Russian exec jailed in Plymouth awaiting financial-hacking charges has his yacht repossessed, so he couldn't flee on it, but judge still keeps him locked up pending trial

Update: Trial date re-set to Jan. 30, 2023.

A federal judge today set an Oct. 11 trial date for Vladislav Klyushin, the head of a Russian Internet firm who is charged as part of a conspiracy to trade on corporate financial data his employees and other Russians allegedly obtained via hacking before the information was released to the SEC and the public.

US District Court Judge Patti Saris set the date at a hearing at which she also once again denied Klyushin's request to be released on bail before the trial, ruling that she saw no conditions she could set would guarantee he would not flee first.

Also at the hearing: A federal prosecutor said the government is spending "hundreds of thousands of dollars" for a contractor to build a searchable database of the gigabytes of text and log files in the case for use by both prosecutors and Klyushin's lawyer, who in turn is looking to hire his own expert to analyze the voluminous log data that allegedly links Klyushin's M-13 firm to the hacks.

Klyushin is formally charged with conspiring to obtain unauthorized access to computers, and to commit wire fraud and securities fraud, and with obtaining unauthorized access to computers, wire fraud and securities fraud.

A US District Court magistrate judge had previously denied his request to be released on bail.

Klyushin's lawyer, Max Nemtsev, argued this morning that Saris could set a series of conditions to assure Klyushin would show up at the Moakley Courthouse in October, including requiring him to sell a $2-million London condo and giving the funds to the court as bail, hiring a detective agency to keep watch over him, limiting his Internet and phone use and even having a camera mounted right outside his front door to make sure he didn't sneak out.

The camera condition was one set on Mafia kingpin Raymond Patriarca after he was arrested on murder and conspiracy charges, and what Klyushin is charged with is far less severe than what Patriarca was accused of, Nemtsev said.

But, Saris said, Patriarca was at least from New England and had ties here, whereas Klyushin has no connections at all to the region - except that some of his alleged hacking may have been done through a server in the Boston area - and is from a country that even in the best of times refuses to extradite its citizens to face charges in other countries. Also, while $2 million is a lot of money for most people, she said she doesn't really know what it means for Klyushin.

"Every instinct in his body would be to get the heck out of here," Saris said, asking why he would bother staying here if released.

Nemstev argued Klyushin wants to prove his innocence. When Saris questioned that, Nemtsev said his client loves to travel and wants to show his children the world, but that would be impossible were he to flee back to Russia, because an arrest warrant would hang over his head should he ever leave Russia. He said that Klyushin's wife and children would be willing to fly to and stay in Boston as a sort of added guarantee of his appearance at trial.

When Saris asked about Klyushin's yacht - the 77-foot-long Seven K - Nemtsev said he couldn't possibly escape on that, partly because it's been seized by creditors, but also because even if he did still own it, "it's not a yacht you can cross the ocean, that he can get on here and travel to Russia." The yacht, which Klyushin bought for about $4 million in 2020, was "an expensive toy," Nemtsev said.

Klyushin has been behind bars since March of last year, when Swiss police, acting on a request from American authorities, arrested him as he and his family were transferring from a private jet to a private helicopter on their way to a skiing vacation at a Swiss resort. He and the Russian government fought his extradition to the US for several months before a Swiss court ordered him sent here, in December. After landing at Logan, he was transported to the Plymouth County House of Corrections, where he has been set up with a computer with Russian translation software that he can use for up to 20 hours a week as he pours through the evidence against him.

At today's hearing, Assistant US Attorney Seth Kosto acknowledged that the actual hacking into the servers of "filing agents" - firms whose computers publicly held companies use to upload public financial statements before they're filed with the SEC - was likely done by another of the men charged with Klyushin, but who had no interest in traveling overseas and so remains safely in Russia. But Kosto said text messages seized from a third indicted man, who also remains in Russia, show that Klyushin knew what his employee was doing and spurred him on.

Kosto said one text exchange would show Klyushin asking about the scheme and the alleged hacker telling him to stop asking about it in texts, because people who do stuff like that wind up as defendants in courtrooms. Kosto said Klyushin texted back an apology and deleted the conversation from his computer and phone. But the third man, the one from whom the government obtains numerous text messages, did not.

Nemtsev said there are innocent explanations for all the messages and said the alleged hacking employee did not actually work for Klyushin's company, that Klyushin could not have acted on the early financial data from American companies because all of that is in English, a language his client barely speaks and that even if the government proves the hacking was done via an American server accessed via an IP address belonging to Klyushin's company, that doesn't mean the company, or Klyushin, was involved in hacking because it has customers who use its servers to reach the rest of the world. He speculated that the man who is charged with doing the actual hacking to obtain the financial information, a former member of Russian military intelligence who is also charged with trying to interfere with the 2016 elections here, might have been working for somebody else to hack the American financial information.

In addition to the criminal charges, Klyushin also faces a separate SEC lawsuit over the more than $82 million he and his co-conspirators allegedly made through the improper trading.