Cyber Fraud Charges in New York Against Tech CEO

Zohar Pinhasi, a cybersecurity expert and owner of the Florida-based company MonsterCloud, has been charged with wire fraud in the Eastern District of New York. Pinhasi, 50, who also goes by the names 'Zack Silver' and 'Zack Green,' is accused of defrauding clients by falsely claiming he could decrypt ransomware without paying cybercriminals.

According to the U. S. Attorney's Office, Pinhasi allegedly misled clients by asserting that MonsterCloud offered an alternative to paying off ransomware attackers.

The indictment claims that Pinhasi made misrepresentations to business owners seeking help after being targeted by cybercriminals. Despite MonsterCloud's website advising clients not to pay ransoms and claiming to use 'proprietary tools' and 'advanced decryption techniques,' Pinhasi allegedly had no such technology. Instead, he is accused of contacting and paying the cybercriminals for decryption keys, which MonsterCloud employees then used to attempt to decrypt the clients' files.

The indictment further alleges that Pinhasi charged clients fees significantly higher than the ransoms paid. For example, in August 2023, Pinhasi reportedly paid a ransom of approximately $8,200 but charged the client around $150,000. Over the course of the alleged scheme, Pinhasi is said to have charged clients more than $19 million while paying over $8 million in ransom payments.

Pinhasi faces two counts of wire fraud and one count of wire fraud conspiracy. If convicted, he could face a maximum penalty of 20 years for each count.

The FBI and the Cybersecurity and Infrastructure Security Agency (CISA) have issued guidance advising against paying ransoms, as it does not guarantee data recovery or security. Assistant Attorney General A. Tysen Duva emphasized the Department of Justice's commitment to protecting ransomware victims, stating, 'This prosecution underscores the Department’s commitment to protecting ransomware victims, regardless of how these cyber ransoms occur.'

The case is being prosecuted by Senior Trial Attorneys Brian Mund and Vasantha Rao of the Justice Department’s Computer Crime and Intellectual Property Section, along with Assistant U.S. Attorneys Alexander Mindlin and Lindsey Oken for the Eastern District of New York.

An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty in a court of law.