Fraud Trial Begins for Former UBS Systems Admin

A former systems administrator for financial services firm UBS went on trial this week for allegedly infecting the company’s network with malicious code that cost millions of dollars to recover from.

Roger Duronio, 63, faces one count each of securities fraud and computer sabotage, and two counts of mail fraud in U.S. District Court in Newark, N.J. He has pleaded not guilty to the charges. In opening statements Tuesday, federal prosecutors painted Duronio as an employee so irate about his less-than-desired salary bonus in late 2001 that he developed malicious code to delete files and cause a major disruption on UBS’s network once the "computer bomb" detonated.

According to prosecutors, shortly after Duronio created the code in late 2001, he quit his job and banked thousands in "put" options against UBS, in which he would profit if the company’s stock price declined by March 15, 2002, as a result of the attack he had allegedly set to launch against computer systems on March 4.

Prosecutors said that "within an hour or so" of walking out the door from UBS, Duronio was at a securities office buying "puts" against UBS. The mail fraud charges relate to confirmation of purchases of the puts that were sent through the U.S. Postal Service.

The damage caused by the malicious code impaired trading at the firm that day, hampering more than 1,000 servers and 17,000 individual workstations. The attack cost UBS about US$3 million to assess and repair, said Assistant U.S. Attorney V. Grady O’Malley.

"It took hundreds of people, thousands of man hours and millions of dollars to correct," O’Malley told jurors.

Lawyers defending Duronio said in opening remarks that UBS withheld information about the computer fraud investigation from the government. Other UBS users could have accessed the company’s system using Duronio’s password, and UBS’s systems were also vulnerable to outside attackers, they said.

Duronio had also purchased puts against other companies in addition to UBS, said defense attorney Chris Adams, a partner at Walder Hayden & Brogan in Roseland, N.J., in his opening statement.

U.S. District Judge Joseph Greenaway is hearing the case.

-Shelley Solheim, IDG News Service (New York Bureau)

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Copyright © 2006 IDG Communications, Inc.

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