Eleven perpetrators allegedly involved in the hacking of nine major U.S. retailers and the theft and sale of more than 40 million credit and debit card numbers have been charged with engineering the largest hacking and identity theft conspiracy ever prosecuted by the Department of Justice.
The case links several high-profile data breaches of the last two years -- including TJX Companies, BJ's Wholesale Club, Barnes & Noble, and Dave & Buster's -- to a single group of conspirators. (See TJX Breach Skewers Customers, Banks and Hackers Sniff Their Way Into Data From Restaurant Chain.)
The 11 suspects -- three from the U.S., three from Ukraine, two from China, one from Estonia, one from Belarus, and one who is known only by an online alias -- are charged with numerous crimes, including conspiracy, computer intrusion, fraud, and identity theft, federal officials said in an announcement today.
In an indictment returned today by a federal grand jury in Boston, Albert Segvec Gonzalez of Miami was charged with computer fraud, wire fraud, access device fraud, aggravated identity theft and conspiracy for his role in the scheme. Criminal information was also released today in Boston on related charges against Christopher Scott and Damon Patrick Toey, both of Miami.
The Boston indictment alleges that during the course of the sophisticated conspiracy, Gonzalez and his co-conspirators obtained the credit and debit card numbers by "wardriving" and hacking into the wireless computer networks of major retailers -- including TJX Companies, BJs Wholesale Club, OfficeMax, Boston Market, Barnes & Noble, Sports Authority, Forever 21, and DSW.
Once inside the networks, the suspects installed "sniffer" programs that captured card numbers, as well as password and account information, as they moved through the retailers credit and debit processing networks, federal officials said.
The indictment alleges that after they collected the data, the conspirators concealed the data in encrypted computer servers that they controlled in Eastern Europe and the United States. They allegedly sold some of the credit and debit card numbers via the Internet to other criminals in the U.S. and Eastern Europe.
The stolen numbers were "cashed out" by encoding card numbers on the magnetic strips of blank cards. The defendants then used these cards to withdraw tens of thousands of dollars at a time from ATMs, according to the indictment. Gonzalez and others were allegedly able to conceal and launder their fraud proceeds by using anonymous Internet-based currencies both within the United States and abroad, and by channeling funds through bank accounts in Eastern Europe.
Gonzalez was previously arrested by the Secret Service in 2003 for access device fraud. During the course of this investigation, the Secret Service discovered that Gonzalez, who was working as a confidential informant for the agency, was criminally involved in the case. Because of the size and scope of his criminal activity, Gonzalez faces a maximum penalty of life in prison if he is convicted of all the charges alleged in the Boston indictment.
Also today, indictments were unsealed in San Diego against alleged scheme participants Maksym Maksik Yastremskiy of Kharkov, Ukraine and Aleksandr Jonny Hell Suvorov of Sillamae, Estonia. The indictments charge the defendants with crimes related to the sale of the stolen credit card data that Gonzalez and others illegally obtained, as well as additional stolen credit card data.
In addition, an indictment against Hung-Ming Chiu and Zhi Zhi Wang, both of China, and a person known only by the online nickname "Delpiero," was also unsealed in San Diego today. Sergey Pavolvich of Belarus and Dzmitry Burak and Sergey Storchak, both of Ukraine, were also charged in San Diego. All are believed to be foreign nationals residing outside of the United States.
The San Diego charges allege that Yastremskiy, Suvorov, Chiu, Wang, Delpiero, Pavolvich, Burak, and Storchak operated an international stolen credit and debit card distribution ring, with operations from Ukraine, Belarus, Estonia, the Peoples Republic of China, the Philippines and Thailand. The indictments allege that each of the defendants sold stolen credit and debit card information for personal gain. The indictment alleges that Yastremskiy received proceeds exceeding $11 million.
In May 2008, Gonzalez, Suvorov, and Yastremskiy also were charged with executing a sophisticated scheme to hack into computer networks run by the Dave & Busters restaurant chain, and stole credit and debit card numbers from at least 11 locations. Specifically, the indictment alleges that the defendants gained unauthorized access to cash register terminals and installed sniffers at each restaurant.
Gonzalez is currently in pre-trial confinement on the New York charges. Based upon the San Diego charges, Turkish officials apprehended Yastremskiy in July 2007 in Turkey when he traveled there on vacation. He has been in confinement in Turkey since then, pending the resolution of related Turkish charges, and the United States has made a formal request for his extradition.
At the request of the Department of Justice, Suvorov was apprehended by the German Federal Police in Frankfurt in March 2008 on the San Diego charges when he traveled there on vacation. He is currently in confinement pending the resolution of extradition proceedings.
So far as we know, this is the single largest and most complex identity theft case ever charged in this country, said Attorney General Michael Mukasey. It highlights the efforts of the Justice Department to fight this pernicious crime and shows that, with the cooperation of our law enforcement partners around the world, we can identify, charge, and apprehend even the most sophisticated international computer hackers.
"Technology has forever changed the way commerce is conducted, virtually erasing geographic boundaries," said U.S. Secret Service Director Mark Sullivan. "While these advances and the global nature of cybercrime continue to have a profound impact on our financial crimes investigations, this case demonstrates how combining law enforcement resources throughout the world sends a strong message to criminals that they will be pursued and prosecuted no matter where they reside."
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