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Kremlin-linked Russian businessman faces U.S. trial for hack-and-trade scheme

By Nate Raymond

BOSTON, Jan 30 (Reuters) - A wealthy Russian businessman with ties to the Kremlin faces trial on Monday on U.S. charges that he participated in a vast scheme that generated tens of millions of dollars in illegal trading profits using corporate information stolen through hacking.

Jury selection is scheduled to begin in federal court in Boston in the case of Vladislav Klyushin, 42, who before his arrest in Switzerland in 2021 owned a Moscow-based information technology company with ties to the Russian government.

The three-week trial comes at a low point in U.S.-Russia relations following Russian President Vladimir Putin's invasion of Ukraine last year. And while the case against Klyushin, who has pleaded not guilty, predates the war, his connections to the Kremlin have long intrigued U.S. authorities.

Prosecutors say Klyushin's company, M-13, not only did work for Putin's administration but also employed a former Russian military intelligence officer wanted by the U.S. government for his alleged involvement in hacking schemes aimed at interfering in the 2016 U.S. presidential election.

His lawyer in the Swiss extradition proceedings, Oliver Ciric, has said the real reason Klyushin was sought was his Russian government ties and that U.S. and British intelligence agencies earlier tried to recruit him.

U.S. authorities say the hacker, Ivan Ermakov, while working for Klyushin helped infiltrate the networks of two firms that help publicly traded companies file reports with securities regulators to download yet-to-be-announced financial reports.

Using those stolen earnings reports, Klyushin, Ermakov and three others from 2018 to 2020 agreed to buy and sell stocks for multiple companies including IBM Corp, Snap Inc and Tesla Inc, allowing them to make at least $89 million, prosecutors say.

Klyushin's lawyers say he was already wealthy before the alleged conduct occurred and that the government's evidence linking any trades he placed to the hacked information suffers from "serious flaws."

He has been held without bail since his extradition from Switzerland, with a judge citing his wealth and assets including a nearly $4 million yacht, which prosecutors say he discussed buying at the same time the trading scheme unfolded.

Prosecutors plan to show jurors a photo of the yacht, though U.S. District Judge Patti Saris last week barred them from presenting more pictures of it to avoid "the prejudice of 'here is a super rich oligarch.'" (Reporting by Nate Raymond in Boston; Editing by Alexia Garamfalvi and Daniel Wallis)