An Estonian man was sentenced today to 66 months in prison for his years-long role in furthering and facilitating computer intrusions, the movement of fraudulently obtained goods and funds, and the monetization of stolen financial account information. He also participated in ransomware attacks causing over $53 million in losses and was ordered to pay over $36 million in restitution.
According to court documents, Maksim Berezan, 37, of Estonia, who was apprehended in Latvia and extradited to the United States, pleaded guilty in April 2021 to conspiracy to commit wire fraud affecting a financial institution and conspiracy to commit access device fraud and computer intrusions. Berezan was an active member of an exclusive online forum designed for Russian-speaking cybercriminals to gather safely and exchange their criminal knowledge, tools, and services. From 2009 through 2015, Berezan not only furthered the criminal aims of the forum, but he also worked closely with forum members and other cybercriminals for purposes of obtaining and exploiting stolen financial account information.
“This case is a prime example of how the Department of Justice can leverage its traditional tools – criminal investigations and prosecutions – to combat ransomware,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. “Many of the world’s ransomware players began as fraudsters engaged in other types of online crimes, and this case demonstrates that their crimes will catch up to them. The United States is committed to working with its international partners to hold cybercriminals accountable.”
“Cybercrime has become increasingly more sophisticated, but so have our methods for combatting it,” said U.S. Attorney Jessica D. Aber for the Eastern District of Virginia. “Ransomware attacks are devastating to people and organizations alike, and we have honed our strategies and techniques to target both the individual actors who perpetrate these attacks and the networks that support them. This case is just one example of how EDVA and the Justice Department are tackling this threat.”
“The Secret Service remains committed to ensuring that modern conveniences of today that facilitate our lawful transactions and economic health are not leveraged by criminals for illicit activity and personal gain,” said Special Agent in Charge Matthew Stohler of the U.S. Secret Service. “While we have long been in the business of protecting money, from the earliest days of coins and paper, to plastic, and today’s more accessible and commonplace digital currencies, we also remain in parallel footprint to the evolution of criminal behavior into cyberspace. Ransomware thieves are not safe in any dark corner of the internet in which they may think they can hide from our highly trained investigators and law enforcement partners worldwide. Together with our critical partners we are dedicated to protecting the public and securing every iteration of our money and every part of our national financial infrastructure.”
According to court documents, following Berezan’s arrest, investigators uncovered within his electronic devices evidence of his involvement in ransomware activities. The post-extradition investigation determined that Berezan had participated in at least 13 ransomware attacks, seven of which were against U.S. victims, and that approximately $11 million in ransom payments flowed into cryptocurrency wallets that he controlled. Berezan used his ill-gotten gains to purchase two Porsches, a Ducati motorcycle, and an assortment of jewelry. In addition, authorities recovered from Berezan’s residence currency worth more than $200,000 and electronic devices storing passphrases to bitcoin wallets that contained bitcoin worth approximately $1.7 million, which has been forfeited.
Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division; U.S. Attorney Jessica D. Aber for the Eastern District of Virginia; Special Agent in Charge Matthew Stohler of the Washington Field Office of the U.S. Secret Service and Special Agent in Charge Jason Kane of the Criminal Investigative Division of the U.S. Secret Service made the announcement.
Senior Trial Attorney Laura Fong and Trial Attorney Alison Zitron of the Criminal Division’s Computer Crime and Intellectual Property Section, and Assistant U.S. Attorneys Alexander P. Berrang, Jonathan Keim, and Zoe Bedell of the Eastern District of Virginia prosecuted the case.
The Justice Department’s Office of International Affairs provided vital assistance. The Department of Justice extends its gratitude to authorities in Estonia and Latvia for their significant cooperation and assistance, in particular, the Latvian State Police and Estonian Police.
- [Protest of Navy Contract Award for Engineering Support Services]
September 17, 2021A firm protested a Navy contract award for engineering support services, contending that the Navy: (1) improperly failed to conduct a cost realism analysis of the awardee’s proposal; (2) did not evaluate the risk posed by the awardee’s use of uncompensated overtime; (3) technical evaluation was inconsistent with the stated evaluation criteria; and (4) did not conduct a cost/technical trade-off analysis in selecting the awardee’s bid. GAO held that: (1) it would consider the protest of the Navy’s cost realism analysis in a future decision; (2) there was no evidence that the awardee proposed the use of uncompensated overtime; (3) the Navy reasonably evaluated the bids in accordance with the stated evaluation criteria; and (4) the Navy was not required to conduct a cost/technical trade-off analysis, since the contract award was based solely on bid price. Accordingly, the protest was dismissed.
- Federal Court Permanently Shuts Down Chicago Tax Preparer
August 20, 2021A federal court in the Northern District of Illinois has permanently enjoined a Chicago, Illinois, tax return preparer from preparing returns for others and from owning or operating any tax return preparation business in the future.
- Father and Son Convicted of $1.7 Million COVID-19 Relief Fraud
March 17, 2022A federal jury in the Western District of North Carolina convicted two men today for the submission of fraudulent loan applications seeking more than $1.7 million in forgivable Paycheck Protection Program (PPP) loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief and Economic Security (CARES) Act.
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- Science & Tech Spotlight: Advanced Plastic Recycling
September 14, 2021Why This Matters Plastic waste in the U.S. has grown tenfold from 1970 to 2018, while recycling rates have remained low. Mounting plastic waste in landfills and oceans can contaminate ecosystems and adversely affect human health and wildlife. Chemical recycling technologies have the potential to improve plastic recycling, but several challenges remain. The Technology What is it? Plastics are found in many everyday items—including food packaging, water bottles, bags, and appliances. They are largely made from fossil fuel-based chemicals combined with various additives—such as stabilizers or flame retardants—to achieve a desired result (e.g., strength, rigidity, color, heat resistance). The majority of plastic waste in the U.S. ends up in landfills, with a relatively small portion incinerated and an even smaller portion recycled. The accumulating plastic waste in landfills generally does not biodegrade or break down. Figure 1. Methods of plastic waste disposal in the U.S. Plastic recycling technologies reprocess or remanufacture plastic waste for reuse. Currently, the dominant technology for plastic recycling is mechanical recycling, which uses physical processes—such as sorting, grinding, washing, separating, drying, and re-granulating—to recover plastics that can be substituted for virgin, or new, plastics. However, mechanical recycling technology is expensive, labor intensive, and generally results in lower quality plastics than virgin plastics. Consequently, industry is considering advanced recycling technologies— namely, chemical recycling—as an alternative or complement to mechanical recycling. Chemical recycling technologies use heat, chemical reactions, or both, to recycle used plastic into virgin-equivalent plastic, fuel, or other chemicals. In addition, recent advances in sorting technology—one of the physical processes common to both chemical and mechanical recycling technologies—may also increase the efficiency of chemical recycling and lead to increased plastic recycling. For example, artificial intelligence technologies have the potential to increase automated sorting efficiency. Similarly, another advanced technology efficiently sorts materials by identifying their molecular vibrations. How does it work? Chemical recycling can promote a closed-loop system, known as a circular economy, wherein plastics are reused rather than discarded in landfills or incinerated. There are three general categories of chemical recycling technologies: conversion, decomposition, and purification. Figure 2. Closed-loop chemical recycling Conversion focuses on converting polymers—long-chain hydrocarbon molecules built from smaller repeating units called monomers—in mixed or sorted plastics into smaller molecules. This can occur through a variety of techniques, including pyrolysis and gasification. Pyrolysis, sometimes called “plastics to fuel,” turns plastic waste into a synthetic crude oil that can be refined into diesel fuel, gasoline, heating oil, or waxes. This process involves heating the plastic waste to high temperatures (300-900°C) in the absence of oxygen. Different forms of pyrolysis use different temperatures, pressures, and processing times. Gasification also heats plastic waste to high temperatures (500- 1300°C) in a low-oxygen environment to convert plastic waste to synthesis gas, or “syngas.” Syngas—a fuel mixture containing mainly hydrogen and carbon monoxide—can be combusted for electric power generation or converted into other fuels or chemicals, such as ethanol and methanol. Decomposition breaks down polymers in sorted plastics into monomers to produce new plastics. This decomposition can be done with heat or chemicals. Chemical decomposition uses solvents to break the polymers into monomers. Some decomposition technologies use enzymes to break down polymers at temperatures as low as room temperature, resulting in less energy consumption. Purification uses solvents to separate polymers from additives or contaminants. Unlike other types of chemical recycling, purification does not break or modify the polymer. Purification may be used with mixed or sorted plastics. How mature is it? While technologies such as pyrolysis and gasification are mature, their use in plastic recycling is relatively new, due in part to the low cost of virgin plastic material and the challenges associated with recycling contaminated or complex plastic products. Conversion is currently the most mature of the chemical recycling technologies, with several companies using pyrolysis, and at least one company using gasification on a commercial scale. Several companies are also developing, or are in the initial phases of piloting, thermal and chemical decomposition. Purification is the least mature chemical recycling technology, although research into it is ongoing. Advanced sorting technologies vary in maturity, with molecular vibrations for material identification already in use, and artificial intelligence sorting still under development. Opportunities Resource conservation. Chemical recycling can produce raw materials of virgin quality, thereby decreasing demand for fossil fuels and other natural resources. Reduced landfill use. A significant amount of plastic waste ends up in landfills. New technologies could reduce the need for landfills, which may reduce the release of harmful chemicals into the environment. New markets. Developing advanced recycling technologies could promote domestic business and employment. Chemical recycling creates a market for plastic waste and a new way to reuse some plastics. Challenges Adoption hurdles. Companies looking to use chemical recycling may face several hurdles, including process and technology challenges, high startup and operating costs, underdeveloped domestic markets for recycled products, and limited incentives for recycling innovation and investment. Suitability. Chemical recycling may not be suitable for all types of plastic, particularly when polymer chains are irreversibly bonded together. Competition. Virgin plastics are typically cheaper to produce than recycled plastics, in part due to transportation costs and limited recycling infrastructure, making it hard for recycling processes to compete. Policy Context & Questions With the volume of plastic waste expected to grow over time, some key questions for policymaker consideration include: What steps could the federal government, states, and other stakeholders take to further incentivize chemical recycling rather than disposal? What are the potential benefits and challenges of these approaches? What steps could policymakers take to support a transition toward a circular economy, including innovation and investment in manufacturing and recycling capacity? What might policymakers do to promote advanced recycling technologies while also reducing the hazards associated with existing plastic production and recycling methods? For more information, contact: Karen L. Howard at (202) 512-6888 or firstname.lastname@example.org.
- Priority Open Recommendations: General Services Administration
May 26, 2021What GAO Found In May 2020, GAO identified eight priority recommendations for the General Services Administration (GSA). Since then, GSA has implemented four of those recommendations by, among other things, seeking authority to loan agencies funds for tenant improvement costs that would otherwise be financed as part of new leases, developing a tool to evaluate design choices, and taking steps to ensure consistent implementation and oversight of cybersecurity risk-management activities and ensure an effective agency-wide view for managing risk. In May 2021, GAO noted four remaining priority recommendations for GSA, which fall into the Federal Real Property Management area. These recommendations involve: improving decision-making related to the Department of Homeland Security’s headquarters consolidation by completing a comprehensive needs assessment and cost and benefits analysis and updating cost and schedule estimates for the remaining portions of the consolidation project and viable alternatives, addressing the accuracy of publicly available street address information in GSA’s real-property database, and addressing the reliability of information used to calculate reported cost savings for GSA’s broker program. GSA’s continued attention to these issues could lead to significant improvements in federal real property management—a high-risk area that GAO has identified as needing transformation to address economy, efficiency, or effectiveness challenges. Why GAO Did This Study Priority open recommendations are the GAO recommendations that warrant priority attention from heads of key departments or agencies because their implementation could save large amounts of money; improve congressional and/or executive branch decision-making on major issues; eliminate mismanagement, fraud, and abuse; or ensure that programs comply with laws and funds are legally spent, among other benefits. Since 2015 GAO has sent letters to selected agencies to highlight the importance of implementing such recommendations. For more information, contact David Trimble at (202) 512-2834 or email@example.com.
- Afghanistan Security: Lack of Systematic Tracking Raises Significant Accountability Concerns about Weapons Provided to Afghan National Security Forces
September 21, 2021The Department of Defense (Defense), through its Combined Security Transition Command-Afghanistan (CSTC-A) and with the Department of State (State), directs international efforts to train and equip Afghan National Security Forces (ANSF). As part of these efforts, the U.S. Army Security Assistance Command (USASAC) and the Navy spent about $120 million to procure small arms and light weapons for ANSF. International donors also provided weapons. GAO analyzed whether Defense can account for these weapons and ensure ANSF can safeguard and account for them. GAO reviewed Defense and State documents on accountability procedures, reviewed contractor reports on ANSF training, met with U.S. and Afghan officials, observed accountability practices, analyzed inventory records, and attempted to locate a random sample of weapons.Defense did not establishclear guidance for U.S. personnel to follow when obtaining, transporting, and storing weapons for the Afghan National Security Forces, resulting in significant lapses in accountability. While Defense has accountability requirements for its own weapons, including serial number tracking and routine inventories, it did not clearly specify whether they applied to ANSF weapons under U.S. control. GAO estimates USASAC and CSTC-A did not maintain complete records for about 87,000, or 36 percent, of the 242,000 U.S.-procured weapons shipped to Afghanistan. For about 46,000 weapons, USASAC could not provide serial numbers, and GAO estimates CSTC-A did not maintain records on the location or disposition of about 41,000 weapons with recorded serial numbers. CSTC-A also did not maintain reliable records for about 135,000 weapons it obtained for ANSF from 21 other countries. Accountability lapses occurred throughout the supply chain and were primarily due to a lack of clear direction and staffing shortages. During our review, CSTC-A began correcting some shortcomings, but indicated that its continuation of these efforts depends on staffing and other factors. Despite CSTC-A’s training efforts, ANSF units cannot fully safeguard and account for weapons and sensitive equipment. Defense and State have deployed hundreds of trainers and mentors to help ANSF establish accountability practices. CSTC-A’s policy is not to issue equipment without verifying that appropriate supply and accountability procedures are in place. Although CSTC-A has not consistently assessed ANSF units’ ability to account for weapons, mentors have reported major accountability weaknesses, which CSTC-A officials and mentors attribute to a variety of cultural and institutional problems, including illiteracy, corruption, and unclear guidance. Further, CSTC-A did not begin monitoring the end use of sensitive night vision devices until 15 months after issuing them to Afghan National Army units.
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- Imminent Danger Pay: Actions Needed Regarding Pay Designations in the U.S. Central Command Area of Responsibility
August 24, 2021What GAO FoundThe Department of Defense (DOD) obligated more than $1 billion in imminent danger pay from fiscal years 2010 through 2013 in the U.S. Central Command’s area of responsibility, excluding Afghanistan, according to data from the military services. In June 2011, the Office of the Under Secretary of Defense for Personnel and Readiness requested the geographic Combatant Commands to assess existing imminent danger pay areas. The last such review had been completed in 2007. In January 2013, the U.S. Central Command recommended terminating imminent danger pay designations in many locations within its area of responsibility. However, the Office of the Under Secretary of Defense for Personnel and Readiness had not completed its current review or made a decision as of December 20, 2013, when we transmitted a draft of our report to DOD. DOD’s guidance on imminent danger pay requires a periodic review but neither specifies the frequency with which periodic reviews must be completed, nor stipulates a time frame by which the Office of the Under Secretary of Defense for Personnel and Readiness should render a final decision regarding the findings of the review. The Standards for Internal Control in the Federal Government highlights, among other things, the importance of management-led reviews and clear policies and procedures as well as assurance that the findings of reviews are promptly resolved. In the absence of clear procedures and policies specifying time frames for the Office of the Under Secretary of Defense for Personnel and Readiness to complete reviews of imminent danger pay area designations and render a final decision, DOD is spending millions of dollars annually for imminent danger pay in areas within U.S. Central Command’s area of responsibility that may not warrant this designation.Why GAO Did This StudyDOD relies on forward-stationed or rotationally deployed forces, bases and infrastructure, and host nation agreements to execute its mission around the world. This combination of forces, footprint, and agreements constitutes DOD’s defense posture in a given geographic region.In December 2012, GAO began work reviewing DOD’s posture in the Middle East and Southwest Asia, as part of series of reports examining DOD’s global defense posture initiatives in response to direction from the Senate Appropriations Committee. As part of this review on posture in the Middle East and Southwest Asia, GAO examined posture costs in the U.S. Central Command’s area of responsibility–including special pays, such as imminent danger pay, and benefits for service members who are assigned, deployed, or on temporary duty travel. In the course of that review, GAO identified issues related to DOD’s process for reviewing and making decisions on imminent danger pay area designations, with regard to the U.S. Central Command’s area of responsibility.To conduct this work, GAO analyzed imminent danger pay and family housing cost data in the U.S. Central Command’s area of responsibility from the military departments for fiscal years 2010 through 2013. To assess the reliability of the data, we interviewed cognizant DOD officials regarding the accuracy of data entry, limitations of the data, and the results of previous audits conducted on the data systems used. We determined the data were sufficiently reliable for the purposes of our review. GAO reviewed, and compared DOD Instruction 1340.09, Hostile Fire Pay and Imminent Danger Pay with GAO’s Standards for Internal Control in the Federal Government to evaluate the Office of the Under Secretary of Defense for Personnel and Readiness’s process for reviewing imminent danger pay designated locations. Further, GAO obtained documentation from the Office of the Under Secretary of Defense for Personnel and Readiness and U.S. Central Command related to U. S. Central Command’s recommendation to terminate imminent danger pay.
- Reserve Forces: Army National Guard and Army Reserve Readiness for 21st Century Challenges
August 31, 2021Ongoing operations in Iraq and Afghanistan have required the deployment of large numbers of Army National Guard and Army Reserve personnel. The Department of Defense (DOD) faces the unprecedented challenge of sustaining large-scale, long-duration operations with an all-volunteer military force. In addition, DOD’s homeland defense missions have taken on higher priority, and National Guard forces have state responsibilities for homeland security activities as well as their traditional roles in responding to natural disasters. Over the past few years, GAO has examined the effects of ongoing military operations and domestic missions on the Army National Guard and Army Reserve. This statement, which draws on prior GAO work, focuses on (1) challenges in sustaining Army reserve component equipment and personnel readiness while supporting ongoing operations and (2) the extent to which the Army’s planned transformation initiatives will alleviate equipment and personnel shortages and enhance readiness.The Army National Guard and Army Reserve have made significant contributions to ongoing military operations, but equipment shortages and personnel challenges have increased and, if left unattended, may hamper the reserves’ preparedness for future overseas and domestic missions. To provide deployable units, the Army National Guard and the Army Reserve have transferred large quantities of personnel and equipment to deploying units, an approach that has resulted in growing shortages in nondeployed units. Also, reserve units have left significant quantities of equipment overseas and DOD has not yet developed plans to replace it. The Army National Guard reports that its units have less than one-third of their required equipment, and the Army Reserve reports that its units have about half of the modern equipment they need to deploy. These shortages could also adversely affect reserve units’ ability to perform homeland defense missions and provide support to civil authorities in the event of natural disasters or terrorist attacks. The Army also faces shortages of personnel trained in some high-demand skills. These readiness challenges have occurred because the Army reserve components’ role has shifted from a strategic reserve force to an operational force that is being used on an ongoing basis. However, DOD has not fully reassessed its equipment, personnel, and training needs and developed a new model for the reserves appropriate to the new strategic environment. GAO has made recommendations that DOD conduct a comprehensive reassessment of equipment, personnel, training, and funding requirements given the reserve components’ shift to an operational role, but DOD’s progress to date in addressing them has been limited. Without a comprehensive reassessment of equipment and personnel policies, the Army’s reserve components may not be well prepared to deal with future events at home or abroad. The Army has begun two transformational initiatives intended to enhance reserve units’ ability to conduct 21st century operations and plans to spend over $24 billion for equipment over the next 5 years. These initiatives are significant, but the extent to which they will alleviate equipment and personnel challenges is unclear. The Army faces challenges in managing both initiatives’ costs and achieving intended capabilities. First, although the Army is making progress in transforming its forces to more flexible modular units, it has not provided detailed information on the capabilities, costs, and risks of its plans, and reserve units are likely to lack some key equipment items well into the future. Second, the Army is implementing a force generation model through which reserve units’ readiness will be increased as units move closer to eligibility for deployment. However, the Army has not fully determined the equipment, personnel, and training that units will require at each stage of the cycle or fully identified the resources to implement its plans. Without detailed implementation plans, decision makers will not have sufficient information with which to assess both DOD’s progress and performance in transforming the Army reserve components and whether investment decisions are being targeted to the highest priority areas.
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