Visalus hacking espionage leads to indictment & arrests
As per a lawsuit filed by Ocean Avenue, Visalus hired a private investigator firm to conduct acts of hacking and corporate espionage at their behest.
In response to Ocean Avenue entering the market as a competitor with Visalus, Nic Sarnicola and Mallen on behalf of Visalus hired a private investigation firm called “Moser & Associates”, in Menlo Park California (the “P.I. Firm”).
The P.I. Firm at the direction of Visalus, and Nic Sarnicola hired a computer expert located in India referred to as “Sumit Vishoi” to access the email accounts of the former Visalus distributors working with Ocean Avenue, Ocean Avenue employees, Ken Dunn and Fred Ninow.
Additionally Visalus distributors who joined Ocean Avenue had their email accounts and other social media accounts and cell phone accounts hacked into shortly after Visalus discovered they had signed up with Ocean Avenue.
Further acts Ocean Avenue accuse Visalus corporate of include the illegal accessing and hacking of the company’s own servers and various accounts belonging to key staff and management.
Nate Moser, of the firm Moser and Associates, was even accused of breaking into Ocean Avenue’s offices and making off with one of their computers.
The photos below were included as an exhibit in Ocean Avenue’s civil complaint:
Ocean Avenue alleged that Visalus’ hiring of the firm was a response to several high-ranking Visalus affiliates joining Ocean Avenue in late 2012 and early 2013.
Despite the detailed claims against them, including photographic evidence, Visalus responded to Ocean Avenue’s lawsuit by stating it was “entirely without merit”. The company also vowed to “vigorously defend itself against (the) untrue allegations”.
Enter the Department of Justice, who covertly began investigating the case sometime in 2013.
This investigation has now concluded, resulting in four indictments on charges of conspiracy to access the e-mail accounts, Skype accounts, and computers.
“Without merit” hey? This should be interesting…
In an indictment unsealed on February 10th, Nathan (Nate) Moser, Peter Siragusa, Carlo Pacileo, Trent Williams and Sumit Gupta (aka Sumit Vishnoi) were indicted on ten counts of
- conspiracy to commit an offense
- accessing a protected computer and obtaining information (incl aiding and abetting)
- intercepting electronic communications (incl aiding and abetting)
In the indictment, Nathan Moser is identified as “a private investigator” and “owner of Moser and Associates”.
Peter Siragusa (aka Bobby Russo) was an associate of Moser’s, who ran his own firm (Siragusa Investigations) but “often assisted” Moser with his investigations.
Carlo Pacileo is cited as “the director of security for ViSalus and Trent Williams and Sumit Gupta hackers that Moser and Siragusa employed.
The indictment states that Visalus “hired Nathan Moser to investigate Ocean Avenue”, with Moser then “enlisting” Peter Siragusa to assist him.
Moser and Siragusa hired Trent Williams and Sumit Gupta, among others, to hack into the victim’s e-mail accounts, Skype accounts and protected computers.
The defendants (also) installed and used a keylogger – a tool that intercepts and logs the particular keys struck on a keyboard in a covert manner to that the person using the keyboard is unaware that his or her actions are being monitored – to obtain information that would assist in the civil lawsuits of Moser and Siragusa’s clients.
One of those clients of course being Carlo Pacileo, acting on behalf of Visalus corporate.
As per a press-release issued by the DOJ on February 11th:
Moser, Siragusa, and Williams made their initial appearances in San Jose yesterday before the Honorable Paul S. Grewal, U.S. Magistrate Judge.
Moser was released on a $100,000 bond, with his wife signing as surety and custodian.Moser’s next hearing is scheduled for identification of counsel today before Judge Grewal.
Siragusa was released pending the filing of a $100,000 secured bond on or before February 20, 2015.
His next hearing is scheduled for February 23, 2015, at 1:30 p.m. before the Honorable Edward J. Davila, U.S. District Judge, in San Jose.
Williams, who remains in custody, has a detention hearing scheduled for February 13, 2015, at 1:30 p.m., before Judge Grewal.
Pacileo made his initial appearance in Los Angeles before the Honorable Ralph Zarefsky, U.S. Magistrate Judge, and was released pending the filing of a $25,000 secured bond on or before February 13, 2015.
His next hearing is scheduled for February 23, 2015 before Judge Davila.
An arrest warrant has been issued for Sumit Gupta, who remains at large in India.
The DOJ claim that the FBI has been called in to bring Gupta in, with ‘agents in San Jose are working with the FBI office in New Delhi, India, to secure Gupta’s prosecution.‘
For their efforts to commit corporate espionage and hack into Ocean Avenue’s computers, Moser, Siragusa, Williams, Pacileo and Gupta are looking at a considerable amount of jail time and substantial fines.
The maximum statutory penalty for a violation of 18 U.S.C. § 1030(b) is 5 years custody, 3 years supervised release, and a fine of $250,000.
The maximum statutory penalty for each violation of 18 U.S.C. § 1030(a)(2)(C) is 10 years custody, 3 years supervised release, and a fine of $250,000.
The maximum statutory penalty for each violation of 18 U.S.C. § 2511(1)(a) is 5 years custody, 3 years supervised release, and a fine of $250,000.
As for Visalus and their claims of Ocean Avenue’s lawsuit having no merit, at the time of publication there was nothing on the Visalus website addressing the indictment.
I also didn’t find anything about it on either the Visalus corporate Facebook page and profile of co-founder Nick Sarnicola (dating back to February 10th).
Despite the seriousness of the criminal activities Visalus paid Moser’s firm to engage in, the company has yet to make an official public statement regarding the case.
An apology to Ocean Avenue and its staff would be a start…
What’ll be interesting to see is if there’s any further fall out from this on Visalus’ side. Sure the puppets have been indicted and will likely spend at least a few years in jail, but what of those pulling their strings?
How much input did Visalus’ co-founders, Ryan Blair, Blake Mallen and Nick Sarnicola have into Carlo Pacileo’s hiring of Moser and Associates?
Did they ask where or how Pacileo’s intel was being sourced? To what extent were they aware of what was going on?
Certainly enough for Nick Sarnicola to publicly deny the allegations through Visalus’ legal team back in 2013.
And what does this mean, if anything, for Visalus’ affiliates? Are they comfortable working with people capable of resorting to illegal hackery to get back at a company they perceived was stealing their top affiliates?
So many questions…