11 CHARGED IN CONNECTION WITH MASSIVE CREDIT CARD FRAUD

11 charged in connection with credit card fraud

THE ASSOCIATED PRESS
International Herald Tribune
Wednesday, August 6, 2008

Boston - Eleven people, including a U.S. Secret Service
informant, have been charged in connection with the hacking
of nine major retailers and the theft and sale of more than
41 million credit and debit card numbers, the Justice
Department announced Tuesday.

The data breach is believed to be the largest hacking and
identity theft case ever prosecuted by the Department of
Justice, which said the suspects were charged with
conspiracy, computer intrusion, fraud and identity theft.

Three of those charged are U.S. citizens while the others
are from places such as Estonia, Ukraine, Belarus and
China.

The indictment returned Tuesday by a federal grand jury in
Boston alleges that the suspects hacked into the wireless
computer networks of retailers including TJX Cos., BJ's
Wholesale Club, OfficeMax, Boston Market, Barnes & Noble,
Sports Authority, Forever 21 and DSW and set up programs
that captured card numbers, passwords and account
information.

"They used sophisticated computer hacking techniques that
would allow them to breach security systems and install
programs that gathered enormous quantities of personal
financial data, which they then allegedly either sold to
others or used themselves," Attorney General Michael
Mukasey said at a news conference. "And in total, they
caused widespread losses by banks, retailers, and
consumers."

Mukasey called the total dollar amount of the alleged theft
"impossible to quantify at this point." U.S. Attorney
Michael J. Sullivan said that while most of the victims
were in the United States, officials still haven't
identified all the people who had a card number stolen.

"I suspect that a lot of people are unaware that their
identifying information has been compromised," he said.

Sullivan said the alleged thieves weren't computer
geniuses, just opportunists who used a technique called
"wardriving," which involved cruising through different
areas with a laptop and looking for accessible wireless
Internet signals. Once they located a vulnerable network,
they installed so-called "sniffer programs" that captured
credit and debit card numbers as they moved through a
retailer's processing networks.

The information was stored on two servers in Ukraine and
Latvia -- one with more than 25 million credit and debit
card numbers and another with more than 16 million numbers,
Sullivan said.

The heist was a black eye for retailers like TJX. The
company initially disclosed the data breach in January 2007
but said a few months later that at least 45.7 million
cards were exposed to possible fraud in a breach of its
computer systems that began in July 2005. Court filings by
some banks that sued TJX put the number of cards affected
at more than 100 million, based on estimates by officials
with Visa and MasterCard, who were deposed in the suit.

In May, TJX said it won support from MasterCard-issuing
banks for a settlement that will pay them as much as $24
million to cover costs from the breach. A similar agreement
reached last November with Visa-card issuing banks set
aside as much as $40.9 million to help banks cover costs
including replacing customers' payment cards and covering
fraudulent charges.

According to the indictments unsealed Tuesday, three of the
defendants are U.S. citizens, one is from Estonia, three
are from Ukraine, two are from China and one is from
Belarus. One individual is known only by an alias online,
and his place of origin is unknown.

At a press briefing in San Jose, California, Homeland
Security Secretary Michael Chertoff said the non-U.S.
citizens under indictment were part of an international
stolen credit and debit card ring.

The ring operated in mainly in Eastern Europe, the
Phillipines, China and Thailand, and the alleged foreign
conspirators remained outside the U.S., Chertoff said.

The thefts were criminal actions committed for the personal
gain of the defendants, who investigators did not consider
a national security threat, Chertoff said.

Still, he said, their alleged crimes demonstrated the
weaknesses of cybersecurity in the U.S.

"Today's indictments are a reminder of a growing threat
that every American faces in the 21st century -- the fact
that each individual's greatest asset is their names, their
identity," Chertoff said.

In the Boston indictment, the alleged ringleader Albert
"Segvec" Gonzalez of Miami was charged with computer fraud,
wire fraud, access device fraud, aggravated identity theft
and conspiracy. Gonzalez, who is in custody in New York,
faces a maximum penalty of life in prison if he is
convicted of all the charges.

Gonzalez was a U.S. Secret Service informant who helped the
agency take over a Web site being used to transmit stolen
identifiers and stolen credit card numbers, U.S. Secret
Service Director Mark Sullivan said at the news conference.

"That was the first time ever that a computer system was
wiretapped," he said.

But he said the Secret Service later found out that
Gonzalez had also been feeding criminals information about
ongoing investigations -- even warning off at least one
person.

"Obviously, we weren't happy that a person working for us
as an informant was double-dealing," Mark Sullivan said.

Indictments were also unsealed Tuesday in San Diego against
Maksym "Maksik" Yastremskiy of Kharkov, Ukraine, and
Aleksandr "Jonny Hell" Suvorov of Sillamae, Estonia. They
are charged with crimes related to the sale of the stolen
credit card data.

Yastremskiy was arrested when he traveled to Turkey on
vacation in July 2007. He is facing related Turkish
charges, and U.S. officials said they have requested his
extradition.

Justice Department officials said Suvorov was arrested on
the San Diego charges by German officials in March when he
traveled there on vacation. He is in custody awaiting the
resolution of extradition proceedings.

Indictments against Hung-Ming Chiu and Zhi Zhi Wang, both
of China, and a person known only by the online nickname
"Delpiero" were also unsealed in San Diego.

A Justice Department spokeswoman said those three suspects,
together with five others, are still at large. Officials
did not give an arraignment date for Gonzalez.

In May, federal prosecutors in New York indicted
Yastremskiy, Suvorov and Gonzalez on 27 counts of fraud and
identity theft. The charges stemmed from allegations that
they hacked into a national restaurant chain's computerized
cash registers and stole credit card information from
customers. Eleven Dave & Buster's restaurants around the
United States suffered at least $600,000 in losses,
prosecutors said.

It was not immediately possible to reach Yastremskiy,
Suvorov and Gonzalez for comment and it was not clear if
they have legal representation.

- - -

Associated Press writers Anne D'Innocenzio in New York and
Marcus Wohlsen in San Jose, California contributed to this
report.

More at:
http://www.iht.com/articles/ap/2008/08/06/business/NA-US-Retailer-Fraud-Indictment.php

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