9 Arrested in Alleged ATM Code Theft Ring

Federal authorities cracked a sophisticated ATM fraud ring Thursday that allegedly stole more than $2 million from bank and gas station customers throughout Los Angeles County.

Nine people, including three Great Western bank tellers, two service station clerks and a former computer technician at the Jet Propulsion Laboratory in Pasadena were arrested in the two-year investigation. One man is considered a fugitive and more arrests are expected in what the FBI is calling the most sophisticated ATM scam ever exposed.

In a 40-page affidavit made public Thursday, the federal government describes how the group connected laptop computers to ATM machines to read customers’ bank account numbers and installed video cameras to record customers punching in their personal identification numbers.

The group recruited gas station clerks who allowed them to hook up the laptops, and recruited bank tellers who stole account numbers and passwords during customers’ transactions, authorities said. The stolen numbers were then encoded onto blank cards, which were used by low-level runners to withdraw hundreds of dollars at a time at convenience stores countywide.

And, at the time of the arrests, the group was developing two Internet services for the purpose of gleaning credit card numbers, according to federal prosecutors. One was an age-verification program for adults-only sites and the other was a casino.

ATM fraud is a burgeoning problem that is hitting the Western United States especially hard, federal investigators and bank officials said Thursday. According to a 1995 study of ATM fraud--the most recent data available--electronic thieves stole nearly $100 million from U.S. financial institutions and the West accounted for more than 70% of those losses.

California Banking Assn. spokesman John Stafford attributed the disproportionate amount of ATM fraud in the West to the large number of machines in California, which accounts for nearly 10% of the 165,000 automated teller machines in the U.S.

The first electronic ATM fraud operation of this kind was uncovered last spring in Orange County when FBI agents arrested four people who attached a laptop computer to an ATM terminal to read PIN codes and account numbers.

The alleged Los Angeles ring’s leaders were identified Thursday as Raffie Eskandarian, 26, of Tujunga and Rene Simonian, 26, of Glendale. Both have convictions for possessing access cards and account information that was not their own. Eskandarian was also arrested in Glendale on suspicion of assault with a deadly weapon in 1990 and convicted of assault and battery.

Also arrested was Patrick Khalafian, 28, of Montrose, who worked in the Jet Propulsion Laboratory’s Earth and Space Sciences Division as a part-time computer technician from May 1996 to August 1997, when he was fired because he failed to disclose a criminal violation on his employment application, authorities said.

Khalafian allegedly designed a computer program called SNIP.DAT for Eskandarian and Simonian. When used in a laptop computer attached to a point of sale terminal, the program captured the ATM magnetic strip information, authorities said. “He’s the brains behind the computer aspects of this operation,” said Lonny Chavez, supervisor of the FBI’s white collar crime squad in L.A.

Khalafian was also designing the Web sites that federal authorities feared would be used to steal more bank and credit card account numbers, Chavez said.

Authorities have identified Gilbert Petrosian, 24, of La Crescenta as the “No. 1 runner” for Eskandarian and Simonian. Petrosian allegedly recruited youths to conduct late-night withdrawals of hundreds of dollars at a time in convenience store tellers with the counterfeit ATM cards as well as stolen ones, said Stephen G. Larson, assistant U.S. attorney.

Petrosian, a convicted forger and embezzler, stole access cards, PIN numbers and account numbers while working as a bank teller, Larson said. He remains at large.

Others arrested were Philip Hacopi Hacopians, 26, of La Crescenta; Zabiullah Najib, 29, of Canoga Park; Vigen Koshkaryan, 19, of Covina; Alec Eskandarian, 19, of Tujunga, and Roland Sahakians, 30, and Roni Der Sarkassian, 22, both of Glendale.

The nine, who appeared in U.S. District Court on Wednesday, have been charged with conspiracy to commit access device fraud. If convicted, they each could face up to 10 years in prison.