Schlossberg's original claim to fame was assisting CD Universe track down hackers who stole 300,000 credit cards. A Wall Street article summarizes:
When he cracked an Internet credit-card fraud case in 2000, he appeared on network television, telling reporters how he tracked down the young Russian who had stolen information on 300,000 credit-card accounts from CD Universe's computer system.
Other than very brief references like this one, there does not seem to be any real details on Schlossberg's involvement with CD Universe. Somehow, and the provenance of this does not appear to be public, many publications quote A Brief History of Cybercrime that has a single line about it, which puts the business relationship in a very negative light:
Barry Schlossberg (aka. Lou Cipher) is successful at extorting 1.4M from CD Universe for services rendered in attempting to catch the Russian hacker. (Jan)
The use of the word "extort" is curious. According to an article by Tampa Bay Business Journal (local copy w/ attrition.org commentary), Schlossberg stopped working the case before it was fully resolved (e.g., apprehension of the person(s) responsible), but does not say if he left the work on good or bad terms:
Schlossberg -- under the auspices of another Tampa firm he owned at the time, SYNC Technology Inc. -- joined the CD Universe case in February 2000 at the request of company management. He stopped working on the case in June.
Schlossberg said he knows the parties who comprise "Maxim." He won't identify them but said the CD Universe case is what "60 Minutes II" is following.
Until recently, Google searches did not find any concrete details to make better sense of what happened. In the emails from Schlossberg, he indicates that the 'Timeline of Hacker History' reference "was the final entry in wikipedia before it dropped the whole incident from their timeline. Extortion was intitially there and subsequently replaced with the above. The original submission to wikipedia was by an individual with the initials of jbl."
Looking at a 2004 Wikipedia entry on Timeline of computer security hacker history, we find the original entry:
January 2000 A Russian hacker attempts to extort $100,000 from online music retailer CD Universe, threatening to expose thousands of customers' credit card numbers. Posting them on a website after the attempt to extort money from the company failed
On December 27, 2004, the Wikipedia page was edited by 66.74.217.118 to change the text to:
January 2000 A Russian cracker attempts to extort $100,000 from online music retailer CD Universe, threatening to expose thousands of customers' credit card numbers. Posting them on a website after the attempt to extort money from the company failed. Barry Schlossberg (AKA Lou Cipher) is successful at extoring 1.4M from CD Universe for "services rendered", in an attempt to "catch the russian hacker".
The edits by "Jbl" (first, second), do not appear to alter this line. It is unknown if the edits from 66.74.217.118 are the same person before signing in, but Schlossberg's comment regarding these initials is likely a reference to a former business partner with those initials, who had a falling out with him. If true, the claims of extortion could simply be an ex-partner seeking a form of revenge against Schlossberg.
