LulzSec announced moments ago that it hacked the Atlanta chapter of Infragard, an FBI affiliate, and uploaded the company's user database to the Internet. The cracking group also claims that documents yielded by the intrusion expose an associated company's use of botnets (networks of malware-infected personal computers) and an attempt by someone involved with it to pay LulzSec not to expose the breach.

We just hacked an FBI affiliated website (Infragard, specifically the Atlanta chapter) and leaked its user base. We also took complete control over the site and defaced it, check it out if it's still up: http://infragardatlanta.org/ While not very many logins (around 180), we'd like to take the time to point out that all of them are affiliated with the FBI in some way. Most of them reuse their passwords in other places, which is heavily frowned upon in the FBI/Infragard handbook and generally everywhere else too. One of them, Karim Hijazi, used his Infragard password for his personal gmail, and the gmail of the company he owns. "Unveillance", a whitehat company that specializes in data breaches and botnets, was compromised because of Karim's incompetence. We stole all of his personal emails and his company emails. We also briefly took over, among other things, their servers and their botnet control panel. After doing so, we contacted Karim and told him what we did. After a few discussions, he offered to pay us to eliminate his competitors through illegal hacking means in return for our silence. Karim, a member of an FBI-related website, was willing to give us money and inside info in order to destroy his opponents in the whitehat world. We even discussed plans for him to give us insider botnet information.

Lulzsec recently defaced PBS's website and stole more than 1m user records and coupon codes at Sony Pictures Entertainment's.

The data posted online includes the personal info for 180 users at Infragard, which is a private-public partnership between the FBI and U.S. businesses "designed to protect IT systems from hacker attacks and other intrusions."

It also includes purported chatlogs with Hijazi; and more than 700MB of internal emails discussing the operations of his company, which include references to network surveillance of Libyan interests.

Though encrypted, the Infragard passwords were also cracked. Of their wide reuse for personal email and other online services, LulzSec adds: "they should be considered imbeciles from this moment until their moment of death."

For the curious, the YouTube video used to deface Infragard's website features someone LulzSec has argued with on Twitter, being insulted by an interviewer.

UPDATE: Karim Hijazi, the CEO of Unveillance, responding to LulzSec's claims today:

Over the last two weeks, my company, Unveillance, has been the target of a sophisticated group of hackers now identified as "LulzSec." During this two week period, I was personally contacted by several members of this group who made threats against me and my company to try to obtain money as well as to force me into revealing sensitive data about my botnet intelligence that would have put many other businesses, government agencies and individuals at risk of massive Distributed Denial of Service (DDoS) attacks. In spite of these threats, I refused to pay off LulzSec or to supply them with access to this sensitive botnet information. Had we agreed to provide this data to them, LulzSec would have been able to grow the size and scope of their DDoS attack and fraud capabilities.

Update: And here's LulzSec with another response:

Karim compromised his entire company and the personal lives of his colleagues, then attempted to silence us with promises of financial gain and mutual benefits … [he] used the same password for all of his online accounts and all accounts linked to a company he owns. Then he tried to bargain with hackers so his company wouldn't crumble.

LulzSec versus FBI Affiliates + Whitehats [Pastebin]