DOJ Charges 11 In Retail Hacking, ID Theft Scheme

It's believed to be one of the largest hacking and identity theft cases ever prosecuted by the U.S. government.

The U.S. Justice Department on Tuesday filed numerous criminal charges against 11 individuals allegedly involved in an international ring that conspired to steal and sell 40 million credit card and debit card numbers obtained by hacking the computer networks of nine U.S. retailers.

According to the indictment returned on Aug. 5 by a federal grand jury in Boston, the 11 suspects have been charged with crimes including conspiracy, computer intrusion, wire fraud, device access fraud, computer fraud, and identity theft. Three of the defendants are U.S. citizens, one is from Estonia, three are from the Ukraine, two are from the People's Republic of China, and one is from Belarus. One individual is known only by an alias online and his place of origin is unknown, according to a statement by the attorney general's office in Boston.

The indictment alleges that the thieves obtained credit and debit card numbers by "wardriving" and hacking into the wireless computer networks of major retailers, including TJX, BJ's Wholesale Club, OfficeMax, Boston Market, Barnes & Noble, Sports Authority, Forever 21, and DSW.

Once inside the networks, they allegedly 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, according to the statement.

Wardriving usually involves individuals sitting in a vehicle outside a store using a laptop computer to capture data such as credit card numbers as wireless transactions take place inside the store, said Dan Clements, president of CardCops, a part of Affinion Group, a company that provides ID theft monitoring and alert services.

"We don't know the dollar value on this theft case yet, but it's a big case," said Clements, whose company was not involved in busting the scheme. However, it's possible that even though the alleged perpetrators have been nabbed, credit and debit card numbers stolen by the ring will still "pop up" in online chat rooms where this type of information is often sold, he said.

The indictment alleges that after data was collected, the hackers concealed the data in encrypted computer servers that they controlled in Eastern Europe and the United States.

Prosecutors alleged that the hackers sold some of the credit and debit card numbers, via the Internet, to other criminals in the United States 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 U.S. Attorney's Office.

The indictment also alleges that the criminals were 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.