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In 1994, in the American firm Citibank,
large sums of money

started mysteriously disappearing
from clients' accounts.

A resultant investigation revealed
that a computer located in Russia

was used to break into
the Citibank systems.

The idea of robbing banks from a distance
revolutionized the criminal world.

In this series, we will tell you
about Russian hackers' very first crimes,

after which the whole world started
talking about them.

RUSSIAN HACKERS: BEGINNING

A DOCUMENTARY BY ANDREY LOSHAK

EPISODE ONE
THE PIONEERS

NEW YORK, USA

Steven Garfinkel, an FBI agent,
was assigned to investigate the case

of the suspicious transactions
that took place in Citibank.

Banking fraud was his specialization,
but he had never encountered anything

like this before.

There was no
computer crime squad in the FBI.

STEVE GARFINKEL
FBI SPECIAL AGENT

There was no cyber division.
It was a totally different world.

And in many respects,
this was an entirely new crime.

It was a…

a cyber bank robbery.

VARNA, BULGARIA

The first penetration into Citibank's
systems was by a hacker called ArkanoiD.

In the beginning of the 1990s,
he was a member

of an early group in Saint Petersburg
who had romanticized hacking;

who hacked security systems
out of curiosity,

but not for money.

Back then…

ALEXEY SMIRNOV A.K.A. ARKANOID

…it was purely noncommercial.

It was just a hobby.

Is this why…

ANDREY LOSHAK

…after breaking
through Citibank's security,

you didn't try to rob it right away?

Essentially, yes. It was basically
a part of our culture.

Doing this for profit was considered
something unusual

and contradicted the traditional concepts
of hacker ethics.

Even if we don't focus on the related
ethical problems,

such as "stealing is bad",

the very idea of theft by technological
means in the 1990s in Russia,

was connected to dealing with some
very unpleasant people.

And I never wanted
to do such a thing at all.

Do you mean that you
would have to find a way

to convert the electronic
funds to real cash?

Yeah, right.
And everything associated with doing this.

Back then, there were two global
computer networks in the world:

the Internet and the X.25 protocol,
which was used by Citibank.

X.25 access in Russia was provided
by an American company called Sprintnet.

To enter the network, you needed to call
the number of the provider's local hub

using your modem,

and enter a special command
into the terminal dialog box.

Via the Sprintnet connection, ArkanoiD
and his friend broke into

Citibank's network and discovered
many flaws.

Later on, a detailed guide for using
the vulnerabilities found by the hackers

was obtained by Vladimir Levin,
an unremarkable computer

and accounting software trader
from Saint Petersburg.

One of the members of our group

sold it to him for the
ridiculous sum of $100.

He sold it because he thought that Levin
wasn't bright enough,

and he didn't expect Levin to resort
to methods we wouldn't like.

Why didn't he consider him bright enough?

Levin never was a hacker.

He never explored anything on his own.

He was just a run-of-the-mill trader
with a small hardware business.

He showed some moderate interest,
but that was all.

Having entered Citibank's
cash management system

on his office computer,

Levin randomly selected a few
major accountholders

and transferred around $500,000
to the account of his friend in Helsinki.

He managed to convert
these funds to real cash.

Levin needed mules: people who helped
to turn the hacker-stolen funds into cash.

FORT LAUDERDALE, FLORIDA, USA

In the beginning of the 1990s,
Yekaterina got lucky:

she met a prince
in a Mercedes named Evgeny.

The couple had a daughter.

However, in the lawless
Saint Petersburg of the 1990s,

their happiness ended quickly.

Evgeny amassed debts.

Evgeny started
walking around with a gun in his pocket.

Some shady people…

YEKATERINA KOROLKOVA

…started coming to our dacha.

We kept on guard all the time;
we were in fear.

He used to say, "We owe this sum of money,
we have to give it back."

EVGENY KOROLKOV

Well…

Anyone willing to buy this house?

I can give you a good price.

DEDOVICHI, PSKOV OBLAST

Evgeny Korolkov no longer has
an apartment in San Francisco.

The former businessman lives
in a village with his grandson.

In the summer of 1994, Korolkov's
acquaintance, Vladimir Levin,

contacted him with a confidential request:

to help him convert, or "encash" the money
stolen from the Citibank accounts.

Korolkov's wife Yekaterina
unexpectedly volunteered for the job.

I had a clear and detailed conversation
with my wife.

Like any woman, she said,

"You are a loser. You can do nothing."

I didn't have an opportunity to do that.

I said, "I would be happy to grant you
this opportunity."

Take this money.

Take this plane ticket.

Go!

"What do I do?"

I said, "Open accounts in five banks
and wait for the money to get there."

Then withdraw it, and you can go
wherever you like.

Why did she need so many accounts?

She wanted a million right away.

I told her, "We can send you a trillion
if you like.

But how are you going to withdraw it?"

I thought it would be wiser for me to go.
He tried to talk me out of this.

But I said that we had no other choice.

We had to pay our debts.

You were aware that
you were doing something illegal?

Absolutely!

Absolutely! And I was absolutely sure
that I wasn't going to get caught.

"Do you think you can just go
and withdraw money,

knowing it's not yours?"

No, I don't think I can.

That's my point.

She thought it would be a piece of cake
to come and withdraw money.

That is my point.

Purely psychologically,
people don't understand,

"How can this be? I have this money.
It was sent to me, but I can't take it."

But you can't.

SAN FRANCISCO, 1994

The money came. A translator and I
went to withdraw that money.

When I recall that time,
it was such a nightmare.

But it was just me. It was just
unforgivable stupidity.

I went in and I said,
"Give me $30,000 in cash."

They were looking at me
with their eyes wide open,

because at that time, you could buy
a house for $30,000.

The bank sees these transfers,

knows they're bad,
and they contact the banks to say,

"Hey, these are bad transactions,
put a freeze on them."

Katerina Korolkova is in the branch
trying to withdraw the money.

They refused to give the money to us.

A security officer approaches us.

He leads us into a room. I was surprised
we weren't arrested right away.

I was really surprised.

He talked to us. We explained
that we were expecting some money

from my husband.

He let us go.

We left.

On Monday, I was packing suitcases
for a flight.

There comes a knock on my door.
It's the FBI.

And then they take me
to the Federal Prison near San Francisco.

That was my trip to America,
to San Francisco in 1994. Yes.

We knew about Levin from Katya.
Katya told us about Levin.

The extent of how he was doing it,
what he was doing,

we didn't fully, you know, understand yet
how he was doing this.

There's another very important
component to this story,

which is the cooperation between
the FBI and the Russian authorities.

When you look back on this,

you look at, you know,
Russian-US relations today

and I don't think
this sort of thing could happen.

SAINT PETERSBURG

The FBI asked for help
in the Organized Crime Department.

The case was assigned
to Investigator Strigalyov.

He found the offenders' address quickly

since a simple telephone modem
was used to hack Citibank's system.

It was easy to trace.

We discovered that that number belonged…

BORIS STRIGALYOV, INVESTIGATOR

…to a company in Saint Petersburg.

The company's name was Saturn.

The company's address was
8 Malaya Morskaya Street,

formerly Gogol Street.

Surveillance helped us locate
the owner of the company:

Vladimir Levin,

a very advanced computer specialist.

Vladimir Levin was detained quite quickly.

In the fall of 1994, he was careless
enough to fly to London on business

where he was detained
at the FBI's request.

This footage shot by British
television features Levin

surrounded by his lawyers.

Unfortunately, the original footage
was lost.

We had to make an inverse translation
from English into Russian.

We asked Levin
whether he was guilty of this crime.

It is not the time
to answer this question,

I would have to answer it
in America in front of the Jury.

From the papers that I saw

and accusations that I read I could say
that I'm not guilty whatsoever.

If I'm extradited to America
of course I may be put on trial,

but all I can say is that I'm not guilty,
and this is total rubbish.

While Levin was in a London prison
fighting extradition to the USA,

in Saint Petersburg, the investigative
team headed by Strigalyov

searched the Saturn offices,
where they found computers and weapons.

We get authority to fly
to Saint Petersburg.

We meet with the Russian police

and we're in the offices at…

MVD headquarters in Saint Petersburg.

I just had a feeling this was
kind of a seminal moment

in the evolution of… you know, of crime.

So, I met with the Russian cops and…

we are going through these materials
on the computer and boom,

we find a smoking gun.

There are Citi bank documents

from the cash management system
on Levin's computer.

So, this is… this is it, man,
we have him dead to rise at this time.

They arrived in a quite short time
after the case was opened

the office was searched and all.

Two FBI officers.

We allowed them to copy
the digital information

we found on the computer.

We communicated and aligned our efforts.

And they left.

The MVD cops saw we were
very excited about this

and it was a cause for a celebration.

It was 11:00 in the morning,
the first bottle of vodka comes out.

We finish the bottle,
two more bottles come out.

You know, I was a lot younger then and
I guess my body can process it but man,

I will tell you I have never in my life…

been as drunk as I was that day.

First of all we started pickles
and it's pickle juice and a vodka.

Chocolate bar and the vodka,
and then somebody says,

"Oh, very special, very special."

Opens a can of tomatoes.

I can actually understand that.
That was almost like a Bloody Mary.

Is "oguschenya" a word?

- What?
- Oguschenya.

- Like, snacks.
- Yes.

Oguschenya, yeah. Oguschenya.

If you recall, at that time our
relationship with the USA was improving.

It was quite favorable.

As a matter of fact,

law enforcement officers
always have mutual respect

because, obviously,

there was nothing political about this,
it was a purely criminal case.

We clearly had to unite forces.

Steve Garfinkel needed testimony
against Levin,

who didn't admit his guilt and fought
being extradited.

Evgeny Korolkov was the one to give it.

Garfunkel convinced him to come
to America with his daughter

and voluntarily surrender
to the authorities.

Why did you go to America
after Levin was arrested?

What choice did I have?

Should I have gone to the Soviet prison?
To the Russian prison?

I had had a civilized negotiation
underway with them.

I took Katya, got a visa in Moscow.

From Moscow, without any rush,

on March 8th,

1995,

I flew to New York City.

- And I was arrested there.
- You turned yourself in.

They told me that if I cooperated
with the investigators,

they would let me go.

And they would let him go.

On top of that, they would let us stay
in the USA.

When they told me that they would
let me stay in the USA

and bring my kid here,

it made me really happy.

Who are "they"?

The FBI.

They gave us money.

$4,000.

And they rented an apartment for us.

I always thought
Korolkov spoke with us at length.

The central story is that

he was associated with these gangsters

in St. Petersburg.

SAINT PETERSBURG

Korolkov's testimony led to
another suspect, Damir Shadaev,

a respected entrepreneur, a timber agent,
later a State Duma deputy

from the Leningrad Oblast Legislative
Assembly, an LDPR party member.

According to the FBI data, Shadaev
helped encash around $4,000

stolen from Citibank.

Shadaev needed money.

He wanted his commission.
Levin wasn't giving money away for free.

Nor was I giving away that money for free.

Just try to send someone to encash money
for free.

He was to give 50% back.

Then we come to interview Shadayev.

First of all, we heard him
coming down the hall,

and he's yakking it up with the cops.

You know, they're all laughing,
"ha-ha-ha,"

and apparently,
he took his gun and holster off

and gave it to the cops before
he came, you know, to see me.

It was kind of clear that whoever
Shadayev was friendly with,

he didn't have to worry about,
you know, anything from the authorities.

According to the case files, $73,000
stolen from Citibank

was spent on buying weapons in a Finnish
hunting store.

Later on, some of that weaponry
was found in Shadaev's estate near Vyborg.

They were to confiscate these weapons.

I don't know what they confiscated.

Can you imagine the amount of weapons

you could buy for around $70,000?

He was the first to buy a 17-round Glock.

I was the second to import
the second one to Russia.

I had a 19-round one.

We showed off to impress each other.

But Shadaev was the first to wear
a Sheik's Cartier watch.

A $60,000 watch.

And he wasn't afraid of wearing it.

In Saint Petersburg, Shadaev is infamous
for scaring off journalists.

In 2008, a film crew from
Channel 100 tried to go to the island

where Shadaev had built an estate,
having unlawfully seized a riverbank.

They had to go back without their cameras.

For some reason, Shadaev wasn't there…

ALEXANDER TROFIMOV, JOURNALIST

…when we came to shoot. He wasn't around.

Suddenly we saw him rushing toward us
on his motor dinghy,

all enraged and agitated.

He came up and greeted us.

He grabbed the camera and the stand

that our camera operator didn't guard
well enough

and he threw the equipment into the river.

At that time, we felt the merciless
1990s vibe.

Thank God we weren't killed.

The richest deputy in the Leningrad Oblast
Legislative Assembly lives

lives on his own island near Vyborg.

Knowing Damir Shadaev's dislike
for the press,

nevertheless, we risked going
to the gates of his estate.

Hello! Speak!

We would like to talk to Mr. Shadaev.

We can't reach him on the phone.

Whom do I tell him is calling?

Please, tell him that we are journalists
from Moscow.

We are making a film
about Vladimir Levin's case.

Okay, I'll call Mr. Shadaev now
and relate whatever he says to you.

Hello!

Hello, Mr. Shadaev.

Your name is mentioned in Levin's case.

Could you please explain
why your name is mentioned there?

DAMIR SHADAEV, BUSINESSMAN

I've never seen or known Levin in my life.

In this case, there was my comrade,
Evgeny Korolkov.

He wasn't much of a comrade, though.

He was a man who bought hardware from us.

He bought equipment.
We sold goods back then.

He amassed a great debt to us. He fled.

He came back and said,
"I'll give everything back to you.

Give me the number of a bank account.
I will send you the money." And he did.

"I will be all right."

Then some police officers came to me
and said that the money was stolen.

I spent a couple of months in jail.

It was the money from Citibank.

I don't know whether it was only
from Citibank or from any other bank.

After two months, they investigated it and
said, "We are sorry. You are innocent."

That is how it ended.

Investigator Strigalyov mentioned
a weapon consignment

bought in Finnish hunting stores.

I buy weapons in many countries
of the world where I have been

because I go hunting.

I have a license for collecting weapons,
for using weapons.

For some reason, it became a part
of the case files.

Well, yeah. They came here
and confiscated all my weapons.

They believed that they were bought
with Citibank money.

I have always bought weapons
with my own money.

I buy food with my own money.

I buy clothes with my own money.

If they had had any suspicions that
these were bought with stolen money,

I think they would have taken it away.

They gave everything back. Of course!

What is this? Did you smell something?
A squirrel?

Shadaev blamed Korolkov.

"He owed me.

"He came and said that he could
repay the debt.

"I will pay you back by a money transfer."

I think this is partly the truth.

But he was definitely aware
that the money was stolen.

THE LDPR PARTY

He went to jail for 30 days
and served the rest of the sentence

under travel restrictions.

Then he was in a hospital.

He did all he could to avoid prison.

And later on, at the end of the 1990s,

he participated in a deputy election.

I think he even ran for the governor
of Leningrad Oblast or something.

Which also helped him get out of this.

To sweep the case under the carpet?

To stop the prosecution against him.

We didn't have enough evidence.

We know very little
about the main player in this story.

He always tried not to draw extra
attention to himself.

He says that he got involved in this story
by accident.

I don't know.

Even my lawyer said that I don't look
like a man who has a lot of money.

Especially ten millions dollars.

Garfinkel managed to convince
the British court

that Levin was the main organizer
of the Citibank robbery.

He was extradited to the USA,
where the young man admitted his guilt

got a three-year sentence and was soon
released as he had served

almost the entire sentence
during the investigation.

He didn't look like a real
criminal mastermind,

but more like a computer geek who…

you know, he found out
about this kind of backdoor

into the Citi financial
cash management system.

So, he really didn't kind of impress me.

And he certainly wasn't,
you know, trying to.

He was just trying to, like,
you know, say as little as he could to us

just to get this thing, you know…

I think, you know,
get it over with and done with

and then get the hell,
you know, out of the US.

You know, as a bad chapter in his…

you know, his life as well.

Vladimir Levin still lives
in Saint Petersburg

and runs a hacker-UNrelated tea
and beer importing business.

CALLING VLADIMIR LEVIN

- I am listening.
- Hello.

Vladimir, hello! Can you hear me well?

I cannot hear you very well.

I will try to increase the volume.

Okay, try now!

My name is Andrey Loshak,
and I am the director

of a film about the phenomenon
of Russian hackers.

Where did you get my number?

We also know how to work with databases.

To be honest, I am not interested at all.

It is all old, boring,
uninteresting stuff.

I think a dead fifteen minutes
of your film will be useless.

It all happened too long ago.
It is boring, uninteresting.

Not interesting at all.
That's what I think.

It is like discussing a horse carriage

in the times when we have Teslas
on our streets.

Nonsense!
It can't be interesting to anyone.

Come on, come on.

Oh, little Tyoma…

The Citibank robbery had a major influence
on Yekaterina and Evgeny Korolkov's fates.

After serving his time and after his
divorce, Korolkov returned to Russia

without money or home.

He lives in poor conditions
with his grandson

while his daughter is trying to make it
in Saint Petersburg.

Yekaterina stayed in the USA,
remarried, and divorced again.

Over the last five years, she has been
living with her biker boyfriend

and working as a surfing instructor.

Due to a bureaucratic mess-up,
she has lived here without documents

for all these years.

Her daughter, who grew up in America,
went to see her father 14 years ago.

Ever since then,
she hasn't been able to return

to the country she considers her homeland.

You have never seen your grandson?

Only on my phone.

Right.

Steve Garfinkel invested lots of effort
in helping Yekaterina acquire citizenship.

But the FBI agent couldn't fight through
the Immigration Service's bureaucracy.

I think she's a good person, I think she…

kind of learned from her past mistakes.

I've always seen her
as being very kind of upbeat.

I follow her on Instagram and Facebook.

She's always got
kind of uplifting stuff, she's…

You know, about, like, kite surfing.

Investigator Strigalyov and his colleague
went to the USA for a reciprocal visit

at the end of the 1990s.

It wasn't very useful for the case.

But the trip was something to remember.

This is me, and this is…

Alexander Polyakov.

This is how I looked when I was
on my trip to New York.

This is our hotel.

I feel very grateful to our American
partners

for arranging very good accommodations
for us.

I had my own room.

Two rooms.

The FBI paid for their trip

because they're going to be
doing an investigation here

to help on their end.

Like, I went there
and, you know, they helped me.

They're going to come here
and I'm going to help them.

We had a party one night in their room.

'Cause it was a really nice room.

It was the same, you know, thing
with bottles of vodka

and they brought a special…
Basically, it's fat, pork…

You know, pork fat
with, you know, raw onions and…

- Salo.
- Salo, yeah, right.

Which is a little, you know…

different for, you know, Americans and…

But we had… we had a really good time.

The Citibank system being broken into
by a Russian hacker

helped the FBI get a budget for creating
special cyber squads,

and later on, a special cyber division
with 56 offices throughout the country.

Levin's case was unique for many reasons.

It was the first network bank robbery,

the first international crime
perpetrated by Russian hackers,

and the only instance
of such close cooperation

between the law enforcement agencies
of Russia and the USA

in the cybercrime area.

CHELYABINSK

Hallelujah!

Oh! The Washington Post,
with a column about me!

A real column about me!

Internet Dreams Turned to Crime.

The dreams of the internet have led
to crimes, I guess.

And there should be a big article.

I read this in Arizona.

Russian hackers hit the headlines
in America again in 2000.

A programmer from Chelyabinsk,
Vasily Gorshkov

decided to cash in on the dot.com boom
and founded a company called TekhNet.Ru.

Its business was creating websites.

He found jobs abroad
and did them in Chelyabinsk.

A monthly profit of $100 was considered
good back at that time.

We have smart
guys who can write this code.

VASILY GORSHKOV

And these guys didn't even necessarily
have to be very smart

because I enjoyed doing
an occasional job myself.

PHP and all. I was studying
these languages.

It didn't seem difficult. It still isn't.

It is very easy to learn something,
to write a script and execute it.

TekhNet. Ru employed
a 20-year-old computer genius

named Alexey Ivanov.

He became Gorshkov's right-hand man
very quickly.

Apart from developing websites,
Ivanov found vulnerabilities

in American companies' networks

and asked $1,500 to eliminate them.

Here is a part of the correspondence
of Ivanov with an administrator

of the Speakeasy Provider from Seattle
he hacked.

I am checking security at Speakeasy
and found some holes.

Would you like to hear more about them?

And now, I'm looking for a job.

Can you talk with your boss
about giving me a job?

I am not sure you would want a job here.
We are pretty poor.

I do have friends in larger companies,
however.

Microsoft, of course. Amazon.

Amazon, hehe? Cool company.

I stole a lot of CDs, DVDs, and books
from Amazon.

I don't have any other way to make money.

Ivanov dreamt of being
a cybersecurity professional.

It was impossible to find such
a job in Russia back then.

Ivanov often complemented his hacks
with a CV and a request to hire him.

That was what gave
the Chelyabinsk hackers away.

SEATTLE, USA

When Ivanov stole the data for 6,000 users
of a popular Seattle internet provider,

the American Special Services started
devising a plan

to catch the Chelyabinsk hacker.

Prosecutor Steven Schroeder was involved
in the case.

Computer crimes were his specialization.

Since Russia didn't respond to inquiries
about the hacker,

they decided on the "lure" option.

STEVEN SCHROEDER

There is an undercover
procedure known as the lure,

which was a technique to trick
criminals in other countries

to come to the United States
or some other country

where they could be then arrested
or arrested and extradited.

The FBI in Seattle set up
a fictitious Internet security company,

which they called Invita.

Ivanov had been advertised
himself to his victims

as a computer security expert
and trying to get employment.

So he was pretty easy to lure.

We began to negotiate with him
and then he said,

"By the way, I want to bring
my partner Gorshkov with me."

Now, that was the first
we'd ever heard of Gorshkov.

Alexey Ivanov was a talented guy
who lived in Chelyabinsk.

He barely made a living,
doing occasional jobs.

Well, browsing the internet
was just his hobby.

Since he had no money to pay
for the services

he might have examined the code,
found holes,

and offered to eliminate it
for a certain sum.

He approached me with a proposition,
"Let's go there

and establish a joint company."

After this, we started creating
that joint venture company

in the area of cyber security.

So, you took that bait.

You journalists might see it that way.

As for me, I had a good time.

And I have a story to tell. Twenty years
later, you are still interested.

Look!

At those windows. Not at the top.
The fifth floor, I guess.

That used to be our office.

TekhNet. Ru was there, right?

Yeah. We had our servers there.

Real servers, real workstations.

The most famous photos of me and Ivanov…

The guys told us to send them photos
to be able to recognize us.

We found the corner of our office
that looked the shabbiest.

It was near the bathroom door.

The door frames were all cracked,
and we took photos against them.

You took these pictures for the Americans?

- Yeah.
- Why did you choose the shabbiest corner?

The Americans thought
that we were poor and miserable.

And we wanted to show them that.

Hey, guys!

A cyber security expert
named Raymond Pompon

was involved in the special operation

for fishing technical details
out of the Russian hackers.

For that, he was to impersonate
an Invita employee

in an office that was rented
for this occasion.

It was, like, a big deal
for the FBI at the time.

RAYMOND POMPON

They actually had a helicopter
flying over Seattle

watching the car leaving the airport.

A lot of money was spent on this because
this was going to be the FBI's big bust,

and they were really going
to send a message to the world

that, like, the FBI can get you
no matter where you are.

TekhNet. Ru is a play on words in Russian.

It means, "I'm not rubbing those things.
But I'm rubbing these things."

Got it?

We are not rubbing those.
We are rubbing these.

I'm not rubbing those ones.
I'm rubbing other ones.

It's a joke.

It's a play of words.

The special operation was secretly filmed.

The footage was to be
a part of the evidence

that was to demonstrate
the Chelyabinsk hackers' guilt in court.

And then I remember they showed up.

And the first thing that surprised me
was how young they were.

Although, I had told the agents,
"You know what you're going to see?

You're going to see one technical guy
and one business guy."

That's kind of how
in the tech world we do it.

When you send somebody to a customer,

you always have, like, the nerd
and then the guy who seals the deal.

And that was kind of the role.

Alexey was the technical guy, and Vasiliy
was, like, the one making the deal.

CHELYABINSK AIRPORT

On Thursday, we left Chelyabinsk.

We arrived in Seattle on Saturday.

We didn't sleep for a minute.

We saw that Seattle did exist.

Right after they met us in the airport,
I had a feeling that they were shady guys.

I didn't think we would work with them.

They asked us where to buy bogus money.

Things like that.

And I was exhausted and didn't feel well.

We arrived.

"We would like to go to a hotel.
Should we book our rooms ourselves?"

"Don't worry, we booked rooms for you.
But first, let's go to the office."

"What office?
We haven't slept since Thursday."

"No, let's go to the office!"

We went there. There was a room.

- So they didn't even let your sleep?
- Bastards!

But when I started talking to them,

I realized that
they were just geeks like me.

We weren't that much different,

except for they seemed to have,
like, no respect for the rules at all,

but I realized that that might've been
culturally dependent, too.

Because I had grown up in a place
where there was a lot of rules,

and they grew up in a place
where probably rules were…

meant to be broken in order to survive.

I can't call myself a hacker.

I'm no hacker.

No, it's not hacking, actually.

But a sort of business.

Right after we came there,
I went to check my e-mail on my server.

The server was physically standing
in the Chelyabinsk office.

I logged in. I had a look.

They were like, "Show us how you hack.
Show us how you do this and that."

We were like,
"What are you talking about?"

They say, "Show us how you hack."

I was trying to do the opposite:
to show them our flash.

Flash was trendy at that time.

They were like, "Yes, that is pretty.
But show us how you hack."

We had a laptop set up
with a keyboard logger on it.

They said, well, let us show you.

We can't do any hacking here
because, you know,

this is America
and we're worried about the FBI.

To which everyone in the room is like…

But what they did is they logged into
their server back in Russia

and pulled down some tools,

to me they weren't actually
very sophisticated tools.

Later on it turned out because
they had done that they'd actually…

we'd captured their password

that they used to log in to their site
to bring their thing down,

which became a big issue
in the case later on.

Later on, when they started
going on and on about bogus money,

I was like, "Okay…

"Guys, you seem to have read
too much about the Russian mafia.

"You have the wrong idea.

"We are just IT guys."

Even though nobody called us IT guys,
just computer guys.

Right after we left that room,

we go down to the parking lot,
and it is all full of police.

All the Washington State Police,
and some came from California.

Gorshkov and Ivanov were immediately
separated and sent to different jails.

They never saw each other again.

Accessing his server on an FBI computer
was Gorshkov's fatal mistake.

Before that, the FBI only had the proof
of Ivanov's guilt.

They accessed this computer
that physically was here, in Chelyabinsk,

in the Russian Federation,

and started copying files
as fast as they could

without understanding what they were.

After that, they went to a judge
to ask for a warrant

to search the computers located in Russia.

But they couldn't obtain this warrant.

It is in Russia,
which is in a different jurisdiction.

Basically, they committed
a crime in Russia.

And a criminal case file
was started in Russia.

About premeditated damage to property
and unauthorized access.

They opened their own case in Russia
against American government

for accessing Gorshkov's data
without his permission.

- Have you heard about it?
- I've heard about it, yes. Yeah.

I have a copy of a headline
on a Moscow newspaper.

What do you think about it?

Well, I think I won't go
on vacation to Russia.

In our file dumpster, they found heaps
of scripts that open someone's e-mail

or close someone else's e-mail.

Several catalogs with titles like
"F…ck eBay."

I don't remember if there was
"F…ck PayPal."

Elon Musk was respected even back then,

so "F…ck PayPal"
might not have been there.

What matters is, there were files
with such names.

I think that's why I lost my case.

When the jury saw that "F…ck,"
they didn't even want to look further.

And they even couldn't understand
what these scripts did.

Data found on Gorshkov's server
enabled the prosecutor

to lay a new accusation against
the hackers.

What they were doing
they were scanning IP addresses

looking for certain port numbers.

Port numbers identified processes
or applications that were running,

and there were some known
vulnerabilities in several of them

and they simply exploited them.

PayPal was not hacked

but what they did was they used

some web-based e-mail companies
to establish e-mail accounts.

They would then associate those accounts
with stolen credit card numbers

and open PayPal accounts
with that information.

They would then purchase goods

either through eBay
or other online merchants,

and pay for them through PayPal
using the stolen credit cards.

Those goods were then
shipped to Kazakhstan.

They had actually built
a very elaborate system

of making use of eBay and PayPal

to launder credit cards
and buy things online.

In some ways I think they were
pioneers in the field.

Oftentimes when you're following
cybercrime, it's like follow the money.

Follow how they're making the money

'cause that's where
you'll see the innovation.

It's like Bitcoin sort of drove
ransomware and things like that.

So, these guys, they were
early to figure that out

and early to really
capitalize on that, so…

Unlike Ivanov, Gorshkov refused
to admit guilt and cooperate

with the investigators.

He faced from 25 to 100 years in prison:
this impressive term

was based on the damage estimated
by the investigators as being $25,000,000:

$500 per stolen card
with 50,000 cards in total.

The defense expert, however, proved
that the investigators

mistook any 16-digit sequences
found by the FBI agents

on the server in Chelyabinsk
for card numbers.

We go to the courtroom.

Ivanov isn't there.

They state the damage.
Twenty-five million.

I can feel my prison reputation
getting a boost. Because it's so…

There comes my expert who,
as I was thinking,

was working not for me
but for the government,

and he says, "Hang on, why did you decide
that these are credit cards?"

At that moment, I got
that he was really working for me.

And the judge goes,
"Do you have any more evidence?"

And that was it. They immediately
wrote off that twenty-five million.

As a result, instead of twenty-five years,

Gorshkov was sentenced to three years,
after which he was deported to Russia.

Prosecutor Schroeder was disappointed.

We were disappointed in the sentence.

We thought it was low.

Judge Coughenour was an interesting man.

He's a federal judge, and he had

worked in an international
organization with Russia

in developing or looking
at the judicial system in Russia.

So, he was fond of Russians,

and he had a lot of sympathy
for these young people

who really didn't have
a lot of opportunity,

where, you know,
buying a used car was a luxury.

He had a lot of sympathy
with that, and he…

He gave Gorshkov
what we thought was a lenient sentence.

This was during the first big
web boom out before the burst,

and there was all these companies
were just exploding.

Technical skills were super valuable.

There were bidding wars
for people with talent.

And, so, to be somewhere,
like, in Chelyabinsk

and see that and not have that…

You know, that could definitely
sort of cloud your mind and go, like,

"Wow, I want a part of that.
How can I become part of that?

Why not me? I may know
more than these guys." So…

That's what I saw from them
and I actually felt bad.

I can understand. You want to do this.

I like to build,
I like to do these things, and it's…

You can't and so here's a way to do it.

And it's unfortunate
this what it ended up.

Having returned to Chelyabinsk,
Gorshkov tried various professions.

In 2010, he decided to run
for the local legislative assembly.

For that, he founded the Townspeople
Social Movement.

This is the focus of attention
for the deputy candidate

Vasily Gorshkov.

Making the residential areas
more comfortable and green.

Controlling the quality
of utility services.

Supporting mothers and children.

YEKATERINA TOMILOVA, A MOM-TO-BE

Gorshkov focuses on mothers' issues.

The issues of single parents,
big and poor families.

We are voting for Vasily Gorshkov.

Mine is the politics of real actions.

For Gorshkov!

For the townspeople!

As expected, Gorshkov lost the election
to the United Russia candidate.

Other attempts to cooperate
with the government

weren't successful either.

That is what I don't like
about our officials and deputies.

I have never hidden my story.
I am not proud of it.

I'm not hiding it because I believe
that I got there by accident.

I really did.

But any time I get in contact
with any state entity,

they say, "Oh, this will come to no good.
Let us think about it," and so on.

Is this like a brand you can't remove?

Yes.

It never goes away.

I think it is double hypocrisy.

The very same people might be saying,
"Yeah, you did great in that story.

You fought back against the Americans."

In the next sentence,
"Hold on, how can we do that?"

Well, you can't.

All that was left from the prison epic
is this box with documents

that Gorshkov managed to take from the USA

and now keeps in his garage.

These are the trial transcriptions.

Here is Gorshkov, the defendant.

Washington. And so on…

Steve Schroeder, Floyd Short.

That's it.

Robert Apgood. He is a good guy.

He was the computer expert.

I have kept all the papers.
I have to arrange them neatly

and then burn them neatly because after
twenty years, if nobody requests them,

you won't be reading them either, guys.

Please, make sure to thank that expert who
did the great job of figuring it all out.

I thought that that expert was against me.

But he eventually showed that
I didn't have the twenty-five million,

as if I had stolen twenty-five million,
I would be sentenced to twenty years.

Quite to the contrary,
he sent money to my family here

because they were in hardship.

He participated in a multi-million
dollar trial, yet he helped,

he sent them some decent money
during that time.

I can't find the proof now,
but they really lived off that.

- Did you ask him?
- I didn't even know about it.

I've never even talked to him.

If he, Rob Apgood, hears this,
I will be sincerely grateful.

He transformed the way I saw people,
Americans included

because when I was on trial,

naturally, I was very angry.

But then I looked at them and thought,
"They're all just people."

This is gifts.

- Yeah, it's very nice.
- Black caviar and vodka.

- Yes, very nice.
- Typical Russian present.

- Yes, very nice.
- It's for Vasiliy Gorshkov.

Vasya was looking at about 25
to 100 years of imprisonment.

ROBERT APGOOD
CYBER SECURITY EXPERT

We did an excellent job as the legal team,

we got it down to three years
with credit for time served.

And he'd already spent 22 months then.

He always struck me
as a very forthright person.

I presented some fairly
damning evidence to him,

and he admitted that he knew
about it, and I thought,

“I got an honest client. That's rare.”

I knew he had a newborn child,
a daughter, I believe.

I spoke to his brother and he said,

“Well, she's having difficulty because she
needs medicine for the baby and whatnot

and they couldn't afford it.” So…

I sent money over to them
to take care of the child.

- Your own money?
- Yes.

- Do you remember how much?
- No.

Doesn't matter.

Did you do these things often
with your clients?

Never before, never since, no.

- Just once with Gorshkov?
- Yes.

Unbelievable.

I don't think children should suffer

because of wrong doings of their parents.

I have a…

strong belief in God.

I'm an ordained minister as well
and have been since 1969.

So, I look at people
from the perspective of

what would a good person do
if God expected them to take action.

And… that's what motivated me.

Gorshkov owes the US Government
over $60,000.

That is the estimated damage
for things bought

under forged accounts and sold in Russia.

A businessman from the Urals,
Andrey Tkachenko,

was among the people who purchased
the goods, no extra questions asked.

We were working with them a lot.

They sold us disks a little cheaper
than the licensed sellers.

But they were still authentic?

Yes. It was evident that they were
from America with all the labels.

And American disks are very different
from European ones, for instance.

It was evident that they came
from America.

I think he also bought phones
on the internet.

Because we had started dealing in phones
by then,

and he also brought us phones.

- For money?
- Yeah. Why not?

Motorola was considered
a good brand back then.

Did you convert, or "encash",
money from PayPal?

We did encash some money.

But the sum wasn't anything
like twenty million.

I, personally, don't care about
those Americans who became his victims.

He stole there and made investments here.

Now, it's the reverse. They steal here
and invest there.

Of course, there is a difference.

If Vasily hadn't gone there,

he would have got a million cards.

He would have handed each Russian
an American card.

"Here! Take it!" It would have been great.

Prosecutor Steve Schroeder,
after retiring,

wrote a book on the Chelyabinsk hacker
case, called The Lure.

You know, this case was a huge deal

for the computer security profession.

- Why?
- Well, because…

The bad guys got caught,
which they often don't,

especially when they're coming
from a foreign country.

And it just turned out well for them.

This was the first large hacking case
that actually went to trial.

What that meant was
that all the evidence was public,

and could be put in a book.

Steve Schroeder,
he wrote a book about this case.

He didn't say nice things about me
but that's okay.

They presented a good case.

They were dispassionate,
they were doing their jobs,

and they did it fairly well.

We just did ours better.

That was the point of the case.

To show… Like, we could stop,
you know, people in Russia

from hacking by capturing them
and arresting them.

So, it was really meant to be
a big statement by the FBI

and they put a lot of thought behind this.

It failed because the case went
to prosecution in September 2001.

You know, soon after that the FBI
sort of shifted priorities to terrorism.

Gorshkov's associate Alexey Ivanov,
after serving his sentence,

stayed in the USA, which is surprising
since they usually deport Russian hackers

with a permanent ban.

We don't know whether he works
for the American company he dreamed of

or for special services.

We couldn't reach Ivanov.

After we contacted him on LinkedIn,
he deleted his account.

I get that he made a deal.

He must have been a valuable expert
for their special services

once he stayed there.

I don't know. And nobody told me
why they didn't let me talk to him.

Why haven't you talked to him since then?

I can't say that I was angry at him
or felt irritation.

Of course, I didn't like some things.

But on a bigger scale,
we just got unlucky.

It could have happened to anyone.

Gorshkov and Ivanov's case was
the FBI's first large investigation

against Russian hackers
in the twenty-first century

despite damages that seem
ridiculously small in our times.

The Americans thought that a show-trial
would stop a growing wave

of cybercrime from post-Soviet countries.

As we know well now, their hopes
weren't destined to be fulfilled.