For practically a dozen years, residents of South Carolina have been saved at nighttime by state and federal investigators over who was answerable for hacking into the state’s income division in 2012 and stealing tax and checking account data for 3.6 million folks. The reply might not be a thriller: KrebsOnSecurity discovered compelling clues suggesting the intrusion was carried out by the identical Russian hacking crew that stole of hundreds of thousands of fee card information from massive field retailers like Home Depot and Target within the years that adopted.
Questions about 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 legislation enforcement division. If authorised, this could be Keel’s third six-year time period in that function.
The Associated 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 think the fact that we didn’t come up with a whole lot of people’s information that got breached is a testament to the work that people have done on this case,” Keel asserted.
A ten-year retrospective revealed in 2022 by The Post and Courier in Columbia, S.C. mentioned investigators decided the breach started on Aug. 13, 2012, after a state IT contractor clicked a malicious hyperlink in an e mail. State officers mentioned they came upon concerning the hack from federal legislation 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 yr surrounding the breach date.
On Oct. 7, 2012 — three days earlier than South Carolina officers say they first realized of the intrusion — a infamous cybercriminal who goes by the deal with “Rescator” marketed the sale of “a database of the tax department of one of the states.”
“Bank account information, SSN and all other information,” Rescator’s gross sales thread on the Russian-language crime discussion board Embargo learn. “If you purchase the entire database, I will give you access to it.”
Every week later, Rescator posted an analogous supply 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 mentioned the information uncovered included Social Security Number (SSN), employer, identify, handle, telephone, taxable revenue, tax refund quantity, and checking account quantity.
“There is a lot of information, I am ready to sell the entire database, with access to the database, and in parts,” Rescator informed Mazafaka members. “There is also information on corporate taxpayers.”
On Oct. 26, 2012, the state introduced the breach publicly. State officers mentioned they have been working with investigators from the U.S. Secret Service and digital forensics consultants from Mandiant, which produced an incident report (PDF) that was later revealed by South Carolina Dept. of Revenue. KrebsOnSecurity sought remark from the Secret Service, South Carolina prosecutors, and Mr. Keel’s workplace. This story can be up to date if any of them reply. Update: The Secret Service declined to remark.
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, handle, telephone, tax ID, date of start, employer and occupation.
Asked to offer 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 companies 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.
“At the time, it was one of the largest breaches in U.S. history but has since been surpassed greatly by hacks to Equifax, Yahoo, Home Depot, Target and PlayStation,” the AP’s Jeffrey Collins wrote.
As it occurs, Rescator’s legal hacking crew was straight answerable for the 2013 breach at Target and the 2014 hack of Home Depot. The Target intrusion noticed Rescator’s cybercrime retailers promoting roughly 40 million stolen fee playing cards, and 56 million playing cards from Home Depot clients.
Who is Rescator? On Dec. 14, 2023, KrebsOnSecurity revealed the outcomes of a 10-year investigation into the identification of Rescator, a.okay.a. Mikhail Borisovich Shefel, a 36-year-old who lives in Moscow and who just lately 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 affect on residents appears unlikely. The stolen tax and monetary information seems to have been offered brazenly on cybercrime boards by one of many Russian underground’s most aggressive and profitable hacking crews.
While there are not any indications from reviewing discussion board posts that Rescator ever offered the information, 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 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 aren’t required to file a return could be victims of refund fraud, as can those that aren’t truly owed a refund from the U.S. Internal Revenue Service (IRS).
According to a 2013 report from the Treasury Inspector General’s workplace, the IRS issued practically $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 handle.
It stays unclear why Shefel has by no means been formally implicated within the breaches at Target, Home Depot, or in South Carolina. It could also be that Shefel has been indicted, and that these indictments stay sealed for some purpose. Perhaps prosecutors have been hoping Shefel would determine to depart Russia, at which level it will be simpler to apprehend him if he believed nobody was searching for him.
But all indicators are that Shefel is deeply rooted in Russia, and has no plans to depart. In January 2024, authorities in Australia, the United States 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 health insurance large Medibank.
Every 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 known as Shtazi-IT.
A Google-translated model of Shtazi dot ru. Image: Archive.org.