Original subtitles

This is the CNBC Original.

In this episode of American Green, a crime spree on the Internet using stolen

information. It's basically a supermarket of cybercrime. Where

trade your financial life story.

This is not a victimless crime.

They may think it is, but I was the victim.

Billions of dollars are at stake.

They followed the money all along.

Fraud migrates to opportunity.

And an unlikely computer genius fights to control it all.

This was spy versus spy.

It was quite an ego boost.

One evening in November 2009, Julie is working late in her home office.

Her concentration and focus are shattered by a disturbing phone call.

So I asked my husband to get the phone, and it happened to be the manager of a

big box store up in Wisconsin.

And she said, I know this might seem like a strange call, but there's a woman

the store who says she's you, and she's opening up a line of credit.

The store is calling because the woman seems to be buying as many high -priced

items as she possibly can.

Julie's mind is racing. Who is this woman in the store?

How did she get her personal information?

And how much damage has she done?

So when she was about the $4 ,700 mark, she said to them, how many more iPods

can I get before I hit the line of credit?

Julie is the latest victim of identity theft, joining the 10 million Americans

whose lives have been turned upside down by this crime every year.

I was exposed in a way that I've never been exposed before, and I've worked a

long time to have good credit, and I've worked a long time to have financial

security for my family, and suddenly it's out there, and I have no idea who

it, and I have no idea how they're going to use it.

In 2009, identity thieves cost U .S. businesses and individuals an estimated

billion.

Credit card numbers and identities like Julie's are bought and sold by the

thousands on websites called Carter's Forums.

It's an underground economy run by gangs that are global, sophisticated, and

highly organized.

At the top of the pyramid are the godfathers, people like Max Ray Butler.

also known as Iceman.

Butler is a brilliant computer hacker.

His theft ring traffics an estimated 1 .8 million stolen credit cards.

And he leads the feds on a year -long game of cat and mouse.

In an exclusive interview with American Greed before entering federal prison,

Butler explains his scheme.

From law enforcement's perspective, these carding forums are probably...

Another paradigm of crime, like you have individuals, street gangs, mafias, and

now you've got this open source mafia where people just go on the Internet and

form little ad hoc collectives and plan who knows what.

Most people think of a hacker as a person working by themselves.

Keith Malarski is a special agent with the FBI who spends years undercover as a

hacker, working to bring down cyber criminals like Max Butler.

In my own experience, I would always think back to the movie War Games. And

think of Matthew Broderick sitting in his room with a computer trying to hack

into something with a modem. But really, over the years, that's changed now,

where this is really organized crime.

Carter's forums traffic in millions of stolen identities every year.

It's a multi -billion dollar business worldwide.

Before he becomes a Don of the digital underworld, Max Butler grows up near

Boise, Idaho.

I was a computer geek from a young age.

My father worked with computers. He worked at IBM, and then he worked at a

computer store, and then he started his own computer store. So I always had

access to machines.

And I started programming when I was eight and was into video games, and I

quite a geek, really.

Butler begins hacking in his teens.

My colleague, he's breaking into the network of Boise State University.

Butler says that at this stage, his hacking is just for kicks.

The administrators that were watching me and watching my activities, because I

was a very curious person, I would go into the binary directory.

Well, that caught their attention. Like, what's this guy doing?

As they started paying attention to me, I started paying attention to them. We

were kind of watching each other, and that was like an early sparring match

happened.

But behind the geeky demeanor, there lurks a history of violence.

In his freshman year in college, Butler is arrested for choking and threatening

to kill his girlfriend.

He is convicted of aggravated assault and receives a stiff five -year

In 1995, his prison stint over, the 22 -year -old Butler tries to build a new

life in San Francisco.

Friends told me that...

You can just move computers around physically and make $30 an hour, let

you actually knew how to use one. And I did, and I was good, and so I moved

down.

As a teenager, Butler hacked for fun.

Now he can turn hacking into a lucrative career.

He goes to work as a computer security consultant.

He was what they call a white hat hacker.

In fact, he epitomized it.

He made a lot of money doing penetration tests.

You would pay him to break into your computer to test your security, but at

same time, he donated his services for free to nonprofit groups.

Soon, Butler is commanding a fee of more than $100 an hour.

He goes by the name Max Vision and enjoys an almost celebrity status among

hacking elite.

I had a really good reputation for always finding the hold because I was

good at what I did. Then I set up a website, Max Vision, network security,

whitehats .com.

In fact, he's so good that the FBI office in San Francisco asks for his

hacking into systems and pointing out weak spots in security.

I got to do what I loved.

I was already spending most of my waking hours doing security research. Now I

can actually apply it and give a nice written report to someone.

Made me feel good. It was a very useful service. I really helped a lot of

people.

But life is a white hat hacker.

isn't exciting enough for Butler.

He starts to break into private networks without permission.

He thrived on the ego of it, of beating these defense systems.

A couple things were really wrong about that. One, I thought I didn't get

permission. I didn't have permission from any of the people who I actually

and fixed their systems. I didn't have permission from the FBI. They didn't

hey, this is a Nokia project.

They didn't actually respond to the email.

The next time I had contact with him, it was in person, like, hey, what's going

on? The Air Force, off to a special investigation in my living room.

Butler is charged with computer fraud.

In May 2001, he is sentenced to 18 months in federal prison.

It is his second time behind bars.

He's only 28 years old.

While Butler sits in prison...

Hacking culture undergoes a dramatic transformation.

The real migration that we saw beginning around 2000 was hackers getting into

systems for profit. So their targets are all monetary, and they're making

enormous amounts of money off of it.

Law enforcement also undergoes a transformation.

In 2002, in an effort to combat cybercrime, the National Cyber Forensics

Training Alliance, or NCFTA, is created.

Among its top targets are the Carter's Forums.

American Greed has given special access to NCFTA's headquarters in Pittsburgh.

This here is a screenshot of Carter Planet, which was one of the original

carding forums.

Anything you want to know about credit cards, social security numbers, dumps or

cashing, you can go in there.

There's a thread here for IDs, so anything you want to know about

kind of for driver's licenses, you can go into that form.

As the world of hacking evolves in the outside world, on the inside, Max Butler

is forging new relationships with criminals.

We would just walk the yard. As exercise, we talk about, well,

about what we did and talk about what could be done.

So we talk about it in a sort of fanciful way, like, oh, wouldn't that be

Next on American Greed, prison yard scheming goes active, costing victims

than $80 million.

And Max Butler is reborn as Iceman.

He's this elite hacker, and he's making over $1 ,000 a day.

In 2002, computer hacker Max Butler is released from prison, having served 18

months for computer fraud.

Butler used to work as a white hat hacker, identifying and fixing security

in computer networks.

But now, he's a twice convicted felon. And, as Max Butler says in an exclusive

interview with American Greed, that white hat isn't looking so good.

I got desperate and I actually started going and looking for minimum wage work.

I went to those places where you show up at 5, 6 o 'clock in the morning and you

do manual labor, move boards around, whatever, and I couldn't get placed

because there would be a queue, a seniority, and so I would just end up

there all morning and nobody would even hire me there.

Former hacker Kevin Polson knows how hard it can be to rebuild a life after

years in prison.

As a 25 -year -old, Polson was arrested for computer intrusion and money

laundering. Now he's a husband and father and senior editor at Wired .com.

Polson is writing a book on Butler.

He was ready to make some money.

He needed the money.

Butler soon finds a way to make some cash.

Through an old prison buddy, he is introduced to Christopher Aragon.

Aragon is a former bank robber who is now learning the dark art of making

counterfeit credit cards.

Aragon tells Butler that they have complementary skill sets.

Butler was the hacker extraordinaire who could obtain access to computer

systems. Aragon, who was also quite computer savvy, was very adept at social

manipulation.

The initial plan is simple.

Butler will target Carter Forums, the black market websites that traffic in

stolen identities and financial information.

He'll hack into their computer systems, steal credit card numbers, and sell them

to Chris Aragon, who will make fake credit cards.

It's a scam that Keith Malarski, an FBI special agent who has gone undercover on

Carter forums, has seen many times before.

So what we have here is a MSR -206, which is the most popular magnetic

and reader that's out on the market.

A simple laptop.

And the bad guys have designed a program called The Germ, which will enable you

to take the credit card number and write it onto the magnetic strip on the back.

So what you do is you take the card, and then you just swipe it, and it's as

easy as that.

The fake credit cards look legitimate.

You can see the quality on the card here is very good. The hologram, the

MasterCard hologram is good. And even on the back, he had raised numbers here,

so when you would feel that as a security measure, it would pass that.

But the hackers won't use the credit cards themselves.

Chris Aragon hires teams of young girls called cashiers, or sometimes mules, to

go on a high -end shopping spree.

you know, girls that he'd met in clubs or friends of friends and say, hey,

you like to go shopping and show them, you know, credit cards that you could

just use for whatever, they would all be excited about it.

Eventually, he would get an organized team together of false IDs, go into a

complex and just go crazy, buy whatever they could, fill up a SUV, and then they

would try to, you know, go fence that merchandise.

Arrogant crew would then use online auction sites to sell some of the stolen

goods.

So it will appear like a legitimate product, and they could sell it for a

discount, and then that's how the lower -end people will make their money.

Butler and Aragon figure the scam will bring in several hundred thousand

a year.

At some point, money would trickle back to me. It was never half.

It was... Really, I got scraps.

But I kind of had this idea that maybe I would get half, but that never worked

out.

To make the scheme more profitable...

Butler needs a steady stream of credit card numbers.

He goes straight to the motherlode, the Carter's forums, where hackers like him

buy and sell numbers and identities by the hundreds of thousands.

He'll be a pirate of pirates.

In 2003, Butler and Aragon spring into action.

The partners set up their hacking operation in hotel rooms around San

Where the air is thick with Wi -Fi signals.

We would choose location based on access to wireless networks.

He would have it packed with computer equipment, including a high -end antenna

that could be used for interception of wireless communications.

Using someone else's Wi -Fi network means Butler can hack away without

trace. He would use a giant...

in order to hack into Wi -Fi signals from neighboring apartments or from

the street in order to have an anonymous Internet connection that he felt

couldn't really be traced back to him.

Once he's up and running on a hijacked Wi -Fi, Butler logs on to Carter's

and looks for weak spots in their security networks.

So I got into hundreds of their machines, and I was watching them.

This was by versus by. It was me against them.

It was quite an ego boost. I got a rush from it.

When he finally breaks through security, Butler loots all the financial data

another criminal has already stolen.

He steals thousands of credit card numbers, passwords, and pins, and

them to his partner, Chris Aragon.

He would kind of set me up, and then I would just be like an incubator. I would

just try to churn out information to provide to him.

In time, it's a well -oiled machine.

Butler nets close to $10 ,000 a month.

But the hacking location, or safe house, has to change every few months to stay

one step ahead of the law.

But law enforcement is close behind.

When American greed returns, a mole has infiltrated the Carter's forums, and

he's working with the U .S. Secret Service to bring down Iceman.

In San Francisco in June 2005, computer hacker Max Butler and his partner Chris

Aragon are stealing credit card numbers with impunity. And they're leaving a

wake of financial disaster for millions of Americans.

Butler, who now calls himself Iceman online, hacks into Carter's forums, the

illegal websites where criminals buy and sell stolen financial data.

Greed has gotten the best of him.

He wants more.

He's even hacking into banks and credit unions.

He's in this cyber underground where he's this elite hacker, and he's making

over $1 ,000 a day.

That's very, very good money, and it's kind of hard to walk away from that,

especially when your ego gets involved where you think that you can't be

Butler justifies his criminal acts by telling himself he's just sticking it to

banks. You know, I made myself feel better about it.

not actually hurting people, individuals.

Of course, it turns out I did actually cause quite a bit of, more than just an

inconvenience, quite an ordeal for a lot of people.

People like Julie, who asked that her last name not be used.

In late 2009, someone using stolen identity information opened up several

of credit at various stores.

They almost get away with charging $11 ,000 in her name.

This is not a victimless crime.

They may think it is, but I was the victim.

Depending on the case, it can take up to two years of painstaking work to clear

one's name after identity theft.

The countless hours that I've had to put into this to try to fix.

My credit and the amount of stress that's gone into this and the amount of

it's taken away from my work schedule and from my family has been tremendous.

Back in his safe house in San Francisco, Iceman is not thinking of his victims.

He's thinking about how he can get even more control and power.

He and partner Chris Aragon decide to start their own Carter's Forum. They

it Carter's Market.

The name was actually his idea. He wanted Carter's Market. He felt that

business motive was appropriate.

Both partners see an upside in the arrangement, an opportunity to greatly

their market.

Max wanted to be able to sell credit card information to more than just

Aragon wanted to be able to sell counterfeit credit cards to other

that he wasn't entirely relying on the purchases that his cashers were making.

So they both had a stake in this.

Butler creates a sliding scale for his wares, and it may be surprising how

cheaply the market prices a stolen credit card.

He charges $12 for a Visa Classic, $16 .50 for a MasterCard, $36 for American

Express.

And like any reputable vendor, his inventory runs deep.

To be a reviewed vendor, for example, of dumps or credit cards, you need to have

a supply of hundreds of thousands, if not millions, of cards.

The credit card numbers are coming from other Carter's forums that Butler has

hacked into.

Every month, Butler is selling more than 250 dumps, the stolen financial and

identity data.

His reputation as master hacker is sealed.

He definitely became one of the top five dump spenders in the world. And this

isn't a business that's traditionally dominated by Eastern Europe.

I really think that Iceman was the first real elite hacker to run one of these

carding forums.

What's more, Butler and Aragon are frustrating law enforcement.

The real difficulty with a cybercrime case is the degree of anonymity that the

Internet affords. It's not the typical situation where you have something like

DNA or blood evidence. You have to...

amass the proof that puts that person behind the keyboard.

The Carter's forums are notoriously tight -knit and suspicious of outsiders.

Prospective members must have an existing member vouch for their

You need to know another criminal in there, generally a couple of criminals

where you've done business with them enough so that they will vouch for your

credibility in order to be a member of the group.

And that culture of secrecy is bolstered by high -tech encryption.

Now they've moved to encrypted communications on encrypted servers.

So it makes it very difficult for law enforcement. And now we have to find

avenues to get into the group in order to get into their very secret

communications. So the criminals know that law enforcement now is looking at

them. So as a result, they're evolving in their techniques.

Despite their success in making money and staying ahead of the law, Butler is

worried. For one thing, he thinks his partner, Chris Aragon, is spending money

too lavishly and drawing too much attention to himself.

His crew was young, and they liked to party. So there were nights out, and

they'd go clubbing in Las Vegas, and he'd spend $1 ,000 on a meal, another $1

,000 on wine.

I wasn't really so much as excited about that. I wanted to be, you know, working

on the computers.

I wasn't really into that party lifestyle.

And there's a much bigger worry.

In 2004, a federal dragnet called Operation Firewall brings down a

Forum called Shadow Crew.

28 people are arrested, ratcheting up the already fearful and paranoid

atmosphere in the Carter's Forums.

In a world where everyone hides behind a screen name, no one knows who might be

an undercover FBI agent.

There's a lot of paranoia on the forums, especially after Operation Firewall.

Nobody really knows who they can trust, and so a lot of accusations get thrown

around. Iceman begins to obsess that an FBI mole might penetrate Carter's

market, or even a rival website, and bring their good times to a screeching

halt. He decided there were too many competing forums, and it was dividing up

the business.

Vendors were scattered around.

They had poor security.

And that the criminal underground would be better off under a single board and

under his benign rule.

At one point, I thought it would be beneficial to just get all the

in one place.

Butler wants to take over and control the Carter's forums so he can weed out

suspicious characters who might be working with law enforcement.

He decides to plot a hostile takeover of his four main rivals, Dark Market, talk

cash, Scandinavian carding, and the vouched. If he can take all their users

bring them under his umbrella, he figures he can exercise total control

has access to the site.

He spends two months preparing.

Then in August 2006, Butler locks himself in his safe house.

And in one spree, a 48 -hour session where I stayed awake, I went through and

checked them off.

got into the site, copied all their data out, got a current snapshot of their

database, shut their site down, deleted their database, imported it into ours,

and built up Carter's Market.

And, I don't know, it seemed fun at the time.

He looks proud, and he is.

Emails, usernames, passwords of everyone who bought and sold on the sites.

The information is all his.

It's like a mob boss taking out the heads of other families.

Iceman is now the undisputed don of the Carter Forums. It was a huge boost for

Carter's Market.

He went from 1 ,500 users to 6 ,000 users overnight with this hostile

The takeover merits a lengthy article in USA Today, which dubs Carter's Market

the Walmart of Carter's Forums.

Carter's Market was the only place to do business now.

When American greed returns,

Iceman seems in total control.

But his arrogance gets the attention of the feds.

In August 2006, Max Iceman Butler is at the top of his game.

As founder and administrator of the illegal website Carter's Market, He and

partner Chris Aragon oversee a multimillion -dollar black market

Carter's Market is described as the Walmart of the digital underground.

And Max Butler is its CEO.

Mr. Butler, in running that website, had complete control of who could access it

and the extent of their access.

But, as the saying goes, power corrupts. And absolute power corrupts absolutely.

Butler has hacked into the sites of his main competitors and stolen their

members to create a monopoly.

This hostile takeover has brought a serious backlash.

What that did was really upset or ticked off a lot of the other people running

the other sites out there. And the equivalent of a cyber war broke out or

war broke out between the rival factions. People were very angry about

especially the people that ran the other forums.

Didn't know what to think. Right away, some people accused us of being fed.

There was a well -known forum member called El Mariachi, who'd been in the

forever, who had already decided that Iceman was an informant just because he

was so arrogant.

And after the hostile takeover, El Mariachi started calling out Max online,

saying, you know, you're obviously a snitch, goading him on, and there were

threats exchanged.

It could be dismissed as hacker's drama.

But for the federal agents who have been stymied in their efforts to infiltrate

the Carter's forums, this cyber war presents an opportunity.

FBI agent Keith Malarski works undercover as a hacker named Master

He sees a chance to boost his undercover reputation and expand the scope of the

investigation.

There was a lot of warring going on. People really didn't know who to trust.

So they were looking for names that had been around for a while, and my name had

been around for a while, the Master Splinter moniker.

People started coming to me and asking me, whose side am I on?

And that really opened up the opportunity for us to take the

the next level.

Agent Malarski creates a legend of Master Splinter as one of the world's

spammers. What that enabled us to do was really penetrate a number of different

groups because spamming is really the backbone that drives the underground

economy.

Before long, Agent Malarski, as Master Splinter, gets the Carter site Dark

Market up and running again after Butler has hacked into it and shut it down.

After Dark Market came back up, Mac continued to hack back into it. It was

ongoing war.

Max and I kind of became enemies, and he hated me.

There were a lot of people going back and forth, and they would come to me and

say, do you know what Iceman said about you, or do you know what Iceman's doing

now, or Iceman's going to try to hack you.

They're mortal enemies on the Internet.

But in reality, Agent Malarski doesn't know the true identity of Iceman or have

any idea where in the world he's operating from.

All that's about to change.

The FBI joins ranks with the U .S. Secret Service.

And in the spring of 2006, the Secret Service develops two confidential

informants.

They're both trusted members on Carter's Market who have decided to work with

law enforcement and provide the federal agents a glimpse behind the curtain of

this black market.

They had an informant on the site.

who was also an administrator, who was able to give them information from the

inside as well. So they were working to find out who Iceman was.

In that fall of 2006, with the Secret Service at his side, one of the

buys 23 credit card accounts from Butler.

Max presumably thought he was corresponding with somebody in Eastern

that he'd be safe.

And in fact, it wound up in Pittsburgh.

It's a small sale worth just $480.

But for the Secret Service, it's a big moment.

That instantly gives them the case.

When you sell anybody stolen credit card information, you're automatically a

felon.

Then Butler makes another misstep.

In a brazen move to steal more financial data, Butler sends a corrupted link to

the e -mail accounts of 500 employees at Capital One Bank.

So hundreds of people clicked on this link in Capital One, and they got

with this, giving him access to their internal network.

But his plan backfires.

Capital One contacts the FBI, who traces the cyberattack to the same account

that registered Carter's Market.

The case against Butler is building.

But Iceman is a worthy adversary.

He suspects correctly...

that Master Splinter is a federal agent.

Max saw that Master Splinter was logging on not from Eastern Europe, where he

was supposed to be based, but from an office building in Pittsburgh.

It's the building that houses the NCFTA, the National Cyber Forensics Training

Alliance.

So Iceman shouted to the hills that anybody would listen that Master

was a Fed and a dark market was a sting operation being run by the FBI or the

NCFDA. He would tell anybody that would listen.

For Malarski slash Master Splinter, being outed threatens to kill his

in the cradle.

So we had to do some scrubbing because we had just taken over this site, and

this was the potential to compromise it all right in the first couple weeks.

Fortunately for Agent Malarski, Iceman cries wolf one too many times, having

accused people before of being federal agents.

Malarski also has a world -class support team, which scrubs the data of any tie

to the federal government.

So now when Iceman made his big reveal to the world that Master Flinner was

of the NCFTA, none of that stuff was there.

So I had convinced the people on Dark Market that I was legit. So they just

thought that Iceman was throwing dirt at me.

So there was a lot of allegations where people were calling one another cops or

feds all the time. And luckily for me, I was just kind of in that wave of all

this allegation, and I was able to survive it.

Next on American Greed, authorities are closing in.

The big break comes when they nab Chris Aragon.

the only person in the world who knows Iceman's real name.

Would he give up his partner?

In spring 2007,

Max Butler, a .k .a. Iceman, is living the hacker's dream, illegally breaking

into systems and getting paid good money for it.

He and his partner, Chris Aragon, managed the multi -million dollar

website called Carter's Market.

It's an online bazaar where crooks can buy and sell stolen credit card and

identity information.

Carter's Market website was founded by Mr. Butler and a close associate of his,

Christopher Aragon, largely so that they would have complete control over the

servers and the access to that market.

But in an interview with American Greed, Max Butler says by spring he was ready

to get out. I had been sort of winding down, wanting to get out from under the

forum. But it's too late. The feds are closing in on Iceman.

So things started to unravel for Max very rapidly.

There were two things that happened.

First, a young charter named Jonathan Giannone, a .k .a. Zebra.

is arrested for wire fraud and identity theft.

An early administrator on Carter's Market, Giannone has an insider's

on Iceman, and he's looking at several years in prison.

The Secret Service came to him and said, if you want to help yourself, you're

going to tell us everything you know about Iceman, the guy that did this

takeover. The zebra has one card to play.

He didn't know who Iceman was, but he did know Chris Aragon, and he knew that

Chris Aragon worked closely with Iceman in real life.

Only one person really on the planet knew who the Iceman was, and that was

Christopher Aragon.

If the Secret Service can get to Chris Aragon, there's a good chance they can

stop Iceman.

The opportunity comes quickly.

On May 12, 2007...

Aragon is arrested trying to use one of his counterfeit cards to buy $13 ,000

worth of luxury purses at Bloomingdale's.

Following that arrest, police in Newport Beach did a series of searches of

computer equipment and other electronic devices in connection with Aragon's

business activities and criminal activities.

Part of that information was shared with the United States Secret Service and

was made available to us in our case.

Just like Zebra, Chris Aragon puts self -preservation above loyalty.

Facing charges of commercial burglary and identity theft, Aragon decides to

talk. He tells them the addresses of Iceman's safe houses, though he doesn't

know his current one.

And he tells them something even more vital, Iceman's true identity.

Chris was really the only one that knew that Iceman was Max Butler.

For the first time in this investigation, the feds now know who

for, a 6 '5", brown -haired, white male who lives in the San Francisco area

named Max Butler.

After Aragon's arrest, Butler is cagey. He quickly abandons his current safe

house. I was in an apartment that he provided, so I got out of there. So I

changed location.

I got rid of all my wireless gear.

But the Secret Service has key information.

They get the name of Butler's girlfriend from an associate of Aragon's and track

down her address.

It's now a shoe leather investigation as teams of agents take out the

girlfriend's house.

Once Butler leaves, they follow him straight to his safe house.

and they followed him as he moved some of his stuff into his new safe house. So

they just followed him right to the front door, literally to the front door.

But they don't rush in, not yet.

Aragon had told them that Butler has a kill switch program that can immediately

destroy evidence.

We knew he had encryption on that computer, and it was going to be hard to

unless those computers were on.

I had them all locked and encrypted. In my mind, encryption was...

This blanket that made them not even real. I didn't see the computers as

computers. When they were encrypted, in my mind, they're brick.

And it's kind of hard to explain that. You think, well, are you crazy? But I

really believed that.

They called on the expertise of CERT, the Computer Emergency Response Team,

based in Pittsburgh.

These are some of the country's foremost experts in the area of decryption, of

taking an encrypted computer and trying to figure out ways to get into that

computer and obtain the evidence.

that we're seeking in the search.

The arrest has to go down without a hitch.

On September 5, 2007, after the 16 -month investigation, the feds are ready

move.

Several Secret Service agents, along with FBI agent Malarski, charge into

Butler's safe house.

Suddenly there's a football team of agents between me and the computers, and

just in shock.

The computer experts get to work.

I thought that they were going in and collecting bricks. I thought they had

nothing.

Of course, that's not the case. They have some really sharp people.

And they were able to get all that information.

The takedown is successful.

They get to Butler's computer before any evidence can be destroyed.

The amount of stolen data in Butler's possession is staggering.

The total of fraudulent charges.

On the 1 .8 million plus cards in Mr. Butler's possession as of the date of

search was $86 .4 million.

At the time, it is the largest identity theft and hacking case in the country's

history.

On September 11, 2007, Butler is charged with three counts of wire fraud and two

counts of identity theft.

Federal sentencing guidelines can put him behind bars for 40 years.

The charges reflect a small fraction of the real cost of Buckner's crimes.

The effect on our economy is huge, obviously, when you're talking about a

of this size.

Financial institutions are under enough stress in this country, and the effect

of hacking activity and identity theft just makes the situation worse.

from everybody, from their employees to those whose cards are compromised, to

individuals who want to then apply for credit in this country.

On June 29, 2009, Butler pleads guilty to wire fraud charges.

His guilty plea, in cooperation with the feds, helped Butler avoid a possible

sentence of 40 years.

On February 12, 2010, Butler is sentenced to 13 years in prison and $27

million in restitution.

At the time, it is the longest sentence for hacking in U .S. history.

With Butler and Aragon behind bars, Carter's market eventually closes down.

But Dark Market keeps its doors open. Master Splinter isn't finished yet.

Slowly, one by one, administrators on Dark Market and other sites begin to be

arrested.

It's a massive sting operation that spans the globe.

The only high -ranking member of Dark Market that hasn't been arrested is

Splinter. It's time to close up shop.

I wrote a going -away letter to the members of Dark Market saying there are

many feds and law enforcement on this site. It's been penetrated.

Iceman was arrested, all the other administrators have been arrested, and

not going to suffer the same fate that they did.

The shutdown of Dark Market prevents more than $150 million worth of loss for

businesses and individuals worldwide.

Within the cybercrime area, there is a bit of an arms race that goes on.

Today, law enforcement and business must wage a full -out assault if they are to

keep ahead of cybercriminals.

There is this constant one -upmanship that goes on within the hacking

against the security professionals that are involved in protecting business

networks. This is very important to us as law enforcement because we also have

to be on the cutting edge of the technology.

We can get you, so you can't hide from us. And we have our international

coalitions, and we're working very closely together with them in order to

this problem.

For victims like Julie, it's too little, too late.

I will have to pay for my credit report every two months, check it, and make

sure that there's nothing on it.

And that's really the maddening part. That's the part that gives me anxiety

attacks. It's like, what else could I be doing to protect myself here? How can I

stop this from becoming this nightmare of trying, you know...

Just basically like being the detective myself and trying to sort this out and

figure out what steps to take. You know, how do I protect myself?

Chris Aragon is currently awaiting trial in California for burglary and identity

theft, among several other charges.

Max Butler serves his time in a federal penitentiary. The Bureau of Prison says

Butler may have limited access to computers behind bars.

In this case, greed was certainly a motive.

But what's obvious from the communications and the risks that Mr.

that ego also played a very big role.

Perhaps the biggest disappointment or shame of this case is the waste of

here by someone who is very bright, very creative, and could have used his

talents to benefit society and ultimately himself, and instead he

a path that would harm many people and businesses and ultimately harm himself.

Illegal hacking can be seductive.

It's a thrill. It's an ego rush to be able to get into another computer that

didn't ask for permission to get into.

It's a temptation, but it's worth it to resist that temptation.

I would say go to school, get an advanced degree, and stay out of

I wish I had advice back then.