Computer Hacker John Schiefer Charged with Wiretapping to Conduct Fraud

John Schiefer, 26, has been charged with and agreed to plead guilty later this month to installing malware on computers, without the knowledge of the computers' owners, in order to intercept private information and conduct identity theft and wire and bank fraud, as announced by the US Attorney's Office and the US Department of Justice. Schiefer is also being charged with defrauding a Dutch advertising company.

The malware, which Schiefer called "spybots", would effectively act as a wiretap on protected computers and would access private communications between that computer and bank accounts, such as those on PayPal. Schiefer and others would then use those communications to find out a users' account name(s), or usernames, and that user's password(s). Schiefer would then access accounts and make purchases unbeknowst to the true owner. Schiefer also admitted to giving those usernames and passwords to others.

This case is the first time that anyone has been indicted and convicted with using "botnets" to conduct identity theft. A "botnet" essentially is a "zombie" computer that performs normally and allows users to do anything they would normally, so that malware, or malicious software, can intercept personal information. The number of computers that Schiefer and his associates infected is estimated at 250,000.

Schiefer also installed malware into computers running Microsoft operating systems, such as Windows. He could then access stored usernames and passwords that the Microsoft software would store in a secure location on the hard drive called the PStore. Schiefer used those usernames and passwords to again access bank accounts, such as PayPal.