Vladislav Klyushin Traveled Freely in Europe, Until He Didn’t Travel in Europe Freely

Bloomberg has a fascinating update on the case of Vladislav Klyushin, the guy who ran a pen-testing company for Vladimir Putin extradited to Boston on charges of insider trading last month. It states that Klyushin has (present tense) access to documents on the 2016 Russian hack and suggests he might be leveraged to share this information to get out of the lengthy insider trading sentence he faces.

According to people in Moscow who are close to the Kremlin and security services, Russian intelligence has concluded that Klyushin, 41, has access to documents relating to a Russian campaign to hack Democratic Party servers during the 2016 U.S. election. These documents, they say, establish the hacking was led by a team in Russia’s GRU military intelligence that U.S. cybersecurity companies have dubbed “Fancy Bear” or APT28. Such a cache would provide the U.S. for the first time with detailed documentary evidence of the alleged Russian efforts to influence the election, according to these people.

There’s a problem with this claim, though, at least as stated. The US already has documentary proof that GRU was behind the hack-and-leak. These documents would not be the first. And given the evidence cited in the indictment against Klyushin and Ivan Yermakov, the hacker cited in both this case and two GRU hack-and-leak cases, they collected more information from Yermakov over the last several years.

So such documents must go beyond mere confirmation of GRU’s role, if reports of Kremlin concerns are true.

Some insight about what the US might be after comes elsewhere in the story. It describes that on two earlier occasions, Western intelligence tried to recruit Klyushin.

U.S. and British intelligence tried twice to recruit Klyushin, according to Ciric, the attorney in Switzerland. U.S. intelligence attempted to engage him in summer 2019 in the south of France and British intelligence approached him in March 2020 in Edinburgh, Ciric said.

Klyushin memorialized that second meeting in a note he wrote a few weeks after the encounter and saved on his computer, according to Ciric. It took place at Edinburgh’s airport, as Klyushin was taking a flight back to Russia, according to the memo, which was submitted to the Swiss courts as part of his appeal against extradition. Klyushin wrote that the two British intelligence agents — one from MI5 and the other from MI6 — spoke to him for a few minutes in a room where he was led after a passport check.

The two Russian-speaking officers, a man and a woman, asked him if he would “cooperate” with U.K. secret services and took his phone number to set up a meeting on his next trip to London planned for May, according to the previously unreported document, which was reviewed by Bloomberg. Klyushin wrote that while he didn’t respond to the cooperation offer, he said he would be willing to see the agents again to discuss selling M-13 products to British intelligence.

It’s unclear whether Klyushin informed Russian intelligence about the U.S. and British recruitment efforts.

On top of the detail that US and British intelligence had targeted Klyushin for recruitment (and believed they had some reason to convince him to do so by summer 2019), this reveals that Klyushin has been traveling without arrest in recent years, both after the time in January 2020 that the indictment parallel constructs the investigation start date to, and well after the May 9, 2018 date when the US seems to have pinpointed Yermakov’s phone. It’s a point Klyushin himself made.

While in the Swiss prison, Klyushin told Bloomberg, through his lawyer, that he didn’t know why he was arrested in March and not before, saying that he had previously traveled freely to Europe. He blamed his detention on an “operation mounted by the U.S. in cooperation with Swiss authorities” to obtain “certain confidential information the American authorities consider” he has.

That is, it’s possible that the US waited to arrest him until they were done with their investigation, but these past interactions with western spooks suggest something else was behind the timing of his arrest. Similarly, the explanation offered by the Swiss lawyer — that the US only learned of Klyushin’s trip to Switzerland by an auspiciously timed hack of his phone — makes no sense, given the access to travel records the US would routinely have even without having someone targeted under Section 702, as Klyushin easily could have been.

The story leaves big questions about whether Klyushin wanted to be turned over or not. In addition to the open question about whether Klyushin told Russian authorities about the recruitment attempts, Bloomberg describes that Klyushin’s Swiss lawyer mailed his appeal of the extradition to the European Court of Human Rights rather than faxing it, with the result that the appeal arrived only after he had already been transferred to US custody.

But it’s hard to believe that Klyushin wanted to be extradited when he was arrested last March. That’s because his family returned to Russia at the end of their 10-day luxury vacation, which they wouldn’t have done if Klyushin had been planning to defect to the US (if one can start using the term again). So if Klyushin came to decide he wanted to be extradited over the nine months while he was held in Switzerland, he may have only come to that conclusion upon receiving more details about the charges against him, possibly including details that might expose him to the ire of the Kremlin.

It is true, however, that the Russian-speaking attorney Klyushin hired in Boston, Maksim Nemtsev, is not one of the ones (such as Igor Litvak) that Russian nationals retain when they’re refusing to cooperate; Nemtsev appears appropriate to the insider trading charges against Klyushin.

There may be a better explanation for the timing than an auspicious hack, though. As described, Klyushin’s trip to Switzerland was likely his first trip to a US extradition partner after Merrick Garland was sworn in as Attorney General on March 11, 2021, eight days before FBI obtained the arrest warrant for Klyushin.

And while the US has documentary evidence that GRU did the hack, what they hadn’t yet obtained when DOJ obtained the indictment against Yermakov and other GRU officers in 2018 was something far more important: what Russia did with two sets of data — the campaign strategy and polling information turned over from Paul Manafort and the analytics stolen from Hillary through the entire month of September. There’s certainly reason to believe DOJ knows more now than they did in 2018. Last April (so shortly after the arrest warrant for Kluyshin), Treasury stated as fact that the information Konstantin Kilimnik obtained from Manafort did get shared with Russian intelligence, even while asserting that Kilimnik was himself a spook. But how that information was shared and what happened with it has not been made public.

And those are the kinds of questions you might not raise aggressively until after Trump was gone.

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45 replies
  1. Benvindo Soares says:

    …. recent dialogue sought by Putin ( as reported) jumps out at me at this point ….this all seems so cozy .

  2. David says:

    In the 5th paragraph from the end, it looks like you forgot to go back and add the “possible charges including…”

  3. Bay State Librul says:

    His attorney has a way of words

    ….. ” He is innocent of insider trading and of “hypothetical election meddling.”

    That’s a gooey, chewy mouthful

  4. Ruthie says:

    “So if Klyushin came to decide he wanted to be extradited over the nine months while he was held in Switzerland, he may have only come to that conclusion upon receiving more details about the charges against him, possibly including [end of paragraph]” I’m in suspense – do tell!

    Is it also possible that Klyushin could, if he does cooperate, finger Manafort, or at least elaborate on that part of the story? It’s a tantalizing prospect.

  5. Zirc says:

    As David points out above, you write:
    “So if Klyushin came to decide he wanted to be extradited over the nine months while he was held in Switzerland, he may have only come to that conclusion upon receiving more details about the charges against him, possibly including”

    Possibly including what?

    Zirc

  6. RMD says:

    curious; Bloomberg, Emptywheel, Boston Globe and WSJ have columns reporting on Klyushin…not the NYT or WaPo.

  7. WilliamOckham says:

    This article looks very much like the Russians sending a message to Klyushin. Much of it is sourced to “people in Moscow who are close to the Kremlin and security services”.

    Close enough to leak that email from Ciric to Lavrov.

    Those sources claim the Russians reacted immediately to the arrest and yet don’t point out that Russia waited until after his family was back in Russia before making the fraud accusation and extradition request.

    • emptywheel says:

      I think there’s a lot of mutual dick-wagging going on, yes. As I noted, there’s no reason his family returns if they think he WANTS to be in the US.

  8. MattyG says:

    Great update – one question concerning the final paragraph “….what they hadn’t yet obtained when DOJ obtained the indictment against Yermakov and other GRU officers in 2018 was something far more important: what Russia did with two sets of data — the campaign strategy and polling information turned over from Paul Manafort and the analytics stolen from Hillary through the entire month of September.”

    Does DOJ *know* specifically what Russia did with the two sets of data? I’m unclear if the meaning is – yes DOJ had collected that knowledge since 2018, or No not yet but Klyushin may offer insight, or No DOJ is still in the dark.

    • emptywheel says:

      There’s no public indication they do. My point is it is something that–unlike the proof GRU did this–DOJ may not have.

      • MattyG says:

        Thanks – I think it was the “…had not *yet* obtained…” part that left me wondering if they had or had not obtained anything since 2018. But as you clarified, at least publically DOJ has not *yet* gained this understanding. Foggy bottom…

  9. joel fisher says:

    No about of high end reporting–and this is high end indeed–will ever convince the majority of the GOP in State or Federal elected office to say out loud what they know to be the truth: TFG is a traitor to the US, used his connections with the Rooskies to steal the ’16 election, tried to do it again in ’20, and lied–and induced others to lie–to cover it up. The rank and file GOP scum vary in their view from “didn’t happen” to “don’t care” and very soon they will be relieving the Democrats of the burden of leading the country. Also fair to note, if this were available in ’18, someone was/is covering it up at the Treasury and/or Justice Departments.

    • Anonymouse says:

      Considering all of the republicans that went to Russia on a 4th of July holiday and everything that we have learned about the NRA being used to funnel foreign money into federal political campaigns… I would say that it is far more than TFG that are traitors.

      [Welcome back to emptywheel. Please use the same username each time you comment so that community members get to know you. This is your second known user name. You were here last in October as ‘Wendigo’; I suggest you revert to that because we have another member who’s commented as ‘anonymouse’. Thanks. /~Rayne]

      • Thomas says:

        The Giffords NRA lawsuit. Haven’t heard anything since November, but they should be able to get info on the shell companies involved in laundering that $35 million in Russian mafia money.
        From other sources, it would seem that 12 Republican Senators are among the compromised.
        If they get such material and can implicate Trump and Republicans with it, what do you think they will do?
        Certainly the records NY state has describe the Trump shell companies and perhaps transactions with the NRA shells.
        Aren’t both of the parties (Giffords and NY State) obligated to bring such evidence to the Feds? Treasury? DOJ? IRS? FBI? DNI?

        • bmaz says:

          “Aren’t both of the parties (Giffords and NY State) obligated to bring such evidence to the Feds? Treasury? DOJ? IRS? FBI? DNI?”

          Nope.

        • Thomas says:

          No?
          Lawyers don’t have any such duty?
          IANAL
          But I have this naive belief that officers of the court have an obligation to notify authorities if they observe things like, I don’t know,
          espionage, money laundering, racketeering activities…No? I

        • Thomas says:

          I do appreciate your reply. Thank you.
          If, in the course of civilly suing, a plaintiff uncovers evidence that the defendant committed felonies, CAN they turn that evidence over to the Feds?
          OR, can the Feds watch a civil case, and then collect evidence from publicly disclosed discovery to file a criminal case?

        • earlofhuntingdon says:

          Not mandatory reporters as to their client’s conduct. What about witnessing crimes committed by those not their client?

        • Leoghann says:

          In graduate school, in a clinical administration class, I was taught that the only crime that has a universal reporting requirement across professions is ongoing child sexual abuse.

        • bmaz says:

          As to lawyers who have learned such information in confidence via their clients, I don’t think even that applies. There are ways around direct reporting for lawyers in such situations but, directly, no, don’t do that.

  10. P J Evans says:

    OT: Elizabeth Holmes (of Theranos) has been found guilty on four charges of fraud and conspiracy, innocent on four, and the jury was deadlocked on three charges.

    • P J Evans says:

      details:
      guilty on three counts of criminal wire fraud and one count of conspiracy to commit wire fraud
      not guilty on four counts of defrauding patients
      deadlocked on three counts of wire fraud

        • bmaz says:

          Lol, that says absolutely nothing. The counts will be very likely be sentenced concurrently, and 20 is the maximum on any count. I would be stunned if she even gets ten years. Frankly, I’d argue for probation or home confinement.

        • P J Evans says:

          He was chastising NPR for saying she’d be getting a long sentence (they figured consecutive and maximum). I think he’s expecting maybe 10.

        • earlofhuntingdon says:

          I’d argue that the fraud was knowing, willful, and systemic, that is, fundamental to her fundraising, business plan, and management conduct. Home confinement would be laughable, but it would be more than bankers received for causing the 2007-08 Depression.

        • Peterr says:

          I’m imagining that argument . . .

          Lawyer: “Your honor, the defense requests a sentence comparable to that received by Jamie Dimon.”

          Judge: “Given the relative sizes of Theranos and JPM Chase, I’ll lop a zero off your client’s sentence, and declare that she will receive a bonus of only $2M and not $20M.”

        • joel fisher says:

          Interesting, indeed. I didn’t follow very closely so I don’t know this to be true, but she did testify and and I’m guessing that she justified herself in ways that were false. Any impact on sentencing do you think?

        • bmaz says:

          It “shouldn’t”, because exercising your Constitutional right to testify in your own defense should not be an aggravating factor for sentencing. As to whether she lied or not, I suspect that would be hard to establish. Not to say that the court could not effectively do just that under some other sentencing consideration.

          As to what the guidelines will be, they could be harsh because the total amount found to be established is somewhere around $135 million, and the amount is a huge aggravating factor. I do think she should be able to formally accept responsibility in spite of having testified in her defense. She has already shown some contrition. I do not think she is a danger to society nor a danger to reoffend.

          Do I think she will get a substantial prison term? Yes, I do. I would suspect 10 years give or take. But, I would have zero problem with far less. The US blithely incarcerates far too many people, and doing so is extremely expensive. For Federal prisons in California, it is about $65,000 per year per inmate.

        • earlofhuntingdon says:

          That’s a lot for shoplifting, illegal possession of a controlled substance, unintentionally voting when ineligible, or cheating to get your kid into a better college.

          It’s peanuts for a grand scale fraud that entrapped millions and made it more fashionable for white collar criminals to crime. Didn’t we spill a lot of ink over how many banksters faced no consequences for systemically cheating dozens of states and millions of borrowers? If her sentence induces another similarly ambitious predator to delay or reduce their predation, it would be money well spent.

        • bmaz says:

          Meh, any more than five years is just vindictive and petty. Whether it is five, ten or fifteen adds no more relative deterrence whatsoever.

        • Leoghann says:

          I disagree on her likeliness to reoffend. Based on both her history and her amazing performance on the stand, I’d put it at ~80%. She used exactly the same talents during her testimony as she did when selling people on her (nonperforming) company. If this experience has taught her anything, it’s how to do it better. Besides the obvious examples in the political sphere, some people are serial grifters. Just look at the life of Billie Sol Estes.

    • graham firchlis says:

      Complex trial, prosecution focused mainly on the money because that’s how we roll, but the most impact was the fraud on patients. The jury didn’t see that, a great shame. Over a million Theranos test results were thrown out, while Holmes and the gang were well aware their methodology was not just unreliable but fanciful. Disgusting.

      Blood from a fingerstick is blood from a wound. It is neither clean venous nor clean arterial, and useful only as a coarse screening test for a very few analytes. Repeat frequent finger stick values, such as glucose, can serve a monitoring function, but a reliable diagnostic result can only come from a clean intravascular draw.

      Holmes’ claims were a scam from the start, not remotely possible. Ripping off a bunch of rich fools is one thing, no real harm other than thier pride, but the damage to patients is incalculable. She and Balwani both deserve a long time in Stony Lonesome, more than they are likely to see. May the civil suits wreak havoc with their lives.

      • Bobby Gladd says:

        I have been following the Theranos thing for years. I started my white-collar career as a programmer and QC analyst in a forensic environmental radiochemistry-mixed waste / bioassay lab in Oak Ridge, and have worked in health IT for years. When I first heard of Theranos, it pinned my dubiety meters. Single blood drop aliquots? For doing accurate multi-parameter analytics? Bullshit.

        Fake it till ya break it.

        https://regionalextensioncenter.blogspot.com/search?q=Theranos&max-results=20&by-date=true

        • graham firchlis says:

          Hard to believe all those sophisticated investors didn’t do any due diligence. Any laboratory hematologist would have laughed it off. As much as by the lies, they were fleeced by thier own greed. [See “The Flimflam Man” w/ George C Scott]

          It is the knowing breach of patient trust that frosts me. Sociopath in a pretty package.

  11. mospeck says:

    “..people in Moscow who are close to the Kremlin and security services, Russian intelligence has concluded that Klyushin, 41, has access to documents relating to a Russian campaign to hack Democratic Party servers during the 2016 U.S. election. These documents, they say, establish the hacking was led by a team in Russia’s GRU military intelligence that U.S. cybersecurity companies have dubbed “Fancy Bear” or APT28..”
    Yea Marcy, we’re in rather unusual times with sidewalk scenes and black limousines. Right now I got the fingers crossed for the poor bad luck Kazakhs*
    But it looks like it’s a not to worry since Mother Russia is coming with help. Soon she will be helping all of us poor lost wanderers.
    * “.. people who inhabit the steppes of southern Russia, 1590s, from Russian kozak, from Turkish kazak “adventurer, guerrilla, nomad,” from qaz “to wander..”
    https://www.nytimes.com/2022/01/06/world/asia/kazakhstan-putin-russia.html
    oh man, the man just reminds you of the Lone Ranger from back in the early 60s. vlad and his team of horses will for certain come over top that hill, stop all this lawlessness and reestablish the rule of law. Some will come in planes and boats and busses, lots more in tanks and halftracks, others in MIG 29s and black limousines. It’s just a demonstration of vlad’s awesome economic power, and also the raw innovation that he and his roscosmos team have recently brought to Russian rocket science. Right now seems a lot like the heady days of nikita and Sputnik.
    https://www.youtube.com/watch?v=p9lf76xOA5k
    Lots of planes right now in the vast Kazakh skies, 8 miles high and falling fast
    https://www.youtube.com/watch?v=hTykAKfMSl8

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