Alsup Slams Feds' 'Stunts' In Trial Of Alleged Russian Hacker

By Hannah Albarazi
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Law360, San Francisco (July 7, 2020, 10:20 PM EDT) -- U.S. District Judge William Alsup criticized a prosecutor Tuesday for presenting "obviously prejudicial" jailhouse phone records instead of "real evidence" against a Russian national on trial in California for allegedly hacking into LinkedIn and Dropbox, saying, "You may end up losing this case because of stunts like that."

Judge Alsup slammed Assistant U.S. Attorney Michelle Kane Tuesday for introducing into evidence jailhouse phone records in which defendant Yevgeniy Nikulin asks acquaintances to help him gain access to magazines about high-tech news, computers, women, cars and bikes while in custody awaiting his trial.

Judge Alsup told the California federal jury, which reassembled Monday after a months-long hiatus caused by the Covid-19 pandemic, not to infer guilt from the prosecutor's reference to prison.

"You've got to rely on the real evidence, if there is any," Judge Alsup told the jury.

Nikulin, who is in his early 30s and a resident of Moscow, has been in custody since 2016, shortly after a federal grand jury indicted him on charges that he used stolen identities to break into databases owned by LinkedIn Corp., Dropbox Inc. and the now-defunct social media questionnaire company Formspring Inc. in 2012.

Nikulin's indictment came down two weeks after U.S. officials said the Russian government was behind a cyberattack of the Democratic National Committee that led to the disclosure of tens of thousands of internal emails on WikiLeaks and elsewhere, saying the hack was "intended to interfere with the U.S. election process."

The Czech Republic ordered Nikulin extradited to the U.S. in 2016, against the wishes of Russia, which wanted to prosecute him in a separate case.

Nikulin pled not guilty in March 2018 and went to trial in March, only for the proceedings to be interrupted for nearly four months due to the novel coronavirus pandemic.

While jurors and participants in the trial are attending in person, the court is also live-streaming the trial to the public in order to maintain social distancing, as the court has limited courtroom capacity amid a rise in new cases of Covid-19 in California.

Prosecutors say Nikulin and co-conspirators may have exposed over 100 million users' data. They also say they believe Nikulin has ties to other high-profile hackers wanted by the U.S. government, including a Ukrainian man accused of infiltrating the U.S. Securities and Exchange Commission's filing system.

During breaks without the jury and after the jury recessed for the day on Tuesday, Judge Alsup let it rip, calling Kane's presentation "gobbledygook."

He said some of the phone records that the government showed the jury were "so lacking in any probative value and so obviously prejudicial."

Kane's argument that the phone records were pertinent because they showed Nikulin had a pattern of trying to get high-tech magazines fell on deaf ears.

"If that is evidence of guilt," Judge Alsup said, "then God help us in this country."

"I think it's going to backfire on you," Judge Alsup added.

However, the phone call transcripts also have Nikulin making comments such as, "I hack websites 24/7" and "I want to hack the prison here. The rules here are stupid."

Judge Alsup said that while there is evidence that someone in Russia hacked into the companies, he said, "Russia is full of hackers" as are Lithuanian, Estonia and neighboring countries.

"It's like Hack City over there," Judge Alsup said.

But the judge said he had seen no evidence at trial that Nikulin is responsible for the intrusion.

"There is an issue in this case of who-done-it," Judge Alsup said.

Judge Alsup said that perhaps "the scales will fall from my eyes" upon hearing the government's closing arguments, which he anticipates beginning on Wednesday.

Following the hearing, Nikulin's attorney, Valery Nechay of the Law Office of Valery Nechay, told Law360 via email that Judge Alsup's terse comments "were absolutely warranted" and that the government hasn't tied Nikulin "to any of the intrusions thus far."

Nechay said it was also "particularly interesting that Judge Alsup questioned the reliability of the [mutual legal assistance treaty] return of information from Russia, given the issues we have been raising and the fact that this unsigned Russian document is the first time Mr. Nikulin was connected to these allegations in any way."

Adam G. Gasner of the Law Office of Adam G. Gasner, Nikulin's co-counsel, told Law360 via email that Judge Alsup was "spot on with his critique of the prosecution's evidence" and that he thinks the prosecution introduced into evidence a recorded phone call that Nikulin made from the jail only to highlight the fact that Nikulin is in custody and to prejudice him in the eyes of the jury.

"We have never argued that these victim companies didn't suffer an intrusion into their data-bases. We have never argued these companies were not hacked," Gasner said. "However, we believe our client didn't commit these hacks."

A government spokesperson declined Law360's request for comment Tuesday.

The government is represented by Michelle Kane of the U.S. Attorney's Office for the Northern District of California.

Nikulin is represented by Adam G. Gasner of Law Office of Adam G. Gasner and Valery Nechay of the Law Office of Valery Nechay.

The case is U.S. v. Yevgeniy Aleksandrovich Nikulin, case number 3:16-cr-00440, in the U.S. District Court for the Northern District of California.

--Editing by Peter Rozovsky.

For a reprint of this article, please contact reprints@law360.com.

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