Eleven people have been charged or indicted in a massive identity theft and computer fraud scheme involving some of the largest data breaches in recent U.S. history, the U.S. Department of Justice announced Tuesday.
The participants in the scheme targeted nine U.S. retailers, including BJ's Wholesale Club, TJX, and DSW Shoe Warehouse, DOJ officials said. Those three retailers all announced large data breaches between 2004 and 2007. OfficeMax, Barnes & Noble, Boston Market, Sports Authority, and Forever 21 also were targeted.
The ID theft ring stole more than 40 million credit and debit card numbers, said Michael Sullivan, U.S. attorney for the District of Massachusetts. The criminals installed sophisticated "sniffer" programs on the retailers' networks, allowing them to collect credit card and password information, he said during a press conference.
This case is believed to be the largest hacking and ID theft case the DOJ has ever prosecuted, said U.S. Attorney General Michael Mukasey.
"This case highlights our increasing vulnerability to the theft of personal information," he added during a press conference. "Computer networks and the Internet are an indispensable part of the world economy. But even as they provide extraordinary opportunities for legitimate commerce and communication, they also provide extraordinary opportunities for criminals. Where criminals are able to breach computer security systems, as alleged here, they have enormous ability to cause harm."
On Tuesday, a federal grand jury in U.S. District Court for the District of Massachusetts indicted Albert "Segvec" Gonzalez of Miami on charges of computer fraud, wire fraud, access device fraud, aggravated identity theft, and conspiracy for his role in the scheme.
The DOJ also announced charges Tuesday against Christopher Scott and Damon Patrick Toey, both of Miami.
Other defendants face numerous charges in California and New York, the DOJ said.
Three of the defendants are U.S. citizens, one is from Estonia, three are from Ukraine, two are from China and one is from Belarus, the DOJ said. One individual is only known by an online alias, and his place of origin is unknown.
After collecting the data, the defendants allegedly concealed it in encrypted servers they controlled in Eastern Europe and the United States., the DOJ said. They allegedly sold some of the credit and debit card numbers on the Internet to other criminals. 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 cash machines, the DOJ said. Gonzalez and others were allegedly able to conceal and launder their fraud proceeds by using anonymous Internet-based currencies and by channeling funds through bank accounts in Eastern Europe, the DOJ said.
The U.S. Federal Trade Commission has sought sanctions against TJX, DSW, and BJ's for their alleged failure to take appropriate security measures to protect customer information.
Gonzalez was previously arrested by the Secret Service in 2003 for access device fraud. During the course of that investigation, the U.S. Secret Service discovered that Gonzalez, who was working as a confidential informant for the agency, was involved in this case, the DOJ said.