UNITED STATES DISTRICT COURT DISTRICT OF NEVADA LAS VEGAS DIVISION UNITED STATES OF AMERICA Plaintiff vs MARCUS HUTCHINS Defendant CASE NO 2 17-MJ-0825-NJK CRIMINAL Las Vegas Nevada Friday August 4 2017 3 00 p m to 3 22 p m CONTINUED INITIAL APPEARANCE IN RULE 5 c 3 PROCEEDING BEFORE THE HONORABLE NANCY J KOPPE UNITED STATES MAGISTRATE JUDGE Appearances See Next Page Court Reporter Recorded Liberty Courtroom Administrator A Caytuero Transcribed by Exceptional Reporting Services Inc P O Box 18668 Corpus Christi TX 78480-8668 361 949-2988 Proceedings recorded by electronic sound recording transcript produced by transcription service EXCEPTIONAL REPORTING SERVICES INC 2 APPEARANCES FOR Plaintiff DANIEL J COWHIG ESQ U S Attorney's Office 501 Las Vegas Blvd So Suite 1100 Las Vegas NV 89101 Defendant ADRIAN LOBO ESQ Lobo Law PLLC 400 S Fourth Street Suite 500 Las Vegas NV 89101 U S Pretrial Services Kelly Bowen Erin Oliver EXCEPTIONAL REPORTING SERVICES INC 3 1 Las Vegas Nevada Friday August 4 2017 3 00 p m 2 Call to Order 3 THE CLERK Your Honor we're now calling United 4 States of America versus Marcus Hutchins Case Number 5 2 17-mj-00825-NJK 6 Counsel please state your name for the record 7 MR COWHIG 8 THE COURT 10 MS LOBO 11 THE COURT Got you Mr Cowhig Adrian Lobo on behalf of Mr Hutchins All right THE DEFENDANT 14 THE COURT Good day This -- okay And Mr Hutchins just make sure you speak up -- 16 THE DEFENDANT 17 THE COURT 18 Good afternoon Ms Lobo and good afternoon Mr Hutchins 13 15 Dan Cowhig on behalf of the United States 9 12 Good afternoon Sorry -- into that microphone when you do talk okay 19 THE DEFENDANT 20 THE COURT Okay Thanks That's okay All right So we were 21 here yesterday 22 initial appearance regarding whether you had an attorney 23 This case got continued in the middle of the So at this time the Court has received the 24 designation of retained counsel for Adrian Lobo which the Court 25 will make a part of the record EXCEPTIONAL REPORTING SERVICES INC 4 1 Now Mr Hutchins you have the right to an identity 2 hearing in this district in which the Government will be 3 required to show that you are in fact the person named in the 4 indictment 5 that your name is Marcus Hutchins but rather that you are in 6 fact the person named Marcus Hutchins who is charged in the 7 indictment 8 9 This identity hearing is not merely to establish Now the Court has been provided a waiver of that identity hearing and preliminary hearing and it has your name 10 at the top and a signature at the bottom 11 that 12 THE DEFENDANT 13 THE COURT 14 I do Is that in fact your signature at the bottom 15 THE DEFENDANT 16 THE COURT 17 Do you recognize Yes And before you signed it did you read it 18 THE DEFENDANT 19 THE COURT And before -- Ari are you picking him 21 THE CLERK He's a little low 22 THE COURT Okay 20 23 I did up You're speaking a little softly but -- 24 THE DEFENDANT 25 THE COURT Sorry We're recording this that's why I'm EXCEPTIONAL REPORTING SERVICES INC 5 1 asking Okay 2 Now before you signed it did you have an 3 opportunity to speak with your attorney so that she could 4 explain to you what an identity hearing is and what a 5 preliminary hearing is as well as the pros and cons of waiving 6 those hearings in this district 7 THE DEFENDANT 8 THE COURT 9 Yes And did you have an opportunity to ask your attorney any questions you might have regarding what those 10 hearings are as well as the pros and cons of waiving those 11 hearings in this district 12 THE DEFENDANT 13 THE COURT I did And based on that discussion and based on 14 the questions you asked and then the answers to them you 15 received is it your intent to knowingly waive your right to an 16 identity hearing in this district 17 THE DEFENDANT 18 THE COURT It is All right So the Court finds that the 19 Defendant has knowingly waived his right to an identity hearing 20 in this district and he is identified as the named Defendant 21 in the indictment and held to answer in the Eastern District of 22 Wisconsin 23 Now Mr Hutchins did you have a chance to speak to 24 counsel today regarding what you are charged with in the 25 indictment EXCEPTIONAL REPORTING SERVICES INC 6 1 THE DEFENDANT 2 THE COURT 3 4 Okay Do you need more time to speak to your attorney Pause Defendant confers with his attorney 5 THE DEFENDANT 6 THE COURT 7 THE DEFENDANT 8 THE COURT 9 THE DEFENDANT No thanks 11 THE DEFENDANT 12 THE COURT No I don't Okay Thanks Sorry I'm having a little trouble You're a little soft-spoken 14 THE DEFENDANT 15 THE COURT Sorry No that's okay 16 nature of the charges against you 17 THE DEFENDANT 18 THE COURT 19 I don't need more time You do need more time THE COURT hearing you No thanks I'm sorry 10 13 A little bit Do you understand the I do Do you understand the purpose of this hearing 20 THE DEFENDANT 21 THE COURT I do Ms Lobo do you have any reason to 22 question the competence of the Defendant to understand the 23 charges against him or to assist in his defense 24 MS LOBO 25 THE COURT No your Honor All right Now the Court has received a EXCEPTIONAL REPORTING SERVICES INC 7 1 supplemental memorandum from Pretrial Services in addition to 2 the report from yesterday 3 supplemental memorandum 4 MR COWHIG 5 MS LOBO 6 THE COURT 7 Okay And Mr Cowhig has that changed the Government's request MR COWHIG 9 THE COURT It has not your Honor All right Is the Government ready to proceed 11 MR COWHIG 12 THE COURT 13 Yes your Honor Yes your Honor 8 10 Have both parties received that Yes your Honor And Ms Lobo is the Defense ready to proceed on the detention hearing 14 MS LOBO Yes your Honor 15 THE COURT 16 MR COWHIG Okay Mr Cowhig Thank you your Honor Based upon the 17 assessment yesterday from Pretrial Services Mr Hutchins we 18 still believe is a risk of nonappearance and a danger to the 19 community 20 In his interview following his arrest Mr Hutchins 21 admitted that he was the author of the code that became the 22 Kronos malware and admitted that he had sold that code to 23 another 24 25 Among the evidence that the Government will present at his trial will be that there are chat logs in which EXCEPTIONAL REPORTING SERVICES INC 8 1 Mr Hutchins discusses with an associate the sale of the Kronos 2 banking trojan through his associate splitting the proceeds of 3 the Kronos trojan with his associate where he complains about 4 the amount of money that he received for the sale of the 5 banking trojan and where he received a request from that 6 associate to update the Kronos banking trojan 7 in these chats is the person from whom the law enforcement 8 agents purchased the Kronos trojan on AlphaBay as specified in 9 the indictment 10 Mr Hutchins is not -- not a local The associate He does not have 11 local ties He does not have a residence here in the United 12 States 13 has financial means to travel outside the United States to flee 14 the jurisdiction 15 here in Las Vegas He is a foreign national has a foreign passport He We don't have any ties that would place him 16 In addition to that furthering the investigation as 17 -- the Eastern District of Wisconsin continued to look at what 18 has evolved since then 19 Mr Hutchins according to tweets that he made to his Twitter 20 account under the handle of Malwaretech Mr Hutchins 21 indicated that he had visited firearms ranges twice and used 22 firearms here 23 During his time here in Las Vegas As a foreign national who's not accepted under 18 24 U S Code 922 y he is a prohibited person for purposes of 18 25 United States Code 922 g 5 B That is not included on the EXCEPTIONAL REPORTING SERVICES INC 9 1 indictment that's a new development in the case 2 nonetheless we point that out to your Honor to indicate other 3 developments in the case 4 But The hearing for Mr Hutchins initial appearance in 5 the Eastern District of Wisconsin is set for August 8th 6 believe that detention based on these facts is most 7 appropriate 8 conditions that were set by Probation or proposed by Probation 9 in their recommendation today would be sufficient 10 We Were Mr Hutchins to flee we don't believe the The Kronos banking trojan continues to exist out 11 there in the wild 12 the Internet he may have the ability to take actions that 13 would either obfuscate some of the evidence related to that 14 His other codefendant is still at large 15 conditions that are set out would prevent Mr Hutchins from 16 carrying out those acts if he were so inclined 17 If Mr Hutchins were able to gain access to We don't believe the Your Honor we ask that Mr Hutchins be detained as a 18 risk of flight and a danger to the community and directed to 19 be delivered to the Marshals in the Eastern District of 20 Wisconsin 21 THE COURT 22 MS LOBO All right Yes Ms Lobo Your Honor today we are going to be 23 seeking the release of Mr Hutchins and here's why 24 the Government's argument that he is a flight risk and a danger 25 to the community that is just simply not true in this case EXCEPTIONAL REPORTING SERVICES INC As far as 10 1 Mr Hutchins is not a danger to the community 2 contrary to presenting this 922 g 5 B allegation 3 received a copy of the tweets from the Government 4 looking at them and talking to Mr Hutchins I am under the 5 impression that it -- this is only being sought for the 6 purposes of -- that this is a high-profile case and that they 7 are trying to do anything to keep him in the custody of the 8 Government 9 And I And after That being said Mr Hutchins traveled to the United 10 States for purposes of a conference 11 employed and when he was in -- at this conference he chose to 12 go to a gun range as many tourists do when they're visiting 13 Las Vegas 14 That passport was a British passport 15 inside of that passport 16 authorizing him to shoot the guns that were at that range 17 for the Government now to say that to be prosecuted or like 18 that this is now somehow a 922 g 5 B you know offense 19 then leads me to believe that well I don't see that the 20 Government is going after and prosecuting business owners who 21 are marketing this for tourists in the international hub that 22 Las Vegas is 23 He's rightfully gainfully He went to the gun range he showed his passport It contained his age He signed all of the paperwork And That being said he's not a danger to the community 24 He doesn't have any substantial -- any criminal history for 25 that matter And he's somebody who has never been in trouble EXCEPTIONAL REPORTING SERVICES INC 11 1 with the law here obviously in the United States or in 2 Britain as well 3 He has contacts and tremendous community support 4 abroad international and locally here 5 Court and if I may show these to the Court there's at least 6 12 to 15 letters from family members from other people in the 7 security community and from I believe employers as well 8 I can have you -- 9 THE COURT You may 10 MS LOBO 11 THE COURT 12 MR COWHIG 13 I brought to the If Has the Government seen that Yes they have Yeah We have your Honor We have no objection 14 THE COURT Okay 15 MS LOBO 16 As far as him being a flight risk Okay Yes you may Thank you Yes he does not 17 live here he's not a citizen He is a foreign national 18 However that being said he does work as a contractor and the 19 individual who's identified in the Pretrial Services report 20 I'm going to mess his last name up Selene Ninuno phonetic 21 who as mentioned has said that he will procure housing and that 22 he will make sure that Mr Hutchins if he is granted release 23 is given a place to stay and that he will comply with all of 24 the directives as ordered by this Court and that he will make 25 his way to Wisconsin that he will arrive there on time EXCEPTIONAL REPORTING SERVICES INC 12 1 I spoke to family in the U K prior to coming to 2 Court today and they are looking at getting any sort of rental 3 vacation rental a short-term lease so that way he can be out 4 of custody whether it be here in Las Vegas or it's in 5 Wisconsin 6 appropriate for his release 7 He'll comply with whatever the Court deems And with that your Honor I'm going to submit it on 8 those conditions as outlined within the Pretrial Services 9 Investigation reports 10 THE COURT 11 at these letters 12 Pause 13 All right 14 MS LOBO All right I'm just taking a quick look Ari if you can pass these down And if I may add one other -- if your 15 Honor is inclined or not inclined to release him for any 16 reason your Honor is that we were asking that if you won't 17 allow the family to procure a residence here that he be 18 released to a halfway house pending his transport to Wisconsin 19 20 THE COURT Okay All right Anything else from the Government 21 MR COWHIG 22 THE COURT No your Honor Okay All right The Court notes 23 initially that the indictment itself the most recent charge in 24 the indictment is in July of 2015 25 Defendant has been free to roam the world during that period of That's two years ago EXCEPTIONAL REPORTING SERVICES INC The 13 1 time and so if he is a risk of non-appearance the Court is 2 unsure as to why it took two years to -- and a danger to the 3 community why it took two years to indict him 4 he has no criminal history 5 Additionally Regarding the gun range the Court agrees with 6 Ms Lobo 7 about shooting at the range 8 People are of course charged with knowing the law 9 shooting guns at a range in Las Vegas is very different from 10 People -- there are advertisements in the airport And he showed his passport However carrying guns on the street in Las Vegas 11 The Court does not find that that means this 12 Defendant is a danger to the community and the Court is 13 persuaded by the lack of criminal history the fact that the 14 indictment -- the activities alleged in the indictment occurred 15 two years ago more than two years ago 16 At this point and before that he does seem to have 17 a great deal of family support and support from friends 18 Therefore the Court finds that conditions can be fashioned 19 Now Mr Hutchins I want you to listen very 20 carefully to all of the conditions that the Court is going to 21 impose on you 22 THE DEFENDANT 23 THE COURT Yes your Honor It is very important that you follow each 24 and every one of these conditions exactly as it is imposed on 25 you If you violate even one of these conditions you could be EXCEPTIONAL REPORTING SERVICES INC 14 1 brought back before the Court and you could face ramifications 2 including detention pending trial 3 THE DEFENDANT 4 THE COURT Do you understand that I understand your Honor All right So the Court is going to 5 order that Mr Hutchins is released on a $30 000 bond secured 6 by cash with these conditions of release 7 You are subject to Pretrial Services supervision 8 You shall use your true name only and you shall not use any 9 false identifiers 10 fraudulent access devices 11 12 13 You shall not possess or use any false or THE DEFENDANT means Ma'am I'm not really sure what that Could you elaborate please THE COURT All right You can -- you can speak to 14 your attorney and if you have any questions about it you can 15 speak to the Pretrial Services officer to make sure because 16 the Pretrial Services officer will go over this again with you 17 and will go over it so that you understand exactly 18 THE DEFENDANT 19 THE COURT 20 All right Thank you But you do understand that that is a condition correct 21 THE DEFENDANT 22 THE COURT Yes All right You shall surrender any 23 passport and or passport card to Pretrial Services or your 24 supervising officer 25 passport card You shall not obtain a new passport or EXCEPTIONAL REPORTING SERVICES INC 15 1 You shall abide by the following restriction on your 2 travel And this is a condition that may be modified depending 3 on where the residence is located but for the moment your 4 travel is restricted to Clark County Nevada which is where we 5 are right now 6 Wisconsin for court purposes And you may travel to the Eastern District of 7 Now the Court will modify that condition depending 8 on where this residence will be once the residence is secured 9 if it is not in Clark County If for example it is in 10 Wisconsin then the Court will restrict your travel to the 11 Eastern District of Wisconsin 12 condition 13 But for right now this is the You shall maintain your residence at a halfway house 14 until that residence is secured and the residence is approved 15 by Pretrial Services 16 You shall pay all or part of the cost of residing in 17 the halfway house based upon your ability to pay as Pretrial 18 Services or the supervising officer determines 19 20 21 You shall avoid all contact directly or indirectly with any codefendants unless it is in the presence of counsel You shall participate in home detention You are 22 restricted to your residence at all times except for 23 employment education religious services medical substance 24 abuse or mental health treatment attorney visits court 25 appearances court ordered obligations or other activities EXCEPTIONAL REPORTING SERVICES INC 16 1 2 preapproved by Pretrial Services or the supervising officer You shall submit to GPS monitoring technology and 3 abide by all of the program requirements and instructions 4 provided by Pretrial Services or the supervising officer 5 related to the proper operation of that technology 6 You shall not tamper with damage or remove the 7 monitoring device and you shall charge the equipment according 8 to the instructions provided by Pretrial Services or the 9 supervising officer 10 You shall pay all or part of the cost of the location 11 monitoring program based upon your ability to pay as determined 12 by Pretrial Services or the supervising officer 13 And you shall not have access to computers or 14 connecting devices which have Internet instant messaging IRC 15 servers and or the worldwide web including but not limited to 16 PDAs cellphones iPods iPads tablets ereaders Wii 17 PlayStation Xbox or any such devices at home your place of 18 employment or in the community 19 Do you understand those conditions 20 THE DEFENDANT 21 THE COURT I understand All right And the next hearing is set 22 for August 8th in the Eastern District of Wisconsin 23 have an address of that courthouse Mr Cowhig 24 25 MR COWHIG Yes your Honor Do you August 8th at 9 30 a m before Magistrate Judge William E Duffin in EXCEPTIONAL REPORTING SERVICES INC 17 1 Courtroom 242 2 Wisconsin Avenue Milwaukee Wisconsin 3 4 The U S District Court is located 517 East THE COURT All right there for that hearing Do you understand that 5 THE DEFENDANT 6 THE COURT 7 I understand All right Is there anything else on this matter 8 MR COWHIG 9 MS LOBO 10 11 You will be required to be THE COURT No your Honor No your Honor All right Thank you everyone Pause 12 MS LOBO Judge 13 THE DEFENDANT 14 MS LOBO Sorry If we could recall briefly He doesn't 15 have I D to travel to U S because his passport has been -- to 16 Wisconsin 17 THE COURT 18 MR SPEAKER 19 MS LOBO 20 THE COURT 21 MS LOBO 22 Three days to get there should be -- It'd take yeah Right But he's going to need that to fly to Wisconsin 23 THE COURT 24 MS LOBO 25 Oh Okay Let's recall this Sorry Pause from 3 19 to 3 20 p m EXCEPTIONAL REPORTING SERVICES INC 18 1 THE COURT Mr Cowhig 2 THE CLERK Mr Cowhig 3 THE COURT We're going to recall the last case 4 THE CLERK Your Honor we're now recalling United 5 States of America versus Marcus Hutchins Case Number 2 17-mj- 6 00825-NJK 7 Counsel please state your name for the record 8 MR COWHIG 9 Dan Cowhig your Honor on behalf of the United States 10 THE COURT 11 MS LOBO 12 THE COURT 13 MS LOBO All right Mr Cowhig Adrian Lobo on behalf of Mr Hutchins Ms Lobo Your Honor I asked that the case be 14 recalled to address the issue of his I D 15 British passport and he is going to be -- presumably he's 16 going to be purchasing tickets to fly to Wisconsin and set up 17 residence there as well 18 stipulation that the passport only be used for purposes of 19 domestic flights and procuring the residence here I would ask 20 that the Court reconsider that option 21 22 23 24 25 THE COURT He only has a So if there is any sort of Does Mr Hutchins have any sort of U K Driver's License that could be used THE DEFENDANT Yeah I did have one but it was stolen last week THE COURT All right EXCEPTIONAL REPORTING SERVICES INC 19 1 2 THE DEFENDANT I may be able to get a new one mailed out but I'm not sure yet 3 MR COWHIG Your Honor assuming Mr Hutchins will 4 be flying to Wisconsin there are -- there are ways to get him 5 on that aircraft without the passport 6 7 THE COURT have to leave pretty quickly for this particular flight 8 9 10 There are ways however he's going to MR COWHIG Yes your Honor The passport will not be required for his flight to -- within destinations within CONUS 11 Without going into too much detail on the record 12 this is something we discussed already with TSA and the 13 immigration folks 14 aircraft and fly to Wisconsin 15 THE COURT 16 MR COWHIG 17 Mr Hutchins will be able to board an MS LOBO 19 THE COURT Okay Yes your Very well All right Then that will -- then the conditions will remain as they were stated before 21 MS LOBO 22 THE COURT 23 Without the British passport Honor 18 20 Without his identification All right Thank you All right This proceeding was adjourned at 3 22 p m 24 25 EXCEPTIONAL REPORTING SERVICES INC CERTIFICATION I certify that the foregoing is a correct transcript from the electronic sound recording of the proceedings in the aboveentitled matter August 10 2017_ TONI HUDSON TRANSCRIBER EXCEPTIONAL REPORTING SERVICES INC                     National Security Archive    Suite 701  Gelman Library  The George Washington University    2130 H Street  NW  Washington  D C  20037    Phone  202 994‐7000  Fax  202 994‐7005  nsarchiv@gwu edu