\. BRYAN SCHRODER United States Attorney ADAM ALEXANDER Assistant 0.S. Attorney Federal Building & U.S. Courthouse 222 West Seventh Avenue, #9, Room 253 Anchorage, Alaska 99513-7567 Phone: (907) 271-5071 Fax: (907) 271-1500 Email: adam.alexander@usdoj.gov KENNETH A. BLANCO Acting Assistant Attorney General CATHERL'\IE ALDEN PELKER Trial Attorney Computer Crime & Intellectual Property Section 1301 New York Avenue, NW, Suite 600 Washington, DC 20005 Telephone: (202) 514-1026 Facsimile: (202) 514-6113 Emai I: catherine.pelker@usdoj.gov IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ALASKA UNITED STATES OF AMERICA, Plaintiff, vs. DALTON NOitlv1AN, Defendant. ) No. 3:17-cr-00167-TMB ) ) ) PLEA AGREEMENT ) ) ) ) ) ) Unless the parties jointly inform the Court in writing of any additional agreements, this document in its entirety contains the terms of the plea agreement between the defendant and the United States. This agreement is limited Case 3:17-cr-00167-TMB Document 5 Filed 12/05/17 Page 1 of 17 r Attorney's Office for the District of Alaska and the Computer Crime and Intellectual Property Section); it does not bind other federal, state, or local prosecuting authorities. l. SUMMARY OF AGREEMENT, Jt'EDERAL RULE OF CRIMINAL PROCEDURE 11 A. Summary of Agreement The defendant agrees to plead guilty to the sole count of the [nfonnation in this case: conspiracy to violate 18 U.S.C. § 1030(a)(5) in violation of 18 U.S.C. § 371. The Prosecuting Offices agree not to prosecute the defendant further for any other offense related to the events that resulted in the charge contained in the Information. The ( 1 crc1dant will waive all rights to appeal the conviction and sentence imposed under this agreement. The defendant will also waive all rights to collaterally attack the conviction and sentence, except on the grow1ds of ineffective assistance of counsel or the voluntariness of the plea. B. Federal Rule of Criminal Procedure 11 Unless the parties otherwise inform the Court in writing, Federal Ruic of Criminal Procedure l l(c)(l)(A) and (B) will control this plea agreement. Thus. the defendant may not withdraw from this agreement or the guilty plea if the Court rejects the parties· sentencing recommendations at the sentencing hearing. II II U.S. v. Dalton Norman Page 2 of 17 Case 3:17-cr-00167-TMB Document 5 Filed 12/05/17 Page 2 of 17 IJ. CHARGES, ELEMENTS, FACTUAL BASIS, STATUTORY PENALTIES AND OTHER MATTERS AFFECTING SENTENCE, FORFEITURE, lU:STIT UTION Charges A. The defendant agrees to plead guilty to the sole count of the Information: 1. Conspiracy to violate 18 U.S.C. § 1030(a)(S)(A) in violation of 18 u.s.c. § 371; Elements B. Th ... clen'ents of the charges to which lhe defendant is pleading guilty are as follows: 1. An agreement between the defendant and at least one other person to commit a violation of 18 U.S.C. 1030(a)(S)(A) (causing intentional damage to a protected computer, to wit knowingly causing the transmission of a program, code, or command to a computer with the intention of impairing without authorization the integrity or availability of data, a program, system, or information; and the computer was used in or affected interstate or foreign commerce or communication); 2. The defendant became a member of the conspiracy knowing of at least one of its objects and intending to help accomplish it; and 3. One of the members of the conspiracy performed at least one overt act for the purpose of carrying out the conspiracy. U.S. v. Dalton Norman Page 3 of 17 Case 3:17-cr-00167-TMB Document 5 Filed 12/05/17 Page 3 of 17 , C. Factual Basis The defendant admits the truth of the allegations in the sole count of Infmmation and the ttuth of the foUowing statement, and the parties stipulate that the Court may rely upon this statement to support the factual basis for the guilty plea and for the imposition of the sentence: Beginning in September 2016, Dalton Norman agreed to work together with identified persons to operate a botnet- a collection of computers infected with malicious software and controlled as a group without the knowledge or permission of the computers' owners. The co-conspirators built the botnet comprised primarily of hijacked internet­ connected home computing devices in order to: (1) initiate powerful distributed denial of service attacks against business competitors and others against whom the co-conspirators held grudges: and (2) provide a source of revenue to the co-conspirators, who could (a) rent the botnet to third-parties in exchange for payment; and (b) use the botnet to extort hosting companies and others into paying protection money in order to avoid being targeted by denial of service attacks. Working together, Norman and his co-conspirators successfully infected hundreds of thousands or internet-connected computing devices, including computers in Alaska and other states, with malicious software kno\\-n as Mirai and enlisted these devices into a large botnet known as the Mirai botnet. I! II U.S. v. Dalt,.n N,1rman Page 4 of 17 Case 3:17-cr-00167-TMB Document 5 Filed 12/05/17 Page 4 of 17 Norman and his co-conspirators would scan the internet for vulnerable devices and. without authorization, attempt to gain administrative access to those devices through the use of credentials that they were not authorized to employ. Norman and his co-conspirators attempted to discover both known and previously undisclosed vulnerabilities that would allow thc:-r, to .·urrcptitiously attain administrative or high-level access to victim devices for the purpose of forcing the devices to participate in the Mirai botnet. Utilizing undisclosed vulnerabilities meant that Norman and his co-conspirators would not have to compete with other criminal actors seeking to develop illicit botnets for access to these devices. Devices with such vulnerabilities were compromised by Norman and his co­ conspirators without authorization of the owner of the affected devices. In August and September 2016, during the course of the conspiracy, Norman and his co-conspirators used the Mirai botnet they created to initiate denial of service attacks against a number of U.S.-bascd hosting companies and other targets. Distributed denial of service ("DDOS") attacks occur when criminal actors use multiple devices acting in unison to flood the victim's Internet connection. The overwhelming amount of traffic generated by such an attack, results in the target computer being unable to send, receive or respond to commands. DDOS attacks are often directed at servers that host websites. with the intent of rendering those websites unavailable to the public. In addition to the damage inflicted on the intended target, DDOS attacks can result in significant collateral consequences for upstream providers as well. The DDOS attacks conducted by Norman and his cr:-cnn�;,irators caused loss during a one-year period aggregating at least $5.000 U.S. v. Dalton Norman Page5ofl7 Case 3:17-cr-00167-TMB Document 5 Filed 12/05/17 Page 5 of 17 in value and caused damage affecting IO or more protected computers during a 1-year period. In ad(!i kn, during the same period, the co-conspirators granted access to their Mirai botnet to other criminals in exchange for payment. With the approval of Nonnan and his co-conspirators. these customers used the Mirai botnet to conduct denial of service attacks that caused loss during a one-year period aggregating at least $5,000 in value and caused damage affecting 10 or more protected computers during a I -year period. N0tman personally performed a number of acts in furtherance of the conspiracy, including, but not limited to: (a) In September 2016, DALTON NORMAN worked with his co-conspirators in order to expand the size of the Mirai botnet. By infecting additional devices, the Mirai co-conspirators were able to increase the power and effectiveness of their attacks against websites and web hosting companies located in the United States and abroad. Over 300,000 devices ultimately became part of the Mirai botnet and were used by NORMAN and others to unlawfully participate in DDOS attacks and other criminal activity. Some of these devices were located in the District ofAlaska. (b) In September 2016, defendant DALTON NOR.\1AN identified vulnerabilities for thousands ofloT devices. Many of these vulnerabilities were private zero­ day vulnerabilities, meaning vulnerabilities that had not yet been disclosed. U.S. v. Dalton Norman Page 6 of 17 Case 3:17-cr-00167-TMB Document 5 Filed 12/05/17 Page 6 of 17 NORMAN sought out and identified these vulnerabilities in order to enlist the devices into the Mirai botnet. In September 2017, DALTON NORMAN developed exploits in order to take (c) advantage of the identified vulnerabilities. DALTON NORMAN, working with his co-conspirators, then executed these exploits in order to gain control of victim devices. D. Statutory Penalties and Other Matters Affecting Sentence 1. Statutory Penalties D1c maximum statutory penalties applicable to the charge to which the defendant is pleading guilty, based on the facts to which the defendant will admit in support of the guilty plea, are as follows: Count l : Conspiracy to violate 18 U.S.C. § 1030(a)(5)(A) 1) Imprisonment: Five years 2) Fine: $250,000 3) Supervised Release: Three years 4) Special Assessment: $100 2. Other Matters Affecting Sentence a. Conditions Affecting the Defendant's Sentence The following conditions may also apply and affect the defendant's sentence: 1) pursuant to Comment 7 of U.S.S.G. § SE! .2, the Court may impose an additional fine to pay the costs to the government of any imprisonment and supervised release term; U.S. v. Dalton :-lorman Page 7 of I 7 Case 3:17-cr-00167-TMB Document 5 Filed 12/05/17 Page 7 of 17 I • 2) pursuant to 18 U.S.C. § 36 l2(f), unless otherwise ordered, if the Court imposes a line of more than $2,500, interest will be charged on the balance not paid within 15 days after the judgment date; 3) upon violating any condition of supervised release, a further term of imprisonment equal to the period of the supervised release may be imposed, with no credit for the time already spent on supervised release; 4) the Court may order the defendant to pay restitution pursuanl to the 18 U.S.C. § 3663 and U.S.S.G. § SEl.l : and if 18 U.S.C. § 3663A (mandatory restitution for certain crimes) applies, the Court shall order the defendant to pay restitution. b. Payment of Special Assessment The d-:fendant agrees to pay the entire special assessment in this case on the day the Court imposes the sentence. All payments will be by check or money order, and are to be delivered to the Clerk of Court, United States District Court, 222 W. 7th Ave. Box 4. Rm. 229, Anchorage, AK 99513-7564. c. Consequences of Felony Conviction A1:y ;,crrnn convicted of a federal felony offense may lose or be denied federal benefi.ts including any grants, loans, licenses, food stamps, welfare or other forms of public assistance, as well as the right to own or possess any firearms, the right to vote, the right to hold public office. and the right to sit on a jury. lf applicable, any defendant who is not a United States citizen may be subject to deportation from the United States following conviction for a criminal offense and will not be permitted to return unless the defendanl specifically receives the prior approval of the United States Attorney General. U.S. v. Dalton Nonnan Page 8 of 17 Case 3:17-cr-00167-TMB Document 5 Filed 12/05/17 Page 8 of 17 .F. Restitution The panics agree that the proper restitution amount will be determined at sentencing. ID. ADVlSORY UNITED STATES SENTENCING GUIDELINES, GUIDEUNE APPLICATION AGREEMENTS, SENTENCING RECOMMEND A TIONS A. Advisory United States Sentencing Guidelines The Court must consult the advisory United States Sentencing Commission GuidelLncs [U.S.S.G.] as well as the factors set forth in 18 U.S.C. § 3553(a) when considering the sentence to impose. The U.S.S.G. do not establish the statutory maximum or minimum sentence applicable to the offense to which the defendant is pleading guilty. The U.S.S.G. are not mandatory and the Court is not bound to impose a sentence recommended by the U.S.S.G. B. Guideline Application Agreements Pursuant to Federal Rule of Criminal Procedure 11 (c )( I )(B), and to assist the Court in determining the appropriate sentence, the parties stipulate that the Offense Level under the U.S.S.G is not less than: 18 u.s.c. § 371 § 2Bl.l(a) Base Offense Level � 2Bl..(b)(2)Victims (IO or more) § 2BJ.l{b)(10) Sophisticated means 6 +2 +2 U.S. v. Dalton Norman Page 9 of 17 Case 3:17-cr-00167-TMB Document 5 Filed 12/05/17 Page 9 of 17 TI1e pan•es have not reached an agreement on the amount of loss, which will be determined at sentencing. t. Acceptance of Responsibility If the United States concludes that the defendant has satisfied the criteria set out in U.S.S.G. § 3E1.l and the applicable application notes, the United States agrees to recommend the defendant for a two level downward adjustment for acceptance of responsibility and, if U.S.S.G. § 3El.l(b) applies, to move for the additional one level adjustment for acceptance of responsibility. If, at any time prior to imposition of the sentence. the United States concludes that the defendant has failed to fully satisfy the criteria set out in U.S.S.G. § 3EI. I, or has acted in a manner inconsistent with acceptance of responsibility, the United States will not make or, if already made, will withdraw this recommendation and motion. C. Sentencing Recommendations The United States Probation Office will prepare the defendant's pre-sentence report in which it will include a recommended calculation of the defendant's sentence range under the U.S.S.G. Both the United States and the defendant will have the opportunity to argue in support ,f 0:· in opposition to the guideline sentence range calculation the U.S.P.O. recommends, as well as present evidence in suppo,t of their respective sentencing arguments. ·n,e parties are free to recommend to the Court their respective positions on the appropriate sentence to be imposed in this case based on the stipulated facts set forth in U.S. v. Dalton 1 orman Page 10 of 17 Case 3:17-cr-00167-TMB Document 5 Filed 12/05/17 Page 10 of 17 Section ll.C., any additional facts established at the imposition of sentence hearing. the applicabl6 statutory penalty sections, the advisory U.S.S.G., and the sentencing factors set forth in 18 U.S.C. § 3553. IV. ADDITIONAL AGREEMENTS BY UNITED STATES In exchange for the defendant's guilty plea and the Court's acceptance of the defendant's plea and the terms of this agreement, the United States agrees that it will not prosecute the defendant further for any other offense - now known - arising out of the subject of the investigation related to the charges brought in the Information in this case and the defendant's admissions set forth in Section II.C. ProviJ.:d, however, if the defendant's guilty plea or sentence is/are rejected, withdra�-11, vacated, reversed, set aside, or modified, at any time, in any proceeding, for any reason, the United States will be free to prosecute the defendant on all charges arising out of the investigation of this case including any charge;:s dismissed pursuant to the terms of this agreement which charges will be automatically reinstated as well as for perjury and false statem.:nt ·. 111c defendant hereby agrees that he waives any defense that the statute of limitations bars the prosecution of such a reinstated charge. V. W AIYER OF TRIAL RIGHTS, APPELLATE RIGHTS, COLLATERAL ATTACK RIGHTS, CLAIM .FOR ATTORNEY FEES AND COSTS, AND RULE 410 A. Trial Rights Being m are of the following, the defendant waives these trial rights: U.S. v. Dalton Norman Page I l of 17 Case 3:17-cr-00167-TMB Document 5 Filed 12/05/17 Page 11 of 17 - the right to have the charges presented to the grand jury prior to entering lhe guilty plea; - The right to a speedy and public lrial by jury on the factual issues establishing guilt or any fact affecting the mandatory minimum and statutory penalties, and any issue affecting any interest in any assets subject to forfeiture; - The right to object to the composition of the grand or trial jury; - The right to plead not guilty or to persist in that plea if it bas already been made; - The right to be presumed innocent and not to suffer any criminal penalty unless and until the defendant's guilt is established beyond a reasonable doubt; - The right to be represented by counsel at trial and if necessary to have a counsel appointed at public expense to represent the defendant at trial the defendant is not waiving the right to have counsel continue to represent the defendant during the sentencing phase or this case; - The right to confront and cross ex.amine witnesses against the defendant, and the right to subpoena witnesses to appear in the defendant's behalf; - The right to remain silent at trial, with such silence not to be used against the defendant, and the right to testify in the defendant's own behalf; and U.S. v. Dalton Norman Page 12 of 17 Case 3:17-cr-00167-TMB Document 5 Filed 12/05/17 Page 12 of 17 - The right to contest the validity of any searches conducted on the defendant's property or person. B. Appellate Rights The defendant waives the right to appeal the conviction resulting from the entry of guilty pica to the charge set forth in this agreement. The defendant further agrees that if the Cour! impo:,;es a sentence that does not exceed the statutory maximum penalties - as set forth in Section II.D. above in this agreement, the defendant waives without exception the right lo appeal on all grounds contained in 18 U.S.C. § 3742 the sentence the Court imposes - including forfeiture (if applicable) or tenns or conditions of probation (if applicable) or supervised release, any fines or restitution. By waiving these rights, the defendant understands that the conviction and sentence the Court imposes will be final. No other court will conduct appellate review of the conviction or the sentence. The defendant agrees that the appellate and collateral attack waivers contained within this agreement will apply to any U.S.C. § 3582(c) modifications, as well as the district court's decision to deny any such modification. Should the defendant file a notice of appeal in violation in this agreement, it will constitute a material breach of the agreement. The government is free to reinstate any dismissed charges, and withdraw any motions for downward departures, or sentences below the mandatory minimum made pursuant to 18 U.S.C. § 3553(e). U.S. v. Dalton Norman Page 13 of 17 Case 3:17-cr-00167-TMB Document 5 Filed 12/05/17 Page 13 of 17 C. Collateral Attack Rights The defendant agrees to waive all rights to collaterally attack the resulting conviction and/or sentence - including forfeiture (if applicable) or terms or conditions of probation (if applicable) or supervised release, and any fines or restitution - the Court imposes. The only exceptions to this collateral attack waiver are as follo"vs: .I) any challenge to the conviction or sentence alleging ineffective assistance of counsel - based on information not now known to the defendant and which, in the exercise of reasonable diligence, cnuld not be known by the defendant at the time the Court imposes sentence; and 2) a challenge to the voluntariness of the defendant's guilty plea. D. Claim for Attorney Fees and Costs Because this is a negotiated resolution of the case, the parties waive any claim for the award of attorney fees and costs from the other party. E. Evidence Rule 410 and Fed. R. Crim. P. ll(t) By signing this agreement, the defendant admits the truth of the facts in the Factual Basis portion ol this agreement set forth in Section II.C. The defendant agrees that the statements made by him in signing this agreement shall be deemed usable and admissible against the defendant as stipulations in any hearing, trial or sentencing that may follow, even if the defendant fails to enter a guilty pica pursuant to this agreement. The foregoing provision acts as a modification, and express waiver, of Federal Rule of Evidence 410 and Fedcral Ru l c of Criminal Procedure 1 1 (t). U.S. v. Dalton Nonnan Page 14 of 17 Case 3:17-cr-00167-TMB Document 5 Filed 12/05/17 Page 14 of 17 VI. ADEQUACY OF THE AGREEMENT Pursuant to Local Criminal Rule 11.2 ( d)(7) and (8). this plea agreement is appropriate in that it confom1s with the sentencing goals that would otherwise be appUcable to the defendant's case if the defendant had gone to trial and had been convicted on all counts in the charging instrument. VII. THE OE.FENDANT'S ACCEPTANCE O.F THE TERMS OF AGREEMENT THIS PLEA I, D:llton Norman, the defendant. affirm this document contains all of the agreements made between me - with the assistance of my attorney-· and the United States regarding my plea. There arc no other promises, assurances, or agreements the United States has made or entered into with me that have affected my decision to enter any plea of guilty or 10 enter into this agreement. If there are any additional promises. assurances, or agreements, 1 and the United States will jointly inform the Court in writing before I enter my guilty plea. I understand that no one, including my attorney, can guarantee the outcome of my case or what sentence the Court may impose if I plead guilty. If anyone. including my attorney. has done or said anything other than what is contained in this agreement 1 will infonn the Court when I stand before it to enter my plea. If there were, I would so inform the Court. I enter into this agreement understanding and agreeing that the conditions set forth herein are obligatory and material to this ag reement and that any failure on my part to fulfill U.S. v. Dalton Nom1an Pagel5ofl7 Case 3:17-cr-00167-TMB Document 5 Filed 12/05/17 Page 15 of 17 these obligations will constitute a material breach of this agreement. If I breach this agreement, l agree the United States, in its sole discretion, may withdraw from this agreement and may reinstate prosecution against me on any charges arising out of the investigation in this matter. lf my compliance with the terms of this plea agreement becomes an issue, at an appropriate hearing, during which I agree any of my disclosures will be admi�;stble, the Court will determine whether or not I have violated the terms of this agreement. I understand the government's burden to prove a breach will be by a preponderance of the evidence. I understand the Court will ask me under an oath to answer questions about the offense to which I am pleading guilty and my understanding of this plea agreement. I understand that r may be prosecuted if I make false statements or give false answers and may suffer other consequences set forth in this agreement. l have read this plea agreement carefully and understand it thoroughly. I know of no reason why the Court should find me incompetent to enter into this agreement or to enter my plea. l enter into this agreement knowingly and voluntarily. I understand that anything that I discuss with my attorney is privileged and confidential, and cannot be revealed without my permission. Knowing this. I agree that this document will be filed with the Court. I am fully satisfied with the representation given me by my attorney ru1d am prepared to repeat this statement at the time I stand before the Court and enter my guilty plea. My attorney and I have discussed all possible defenses to the charges to which T am U.S. v. Dalton Norman Page 16 of 17 Case 3:17-cr-00167-TMB Document 5 Filed 12/05/17 Page 16 of 17 pleading guilty. My attorney has investigated my case and followed up on any information and issues I have raised to my satisfaction. My attorney has taken the time to fully explain the legal and factual issues involved in my case to my satisfaction. We have discussed the statutes app :cable to my offense and sentence as well as the possible effect the U.S.S.G. may have on my sentence. Based on my complete understanding ofthis plea agreement, I therefore admit that l am guilly ofthe sole count of the Information. DATED: II /1� / l1 �� Dalton Norman Defendant As counsel for the defendant, I have conveyed all written plea offers and I have discussed the terms of this plea agreement with the defendant, have fully explained the charge to which the defendant is pleading guilty and the necessary elements, all possible defenses, and the consequences of a guilty pica to a felony. Based on these discussions. I have no reason to doubt that the defendant is knowingly and voluntarily entering into this agreement and entering a plea of guilty. I know ofno reason to question the defendru1t's competency to make these decisions. If, prior to the imposition of sentence, I become aware of any reason to question the defendant's competency to enter into this plea agreement or to enter a plea of guilty, I will i ediately inform the cou1t. DATED:__�/-/ _/27 __,_.,....µ-+-7-- Attorney for Dalton Norman On behalf of the United States, I accept the defendant's offer to plead guilty under the terms of this plea agreement. DATED: I 2. U.S. (, Ll f v. Dalton Norman Page 17 of 17 Case 3:17-cr-00167-TMB Document 5 Filed 12/05/17 Page 17 of 17