Spam Nation (18 page)

Chapter 8

In early summer 2008, SpamIt co-owner Igor “Desp” Gusev, then twenty-seven, was vacationing with his young wife and infant daughter in Marbella, on the picturesque coast of southern Spain. He’d just been offered a job as a civil servant in Russia, as an aide to an official at the Russian government’s Ministry of Economic Development, but he was ambivalent about leaving Spain and accepting the position.

At that time, SpamIt and GlavMed had emerged as the largest rogue Internet pharmacy program on the planet and had attracted nearly all of the world’s top spammers. Both programs had just reached what would be the peak of their earning power and were bringing in almost $6 million in revenue each month.

Despite the success of his spam venture, Gusev was thinking strongly about taking the government job and leaving his life as a cybercrime boss far behind. The subject hadn’t come up yet with his business partner, Dmitry Stupin, but Gusev had to break the news at some point. The two had built GlavMed and SpamIt from nothing into a thriving business, but lately bitterness had arisen between them. Gusev was anxious for a more meaningful, legitimate, and stable life with his family. Stupin, meanwhile, was growing increasingly resentful
that Gusev was constantly traveling and leaving him to wrangle with the day-to-day challenges of running a business that relied principally on criminals.

The following exchange, from a chat log between Gusev and Stupin recorded in summer 2008 and translated into English by native Russian speaker Aleksey Mikhaylov, illustrates the simmering resentment that Stupin felt at being left behind. It also includes a theme that ran through many of their conversations: Stupin was forever dreaming up new ways to make money, while Gusev seemed to yearn for a more respectable—if also more routine way of life.

GUSEV
: I like it in Spain very much :) However, all the fun is shadowed by the future “job”; we’ll see what kind of shithole this is.

STUPIN
: What kind of “job”? What are you talking about?

GUSEV
: I am going to join the Ministry of Economic Development as an assistant to the vice minister.

STUPIN
: Hmm…have you finally decided to do it? If you think thoroughly, and invest your time and efforts into what we already have, we can raise profits up to two to three times, which translates to several extra millions of dollars per year just for you.

GUSEV
: Surely, if your goal is to make money :) It’s too long to explain in writing. Let’s have lunch in Moscow sometime and I will explain to you why I want to take this job. However, here is short version: it is not the main thing to make money in our country. The most important thing is to retain it, multiply it, to ensure that nobody is going to seize
it. Our main source of income now is a semi-legal business. If they want to bring us down, they will do it as easy as 1–2–3. It’s not going to be easy to escape from it, even with the two or three political connections I have now. The main goal is not to lose what we already have and not allow us to be brought down.

STUPIN
: When it comes to not losing—simply buy real estate abroad. It is more “mobile” than you think. If the shit hits the fan, we can maintain everything with the efforts of four to five people. Everyone else—they are only for business development.

GUSEV
: I am not talking about money. This is about business itself. If you and I get into trouble, all this “mobility” will disappear. Therefore, I want to make it so that it would not be easy to cause problems for you and me. You have to admit that the business is not going to sustain itself without you and me. Andrey, Margo, Sashka, Stratos will not be able to do it by themselves.

STUPIN
: I have a feeling lately that I am talking to a wall. Am I getting on your nerves?

GUSEV
: No, why do you think so?

STUPIN
: Your behavior is different. There is no more communication.

GUSEV
: It is not too different for me. I write something and do not get any replies. You just write “okay” from time to time :)

STUPIN
: I do not consider you a “worker” anymore, a person to work with. I constantly communicate with Andrey and Sashka, and I discuss everything with them. You are either absent, or you are doing nothing (as it appears to me). It does not get on my nerves or irritate me. I just no longer consider you a person I need to or can work with.

GUSEV
: As far as the job, you have had full authority for a long time. It is more efficient this way.

STUPIN
: It is more convenient for me not to communicate with you much, because otherwise I start wondering why we need you at all. It is going to be better if you start doing something, or else I will continue to discuss stuff with you less and less.

GUSEV
: You know, thanks for being frank with me, but I have not given you an opportunity to rise to a partner from a simple programmer just so that in the future you’d tell me that I was no longer necessary. You would have been a lead developer in some major company with the salary of five to seven thousand, and you would not have been able to buy your house in Turkey if we did not meet together at that time, and if I had not have allowed you to manage the company. Think about it at your leisure. Money blinds people and gives false feelings of total power.

STUPIN
: Did I say that you’ve become unnecessary? That was your own thought. If you had thought a bit further, you’d understand that
I
was the reason that everything was working so reliably and so thoroughly, only because of my becoming the person you allowed me to become.

GUSEV
: Let’s talk tonight. I will cool off a little.

STUPIN
: No problem. I have no issues.

But this feud would have to wait while a more pressing concern came to the fore. While Gusev was still in southern Spain, he received a flood of urgent messages from a friend named Alexey, a hacker upon whom he relied for intelligence about law-enforcement interest in spammer activity.

LEHA
: Hey. Are you there? I’ve been looking for you.

GUSEV
: Sorry, have been in Spain with the family.

LEHA
: There is something bad that you need to know. Just listen to what I have to say, and then draw your own conclusions.

Leha explained that a few nights prior, he ran into Yuri “Hellman” Kabayenkov, Vrublevsky’s fifty-fifty partner in Rx-Promotion. As happened more often than not, Kabayenkov was drunk, and on this night in particular Leha heard him bragging about his role in bribing the local police into opening a criminal investigation into Gusev’s business.

LEHA
: So I happened to run into drunken Hellman last week. And either just to brag, or just because he’s a stupid moron, he spilled his guts. He asked, “Have you stayed in touch with Desp (Gusev)?” This was definitely a loaded question. I immediately said, “Why do you ask?”

Hellman hinted that “right-thinking people” would start thinking about distancing themselves from Gusev, and that he himself had seen
the paperwork for the case, which specified that Gusev was to be accused of money laundering.

GUSEV
: What are they trying to pin on me?

LEHA
: The article in the criminal code that deals with legalization of proceeds from crime. I’m not sure whether the criminal case actually exists yet or not, I’m just relaying what I heard. I myself am shocked by such stupid behavior. Obviously, Pasha [Pavel Vrublevsky] was the one who initiated this, but the fact that Hellman got himself into this is especially ridiculous.

GUSEV
: Thanks, Leha. You warned me in time.

LEHA
: Hellman wanted to buy a car. If you remember, he bragged about this at my birthday party… But at some point he said that he had to delay the purchase, because he needed lots of money for something. And now, while he’s drunk, he let it spill exactly what he needed the money for.

GUSEV
: Do you by any chance know the prosecutor’s office that is in charge of the case?

LEHA
: I have no idea which prosecutor’s office or who initiated the case. I’m not even sure the case exists. I didn’t see it.

GUSEV
: But what reason does Hellman have to pay for my criminal case? What did I do to him?

LEHA
: It’s total nonsense. I have no idea what reason he
might have. I asked him and his response was, “But why not?” Pasha [referring to Vrublevsky] is a fucking asshole. To do this kind of bullshit is way too much.

GUSEV
: The funny thing is, he still owes me money.

LEHA
: So much bragging. He says that police colonels and generals are working for him on these things. Hellman has also picked up on this crap. Says that he has everything under control.

GUSEV
: If you can try to find out which prosecutor’s office is handling the case, it will make finding it a lot easier.

LEHA
: I have a very fucking bad feeling about this, Igor. Do you have any way to solve this problem?

GUSEV
: I will start working on this now. I’m not 100 percent sure, but I will ask some very serious people for help. As you know, a 100 percent guarantee of solving all problems is not given even by God.

And so began the Pharma Wars, a long-running, public, and ultimately very costly grudge match between the proprietors of the world’s largest pharmacy partnerkas then—a feud that would forever change the course of the spam industry. The investigation that Vrublevsky and Hellman allegedly purchased against Gusev and his business would set in motion a damaging series of events that would find the two men competing to see who could spend more money bribing officials to help ruin the other.

And they would both succeed.

Gusev believes that Vrublevsky and Hellman paid for the criminal
case against him because they suspected him of being responsible for a recent financial catastrophe that wiped out more than $7 million in funds belonging to one of their businesses. The lost money was being held in escrow for some of Russia’s most accomplished hackers, and the resulting fallout from the money’s disappearance quickly made RedEye (Vrublevsky) a persona non grata among adult webmasters and spammers alike.

In a telephone interview, Gusev said the trouble with Vrublevsky started shortly after the latter was the victim of a corporate raid that led to the looting of millions of dollars that Vrublevsky reportedly owed to Russian adult webmasters. Many Western readers are no doubt familiar with the concept of a conventional corporate raid—also known as a hostile takeover—which involves buying a sizeable interest in a company and then using the resulting voting rights to enact changes such as replacing top executives or liquidating the company.

In Russia, however, the hostile takeover is all too frequently a violent event, and can just as often happen via bribed judges or politicians as at the point of a gun. According to Knowledge@Wharton, a publication from the Wharton business school,
a
staggering
70,000 Russian companies each year become targets of raider attacks.

“In the mid-1990s, reports of AK-47 wielding masked men storming the headquarters of up-and-coming companies, seizing assets, and forcing owners to sign a variety of property transfer documents were all too common,” wrote the five members of the 2010 class of Wharton’s Lauder Institute who authored the article.

“Since the [Russian] financial default of 1999, however, tactics of raiders and their agents have become much more sophisticated. These days, the most common scenario involves an interested party placing an order with a raiding team for the takeover of a target company. Raiders typically start by acquiring a minority share in the target firm and using this share to initiate frivolous lawsuits against the target. The raiders then use a complex game of legal arbitrage
to compromise the company’s operations and drastically devalue its stock. These actions result in possible bankruptcy and almost certain takeover by the raider.”

The business entity targeted in the raid against Vrublevsky was Fethard Finance, a now-defunct virtual currency system of which Vrublevsky was a majority shareholder. Through a legal entity he founded called “Red & Partners,” Vrublevsky developed a network of extreme porn sites. The online forum that Vrublevsky (a.k.a. “RedEye”)
13
founded—Crutop.nu—was the perfect spot for marketing the Red & Partners sites to Russian adult webmasters, who could earn commissions for selling monthly memberships to the sites. (Recall that our “Virgil” in this spammer netherworld—Vishnevsky—earned a tidy living as a young man advertising Crutop-affiliate websites.) When these webmaster affiliates got paid, they were compensated not in dollars or Russian rubles, but in credits with Fethard’s virtual currency, which quickly caught on as an accepted form of payment for goods and services in the Russian cyber underground.

Fethard and Vrublevsky’s porn empire seemed to be humming along nicely until September 2007, when Vrublevsky—or rather the Crutop administrator RedEye—broke the news to more than eight thousand Russian adult webmasters who had money tied up with the virtual currency: Fethard had been the latest victim of a corporate raid and was flat broke.

According to Gusev, the brains behind the raid was Mikhail Zhilenkov, the husband of Maria Okulova, the granddaughter of the first president of Russia, Boris Yeltsin. Interestingly, Okulova’s father, Valery Okulov, is the former CEO of Aeroflot—Russia’s largest airline, and a company that would soon radically change the direction of Vrublevsky’s life.

“In 2007, the Fethard system had two main shareholders: Pavel and
Zhilenkov, who is a well-known raider and has some good connections in police and [Russian FSB],” Gusev recalled in a phone interview. Indeed, Alexander Khinshtein, a journalist for the Russian news magazine
Moskovsky
Komsomolets
, has detailed the exploits of RostInvest, a Zhilenkov investment firm implicated in a number of raider scandals throughout the latter half of the last decade.