Michaels Breach: Fraudsters Sentenced

[InfoSec News <alerts () infosecnews org>]

http://www.bankinfosecurity.com/michaels-breach-fraudsters-sentenced-a-4991

By Tracy Kitten
BankInfo Security
July 30, 2012

Two men were sentenced this week in connection with fraudulent 
transactions they made with compromised debit cards tied to the Michaels 
point-of-sale breach.

In 2011, banking institutions reported tens of thousands of fraudulent 
transactions linked to consumers who had visited Michaels craft stores 
that were affected by the breach. POS and PIN-entry devices at 84 
locations in 20 states were later found to have been swapped out with 
devices manipulated to collect card numbers and PINs. Investigators say 
94,000 debit and credit cards were affected by the breach.

On June 25, a judge in the U.S. District Court for the Northern District 
of California sentenced Eduard Arakelyan, 21, and Arman Vardanyan, 23, 
to 36 months in prison on charges of conspiracy to commit bank fraud. 
Each also was sentenced to an additional 24 months for aggravated 
identity theft and five years of supervised release. The court has 
ordered both to pay $42,000 in restitution.

The two men, who were charged March 5, pleaded guilty on March 20, 
according to a statement issued this week by the Department of Justice. 
Arakelyan and Vardanyan admitted that in the summer of 2011, they used 
card numbers stolen from Michaels to create nearly 1,000 counterfeit 
cards they later used at ATMs in Northern California to withdraw funds 
from bank accounts. Authorities say 952 debit accounts were affected by 
Arakelyan and Vardanyan.

[...]


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