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Feds shutter DNS malware scam that infected 4 million PCs

$14m scheme attacked Macs as well as Windows

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Federal authorities have shut down an international conspiracy that forced more than four million computers to connect to fraudulent webpages when users tried to visit Netflix, the US Internal Revenue Service, Apple's iTunes and other services.

Prosecutors named seven Eastern European defendants who allegedly generated more than $14 million in profit by infecting Macs and Windows machines with malware that replaced the IP addresses of legitimate sites with those controlled by the attackers. Operators received a payment each time a rogue page was opened because they had entered into advertising agreements awarding them fees based on the number of times links for certain websites were clicked on.

The scam relied on malware known as DNS Changer, which causes machines running Apple's Mac OS X, as well Windows PCs, to rely on rogue DNS, or domain name system, servers deployed by the attackers. The program pointed to fraudulent IP addresses for about 15,000 domains. As a result, victims encountered websites they never would have seen on uninfected systems. The malware also prevented them from reaching antimalware sites, making it hard for them to disinfect their machines.

Some of the victims were using Macs, Paul Ferguson, Senior Threat Researcher at antivirus provider Trend Micro, told The Register. He said his team discovered the scheme five years ago.

According to a blog post published by Trend Micro researchers, two data centers in New York and Chicago were recently raided, and more than 100 command and control servers were taken offline. To reduce the disruption to infected machines, the rogue DNS servers have been replaced with modified machines that are being operated for the next four months by the not-for-profit Internet Systems Consortium. Authorities wisely opted not to disconnect the DNS servers completely because millions of PCs now rely on them to find internet domains.

Federal prosecutors in Manhattan said the scam was controlled by an Estonian company known as Rove Digital. Six Estonian nationals have been arrested by local authorities, and the federal prosecutors plan to seek the defendants' extradition to the US. The defendants include Vladimir Tsastsin, 31; Timur Gerassimenko, 31; Dmitri Jegorov, 33; Valeri Aleksejev, 31; Konstantin Poltev, 28; and Anton Ivanov, 26. A seventh defendant, 31-year-old Russian national Andrey Taame, remains at large.

Each defendant is charged with five counts of wire fraud and computer intrusion crimes. Tsastsin is charged with an additional 22 counts of money laundering. If convicted on all counts, six of the defendants face a maximum of 85 years in prison. Tsastsin faces an additional maximum 10 years in prison for each of the additional counts.

Tsastsin was the president of EstDomains, a domain name registrar with a reputation for catering to cyber criminals. He lost his accreditation with ICANN in 2008 following a conviction in an Estonian court for credit card fraud, money laundering, and document forgery.

In addition to fleecing advertisers out of $14 million in fraudulent fees, the scam also deprived legitimate website operators and advertisers of revenue they would have generated if victims hadn't been diverted. Search engines also lost money in fees they paid for clicks they believed came from interested computer users.

The shutdown is the result of a two-year investigation dubbed "Operation Ghost Click." More from the US Attorney's office and the FBI is here and here. ®

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