Pastor Charged in Global Hacking Scheme Gets $2 Million Bail

  • U.S. prosecutors claimed Korchevsky is a flight risk
  • 80 supporters showed up in Brooklyn for Korchevsky hearing

A Pennsylvania pastor described by prosecutors as the "linchpin" of a global insider-trading scheme was granted bail after his backers urged a judge to allow him to remain free.

At least 80 supporters turned up for Vitaly Korchevsky’s hearing in Brooklyn, New York, Wednesday, prompting U.S. District Judge Raymond Dearie to say he was persuaded to grant bail “given the faith that hundreds of people have put in him.” The judge set bail at $2 million, as requested by Korchevsky’s lawyers.

Korchevsky, 50, is one of nine people charged by federal prosecutors in Brooklyn and Newark, New Jersey, and accused of being part of an alliance of hackers and traders who tapped corporate press releases before they became public and traded on the information. Regulators said the conspiracy netted the group about $100 million. Korchevsky is alleged to have made $17 million.

"The defendant was the linchpin of a sprawling financial and hacking conspiracy that spread two continents and affected markets throughout the world," Brooklyn prosecutors said in a letter to Dearie on Tuesday. The crime has "shaken securities issuers" globally, they said.

Arkadiy Dubovoy, 51, of Alpharetta, Georgia, who is also accused of taking part in the conspiracy, appeared Wednesday in federal court in Newark, where he was indicted. He didn’t enter a plea and a judge ordered him
detained. His lawyer, Michael Diamondstein, said he will request bail later.

Second Accused

Dubovoy had previously appeared in federal court in Georgia after he and his son, Igor, were arrested at their homes in Alpharetta. Prosecutors argued then that he posed a risk of fleeing. A judge ordered him held without bail until his transfer to New Jersey.

In court papers, prosecutors said evidence collected includes forensic images of laptops and computers seized by Ukrainian authorities in November 2012 from two accused hackers, Ivan Turchynov and Oleksandr Ieremenko. They remain at large.

Korchevsky’s lawyer Steven Brill said his client has "dedicated his life" to his church. Born in Kazakhstan, he spent his early years living in the atheist former Soviet Union, where he was beaten for keeping Bibles, Brill said.

Standing silently next to Brill in jail garb, Korchevsky nodded when Dearie asked if he was a "credentialed" minister. Brill said his client holds master’s degrees in divinity and business administration.

Korchevsky has a wife and two children, according to Brill. One of the
properties offered as security for the bail included the pastor’s primary
residence, which was purchased in 2004, and a home owned by his in-laws.

Prominent Figure

In a letter Tuesday, Brill said the pastor is a "prominent figure in the Slavic Baptist Church -- both nationally and worldwide." He is also the chairman of an association of 28 churches and 4,000 members, Brill said.

"He has traveled far and wide to preach to congregations in all parts of the
world," Brill said.

The board of the Slavic Evangelical Baptist Church in Brookhaven, Pennsylvania, about 20 miles (32 kilometers) southwest of Philadelphia, said in an earlier letter to the judge that Korchevsky is a “very respected and connected” member of the community who has served as senior pastor since the church was founded in 2003.

Another federal judge in Brooklyn, Brian Cogan, earlier this month had blocked a Philadelphia judge’s decision to let Korchevsky go free on $100,000 bail after prosecutors claimed the pastor was a flight risk.

Korchevsky is a naturalized U.S. citizen who "retains broad family connections to Ukraine," where suspected hackers who participated in the scheme are thought to be from, prosecutors said in the letter to the judge.

More Assets

Korchevsky had not fully disclosed his assets, according to the prosecutors.
In addition to his home, he also owns nine properties, including eight in
Pennsylvania and one in Georgia, worth about $5 million in total. The
government froze about $5 million of his assets in bank and brokerage accounts, prosecutors said.

"Of the remaining $17 million in profits, Korchevsky appears to have given
generously to the Slavic Baptist Church," prosecutors said in their letter.

The government alleged that hackers siphoned more than 150,000 press releases including corporate data on earnings that could be used to anticipate stock market moves and make profitable trades. The hackers passed the information to associates in America and Ukraine, who allegedly used it to buy and sell shares of dozens of companies.

The case is U.S. v Korchevsky, 15-cr-000381, U.S. District Court, Eastern District of New York (Brooklyn.)

(An earlier version of this story corrected the judge’s name.)

Before it's here, it's on the Bloomberg Terminal. LEARN MORE