Crypto fraudster in ‘genius’ hack gets 18 months in prison

(December 2): By day, Nicholas Truglia lived a solitary life from his luxury Manhattan apartment, where he played video games and worked out. At night, he went clubbing and bragged about having more money than anyone else in the room, according to court documents.

Now Truglia, 25, will serve 18 months in prison after a federal judge sentenced him Thursday for his role in a scheme to hack a blockchain consultant’s phone and steal $22 million in cryptocurrency. Truglia has already served 12 months of the term. He faced 51 to 63 months under sentencing guidelines.

During sentencing, it was revealed that he has US$53 million in assets, including crypto, art and jewelry, and has agreed to pay more than US$20 million in restitution.

Truglia, who pleaded guilty last year to conspiracy to commit wire fraud, has been described in court documents as part of a posse of “evil computer geniuses” who tricked telecom employees into transferring customers’ cellphone numbers to SIM cards controlled by the hackers.

But he is the only one facing criminal charges. He has already been hit with civil judgments totaling nearly $80 million for the bold attacks, which targeted wealthy crypto figures on opposite ends of the United States.

In court, Truglia apologized to the one victim named in the case and spoke of his willingness to turn his life around. “I would never steal from someone face-to-face, so the fact that I did it on the Internet is shameful,” he said in a lengthy statement before sentencing.
Rain man

His conviction is for a 2018 hack attack on Michael Terpin, founder and CEO of Transform Group, which advises blockchain companies on public relations. The hackers recruited Truglia to convert the stolen Triggers, a digital token, into Bitcoin after they gained access to Terpin’s cryptocurrency accounts, defense attorney Jeffrey Udell said in court Wednesday.

Udell revealed that his client had since been diagnosed with autism, which he said made it more difficult for Truglia to separate the virtual world from reality. He described Truglia as a highly intelligent man with no family support or network of friends other than the connections he made online.

“He could not fathom that what he did online with these people had real effects on people like Mr. Terpin,” Udell told U.S. District Judge Alvin Hellerstein in Manhattan.

Autism is often characterized by difficulties in understanding relationships and sometimes in sensing the impact of one’s behavior on others.

The judge showed some sympathy for the defense, likening Truglia to Dustin Hoffman’s autistic character in Rain Man.

“Perhaps that explains the enormous success Truglia had on the Internet,” Hellerstein said. “But that doesn’t explain taking someone else’s money.”

At the same time, the judge questioned the government’s decision to charge only Truglia, even though it knew four others were involved in the scheme.
Hunt for thieves

Realizing his balance was depleted, Terpin began an ambitious effort to track down the thieves. Enlisting the services of a high-profile Los Angeles attorney, Pierce O’Donnell, he eventually narrowed his search to a New York state teenager who was 15 at the time of the hack. Terpin accused him of leading the group that hacked his phone and took his money, according to a civil complaint he filed against the teenager in New York.

Terpin’s attorneys contacted the young man’s mother in January 2019 and were referred to his attorney, and the teenager later turned over cash, cryptocurrency and an expensive watch — worth a total of about $2 million — to Terpin, according to the complaint.

When asked where the rest of the money had gone, the teenager said two people he referred to only as Harry and Josh plus a third, “Nick Truglia,” had taken a cut, according to emails filed in the civil suit. Terpin was awarded $22 million in a settlement.

Around the time he was charged by federal prosecutors in New York, Truglia was facing charges in California, accused of stealing more than $1 million in crypto by hacking into a man’s phone several months after targeting Terpin. The man, who eventually received a $3.14 million civil judgment against Truglia, said the hack had cost him his daughter’s college fund.

The case is US v. Nicholas Truglia, 19-cr-00921, US District Court, Southern District of New York (Manhattan).