U.S. Charges Five in Cases Connected to J.P. Morgan Hack--Update

By Christopher M. Matthews, Emily Glazer and Devlin Barrett 

U.S. authorities charged five people Tuesday in the first cases bearing some link to the massive cyberattack on J.P. Morgan Chase & Co. last year.

The men were accused of crimes ranging from securities fraud to money laundering--not with anything directly related to the attack on the bank--but U.S. officials confirmed there was a link.

The names of two of the men arrested Tuesday appeared in an Federal Bureau of Investigation memo circulated last fall that listed several people of interest related to the J.P. Morgan hacking, a person familiar with the matter said. The officials wouldn't elaborate on the connection.

The men were charged in a Manhattan federal court Tuesday. Three were accused of running a pump-and-dump scheme to manipulate stock prices, while the other two were accused of operating an illegal bitcoin operation. Separately, the Securities and Exchange Commission filed civil charges against the three related to the alleged stock manipulation.

Four of the men were arrested in Florida and Israel, while a fifth remains at large. None of the court documents detailed the men's connection to the J.P. Morgan hacking last summer.

The hacking episode ultimately involved the theft of contact information for about 76 million households world-wide. The stolen information included names, phone numbers and email addresses. Such information could be valuable to spammers seeking to target millions of email accounts as part of a scam.

The bank has said hackers failed to obtain detailed personal information such as account numbers, passwords, Social Security numbers or dates of birth.

The hackers were in the bank's networks for about two months undetected, raising concerns about the ability of companies and law enforcement to fend off such attacks, people familiar with the matter have said.

The breach took on political overtones as well. At the time it became public last summer, initial evidence suggested the hacker or hackers may have been located in Russia, prompting speculation that the Russian government could have been seeking to retaliate over diplomatic disputes with the U.S.--a suggestion that was discounted by a number of federal cybersecurity officials.

On Tuesday, law-enforcement agents in Israel arrested Gery Shalon and Ziv Orenstein. Federal prosecutors in Manhattan charged them in an indictment with securities fraud and other charges in connection with what they alleged was a multimillion-dollar pump-and-dump scheme. Mr. Shalon and Mr. Orenstein are Israeli citizens, and the U.S. will seek their extradition, prosecutors said. Prosecutors charged a third man, Joshua Samuel Aaron, who is a U.S. citizen living in Russia and remains at large.

In two separate complaints, New York prosecutors charged Yuri Lebedev and Anthony Murgio with running an unlicensed bitcoin exchange. Both men were arrested at their homes in Florida on Tuesday, prosecutors said. The pair allegedly operated Coin.mx which allowed customers to exchange cash for virtual currency. Messrs.. Lebedev and Murgio allegedly allowed victims of cyberattacks to buy bitcoin to pay ransom to hackers who had seized control of the victims' computers, prosecutors said, allowing hackers to receive the proceeds of their crime.

Messrs. Shalon, Orenstein, Lebedev and Murgio were in custody and couldn't be reached for comment. Mr. Aaron also couldn't be reached for comment.

It wasn't clear whose names appeared on the FBI memo last fall.

Write to Christopher M. Matthews at [e-mail], Emily Glazer at [e-mail] and Devlin Barrett at [e-mail]

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