi network
means Butler can hack away without

trace. He would use a giant...

in order to hack into Wi -Fi signals
from neighboring apartments or from

the street in order to have an anonymous
Internet connection that he felt

couldn't really be traced back to him.

Once he's up and running on a hijacked
Wi -Fi, Butler logs on to Carter's

and looks for weak spots in their
security networks.

So I got into hundreds of their
machines, and I was watching them.

This was by versus by. It was me against
them.

It was quite an ego boost. I got a rush
from it.

When he finally breaks through security,
Butler loots all the financial data

another criminal has already stolen.

He steals thousands of credit card
numbers, passwords, and pins, and

them to his partner, Chris Aragon.

He would kind of set me up, and then I
would just be like an incubator. I would

just try to churn out information to
provide to him.

In time, it's a well -oiled machine.

Butler nets close to $10 ,000 a month.

But the hacking location, or safe house,
has to change every few months to stay

one step ahead of the law.

But law enforcement is close behind.

When American greed returns, a mole has
infiltrated the Carter's forums, and

he's working with the U .S. Secret
Service to bring down Iceman.

In San Francisco in June 2005, computer
hacker Max Butler and his partner Chris

Aragon are stealing credit card numbers
with impunity. And they're leaving a

wake of financial disaster for millions
of Americans.

Butler, who now calls himself Iceman
online, hacks into Carter's forums, the

illegal websites where criminals buy and
sell stolen financial data.

Greed has gotten the best of him.

He wants more.

He's even hacking into banks and credit
unions.

He's in this cyber underground where
he's this elite hacker, and he's making

over $1 ,000 a day.

That's very, very good money, and it's
kind of hard to walk away from that,

especially when your ego gets involved
where you think that you can't be

Butler justifies his criminal acts by
telling himself he's just sticking it to

banks. You know, I made myself feel
better about it.

not actually hurting people,
individuals.

Of course, it turns out I did actually
cause quite a bit of, more than just an

inconvenience, quite an ordeal for a lot
of people.

People like Julie, who asked that her
last name not be used.

In late 2009, someone using stolen
identity information opened up several

of credit at various stores.

They almost get away with charging $11
,000 in her name.

This is not a victimless crime.

They may think it is, but I was the
victim.

Depending on the case, it can take up to
two years of painstaking work to clear

one's name after identity theft.

The countless hours that I've had to put
into this to try to fix.

My credit and the amount of stress
that's gone into this and the amount of

it's taken away from my work schedule
and from my family has been tremendous.

Back in his safe house in San Francisco,
Iceman is not thinking of his victims.

He's thinking about how he can get even
more control and power.

He and partner Chris Aragon decide to
start their own Carter's Forum. They

it Carter's Market.

The name was actually his idea. He
wanted Carter's Market. He felt that

business motive was appropriate.

Both partners see an upside in the
arrangement, an opportunity to greatly

their market.

Max wanted to be able to sell credit
card information to more than just

Aragon wanted to be able to sell
counterfeit credit cards to other

that he wasn't entirely relying on the
purchases that his cashers were making.

So they both had a stake in this.

Butler creates a sliding scale for his
wares, and it may be surprising how

cheaply the market prices a stolen
credit card.

He charges $12 for a Visa Classic, $16
.50 for a MasterCard, $36 for American

Express.

And like any reputable vendor, his
inventory runs deep.

To be a reviewed vendor, for example, of
dumps or credit cards, you need to have

a supply of hundreds of thousands, if
not millions, of cards.

The credit card numbers are coming from
other Carter's forums that Butler has

hacked into.

Every month, Butler is selling more than
250 dumps, the stolen financial and

identity data.

His reputation as master hacker is
sealed.

He definitely became one of the top five
dump spenders in the world. And this

isn't a business that's traditionally
dominated by Eastern Europe.

I really think that Iceman was the first
real elite hacker to run one of these

carding forums.

What's more, Butler and Aragon are
frustrating law enforcement.

The real difficulty with a cybercrime
case is the degree of anonymity that the

Internet affords. It's not the typical
situation where you have something like

DNA or blood evidence. You have to...

amass the proof that puts that person
behind the keyboard.

The Carter's forums are notoriously
tight -knit and suspicious of outsiders.

Prospective members must have an
existing member vouch for their

You need to know another criminal in
there, generally a couple of criminals

where you've done business with them
enough so that they will vouch for your

credibility in order to be a member of
the group.

And that culture of secrecy is bolstered
by high -tech encryption.

Now they've moved to encrypted
communications on encrypted servers.

So it makes it very difficult for law
enforcement. And now we have to find

avenues to get into the group in order
to get into their very secret

communications. So the criminals know
that law enforcement now is looking at

them. So as a result, they're evolving
in their techniques.

Despite their success in making money
and staying ahead of the law, Butler is

worried. For one thing, he thinks his
partner, Chris Aragon, is spending money

too lavishly and drawing too much
attention to himself.

His crew was young, and they liked to
party. So there were nights out, and

they'd go clubbing in Las Vegas, and
he'd spend $1 ,000 on a meal, another $1

,000 on wine.

I wasn't really so much as excited about
that. I wanted to be, you know, working

on the computers.

I wasn't really into that party
lifestyle.

And there's a much bigger worry.

In 2004, a federal dragnet called
Operation Firewall brings down a

Forum called Shadow Crew.

28 people are arrested, ratcheting up
the already fearful and paranoid

atmosphere in the Carter's Forums.

In a world where everyone hides behind a
screen name, no one knows who might be

an undercover FBI agent.

There's a lot of paranoia on the forums,
especially after Operation Firewall.

Nobody really knows who they can trust,
and so a lot of accusations get thrown

around. Iceman begins to obsess that an
FBI mole might penetrate Carter's

market, or even a rival website, and
bring their good times to a screeching

halt. He decided there were too many
competing forums, and it was dividing up

the business.

Vendors were scattered around.

They had poor security.

And that the criminal underground would
be better off under a single board and

under his benign rule.

At one point, I thought it would be
beneficial to just get all the

in one place.

Butler wants to take over and control
the Carter's forums so he can weed out

suspicious characters who might be
working with law enforcement.

He decides to plot a hostile takeover of
his four main rivals, Dark Market, talk

cash, Scandinavian carding, and the
vouched. If he can take all their users

bring them under his umbrella, he
figures he can exercise total control

has access to the site.

He spends two months preparing.

Then in August 2006, Butler locks
himself in his safe house.

And in one spree, a 48 -hour session
where I stayed awake, I went through and

checked them off.

got into the site, copied all their data
out, got a current snapshot of their

database, shut their site down, deleted
their database, imported it into ours,

and built up Carter's Market.

And, I don't know, it seemed fun at the
time.

He looks proud, and he is.

Emails, usernames, passwords of everyone
who bought and sold on the sites.

The information is all his.

It's like a mob boss taking out the
heads of other families.

Iceman is now the undisputed don of the
Carter Forums. It was a huge boost for

Carter's Market.

He went from 1 ,500 users to 6 ,000
users overnight with this hostile

The takeover merits a lengthy article in
USA Today, which dubs Carter's Market

the Walmart of Carter's Forums.

Carter's Market was the only place to do
business now.

When American greed returns,

Iceman seems in total control.

But his arrogance gets the attention of
the feds.

In August 2006, Max Iceman Butler is at
the top of his game.

As founder and administrator of the
illegal website Carter's Market, He and

partner Chris Aragon oversee a
multimillion -dollar black market

Carter's Market is described as the
Walmart of the digital underground.

And Max Butler is its CEO.

Mr. Butler, in running that website, had
complete control of who could access it

and the extent of their access.

But, as the saying goes, power corrupts.
And absolute power corrupts absolutely.

Butler has hacked into the sites of his
main competitors and stolen their

members to create a monopoly.

This hostile takeover has brought a
serious backlash.

What that did was really upset or ticked
off a lot of the other people running

the other sites out there. And the
equivalent of a cyber war broke out or

war broke out between the rival
factions. People were very angry about

especially the people that ran the other
forums.

Didn't know what to think. Right away,
some people accused us of being fed.

There was a well -known forum member
called El Mariachi, who'd been in the

forever, who had already decided that
Iceman was an informant just because he

was so arrogant.

And after the hostile takeover, El
Mariachi started calling out Max online,

saying, you know, you're obviously a
snitch, goading him on, and there were

threats exchanged.

It could be dismissed as hacker's drama.

But for the federal agents who have been
stymied in their efforts to infiltrate

the Carter's forums, this cyber war
presents an opportunity.

FBI agent Keith Malarski works
undercover as a hacker named Master

He sees a chance to boost his undercover
reputation and expand the scope of the

investigation.

There was a lot of warring going on.
People really didn't know who to trust.

So they were looking for names that had
been around for a while, and my name had

been around for a while, the Master
Splinter moniker.

People started coming to me and asking
me, whose side am I on?

And that really opened up the
opportunity for us to take the

the next level.

Agent Malarski creates a legend of
Master Splinter as one of the world's

spammers. What that enabled us to do was
really penetrate a number of different

groups because spamming is really the
backbone that drives the underground

economy.

Before long, Agent Malarski, as Master
Splinter, gets the Carter site Dark

Market up and running again after Butler
has hacked into it and shut it down.

After Dark Market came back up, Mac
continued to hack back into it. It was

ongoing war.

Max and I kind of became enemies, and he
hated me.

There were a lot of people going back
and forth, and they would come to me and

say, do you know what Iceman said about
you, or do you know what Iceman's doing

now, or Iceman's going to try to hack
you.

They're mortal enemies on the Internet.

But in reality, Agent Malarski doesn't
know the true identity of Iceman or have

any idea where in the world he's
operating from.

All that's about to change.

The FBI joins ranks with the U .S.
Secret Service.

And in the spring of 2006, the Secret
Service develops two confidential

informants.

They're both trusted members on Carter's
Market who have decided to work with

law enforcement and provide the federal
agents a glimpse behind the curtain of

this black market.

They had an informant on the site.

who was also an administrator, who was
able to give them information from the

inside as well. So they were working to
find out who Iceman was.

In that fall of 2006, with the Secret
Service at his side, one of the

buys 23 credit card accounts from
Butler.

Max presumably thought he was
corresponding with somebody in Eastern

that he'd be safe.

And in fact, it wound up in Pittsburgh.

It's a small sale worth just $480.

But for the Secret Service, it's a big
moment.

That instantly gives them the case.

When you sell anybody stolen credit card
information, you're automatically a

felon.

Then Butler makes another misstep.

In a brazen move to steal more financial
data, Butler sends a corrupted link to

the e -mail accounts of 500 employees at
Capital One Bank.

So hundreds of people clicked on this
link in Capital One, and they got

with this, giving him access to their
internal network.

But his plan backfires.

Capital One contacts the FBI, who traces
the cyberattack to the same account

that registered Carter's Market.

The case against Butler is building.

But Iceman is a worthy adversary.

He suspects correctly...

that Master Splinter is a federal agent.

Max saw that Master Splinter was logging
on not from Eastern Europe, where he

was supposed to be based, but from an
office building in Pittsburgh.

It's the building that houses the NCFTA,
the National Cyber Forensics Training

Alliance.

So Iceman shouted to the hills that
anybody would listen that Master

was a Fed and a dark market was a sting
operation being run by the FBI or the

NCFDA. He would tell anybody that would
listen.

For Malarski slash Master Splinter,
being outed threatens to kill his

in the cradle.

So we had to do some scrubbing because
we had just taken over this site, and

this was the potential to compromise it
all right in the first couple weeks.

Fortunately for Agent Malarski, Iceman
cries wolf one too many times, having

accused people before of being federal
agents.

Malarski also has a world -class support
team, which scrubs the data of any tie

to the federal government.

So now when Iceman made his big reveal
to the world that Master Flinner was

of the NCFTA, none of that stuff was
there.

So I had convinced the people on Dark
Market that I was legit. So they just

thought that Iceman was throwing dirt at
me.

So there was a lot of allegations where
people were calling one another cops or

feds all the time. And luckily for me, I
was just kind of in that wave of all

this allegation, and I was able to
survive it.

Next on American Greed, authorities are
closing in.

The big break comes when they nab Chris
Aragon.

the only person in the world who knows
Iceman's real name.

Would he give up his partner?

In spring 2007,

Max Butler, a .k .a. Iceman, is living
the hacker's dream, illegally breaking

into systems and getting paid good money
for it.

He and his partner, Chris Aragon,
managed the multi -million dollar

website called Carter's Market.

It's an online bazaar where crooks can
buy and sell stolen credit card and

identity information.

Carter's Market website was founded by
Mr. Butler and a close associate of his,

Christopher Aragon, largely so that they
would have complete control over the

servers and the access to that market.

But in an interview with American Greed,
Max Butler says by spring he was ready

to get out. I had been sort of winding
down, wanting to get out from under the

forum. But it's too late. The feds are
closing in on Iceman.

So things started to unravel for Max
very rapidly.

There were two things that happened.

First, a young charter named Jonathan
Giannone, a .k .a. Zebra.

is arrested for wire fraud and identity
theft.

An early administrator on Carter's
Market, Giannone has an insider's

on Iceman, and he's looking at several
years in prison.

The Secret Service came to him and said,
if you want to help yourself, you're

going to tell us everything you know
about Iceman, the guy that did this

takeover. The zebra has one card to
play.

He didn't know who Iceman was, but he
did know Chris Aragon, and he knew that

Chris Aragon worked closely with Iceman
in real life.

Only one person really on the planet
knew who the Iceman was, and that was

Christopher Aragon.

If the Secret Service can get to Chris
Aragon, there's a good chance they can

stop Iceman.

The opportunity comes quickly.

On May 12, 2007...

Aragon is arrested trying to use one of
his counterfeit cards to buy $13 ,000

worth of luxury purses at
Bloomingdale's.

Following that arrest, police in Newport
Beach did a series of searches of

computer equipment and other electronic
devices in connection with Aragon's

business activities and criminal
activities.

Part of that information was shared with
the United States Secret Service and

was made available to us in our case.

Just like Zebra, Chris Aragon puts self
-preservation above loyalty.

Facing charges of commercial burglary
and identity theft, Aragon decides to

talk. He tells them the addresses of
Iceman's safe houses, though he doesn't

know his current one.

And he tells them something even more
vital, Iceman's true identity.

Chris was really the only one that knew
that Iceman was Max Butler.

For the first time in this
investigation, the feds now know who

for, a 6 '5", brown -haired, white male
who lives in the San Francisco area

named Max Butler.

After Aragon's arrest, Butler is cagey.
He quickly abandons his current safe

house. I was in an apartment that he
provided, so I got out of there. So I

changed location.

I got rid of all my wireless gear.

But the Secret Service has key
information.

They get the name of Butler's girlfriend
from an associate of Aragon's and track

down her address.

It's now a shoe leather investigation as
teams of agents take out the

girlfriend's house.

Once Butler leaves, they follow him
straight to his safe house.

and they followed him as he moved some
of his stuff into his new safe house. So

they just followed him right to the
front door, literally to the front door.

But they don't rush in, not yet.

Aragon had told them that Butler has a
kill switch program that can immediately

destroy evidence.

We knew he had encryption on that
computer, and it was going to be hard to

unless those computers were on.

I had them all locked and encrypted. In
my mind, encryption was...

This blanket that made them not even
real. I didn't see the computers as

computers. When they were encrypted, in
my mind, they're brick.

And it's kind of hard to explain that.
You think, well, are you crazy? But I

really believed that.

They called on the expertise of CERT,
the Computer Emergency Response Team,

based in Pittsburgh.

These are some of the country's foremost
experts in the area of decryption, of

taking an encrypted computer and trying
to figure out ways to get into that

computer and obtain the evidence.

that we're seeking in the search.

The arrest has to go down without a
hitch.

On September 5, 2007, after the 16
-month investigation, the feds are ready

move.

Several Secret Service agents, along
with FBI agent Malarski, charge into

Butler's safe house.

Suddenly there's a football team of
agents between me and the computers, and

just in shock.

The computer experts get to work.

I thought that they were going in and
collecting bricks. I thought they had

nothing.

Of course, that's not the case. They
have some really sharp people.

And they were able to get all that
information.

The takedown is successful.

They get to Butler's computer before any
evidence can be destroyed.

The amount of stolen data in Butler's
possession is staggering.

The total of fraudulent charges.

On the 1 .8 million plus cards in Mr.
Butler's possession as of the date of

search was $86 .4 million.

At the time, it is the largest identity
theft and hacking case in the country's

history.

On September 11, 2007, Butler is charged
with three counts of wire fraud and two

counts of identity theft.

Federal sentencing guidelines can put
him behind bars for 40 years.

The charges reflect a small fraction of
the real cost of Buckner's crimes.

The effect on our economy is huge,
obviously, when you're talking about a

of this size.

Financial institutions are under enough
stress in this country, and the effect

of hacking activity and identity theft
just makes the situation worse.

from everybody, from their employees to
those whose cards are compromised, to

individuals who want to then apply for
credit in this country.

On June 29, 2009, Butler pleads guilty
to wire fraud charges.

His guilty plea, in cooperation with the
feds, helped Butler avoid a possible

sentence of 40 years.

On February 12, 2010, Butler is
sentenced to 13 years in prison and $27

million in restitution.

At the time, it is the longest sentence
for hacking in U .S. history.

With Butler and Aragon behind bars,
Carter's market eventually closes down.

But Dark Market keeps its doors open.
Master Splinter isn't finished yet.

Slowly, one by one, administrators on
Dark Market and other sites begin to be

arrested.

It's a massive sting operation that
spans the globe.

The only high -ranking member of Dark
Market that hasn't been arrested is

Splinter. It's time to close up shop.

I wrote a going -away letter to the
members of Dark Market saying there are

many feds and law enforcement on this
site. It's been penetrated.

Iceman was arrested, all the other
administrators have been arrested, and

not going to suffer the same fate that
they did.

The shutdown of Dark Market prevents
more than $150 million worth of loss for

businesses and individuals worldwide.

Within the cybercrime area, there is a
bit of an arms race that goes on.

Today, law enforcement and business must
wage a full -out assault if they are to

keep ahead of cybercriminals.

There is this constant one -upmanship
that goes on within the hacking

against the security professionals that
are involved in protecting business

networks. This is very important to us
as law enforcement because we also have

to be on the cutting edge of the
technology.

We can get you, so you can't hide from
us. And we have our international

coalitions, and we're working very
closely together with them in order to

this problem.

For victims like Julie, it's too little,
too late.

I will have to pay for my credit report
every two months, check it, and make

sure that there's nothing on it.

And that's really the maddening part.
That's the part that gives me anxiety

attacks. It's like, what else could I be
doing to protect myself here? How can I

stop this from becoming this nightmare
of trying, you know...

Just basically like being the detective
myself and trying to sort this out and

figure out what steps to take. You know,
how do I protect myself?

Chris Aragon is currently awaiting trial
in California for burglary and identity

theft, among several other charges.

Max Butler serves his time in a federal
penitentiary. The Bureau of Prison says

Butler may have limited access to
computers behind bars.

In this case, greed was certainly a
motive.

But what's obvious from the
communications and the risks that Mr.

that ego also played a very big role.

Perhaps the biggest disappointment or
shame of this case is the waste of

here by someone who is very bright, very
creative, and could have used his

talents to benefit society and
ultimately himself, and instead he

a path that would harm many people and
businesses and ultimately harm himself.

Illegal hacking can be seductive.

It's a thrill. It's an ego rush to be
able to get into another computer that

didn't ask for permission to get into.

It's a temptation, but it's worth it to
resist that temptation.

I would say go to school, get an
advanced degree, and stay out of

I wish I had advice back then.