August 6, 2008
11 Charged in Theft of 41 Million Card Numbers
By BRAD STONE
"Mr. Gonzalez and several in his cohort drove around and scanned the wireless networks of retailers to find security holes — known as "war driving," according to prosecutors. Once the thieves identified technical weaknesses in the networks, they installed so-called sniffer programs, obtained from collaborators overseas."
Federal prosecutors have charged 11 people with stealing more than 41 million credit and debit card numbers, cracking what officials said on Tuesday appeared to be the largest hacking and identity theft ring ever exposed.
The thieves focused on major national retail chains like OfficeMax, Barnes & Noble, BJ's Wholesale Club, the Sports Authority and T. J. Maxx — the discount clothes retailer that first suggested the existence of the ring early last year, when it said its systems had been breached by hackers.
Underscoring the multinational, collaborative aspect of organized crime today, three of the defendants are United States citizens, one is from Estonia, three are from Ukraine, two are from China and one is from Belarus. The name and whereabouts of the final defendant are unknown.
Federal officials said a principal organizer of the ring was Albert Gonzalez, a man from Miami who was indicted on Tuesday by a federal grand jury in Boston on charges of computer fraud, wire fraud, aggravated identity theft, conspiracy and other charges. If convicted on all counts, Mr. Gonzalez would face life in prison.
Mr. Gonzalez and several in his cohort drove around and scanned the wireless networks of retailers to find security holes — known as "war driving," according to prosecutors. Once the thieves identified technical weaknesses in the networks, they installed so-called sniffer programs, obtained from collaborators overseas.
Those programs tapped into the retailers' networks for processing credit cards and intercepted customers' PINs and debit and credit numbers that were stored there. The thieves then spirited that information away to computers in the United States, Latvia and Ukraine.
Officials say the conspirators sold credit card numbers online and imprinted other stolen numbers on the magnetic stripes of blank cards so that they could withdraw thousands of dollars from A.T.M.'s.
"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," said Michael B. Mukasey, the United States attorney general, at a news conference in Boston to announce the indictments.
Mr. Gonzalez was first arrested by the Secret Service in 2003 on similar charges. He was subsequently placed on supervised pretrial release and became an informant to the agency in its campaign against organizers of ShadowCrew, a bulletin board where hackers traded stolen financial information.
But prosecutors said that Mr. Gonzalez continued his criminal activities and tried to warn one of his conspirators, Damon Patrick Toey, to ensure that Mr. Toey would not be identified or arrested in the operation against ShadowCrew. Mr. Toey was among those indicted on Tuesday in Massachusetts.
"As soon as we became aware that Mr. Gonzalez was also working with criminals and getting them information, we immediately took action," said Mark Sullivan, director of the Secret Service.
A lawyer for Mr. Gonzalez could not be located.
To sell card numbers on the black market, the group turned to Maksym Yastremskiy of Ukraine and Aleksandr Suvorov of Estonia, who were also charged, according to prosecutors.
Mr. Yastremskiy, thought to be a major figure in the international sale of stolen credit card information, was apprehended in July 2007 on vacation in Turkey and is in prison awaiting trial on charges including credit card theft. The United States has asked Turkey to extradite him.
The indictments shed more light on the breach into the stores of TJX, the owner of T. J. Maxx. In 2005, Christopher Scott, another man who was charged, compromised wireless access points at a Marshalls in Miami and used them to download payment information from computers at TJX headquarters in Framingham, Mass., prosecutors said.
The following year, prosecutors said, the conspirators established a virtual private network connection into TJX's payment processing server and successfully uploaded a sniffer program.
In public financial filings, TJX said it had spent around $130 million on matters related to the break-in, including legal settlements, and it expected to spend an additional $23 million in the 2009 fiscal year.
Federal officials did not have an overall tally for the amount of money stolen by the ring, but they offered some glimpses into its profitability. In the indictment against Mr. Gonzalez, federal officials asked that he be forced to forfeit more than $1.6 million, among other assets.
"These guys were obviously sophisticated and organized," said Toby Weiss, chief executive of Application Security, a database security firm. "In this economy, we can't have people afraid to spend."
August 6, 2008
Russian Gang Hijacking PCs in Vast Scheme
By JOHN MARKOFF
A criminal gang is using software tools normally reserved for computer network administrators to infect thousands of PCs in corporate and government networks with programs that steal passwords and other information, a security researcher has found.
The new form of attack indicates that little progress has been made in defusing the threat of botnets, networks of infected computers that criminals use to send spam, steal passwords and do other forms of damage, according to computer security investigators.
Several security experts say that although attacks against network administrators are not new, the systematic use of administrative software to spread malicious software has not been widely seen until now.
The gang was identified publicly in May by Joe Stewart, director of malware research at SecureWorks, a computer security firm in Atlanta. Mr. Stewart, who has determined that the gang is based in Russia, was able to locate a central program controlling as many as 100,000 infected computers across the Internet. The program was running at a commercial Internet hosting computer center in Wisconsin.
Mr. Stewart alerted a federal law enforcement agency that he declined to identify, and he said that it was investigating the matter. Although the original command program was shut down, the gang immediately reconstituted the system, he said, moving the control program to another computer in the Ukraine, beyond the reach of law enforcement in the United States.
The system infects PCs with a program known as Coreflood that records keystrokes and steals other information. The network of infected computers collected as much as 500 gigabytes of data in a little more than a year and sent it back to the Wisconsin computer center, Mr. Stewart said.
One of the unique aspects of the malicious software is that it captures screen information in addition to passwords, according to Mark Seiden, a veteran computer security engineer. That makes it possible for gang members to see information like bank balances without having to log in to stolen accounts.
Mr. Stewart's discoveries are evidence that while the botnet problem is now well understood, botnets are still a widespread threat.
"The rate of infection is still high, but concern among corporations is low," said Rick Wesson, a botnet investigator at Support Intelligence, a security consulting firm in San Francisco. "Many corporations seem to think it's O.K. to be infected several times a month."
Mr. Stewart and other computer security investigators have previously described the activities of the gang that uses the Coreflood program. But Mr. Stewart plans to offer new details about the gang, which has operated with impunity for several years, at the Black Hat Briefings computer security conference that begins Thursday in Las Vegas.
As part of his investigation, Mr. Stewart charted the rate of computer infections at a state police agency and a large hotel chain. Both were victims of an outbreak that began after the gang obtained the password and login information of their network administrators. In both cases hundreds or thousands of computers were infected within minutes or hours.
Mr. Stewart would not name the organizations because of the continuing law enforcement investigation.
In these examples as well as a range of others, the gang infected a machine belonging to an administrator and then used Microsoft administrative tools to infect all the computers for which that person had responsibility, Mr. Stewart said.
The new attack is a byproduct of the way modern computer networks are administered, where authority is centralized and software updates for thousands of machines are automated.
"The great thing about this system is that from one computer it is possible to push out updates to all machines in a corporate network at once," Mr. Stewart said. "This is a useful tool that Microsoft has provided. However, the bad guys said, 'We'll just use it to roll out our Trojan to every machine in the network.' "
A Microsoft spokesman declined to comment on the attacks.
Mr. Stewart said that the gang behind the Coreflood program was responsible for 378,000 infections over 16 months. In each case the infected computer would capture and transmit personal information to a centralized database that kept track of the "spies" in the network.
In his Black Hat presentation, Mr. Stewart plans to say that he believes the Russian gang was behind a successful theft of money from the bank account of a Miami businessman, Joe Lopez.
In April 2004, someone made an unauthorized wire transfer of $90,348 from Mr. Lopez's account with Bank of America to Parex Bank in Riga, Latvia. Of that amount, $20,000 was successfully withdrawn by a person using a false identity. The Coreflood program was found on Mr. Lopez's computer.
After discovering the control program in Wisconsin, Mr. Stewart tracked the online activities of some gang members in a Russian city that he declined to identify because of the investigation.
He said translations of some entries on the blogging site LiveJournal had led him to believe that one member of the gang had died, but that others remained active. He said that he had provided investigators with a wealth of information about the group from members' online discussions and other material he had collected.
"If the Russians are sincerely interested in tracking these guys down, I think it's possible," he said.