Feds Arrest 99 For Identity Theft, Card Fraud

Top 10 Security Stories Of 2010

Authorities on Wednesday announced the arrest of 99 people as part of an investigation into the Armenian Power organized crime ring, which allegedly scammed, stole, and extorted more than $20 million from its victims.

"Members of the organized crime groups charged today have allegedly committed literally hundreds of criminal acts -- running the gamut of extortion, kidnapping, bank fraud, healthcare fraud, drug trafficking, and more," said Lanny Breuer, assistant attorney general for the Justice Department's criminal division, in a statement.

In one 134-count indictment, returned by a federal grand jury three weeks ago under seal, 29 people were accused of participating in a conspiracy that violated the federal Racketeer Influenced and Corrupt Organizations (RICO) Act. "The RICO charge alleges a host of illegal activities, some of which are sophisticated white-collar crimes such as identity theft, credit card skimming, and manufacturing counterfeit checks," said federal authorities.

According to the indictment, which was unsealed on Wednesday, the gang skimmed hundreds of credit and debit card numbers after installing skimmers on cash registers in 99 Cents Only stores across southern California. They then used this information to create counterfeit credit cards, with which they stole $2 million.

According to a news report, a 99 Cents Only store manager had noticed that credit and debit card transactions were not clearing properly. He alerted authorities, who later arrested two people when they attempted to remove credit card skimming devices from cash registers.

In the second indictment, also returned by a federal grand jury, 20 people were charged with targeting elderly people's bank accounts. According to investigators, "members of the Armenian Power organization were working in conjunction with members of African-American street gangs and bribed bank insiders to gather information that allowed them to take over bank accounts and cause losses of at least $10 million."

The case is the culmination of a five-year investigation into Armenian Power. Authorities said the gang, which numbers about 200 people, "consists primarily of individuals whose heritage goes back to Armenia and other Eastern Bloc countries," and began as an East Hollywood street gang in the 1980s. Since then, however, its members have allegedly embraced more diverse criminal enterprises, said authorities.

Investigators said they're seeing more gangs, including Armenian Power, now embracing identity theft, especially to steal from Medicare and Medicaid programs. "We are concerned with the increased level of fraud committed by these organized groups," said Glenn Ferry, special agent in charge for the office of inspector general of the Department of Health & Human Services, in a statement.