Who Stole 3.6M Tax Data from South Carolina? – Krebs on Safety


For almost a dozen years, residents of South Carolina have been saved at the hours of darkness by state and federal investigators over who was accountable for hacking into the state’s income division in 2012 and stealing tax and checking account data for 3.6 million individuals. The reply might now not be a thriller: KrebsOnSecurity discovered compelling clues suggesting the intrusion was carried out by the identical Russian hacking crew that stole of tens of millions of fee card information from massive field retailers like Dwelling Depot and Goal within the years that adopted.

Questions on who stole tax and monetary information on roughly three quarters of all South Carolina residents got here to the fore final week on the affirmation listening to of Mark Keel, who was appointed in 2011 by Gov. Nikki Haley to go the state’s regulation enforcement division. If accredited, this is able to Keel’s third six-year time period in that function.

The Related Press reviews that Keel was cautious to not launch many particulars concerning the breach at his listening to, telling lawmakers he is aware of who did it however that he wasn’t prepared to call anybody.

“I feel the truth that we didn’t provide you with a complete lot of individuals’s data that acquired breached is a testomony to the work that individuals have completed on this case,” Keel asserted.

A ten-year retrospective revealed in 2022 by The Put up and Courier in Columbia, S.C. stated investigators decided the breach started on Aug. 13, 2012, after a state IT contractor clicked a malicious hyperlink in an e-mail. State officers stated they discovered concerning the hack from federal regulation enforcement on October 10, 2012.

KrebsOnSecurity examined posts throughout dozens of cybercrime boards round that point, and located just one occasion of somebody promoting massive volumes of tax information within the 12 months surrounding the breach date.

On Oct. 7, 2012 — three days earlier than South Carolina officers say they first discovered of the intrusion — a infamous cybercriminal who goes by the deal with “Rescator” marketed the sale of “a database of the tax division of one of many states.”

“Checking account data, SSN and all different data,” Rescator’s gross sales thread on the Russian-language crime discussion board Embargo learn. “If you buy all the database, I will provide you with entry to it.”

Per week later, Rescator posted an analogous provide on the unique Russian discussion board Mazafaka, saying he was promoting data from a U.S. state tax database, with out naming the state. Rescator stated the info uncovered included employer, identify, tackle, cellphone, taxable revenue, tax refund quantity, and checking account quantity.

“There’s a number of data, I’m able to promote all the database, with entry to the database, and in components,” Rescator informed Mazafaka members. “There’s additionally data on company taxpayers.”

On Oct. 26, 2012, the state introduced the breach publicly. State officers stated they have been working with investigators from the U.S. Secret Service and digital forensics specialists from Mandiant, which produced an incident report (PDF) that was later revealed by South Carolina Dept. of Income. KrebsOnSecurity sought remark from the Secret Service, South Carolina prosecutors, and Mr. Keel’s workplace. This story will probably be up to date if any of them reply.

On Nov. 18, 2012, Rescator informed fellow denizens of the discussion board Verified he was promoting a database of 65,000 information with checking account data from a number of smaller, regional monetary establishments. Rescator’s gross sales thread on Verified listed greater than a dozen database fields, together with account quantity, identify, tackle, cellphone, tax ID, date of start, employer and occupation.

Requested to supply extra context concerning the database on the market, Rescator informed discussion board members the database included monetary information associated to tax filings of a U.S. state. Rescator added that there was a second database of round 80,000 firms that included social safety numbers, names and addresses, however no monetary data.

The AP says South Carolina paid $12 million to Experian for identification theft safety and credit score monitoring for its residents after the breach.

“On the time, it was one of many largest breaches in U.S. historical past however has since been surpassed drastically by hacks to Equifax, Yahoo, Dwelling Depot, Goal and PlayStation,” the AP’s Jeffrey Collins wrote.

Because it occurs, Rescator’s prison hacking crew was instantly accountable for the 2013 breach at Goal and the 2014 hack of Dwelling Depot. The Goal intrusion noticed Rescator’s cybercrime retailers promoting roughly 40 million stolen fee playing cards, and 56 million playing cards from Dwelling Depot clients.

Who’s Rescator? On Dec. 14, 2023, KrebsOnSecurity revealed the outcomes of a 10-year investigation into the identification of Rescator, a.ok.a. Mikhail Borisovich Shefel, a 36-year-old who lives in Moscow and who not too long ago modified his final identify to Lenin.

Mr. Keel’s assertion that by some means the efforts of South Carolina officers following the breach might have lessened its influence on residents appears unlikely. The stolen tax and monetary information seems to have been offered overtly on cybercrime boards by one of many Russian underground’s most aggressive and profitable hacking crews.

Whereas there aren’t any indications from reviewing discussion board posts that Rescator ever offered the info, his gross sales threads got here at a time when the incidence of tax refund fraud was skyrocketing.

Tax-related identification theft happens when somebody makes use of a stolen identification and Social Safety quantity (SSN) to file a tax return in that individual’s identify claiming a fraudulent refund. Victims normally first study of the crime after having their returns rejected as a result of scammers beat them to it. Even those that should not required to file a return will be victims of refund fraud, as can those that should not really owed a refund from the U.S. Inside Income Service (IRS).

In response to a 2013 report from the Treasury Inspector Common’s workplace, the IRS issued almost $4 billion in bogus tax refunds in 2012, and greater than $5.8 billion in 2013. The cash largely was despatched to individuals who stole SSNs and different data on U.S. residents, after which filed fraudulent tax returns on these people claiming a big refund however at a special tackle.

It stays unclear why Shefel has by no means been formally implicated within the breaches at Goal, Dwelling Depot, or in South Carolina. It could be that Shefel has been indicted, and that these indictments stay sealed for some motive. Maybe prosecutors have been hoping Shefel would determine to go away Russia, at which level it will be simpler to apprehend him if he believed nobody was on the lookout for him.

However all indicators are that Shefel is deeply rooted in Russia, and has no plans to go away. In January 2024, authorities in Australia, the USA and the U.Ok. levied monetary sanctions in opposition to 33-year-old Russian man Aleksandr Ermakov for allegedly stealing information on 10 million clients of the Australian medical insurance big Medibank.

Per week after these sanctions have been put in place, KrebsOnSecurity revealed a deep dive on Ermakov, which discovered that he co-ran a Moscow-based IT safety consulting enterprise together with Mikhail Shefel referred to as Shtazi-IT.

A Google-translated model of Shtazi dot ru. Picture: Archive.org.


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