Russian Cyber-Fraud Orchestrator Gets 3-Year Prison Term

A Russian national was sentenced to three years in U.S. prison for being part of a cyber-fraud scheme from Europe that illegally gained computer access to bank accounts via websites claiming to offer goods and merchandise.

Vladimir Zdorovenin, 55, pleaded guilty in federal court in Manhattan in February to a count of conspiracy and a count of wire fraud. Federal prosecutors alleged that a scheme from 2004 to 2005 in Russia, Zdorovenin, his son, Kirill, and others preyed on U.S. consumers who believed the unauthorized charges were for legitimate goods.

Zdorovenin’s lawyer, Sabrina Shroff today asked the judge to impose a term of for 24 months in prison while prosecutors said a term between 51 to 63 months was appropriate.

U.S. District Judge Paul Gardephe in Manhattan said before he imposed his sentence that a lesser term was appropriate because he believed the defendant didn’t have the technical expertise which Kirill Zdorovenin, the defendant’s son, had to commit the fraud scheme.

“In my mind, he poses little or no risk of recidivism and I believe that his involvement in the scheme was aberrational and undoubtedly conducted at the volition of the son,” Gardephe said. “There is no evidence that the defendant was involved in the technical aspects of the fraud or understood how his son was obtaining the information.”

Leniency Request

The judge said he believed a term of imprisonment was necessary because the defendant, instead of rebuffing his son from involvement in the scheme, joined him.

Zdorovenin asked for leniency from the court saying his youngest child, a 5-year-old boy in Russia, needed his father.

“I’m very sorry your honor,” Zdorovenin said. “I want to ask you for leniency for my family because they are forced to be punished. They will suffer more than I will. The lessons I have learned will be with me for the rest of my life.”

Zdorovenin has been in U.S. custody since he was extradited to New York after his arrest in Zurich in 2011. His son, Kirill, who the U.S. says was part of the scheme, remains at large, prosecutors said.

Financial Services

Prosecutors alleged that the Zdorovenins and unidentified accomplices controlled U.S.-registered companies Sofeco LLC, Pintado LLC and Tallit LL that appeared to be legitimate Internet merchants which sold legitimate goods.

The defendants both took unauthorized charges on customers’ credit cards, prosecutors said. They also got credit card numbers by either buying them from unidentified people who had obtained them illegally or by using computer programs that were surreptitiously installed on victims’ computers, the U.S. alleged.

Zdorovenin pleaded guilty to engaging in a scheme with his son from June 2004 to February 2005 to access financial services accounts of U.S. victims and attempted to transfer hundreds of thousands of dollars into bank accounts they controlled at JPMorgan Chase & Co. and a company identified in the indictment as Asia Europe America’s Bank, prosecutors said.

The defendants also maintained a financial services account at Ameritrade Inc. and bought and sold securities in publicly traded companies through a business called Rim Investment Management Ltd., prosecutors said.

Securities Fraud

The Zdorovenins were accused of committing securities fraud by purchasing and selling thousands of shares of securities of companies, including Terayon Communications Systems Inc. and Internet Capital Group Inc., by trading in the accounts of U.S. victims, prosecutors said.

The Zdorovenins bought and sold securities in the same companies in their Rim account at Ameritrade, manipulating and earning profits they wouldn’t otherwise have made, the U.S. said.

The indictment alleges that in July 2004 both Zdorovenins participated in meetings with unidentified co-conspirators in Cyprus. Those co-conspirators transferred almost $300,000 from a financial services account of a person in the U.S. to a bank account controlled by Vladimir and Kirill Zdorovenin, the government said.

The case is U.S. v. Zdorovenin, 07-cr-00440, U.S. District Court, Southern District of New York (Manhattan).

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