Tuesday, August 18, 2009

White Collar: Indictment in Largest Identity Theft Scheme

Federal prosecutors in New Jersey on Monday announced an indictment in the largest identity theft scheme ever uncovered in the United States. Charged in the indictment were Albert Gonzalez and two others who remain fugitives.

The indictment alleges that Gonzalez and the others targeted large corporations for theft of credit and debit card numbers. The group allegedly placed "sniffer" programs on the corporate networks of targeted businesses. These programs relayed the credit card information to computers controlled by the defendants as the actual transactions were occurring.

Gonzalez and his cohorts allegedly infiltrated the computer systems of Hannaford Brothers, a supermarket chain, 7-Eleven, Inc., Heartland Payment Systems, a payment processor, and two other retailers who were unnamed by the indictment. Some of the credit and debit card information was sold online. Other credit card numbers were used to make unauthorized purchases or withdrawals from banks.

Federal officials contend that the schemers stole the information for more than 130 million credit or debit cards.

Gonzalez was arrested while in prison for other identity theft schemes. He has been in custody since May 2008, when he was placed under arrest for data theft from the restaurant chain, Dave & Buster's. Additionally, Gonzalez was indicted for theft of other credit card information including 2005 thefts from the T.J. Maxx retail stores.

If Gonzalez goes to trial in the New Jersey case, it will probably have to await disposition of the two earlier prosecutions. More likely is a global resolution in which Gonzalez pleads guilty in all three indictments and the cases are consolidated for sentencing in one court, probably New Jersey since the case there appears to be the most serious of the criminal violations.

Gonzalez's co-defendants remain at large, and the government believes that they are in Russia. Also, interestingly, Gonzalez had previously been arrested in New Jersey on a fraud charge in 2003 and had cooperated with the Secret Service and federal prosecutors in identifying online fraudsters. Prosecutors believe that, even as he was cooperating with federal law enforcement, Gonzalez was engaging in cyber fraud using fictitious names.

Gonzalez is currently in jail and will undoubtedly remain there pending sentencing at which time he will move to a federal prison facility.

For in depth articles on the indictment of Gonzalez, please see the New York Times, "3 Indicted in Theft of 130 Million Card Numbers," August 18, 2009 http://www.nytimes.com/2009/08/18/technology/18card.html?_r=1&ref=business and the Wall Street Journal, "Arrest in Epic Cyber Crime," August 18, 2009 http://online.wsj.com/article/SB125053669921337753.html.

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