Prosecutors allege that Pinhasi secretly paid hackers for decryption keys while charging clients much higher fees.
A Florida cybersecurity expert who claimed his company could recover data locked by ransomware without paying hackers has been charged with fraud in the United States. Federal prosecutors allege that Zohar Pinhasi, 50, secretly paid cybercriminals to obtain decryption keys while charging his clients much higher fees. According to the US Department of Justice, his company collected more than $19 million from clients and paid over $8 million in ransom payments. Pinhasi, who also used the names “Zack Silver” and “Zack Green,” owns MonsterCloud LLC, a Florida-based ransomware remediation company. He was arraigned on wire fraud charges in a federal court in Brooklyn on Wednesday after a grand jury in the Eastern District of New York indicted him on September 23. The allegations concern businesses that had already suffered ransomware attacks and approached MonsterCloud for help. Ransomware is a type of cyberattack in which criminals encrypt files, making them inaccessible, and demand payment to provide a decryption key. MonsterCloud presented itself as a company that could recover such files without giving money to the attackers. However, prosecutors allege that Pinhasi did not have the special technology he advertised. Instead, he contacted the same cybercriminals who had attacked his clients, paid them for decryption keys and charged the businesses substantially more than the ransom amounts.
MonsterCloud claimed to recover encrypted data
According to the indictment, MonsterCloud promoted its services as an alternative to paying ransomware attackers. Its website warned businesses against paying ransom and claimed that its team could help recover encrypted information through specialised technology. The company said it used “proprietary tools” and “advanced decryption techniques” to restore access to affected files. These claims were particularly relevant to businesses whose data had become inaccessible following cyberattacks. MonsterCloud's website also stated that “our team specializes in helping businesses recover their data without succumbing to ransom demands.” Federal investigators, however, allege that the company did not possess the technology it claimed to use. Instead of independently decrypting the files, Pinhasi allegedly negotiated with the attackers and paid them to obtain decryption keys. MonsterCloud employees then used those keys in an attempt to restore the clients' encrypted files. Prosecutors say the clients were not told that their payments were being used to pay the criminals responsible for the original attacks.
$150,000 for an $8,200 ransom
One transaction highlighted by prosecutors took place in August 2023. According to the Justice Department, Pinhasi paid approximately $8,200 to a cybercriminal to obtain a decryption key. However, he allegedly charged the affected client approximately $150,000 for the service, significantly more than the ransom payment. Investigators say this was part of a broader scheme in which MonsterCloud collected large fees while secretly paying ransomware attackers. Over the course of the alleged scheme, prosecutors say Pinhasi charged clients more than $19 million and sent over $8 million to cybercriminals. The indictment also raises questions about the company's advertising. MonsterCloud's website featured testimonials, including some from paid spokespersons. According to prosecutors, one such spokesperson contacted Pinhasi in May 2019 to ask whether MonsterCloud actually possessed proprietary software capable of decrypting ransomware-affected data. Pinhasi allegedly responded, “Monstercloud doesn’t hold any Proprietary technology [to] decrypt the ransomware data.”
What US prosecutors said
US Attorney Joseph Nocella Jr. for the Eastern District of New York accused Pinhasi of taking advantage of businesses that were already victims of cybercrime. “As alleged in the indictment, by falsely claiming to decrypt ransomware without paying off the ransomers, the defendant re-victimized his clients while extracting a hefty profit for himself,” Nocella said. FBI Assistant Director in Charge James C. Barnacle Jr. also alleged that Pinhasi failed to address the underlying cybersecurity threat while profiting from clients seeking assistance. “As alleged, Zohar Pinhasi claimed to fix ransomware while never remediating the underlying threat. Instead, he turned the victim's crisis into his own profit center,” Barnacle said.
What charges does Pinhasi face?
Pinhasi, a US and Israeli national from Hollywood, Florida, faces two counts of wire fraud and one count of wire fraud conspiracy. If convicted, he faces a maximum prison sentence of 20 years on each count. The case is being prosecuted by the US Attorney's Office for the Eastern District of New York and the Justice Department's Computer Crime and Intellectual Property Section. The Justice Department also referred to joint guidance from the FBI and the Cybersecurity and Infrastructure Security Agency (CISA), which advises ransomware victims against paying attackers. The agencies warn that paying a ransom does not guarantee that encrypted data will be recovered, compromised systems will become secure or stolen information will not be leaked.
