Thu, Mar 21, 2019 - Page 9 News List

What JPMorgan hack suspect might offer to help US authorities

Gery Shalon could provide US prosecutors with a road map to Russian cybercrimes, money laundering

By Helena Bedwell, Christian Berthelsen and Michael Riley  /  Bloomberg

Illustration: Mountain People

He is the accused mastermind of one of the biggest hacks ever. He and his crew allegedly pilfered information from more than 80 million JPMorgan Chase & Co clients and ran online gambling, stock manipulation and money-laundering schemes around the world.

Gery Shalon, charged with those crimes four years ago, has rarely appeared in court since he was extradited to the US. Now it is clear why: Shalon is helping US authorities, people familiar with the matter said.

Such cooperation could result in anything from a lighter sentence to outright release. That would be a remarkable turnabout for a man whom then-US attorney general Loretta Lynch accused of netting hundreds of millions of US dollars from “one of the largest thefts of financial-related data in history.”

Because authorities singled out Shalon as the brazen scheme’s leader, he would have to deliver something important to chip away at his 23 counts, several of them carrying potential 20-year prison terms.

While the precise nature of his cooperation is not clear, Shalon intersected with worlds that later came under the glare of some of US history’s most politically charged investigations.

An Israeli citizen, he allegedly teamed up with a Russian hacker who is now also in US custody, raising the prospect that Shalon could provide US prosecutors with a road map to Russian cybercrimes, how criminal hackers interact with that nation’s intelligence services, or both.

Other alleged Russian cybercriminals have been brought to the US and charged, among them potential cooperators.

Judging by the range of activities outlined in Shalon’s indictment, he might also be able to act as a guide into criminal spheres such as international money laundering.

A release of Shalon would be “pretty extreme,” said Rebecca Roiphe, a professor at New York Law School and former Manhattan prosecutor who is not involved in the case. “He must be giving up somebody who is far more culpable than him, either in this crime or in a coordinated crime, to get that deal.”

If he is cooperating, “there may be something coming down the road that will answer this riddle,” she added.

A spokesman for the US attorney’s office in Manhattan declined to comment.

A lawyer for Shalon did not respond to requests for comment.

LIGHT SENTENCE?

The prospect of a light sentence for Shalon was raised recently by his father, Shota Shalelashvili, a lawmaker in the Republic of Georgia.

In an interview on Georgian television last month, Shalelashvili hinted that his son could soon be released from US custody after explaining how he carried out the hack and repaying “millions” in stolen money.

Shalon has been allowed to remove his home monitoring device, his father told Georgian television, indicating he was at some point allowed to move from jail to home confinement.

Shalelashvili did not respond to requests to comment about the TV report.

Shalon’s alleged hacking conspiracy had tentacles across a wide swath of the global financial system and encompassed identity theft, pump-and-dump frauds, illegal Internet casinos and money transfers via an illegal cryptocurrency exchange. Victims of the hack included Fidelity Investments, E-Trade Financial Corp and Dow Jones & Co.

The breach of sensitive systems inside JPMorgan was so vast that US intelligence officials initially feared there might be a connection to Russian spy agencies, and they provided the FBI with evidence of possible links, according to a US law enforcement official.

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