February 17, 2018 Mueller Indictment - The "Russian Influence" Is A Commercial Marketing Scheme Yesterday the U.S. Justice Department indicted the Russian Internet Research Agency on some dubious legal grounds. It covers thirteen Russian people and three Russian legal entities. The main count of the indictment is an alleged "Conspiracy to Defraud the United States". The published indictment gives support to our long held believe that there was no "Russian influence" campaign during the U.S. election. What is described and denounced as such was instead a commercial marketing scheme which ran click-bait websites to generate advertisement revenue and created online crowds around virtual persona to promote whatever its commercial customers wanted to promote. The size of the operation was tiny when compared to the hundreds of millions in campaign expenditures. It had no influence on the election outcome. The indictment is fodder for the public to prove that the Mueller investigation is "doing something". It distracts from further questioning the origin of the Steele dossier. It is full of unproven assertions and assumptions. It is a sham in that none of the Russian persons or companies indicted will ever come in front of a U.S. court. That is bad because the indictment is build on the theory of a new crime which, unless a court throws it out, can be used to incriminate other people in other cases and might even apply to this blog. The later part of this post will refer to that. In the early 1990s some dude in St.Petersburg made a good business selling hot dogs. He opened a colorful restaurant. Local celebrities and politicians were invited to gain notoriety while the restaurant served cheap food for too high prices. It was a good business. A few years later he moved to Moscow and gained contracts to cater to schools and to the military. The food he served was still substandard. But catering bad food as school lunches gave him, by chance, the idea for a new business: Parents were soon up in arms. Their children wouldn’t eat the food, saying it smelled rotten. As the bad publicity mounted, Mr. Prigozhin’s company, Concord Catering, launched a counterattack, a former colleague said. He hired young men and women to overwhelm the internet with comments and blog posts praising the food and dismissing the parents’ protests. “In five minutes, pages were drowning in comments,” said Andrei Ilin, whose website serves as a discussion board about public schools. “And all the trolls were supporting Concord.” The trick worked beyond expectations. Prigozhin had found a new business. He hired some IT staff and low paid temps to populate various message boards, social networks and the general internet with whatever his customers asked him for. You have a bad online reputation? Prigozhin can help. His internet company will fill the net with positive stories and remarks about you. Your old and bad reputation will be drowned by the new and good one. Want to promote a product or service? Prigozhin's online marketeers can address the right crowds.

Pic: A Russian influencer To achieve those results the few temps who worked on such projects needed to multiply their online personalities. It is better to have fifty people vouch for you online than just five. No one cares if these are real people or just virtual ones. The internet makes it easy to create such sock-puppets. The virtual crowd can then be used to push personalities, products or political opinions. Such schemes are nothing new or special. Every decent "western" public relations and marketing company will offer a similar service and has done so for years. While it is relatively easy to have sock-puppets swamp the comment threads of such sites as this blog, it is more difficult to have a real effect on social networks. These depend on multiplier effects. To gain many real "likes", "re-tweets" or "followers" an online persona needs a certain history and reputation. Real people need to feel attached to it. It takes some time and effort to build such a multiplier personality, be it real or virtual. At some point Prigozhin, or whoever by then owned the internet marketing company, decided to expand into the lucrative English speaking market. This would require to build many English language online persona and to give those some history and time to gain crowds of followers and a credible reputation. The company sent a few of its staff to the U.S. to gain some impressions, pictures and experience of the surroundings. They would later use these to impersonate as U.S. locals. It was a medium size, long-term investment of maybe a hundred-thousand bucks over two or three years. The U.S. election provided an excellent environment to build reputable online persona with large followings of people with discriminable mindsets. The political affinity was not important. The personalities only had to be very engaged and stick to their issue - be it left or right or whatever. The sole point was to gain as many followers as possible who could be segmented along social-political lines and marketed to the companies customers. Again - there is nothing new to this. It is something hundreds, if not thousands of companies are doing as their daily business. The Russian company hoped to enter the business with a cost advantage. Even its mid-ranking managers were paid as little as $1,200 per month. The students and other temporary workers who would 'work' the virtual personas as puppeteers would earn even less. Any U.S. company in a similar business would have higher costs. In parallel to building virtual online persona the company also built some click-bait websites and groups and promoted these through mini Facebook advertisements. These were the "Russian influence ads" on Facebook the U.S. media were so enraged about. They included the promotion of a Facebook page about cute puppies. Back in October we described how those "Russian influence" ads (most of which were shown after the election or were not seen at all) were simply part of a commercial scheme: The pages described and the ads leading to them are typical click-bait, not part of a political influence op.

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One builds pages with "hot" stuff that hopefully attracts lots of viewers. One creates ad-space on these pages and fills it with Google ads. One attracts viewers and promotes the spiked pages by buying $3 Facebook mini-ads for them. The mini-ads are targeted at the most susceptible groups. A few thousand users will come and look at such pages. Some will 'like' the puppy pictures or the rant for or against LGBT and further spread them. Some will click the Google ads. Money then flows into the pockets of the page creator. One can rinse and repeat this scheme forever. Each such page is a small effort for a small revenue. But the scheme is highly scaleable and parts of it can be automatized. Because of the myriad of U.S. sanctions against Russia the monetization of these business schemes required some creativity. One can easily find the name of a real U.S. person together with the assigned social security number and its date of birth. Those data are enough to open, for example, a Paypal account under a U.S. name. A U.S. customer of the cloaked Russian Internet company could then pay to the Paypal account and the money could be transferred from there to Moscow. These accounts could also be used to buy advertisement on Facebook. The person who's data was used to create the account would never learn of it and would have no loss or other damage. Another scheme is to simply pay some U.S. person to open a U.S. bank account and to then hand over the 'keys' to that account. The Justice Department indictment is quite long and detailed. It must have been expensive. If you read it do so with the above in mind. Skip over the assumptions and claims of political interference and digest only the facts. All that is left is, as explained, a commercial marketing scheme. I will not go into all its detail of the indictment but here are some points that support the above description. Point 4: Defendants, posing as US. persons and creating false U.S. personas, operated social media pages and groups designed to attract U.S. audiences. These groups and pages, which addressed divisive US. political and social issues, falsely claimed to be controlled by US. activists when, in fact, they were controlled by Defendants. Defendants also used the stolen identities of real U.S. persons to post on social media accounts. Over time, these social media accounts became Defendants' means to reach significant numbers of Americans ... Point 10d: By in or around April 2014, the ORGANIZATION formed a department that went by various names but was at times referred to as the "translator project." This project focused on the US. population and conducted operations on social media platforms such as YouTube, Facebook, Instagram, and Twitter. By approximately July 2016, more than eighty ORGANIZATION employees were assigned to the translator project. (Some U.S. media today made the false claim that $1.25 million per month were spend by the company for its U.S. campaign. But Point 11 of the indictment says that the company ran a number of such projects directed at a Russian audience while only the one described in 10d above is aimed at an U.S. audience. All these projects together had a monthly budget of $1.25 million.) (Point 17, 18 and 19 indict individual persons who have worked for the "translator" project" "to at least in and around [some month] 2014". It is completely unclear how these persons, who seem to have left the company two years before the U.S. election, are supposed to have anything to do with the claimed "Russian influence" on the U.S. election and the indictment.) Point 32: Defendants and their co-conspirators, through fraud and deceit, created hundreds of social media accounts and used them to develop certain fictitious U.S. personas into "leader[s] of public opinion" in the United States. The indictment then goes on and on describing the "political activities" of the sock-puppet personas. Some posted pro-Hillary slogans, some anti-Hillary stuff, some were pro-Trump, some anti-everyone, some urged not to vote, others to vote for third party candidates. The sock-puppets did not create or post fake news. They posted mainstream media stories. Some of the persona called for going to anti-Islam rallies while others promoted pro-Islam rallies. The Mueller indictment lists a total of eight rallies. Most of these did not take place at all. No one joined the "Miners For Trump" rallies in Philly and Pittsburgh. A "Charlotte against Trump" march on November 19 - after the election - was attended by one hundred people. Eight people came for a pro-Trump rally in Fort Myers. The sock-puppets called for rallies to establish themselves as 'activist' and 'leadership' persona, to generated more online traffic and additional followers. There was in fact no overall political trend in what the sock-puppets did. The sole point of all such activities was to create a large total following by having multiple personas which together covered all potential social-political strata. At Point 86 the indictment turns to Count Two - "Conspiracy to Commit Wire Fraud and Bank Fraud". The puppeteers opened, as explained above, various Paypal accounts using 'borrowed' data. Then comes the point which confirms the commercial marketing story as laid out above: Point 95: Defendants and their co-conspirators also used the accounts to receive money from real U.S. persons in exchange for posting promotions and advertisements on the ORGANIZATION-controlled social media pages. Defendants and their co-conspirators typically charged certain U.S. merchants and U.S. social media sites between 25 and 50 U.S. dollars per post for promotional content on their popular false U.S. persona accounts, including Being Patriotic, Defend the 2nd, and Blacktivist. There you have it. There was no political point to what the Russian company did. Whatever political slogans one of the company's sock-puppets posted had only one aim: to increase the number of followers for that sock-puppet. The sole point of creating a diverse army of sock-puppets with large following crowds was to sell the 'eyeballs' of the followers to the paying customers of the marketing company. There were, according to the indictment, eighty people working on the "translator project". These controlled "hundreds" of sock-puppets online accounts each with a distinct "political" personality. Each of these sock-puppets had a large number of followers - in total several hundred-thousands. Now let's assume that one to five promotional posts can be sold per day on each of the sock-puppets content stream. The scheme generates several thousand dollars per day ($25 per promo, hundreds of sock-puppets, 1-5 promos per day per sock-puppet). The costs for this were limited to the wages of up to eighty persons in Moscow, many of them temps, of which the highest paid received some $1,000 per month. While the upfront multiyear investment to create and establish the virtual personas was probably significant, this likely was, over all, a profitable business. Again - this had nothing to do with political influence on the election. The sole point of political posts was to create 'engagement' and a larger number of followers in each potential social-political segment. People who buy promotional posts want these to be targeted at a specific audience. The Russian company could offer whatever audience was needed. It had sock-puppets with pro-LGBT view and a large following and sock-puppets with anti-LGBT views and a large following. It could provide pro-2nd amendment crowds as well as Jill Stein followers. Each of the sock-puppets had over time generated a group of followers that were like minded. The entity buying the promotion simply had to choose which group it preferred to address. The panic of the U.S. establishment over the loss of their preferred candidate created an artificial storm over "Russian influence" and assumed "collusion" with the Trump campaign. (Certain Democrats though, like Adam Schiff, profit from creating a new Cold War through their sponsoring armament companies.) The Mueller investigation found no "collusion" between anything Russia and the Trump campaign. The indictment does not mentions any. The whole "Russian influence" storm is based on a misunderstanding of commercial activities of a Russian marketing company in U.S. social networks. There is a danger in this. The indictment sets up a new theory of nefarious foreign influence that could be applied to even this blog. As U.S. lawyer Robert Barns explains: The only thing frightening about this indictment is the dangerous and dumb precedent it could set: foreign nationals criminally prohibited from public expression in the US during elections unless registered as foreign agents and reporting their expenditures to the FEC.

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Mueller's new crime only requires 3 elements: 1) a foreign national; 2) outspoken on US social media during US election; and 3) failed to register as a foreign agent or failed to report receipts/expenditures of speech activity. Could indict millions under that theory.

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The legal theory of the indictment for most of the defendants and most of the charges alleges that the "fraud" was simply not registering as a foreign agent or not reporting expenses to the FEC because they were a foreign national expressing views in a US election. Author Leonid Bershidsky, who prominently writes for Bloomberg, remarks: I'm actually surprised I haven't been indicted. I'm Russian, I was in the U.S. in 2016 and I published columns critical of both Clinton and Trump w/o registering as a foreign agent. As most of you will know your author writing this is German. I write pseudo-anonymously for a mostly U.S. audience. My postings are political and during the U.S. election campaign expressed an anti-Hillary view. The blog is hosted on U.S, infrastructure paid for by me. I am not registered as Foreign Agent or with the Federal Election Commission. Under the theory on which the indictment is based I could also be indicted for a similar "Conspiracy to Defraud the United States". (Are those of you who kindly donate for this blog co-conspiractors?) When Yevgeni Prigozhin, the hot dog caterer who allegedly owns the internet promotion business, was asked about the indictment he responded: "The Americans are really impressionable people, they see what they want to see. [...] If they want to see the devil, let them see him." Posted by b on February 17, 2018 at 20:09 UTC | Permalink Comments next page » next page »