The Russian Vladislav Klyushin was convicted of hacking

A Russian businessman with ties to the Kremlin was sentenced to nine years in a U.S. prison on Thursday after being convicted of participating in a $93 million insider trading scheme in which secret earnings information from several companies was hacked.

Vladislav Klyushin, the owner of a Moscow-based information technology company called M-13 that worked for the Russian government, was sentenced in February by U.S. District Judge Patti Saris in Boston after a jury found him guilty.

According to prosecutors, in 2018 to 2020, hackers viewed and downloaded undisclosed earnings reports from hundreds of companies, including Tesla and Microsoft, that Klyushin and others had traded in before the news was made public.

“The defendant’s massive profits here came out of the pockets of other investors,” Assistant U.S. Attorney Seth Kosto said during the sentencing hearing. “This is really hurting American markets.”

Kosto had requested a 14-year prison sentence.

While Saris didn’t go that far, the judge said a lengthy sentence was warranted for a complex international crime that “caused significant harm to U.S. capital markets.”

Klyushin, 42, is one of the most prominent Russians in U.S. custody.

And although his case predated last year’s Russian invasion of Ukraine ordered by President Vladimir Putin, Klyushin’s ties to the Kremlin have long intrigued American authorities.

Asked after the sentencing hearing whether Klyushin was a good candidate for a prisoner exchange with Russia, his lawyer Maksim Nemtsev told reporters that his client “potentially” did so but that he had no personal knowledge of whether it was being discussed.

There is a current precedent for such an exchange.

Russia released imprisoned American basketball star Brittney Griner last year in exchange for Russian arms dealer Viktor Bout, who was imprisoned in the United States.

According to prosecutors, M-13 not only worked for Putin’s government but also employed Ivan Ermakov, a former Russian military intelligence officer wanted by the American government for his alleged involvement in hacking attacks aimed at interfering in the 2016 presidential election.

Ermakov, along with Klyushin and three other Russian nationals, were charged with carrying out the hack-and-trade plan.

Only Klyushin stood trial after he was arrested during a ski trip in Switzerland in 2021 and extradited to the USA.

Klyushin plans to appeal his conviction.

Prosecutors said hackers penetrated the networks of two firms that help publicly traded companies file reports with U.S. securities regulators: Donnelley Financial Solutions and Toppan Merrill.

According to prosecutors, Klyushin and his associates then made $93 million trading stocks based on undisclosed information that hackers stole from publicly traded companies.

According to prosecutors, Klyushin individually made more than $34 million as part of the scheme.

The judge on Thursday ordered Klyushin to keep that money, although she said it was unlikely most of it would ever be recovered.

Nemtsev had asked for a three-year prison sentence, which would take into account the two and a half years Klyushin had already been in custody, saying the longer he was in prison, the more his client would be deprived of the opportunity to see his children grow up in Russia.

“There is no reason to believe that he would endanger the well-being of his family if he commits crimes again,” Nemtsev said.

But Kosto said allowing Klyushin, a “powerful person” with ties to the “highest echelons of Russian society,” a quick return to his homeland was a “recipe for backsliding.”

Klyushin’s lawyers argued that there was no evidence that he had inside information and knew about hacking attacks.

Oliver Ciric, his lawyer in Switzerland, said the real reason for the charges against Klyushin was his ties to the Russian government.

Ciric said U.S. intelligence officials tried to recruit Klyushin in 2019 and British intelligence did the same a year later.