1 00:00:00,080 --> 00:00:03,040 Speaker 1: The US government has accused Russia of directing some of 2 00:00:03,080 --> 00:00:06,640 Speaker 1: the world's most notorious cyber criminals to break into half 3 00:00:06,640 --> 00:00:10,440 Speaker 1: a billion accounts at Yahoo in a sweeping criminal conspiracy 4 00:00:10,520 --> 00:00:15,080 Speaker 1: that married illicit profits with intelligence gathering. The federal indictment 5 00:00:15,160 --> 00:00:19,640 Speaker 1: charges to Russian intelligence officers and two hackers with conspiring 6 00:00:19,720 --> 00:00:22,520 Speaker 1: to carry out one of the largest cyber intrusions in 7 00:00:22,680 --> 00:00:25,919 Speaker 1: US history. The government was sending a clear message to 8 00:00:26,000 --> 00:00:29,880 Speaker 1: Moscow that cyber attacks would not be tolerated. Here's Acting 9 00:00:29,880 --> 00:00:34,239 Speaker 1: Assistant Attorney General Mary McCord. The involvement and direction of 10 00:00:34,360 --> 00:00:38,479 Speaker 1: FSB officers with law enforcement responsibilities makes this conduct that 11 00:00:38,560 --> 00:00:42,040 Speaker 1: much more egregious. There are no four free passes for 12 00:00:42,040 --> 00:00:46,600 Speaker 1: foreign state sponsored criminal behavior. The Russians targeted a diverse 13 00:00:46,640 --> 00:00:50,080 Speaker 1: crew from the White House and military officials, two executives 14 00:00:50,080 --> 00:00:53,760 Speaker 1: at banks and global companies. Our guests are and mckennack, 15 00:00:53,840 --> 00:00:56,920 Speaker 1: professor at Penn State Law School, and John reid Stark, 16 00:00:57,240 --> 00:01:00,120 Speaker 1: founder of John reid Stark Consulting and founder of the 17 00:01:00,240 --> 00:01:05,240 Speaker 1: SEC's Office of Internet Enforcement. John. In the announcement, the 18 00:01:05,319 --> 00:01:08,480 Speaker 1: government made its case to the public that Moscow is 19 00:01:08,600 --> 00:01:13,360 Speaker 1: orchestrating criminal hacks with cyber criminals tell us more about 20 00:01:13,480 --> 00:01:18,760 Speaker 1: the Russian cyber spying regime. Sure, Jean, how are you 21 00:01:19,040 --> 00:01:22,800 Speaker 1: this afternoon? And thanks for inviting me to talk to you. Uh. 22 00:01:22,920 --> 00:01:25,080 Speaker 1: You know, when I read this, I thought, like Captain 23 00:01:25,080 --> 00:01:28,280 Speaker 1: Renault and Casablanca. Remember, I'm shocked, shocked to find the 24 00:01:28,360 --> 00:01:32,160 Speaker 1: gambling is going on. It's this kind of hacking in 25 00:01:32,200 --> 00:01:34,000 Speaker 1: this kind of scheme has been going on for quite 26 00:01:34,040 --> 00:01:36,840 Speaker 1: some time, dating back to when I was at the SEC. Remember, 27 00:01:36,920 --> 00:01:39,959 Speaker 1: there have been cyber attacks on the federal government dating 28 00:01:40,000 --> 00:01:42,840 Speaker 1: back that are documented, dating back to two thousand nine, 29 00:01:42,880 --> 00:01:47,119 Speaker 1: two twelves, all over the place and by various different 30 00:01:47,120 --> 00:01:52,160 Speaker 1: state sponsored terrorist regimes. So I don't know that this 31 00:01:52,280 --> 00:01:55,520 Speaker 1: is anything new. But what's amazing is that these people 32 00:01:55,520 --> 00:01:58,400 Speaker 1: were finally caught, and I think the FBI has really 33 00:01:58,440 --> 00:02:00,840 Speaker 1: got to be commended here. I'm sure this investigation took 34 00:02:00,920 --> 00:02:03,480 Speaker 1: quite some time. It's the first time, as far as 35 00:02:03,520 --> 00:02:08,600 Speaker 1: I can tell, that actual Russian intelligence officials were indicted 36 00:02:08,680 --> 00:02:11,000 Speaker 1: right along with the hackers that they had engaged to 37 00:02:11,040 --> 00:02:14,640 Speaker 1: carry on these arts. On that last point, what what 38 00:02:14,800 --> 00:02:17,720 Speaker 1: is the significance of that The fact that for the 39 00:02:17,760 --> 00:02:23,280 Speaker 1: first time Russian FSB agents were included in an indictment. 40 00:02:25,040 --> 00:02:28,639 Speaker 1: It's thanks for having me, folks. It's really it's significant 41 00:02:28,760 --> 00:02:31,560 Speaker 1: just because we've heard so much in the news. Our 42 00:02:31,560 --> 00:02:34,280 Speaker 1: election cycle was filled with these you know, allegations of 43 00:02:34,360 --> 00:02:37,840 Speaker 1: Russian hacking, um and interference with the election, and so 44 00:02:37,919 --> 00:02:40,720 Speaker 1: to see the FBI and the Department of Justice come 45 00:02:40,720 --> 00:02:45,400 Speaker 1: out so clearly with you know, very strong charges both 46 00:02:45,480 --> 00:02:49,799 Speaker 1: based on economic espionage for foreign as well as our 47 00:02:49,840 --> 00:02:53,400 Speaker 1: federal laws for computer fraud and abuse, UM, it's really 48 00:02:54,200 --> 00:02:59,040 Speaker 1: it's significant, and it shows that, you know, they were 49 00:02:59,120 --> 00:03:02,760 Speaker 1: very careful I'm sure before making these charging documents public. 50 00:03:03,320 --> 00:03:07,000 Speaker 1: It shows that they are really ready to back up 51 00:03:07,080 --> 00:03:10,080 Speaker 1: and and to to prosecute this. You know. What's going 52 00:03:10,080 --> 00:03:11,680 Speaker 1: to be the trick here though, is one of the 53 00:03:11,880 --> 00:03:15,200 Speaker 1: one of the hackers involved has already you know, been 54 00:03:15,280 --> 00:03:17,880 Speaker 1: on the list to be extradited from Russia, and Russia 55 00:03:17,919 --> 00:03:20,960 Speaker 1: of course has not extra extradited that hacker. So what 56 00:03:21,040 --> 00:03:23,720 Speaker 1: remains to be seen now is what's the fallout going 57 00:03:23,760 --> 00:03:27,919 Speaker 1: to be for US Russian relations when US demands extradition 58 00:03:28,080 --> 00:03:30,799 Speaker 1: of these two FSB officers. As I think where we're 59 00:03:30,800 --> 00:03:33,360 Speaker 1: really going to see things get sticky, particularly with you know, 60 00:03:33,480 --> 00:03:36,880 Speaker 1: current presidential politics John that that is one of the 61 00:03:36,960 --> 00:03:42,080 Speaker 1: questions here. What if you've got the Russian government involved, 62 00:03:42,160 --> 00:03:46,000 Speaker 1: and you've got hackers who you can extradite, How effective 63 00:03:46,000 --> 00:03:48,440 Speaker 1: can it be to bring indictments and situations like this. 64 00:03:49,760 --> 00:03:52,640 Speaker 1: It's always effective. I don't think it's obviously not as 65 00:03:52,640 --> 00:03:55,680 Speaker 1: effective as getting someone locking them up. But when I 66 00:03:55,760 --> 00:03:59,160 Speaker 1: was at the SEC for eleven years, we chased after 67 00:03:59,240 --> 00:04:01,360 Speaker 1: people and we Jeff only froze their money, but we 68 00:04:01,400 --> 00:04:05,480 Speaker 1: could never, only on very rare occasions, could we orchestrate 69 00:04:05,520 --> 00:04:08,120 Speaker 1: an actual arrest in a foreign country, because there are 70 00:04:08,120 --> 00:04:12,200 Speaker 1: so many issues of just not just judicial committy, but 71 00:04:12,320 --> 00:04:16,120 Speaker 1: also being able to extradite, being able to execute a 72 00:04:16,120 --> 00:04:18,920 Speaker 1: subpoena on someone in a foreign country is a very 73 00:04:18,960 --> 00:04:22,240 Speaker 1: difficult thing. So I think that these these types of 74 00:04:22,240 --> 00:04:25,840 Speaker 1: actions have a tremendous deterrent effect. I realize it's not 75 00:04:25,880 --> 00:04:28,240 Speaker 1: going to stop a lot of actors from doing what 76 00:04:28,279 --> 00:04:31,279 Speaker 1: they're doing, but I think and is exactly right because 77 00:04:31,360 --> 00:04:34,960 Speaker 1: what's so unique here is this prosecution crosses over to 78 00:04:35,040 --> 00:04:38,400 Speaker 1: the political arena. All the matters that I did when 79 00:04:38,400 --> 00:04:41,919 Speaker 1: I was at the SEC many involved foreign nationals, but 80 00:04:42,160 --> 00:04:45,240 Speaker 1: they were never tied explicitly to the government like this. 81 00:04:45,320 --> 00:04:50,760 Speaker 1: So it was essentially a one dimensional prosecutor prosecutorial exercise. 82 00:04:51,120 --> 00:04:53,760 Speaker 1: But now you're also going to going to be engaging 83 00:04:53,760 --> 00:04:56,279 Speaker 1: in the State Department, the Defense Department, the Pentagon, and 84 00:04:56,320 --> 00:04:59,640 Speaker 1: everyone else in helping to track these people down and 85 00:04:59,680 --> 00:05:03,800 Speaker 1: bring a justice. And they targeted a wide range of 86 00:05:03,800 --> 00:05:07,240 Speaker 1: people and companies both here and in Russia. Do we 87 00:05:07,320 --> 00:05:13,039 Speaker 1: know what information they got, what damage they actually did. Yeah, 88 00:05:13,200 --> 00:05:17,159 Speaker 1: we do from the helpful information provided by the Apartment 89 00:05:17,160 --> 00:05:21,080 Speaker 1: of Justice. UM, It's it's fascinating here because Yahoo, when 90 00:05:21,120 --> 00:05:23,719 Speaker 1: this story initially came out back in the fall of 91 00:05:24,920 --> 00:05:27,000 Speaker 1: that there had been a breach, insisted that there was 92 00:05:27,040 --> 00:05:30,440 Speaker 1: a limited amount of personally identifiable information that had been hacked. 93 00:05:31,000 --> 00:05:33,599 Speaker 1: What's clear from these documents released by the Department of 94 00:05:33,640 --> 00:05:38,120 Speaker 1: Justice is that Yahoo's user database was taken as well 95 00:05:38,160 --> 00:05:41,120 Speaker 1: as Yahoo's account management tool. And if you think about that, 96 00:05:41,120 --> 00:05:43,640 Speaker 1: that's like the keys to the you know, candy jar. 97 00:05:44,440 --> 00:05:48,480 Speaker 1: That it enabled, um, these hackers to not just get 98 00:05:48,560 --> 00:05:52,840 Speaker 1: folks you know, names, email addresses, and that kind of information, 99 00:05:52,839 --> 00:05:55,919 Speaker 1: but actually because of the information that was taken using 100 00:05:55,960 --> 00:06:00,560 Speaker 1: this proprietary information that Yahoo had and Yahoo's database UM 101 00:06:00,600 --> 00:06:03,560 Speaker 1: and account management tools these hackers were actually able to 102 00:06:03,560 --> 00:06:06,720 Speaker 1: get into the content of the communications, which is very 103 00:06:06,800 --> 00:06:09,760 Speaker 1: unusual for a hack in the sense of they were 104 00:06:09,800 --> 00:06:13,360 Speaker 1: actually able to read contents of emails from thousands of 105 00:06:13,480 --> 00:06:17,240 Speaker 1: individuals who's you know, communications were hacked. Not only that 106 00:06:17,320 --> 00:06:21,280 Speaker 1: in this case, um, which is in stark contrast to 107 00:06:21,320 --> 00:06:23,640 Speaker 1: what y'ah who said initially for a very long time 108 00:06:23,720 --> 00:06:27,000 Speaker 1: and continued to repeat, we also know that credit card 109 00:06:27,040 --> 00:06:30,040 Speaker 1: and financial information was actually taken and used by one 110 00:06:30,080 --> 00:06:33,760 Speaker 1: of the hackers. He used Yahoo's own account tools to 111 00:06:33,920 --> 00:06:37,760 Speaker 1: gain individuals financial information and credit card informations. And so 112 00:06:37,800 --> 00:06:39,640 Speaker 1: the flip side of this is that we're seeing a 113 00:06:39,720 --> 00:06:43,320 Speaker 1: flew of lawsuits across the country being filed against Yahoo 114 00:06:43,400 --> 00:06:46,560 Speaker 1: by individuals who are claiming their credit card information was compromised. 115 00:06:46,720 --> 00:06:50,120 Speaker 1: We're talking about the federal indictment charging two Russian intelligence 116 00:06:50,160 --> 00:06:53,360 Speaker 1: officers and two hackers with conspiring to carry out we're 117 00:06:53,440 --> 00:06:57,000 Speaker 1: the largest cyber intrusions in US history. Our guests are 118 00:06:57,080 --> 00:07:00,120 Speaker 1: and mchannic, professor at Penn State Law School, and John 119 00:07:00,160 --> 00:07:05,080 Speaker 1: read Stark, founder of John Reid Stark Consulting, and Assistant 120 00:07:05,080 --> 00:07:08,960 Speaker 1: Attorney General. Mary McCord said the charges are unrelated to 121 00:07:09,000 --> 00:07:12,320 Speaker 1: the hacking of the Democratic National Committee and the FBI's 122 00:07:12,360 --> 00:07:18,520 Speaker 1: investigation of Russian interference in the presidential campaign. But could 123 00:07:18,560 --> 00:07:22,360 Speaker 1: what they learned here through their investigation helped them with 124 00:07:22,400 --> 00:07:28,080 Speaker 1: those other investigations. Well, part of this is speculation, but 125 00:07:28,960 --> 00:07:32,440 Speaker 1: there's you know, when we see the strength of this 126 00:07:32,600 --> 00:07:39,680 Speaker 1: indictment against two known Russian intelligence officers, uh, that that 127 00:07:40,680 --> 00:07:43,560 Speaker 1: is probably going to be a very helpful treasure trow 128 00:07:43,760 --> 00:07:47,680 Speaker 1: of information. You know, we this this Russia has long 129 00:07:47,720 --> 00:07:51,679 Speaker 1: been known to work directly with hackers, um and so 130 00:07:52,040 --> 00:07:54,040 Speaker 1: I think that there's probably a lot more to this 131 00:07:54,160 --> 00:07:57,960 Speaker 1: than well, it may not be directly connected, you know, 132 00:07:58,080 --> 00:08:02,720 Speaker 1: just the activities of state spot INSERTD cyber hacking are 133 00:08:02,880 --> 00:08:05,880 Speaker 1: going to reveal lots of useful data. And I'm sure 134 00:08:05,960 --> 00:08:08,400 Speaker 1: John can add to this, and with what he's seen 135 00:08:08,440 --> 00:08:11,640 Speaker 1: at the sec UM just in terms of you know, 136 00:08:12,600 --> 00:08:18,840 Speaker 1: we're seeing a government that's involved in economic espionage against 137 00:08:19,200 --> 00:08:23,000 Speaker 1: the United States citizens and the information really, you know, 138 00:08:23,120 --> 00:08:26,200 Speaker 1: was personal information about the US government officials as well 139 00:08:26,240 --> 00:08:31,400 Speaker 1: as private citizens. John, can you add to that, sure? 140 00:08:31,560 --> 00:08:33,280 Speaker 1: You know, I I totally agree. I think to what 141 00:08:33,360 --> 00:08:35,439 Speaker 1: it what it does is kind of answers the mysteries 142 00:08:35,440 --> 00:08:38,280 Speaker 1: of data breach response. I do a lot of data 143 00:08:38,280 --> 00:08:40,560 Speaker 1: breach response work where you sort of walked into the 144 00:08:40,679 --> 00:08:43,040 Speaker 1: situation and everyone wants to know, well, what were the 145 00:08:43,080 --> 00:08:47,080 Speaker 1: hacker looking for? What were their goals? But here, based 146 00:08:47,080 --> 00:08:50,520 Speaker 1: on the digital forensics and and other inculpatory evidence, you 147 00:08:50,520 --> 00:08:53,360 Speaker 1: can see that the hackers who were enlisted here had 148 00:08:53,360 --> 00:08:56,760 Speaker 1: a broad range of goals. By the one thing they 149 00:08:56,800 --> 00:08:59,440 Speaker 1: wanted to do was to search Yahoo user mail accounts 150 00:08:59,440 --> 00:09:02,319 Speaker 1: for credit art and gift card account numbers. Another thing 151 00:09:02,320 --> 00:09:04,679 Speaker 1: they did was they set up an online marketing scheme 152 00:09:04,720 --> 00:09:10,040 Speaker 1: by manipulating Yahoo search results for erectile dysfunction drugs. And 153 00:09:10,040 --> 00:09:13,360 Speaker 1: I think that demonstrates the range of the use of 154 00:09:13,400 --> 00:09:16,120 Speaker 1: exceltrated data and in the broad range of the the 155 00:09:17,200 --> 00:09:20,920 Speaker 1: hackers attack factor. In other words, it's just like a 156 00:09:20,960 --> 00:09:23,959 Speaker 1: burglar who comes into a home. They rumage through, grab 157 00:09:24,080 --> 00:09:27,440 Speaker 1: anything they can. It might be targeted, it might be not, 158 00:09:27,600 --> 00:09:29,680 Speaker 1: it might not be. They just grab everything they kind, 159 00:09:30,000 --> 00:09:32,000 Speaker 1: they take it away, and then they see what they 160 00:09:32,000 --> 00:09:34,640 Speaker 1: can do with it to monetize it. So whether that 161 00:09:34,720 --> 00:09:37,640 Speaker 1: sheds light on an actual motive of what these hackers 162 00:09:37,679 --> 00:09:41,079 Speaker 1: were doing, certainly the indictment indicates that they had specific 163 00:09:41,120 --> 00:09:44,440 Speaker 1: targets in mind. But the indictment also indicates that these 164 00:09:44,440 --> 00:09:46,719 Speaker 1: guys just grabbed anything they could and then they went 165 00:09:47,040 --> 00:09:49,040 Speaker 1: wound up doing any kind of scheme they could to 166 00:09:49,160 --> 00:09:51,920 Speaker 1: enrich themselves. And what are some of the things we 167 00:09:52,040 --> 00:09:54,400 Speaker 1: don't know yet based on We learned a lot from 168 00:09:54,400 --> 00:09:56,360 Speaker 1: this indictment, but there are a lot of things we 169 00:09:56,400 --> 00:09:59,400 Speaker 1: don't know. Tell us about some of those. So what 170 00:09:59,480 --> 00:10:01,959 Speaker 1: we don't is and I haven't heard the news today, 171 00:10:01,960 --> 00:10:04,560 Speaker 1: but I know the Canadian hacker. One of the hackers 172 00:10:05,000 --> 00:10:07,959 Speaker 1: was a Canadian citizen, and we are waiting to hear 173 00:10:08,240 --> 00:10:11,000 Speaker 1: if he is going to be extradited by the Canadian courts. 174 00:10:11,520 --> 00:10:14,880 Speaker 1: Um appears the US government has requested that One of 175 00:10:14,880 --> 00:10:17,480 Speaker 1: those things I think we can learn from this is 176 00:10:18,480 --> 00:10:23,800 Speaker 1: going forward, how information can be used by state actors 177 00:10:24,280 --> 00:10:28,520 Speaker 1: in terms of, you know, what who are they targeting, 178 00:10:28,520 --> 00:10:30,520 Speaker 1: and what are they targeting? As John pointed out, they 179 00:10:30,559 --> 00:10:33,240 Speaker 1: went in and tried to grab everything. But we know, 180 00:10:33,520 --> 00:10:36,920 Speaker 1: because of the details provided in the indictment that these 181 00:10:36,960 --> 00:10:41,040 Speaker 1: two Russian intelligence officers had specific targets, and not only 182 00:10:41,080 --> 00:10:44,720 Speaker 1: that this conspiracy was an ongoing, evolving process based upon 183 00:10:44,800 --> 00:10:48,319 Speaker 1: information that was discovered. So going forward, we may learn 184 00:10:48,520 --> 00:10:52,240 Speaker 1: more details about individuals in the United States government as 185 00:10:52,280 --> 00:10:57,520 Speaker 1: well as individuals in private industry who were targeted, specifically targeted. 186 00:10:57,600 --> 00:11:00,079 Speaker 1: And when we see that that was directed by I 187 00:11:00,640 --> 00:11:03,400 Speaker 1: Russian intelligence officers, I think we're going to learn a 188 00:11:03,400 --> 00:11:05,840 Speaker 1: lot more. But we don't know those details. We just 189 00:11:05,880 --> 00:11:08,520 Speaker 1: have this, you know, sort of santalizing figure off oh over. 190 00:11:09,720 --> 00:11:14,680 Speaker 1: Individuals contents of their communications were specifically targeted by these 191 00:11:15,120 --> 00:11:18,120 Speaker 1: Russian intelligence officers. So it's going to be interesting to see. 192 00:11:18,160 --> 00:11:20,520 Speaker 1: We don't know where that's going to lead. It's certainly, 193 00:11:20,640 --> 00:11:23,680 Speaker 1: it certainly will be and we'll be talking about it more. 194 00:11:23,840 --> 00:11:26,360 Speaker 1: Thank you both for being on Bloomberg Law. That's and mccannic, 195 00:11:26,400 --> 00:11:29,160 Speaker 1: professor at Penn State Law School, and John reid Stark, 196 00:11:29,200 --> 00:11:33,160 Speaker 1: founder of John Reid Stark Consulting, coming up on Bloomberg Law, 197 00:11:33,200 --> 00:11:36,360 Speaker 1: first in Hawaii then Maryland. A pair of judges halt 198 00:11:36,440 --> 00:11:40,280 Speaker 1: President Donald Trump's revised travel band before it can be enforced.