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7/30/2007
10:27 AM
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Risk Management System Busts Data Skimming Ring

Four men have pleaded guilty to using phony point-of-sale PIN-pad terminals to steal customers' data and passwords and then defraud stores.

A finely tuned fraud-detection system earlier this year helped put the kibosh on a cross-country ring of payment-card thieves hitting up grocery stores in New England and stealing from ATMs in California. Now, four California men are facing several years in prison and fines of up to $250,000 for the roles they played in a skimming operation at Stop & Shop supermarkets that compromised more than 238 payment card account numbers and netted them more than $130,000. It could easily have been much worse.

Mikael Stepanian, Arutyun Shatarevyan, Gevork Baltadjian, and Arman Ter-Esayan have all pleaded guilty to conspiracy to traffic in unauthorized access devices and aggravated identity theft for stealing credit and debit card account information in February through altered supermarket point-of-sale PIN-pad terminals they planted during overnight hours at four 24-hour Stop & Shop stores in Rhode Island and one in Massachusetts.

The scam worked like this: As they entered a store, one of the men distracted a clerk while the others swapped the store's PIN-pad terminals with nearly identical devices that had been electronically altered to capture customers' account numbers and PINs, a process that took as little as 12 seconds, according to a statement released July 13 by the U.S. Attorney's Office for the District of Rhode Island. Several days later, the men returned to the store, replaced the original terminal, and made off with the altered one containing customers' account information.

As a result of this conspiracy, $132,018 in fraudulent charges were made against the compromised accounts at several financial institutions, including Citizens Bank.

But investigators at Citizens Bank noticed something fishy when they saw transactions taking place on both the West and East coasts for certain customers. Citizens soon found a common point in a series of unauthorized ATM withdrawals in their network. All of the compromised accounts had previously been used at Stop & Shop stores in Rhode Island. Alerted that their stores were being targeted by the thieves, Stop & Shop security personnel later reviewed store surveillance tapes and saw the fraudsters switching PIN-pad terminals. This led to the arrest of three of the men inside a Stop & Shop in Coventry, R.I., on Feb. 26. The fourth man was arrested in a parked car outside the store.

A search of the men's hotel rooms in Connecticut turned up devices for skimming credit and debit card information and a laptop computer with thousands of credit and debit card account numbers and PINs, stored in folders cleverly labeled "Stop & Shop."

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