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11 Charged With Hacking, Identity Theft

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The Associated Press

Published: August 6, 2008

NEW YORK - The Department of Justice announced Tuesday that it had charged 11 people in connection with the hacking of nine major U.S. retailers and the theft and sale of more than 40 million credit and debit card numbers.

It is thought to be the largest hacking and identity theft case ever prosecuted by the Department of Justice. The charges include conspiracy, computer intrusion, fraud and identity theft. Three of the defendants are U.S. citizens, and the others are from places such as Estonia, Ukraine, Belarus and China.

The indictment returned Tuesday by a federal grand jury in Boston alleges that the people charged hacked into the wireless computer networks of retailers including TJX Cos., BJ's Wholesale Club, OfficeMax, Boston Market, Barnes & Noble, Sports Authority, Forever 21 and DSW.

"While technology has made our lives much easier it has also created new vulnerabilities," U.S. Attorney Michael J. Sullivan said in a statement. "This case clearly shows how strokes on a keyboard with a criminal purpose can have costly results."

The indictment alleges that the hackers installed programs to capture card numbers, passwords and account information, and then concealed the data in computer servers that they controlled in the United States and Eastern Europe.

"They used sophisticated computer hacking techniques, breaching security systems and installing programs that gathered enormous quantities of personal financial data, which they then allegedly sold to others or used themselves," said Attorney General Michael Mukasey in prepared remarks. "And in total, they caused widespread losses by banks, retailers, and consumers."

The heist was a black eye for retailers such as TJX. The company, which initially disclosed the data breach in January 2007, said a few months later that at least 45.7 million cards were exposed to possible fraud in a breach of its computer systems that began in July 2005. Court filings by some banks that sued TJX put the number of cards affected at more than 100 million, based on estimates by officials with Visa and MasterCard, who were deposed in the suit.

In May, TJX said it won support from MasterCard-issuing banks for a settlement that will pay them as much as $24 million to cover costs from the data breach. A similar agreement reached last November with Visa-card-issuing banks also was overwhelmingly approved. That agreement set aside as much as $40.9 million to help banks.

In the indictments unsealed Tuesday, 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. One individual is only known by an alias online, and his place of origin is unknown.

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