Feds Arrest Hackers of TJX, Other Retailers in Huge Conspiracy Bust
Eleven perpetrators held responsible for online theft and sale of more
than 40 million credit and debit cards

AUGUST 5, 2008 | 4:15 PM

By Tim Wilson
Site Editor, Dark Reading

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, BJ’s 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 People’s 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 & Buster’s 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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