Feds Indict Fraudsters Who Bought at Apple Stores

February 3, 2011

An organized group of thieves who manufactured credit cards using stolen information purchased from the Internet made their fraudulent purchases exclusively at Apple stores in 13 states, totaling at least $1 million in loot. Manhattan District Attorney Cyrus R. Vance, Jr. announced the indictment of 27 persons who assumed the identities of hundreds of account holders, purchased Macintosh computers, other Apple gear and gift cards, and then sold the goods through fencing operations. He didn’t explain why the group targeted Apple, or if they took advantage of any security shortcomings at the stores. In March 2008 Apple stopped asking customers to show identification for credit card purchases, in order to comply with Visa and MasterCard contract requirements. Merchants can ask for ID under the credit card contract rules, but can’t deny a purchase if the customers declines. It’s not clear if these suspects were using fraudulent ID to make their purchases.

Vance said the group began operating in mid-2008, but wasn’t discovered until May 2010 when one of its members was jailed in New York City. The suspect continued to manage the operation from jail, which included purchasing credit card information form Internet sources, creating fraudulent credit cards, recruiting buyers, making purchases at Apple stores, and then selling the products.

Police began an investigation and notified Apple of the scheme, eventually leading to arrests by police and the U.S. Secret Service earlier this week.

Vance said fraudulent purchases were made at Apple stores in New York, Florida, Wisconsin, New Jersey, Connecticut, Alabama, Oregon, Indiana, Georgia, Nevada, Pennsylvania, Virginia and the District of Columbia.

Police recovered $300,000 in cash and other holdings during warrant searches, three firearms and equipment to manufacture credit cards.

In a press release, Vance, “thanked Apple, Inc., for its cooperation during this investigation.”

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