TJX, HEARTLAND HACKER SAYS:
'THE FEDS MADE ME DO IT'
BOSTON-A one-time government informant convicted of the identity thefts at TJX Cos., Heartland Payment Systems and as many as a dozen companies is asking a federal judge if he can withdraw his guilty plea because he claims he was under government assignment when he committed some of the biggest online identity thefts ever.
Thirty-year-old Albert Gonzalez, currently serving a 20-year sentence at the federal prison in Milan, Mich., has filed a motion to overturn his March 2010 guilty plea on the grounds that his illegal acts were sanctioned by the government.
Gonzalez claims in his new legal move that he was still working for the Secret Service when he hacked into the computer systems of TJX, Heartland Payment, Hannaford Brothers, BJ's Wholesale Club, 7-Eleven, Barnes & Noble, Sports Authority, OfficeMax, and Dave & Busters. "When I committed the illegal acts to which I pleaded guilty I believed I was acting under the grant of authority for Agents of the U.S. Secret Service," says Gonzalez in his motion.
The consumer data from these companies was sold over the Internet and used to either hack into accounts or make counterfeit credit cards. The cards were used to make purchases or withdraw cash by individuals, most of them unaffiliated, all over the world. Authorities estimate as much as $200 million was stolen from U.S. accounts this way.
The federal government has publicly conceded that Gonzalez worked for the Secret Service as a confidential informant on cyber crime after his 2003 arrest for hacking into private computer systems. During court proceedings the Secret Service maintained that Gonzalez was not authorized by them when he subsequently hacked into so many of the nation's biggest retailers and that they were unaware of his actions. The government is scheduled to submit its response n the next few weeks to Gonzalez's plea in U.S. District Court for the District of Massachusetts, where he pleaded guilty for the TJX case.
According to documents submitted with the motion, Gonzalez began working for the Secret Service in exchange for staying out of jail when he was convicted in 2003 of stealing card data and selling it online as part of the Secret Service's "Operation Firewall." He claims his work helped lead to several major indictments and convictions and that he was somewhat of a star within the Secret Service.
"I was asked to commit acts I knew were illegal," he says. When he questioned his superiors in the Secret Service he said they told him, "don't worry, we've got your back."
"At that point," says Gonzalez, "I would have done anything they asked me to do."
According to Gonzalez, the Secret Service paid him $1,200 a month as an informant. Some times they gave him extra cash. One time, he said, he needed $5,000 to pay off a debt to a Russian involved in the online card frauds so they agreed to look the other way when he used his hacking skills to earn the money.
Gonzalez said he was shocked when he was arrested May 7, 2008 and he tried to use his Secret Service connections to get him off. "I was expecting the Secret Service to come and take custody of me and squash the charges," he says. He says all of his actions were authorized by the government. He claims he is being made a "scapegoat" to cover someone's mistake, "the huge identity thefts.
NY HIGH COURT TO HEAR
CU APPEAL OF MORTGAGE TAX
ALBANY, N.Y.-The New York State Court of Appeals, the state's highest court, agreed last week to hear an appeal from Hudson Valley FCU, which claims its status as a federally chartered credit union should exempt it from the state's recordation transfer tax on all real estate transactions.
The state appeals court also agreed to allow the U.S. Department of Justice to argue on behalf of the credit union that the Federal CU Act exempts all federal credit unions from state taxes like the New York levy.
The stakes in the case are huge, with federally chartered credit unions like Hudson Valley FCU paying tens of millions of dollars in the mortgage tax each year.
"We've been dismissed at the two lower court levels, so this is a very big thing for us," Dale Lois, a Fishkill, N.Y., lawyer who is representing the $3.2 billion Poughkeepsie-based credit union, told the Credit Union Journal this morning.
Hudson Valley, a one-time IBM employees' credit union, has sued the New York State Department of Taxation and Finance, claiming it is shielded from paying the state tax by the Federal CU Act. Under the Federal CU Act, federally chartered credit unions are considered federal instrumentalities and thus, are exempt from both federal and state taxes. But the lower courts dismissed this argument and asserted that the state's mortgage recordation tax is a levy on the privilege of a mortgagee to record their deed and not a tax on the credit union.
The New York Supreme Court, which is the state's lower appeals court, rejected the credit union's argument in a June ruling, saying the state tax is not a tax on property, so is not included in the federal credit union exemption.
The New York CU League, CUNA and NAFCU, as well as the Justice Department all filed friend of the court briefs on behalf of Hudson Valley FCU.
Lois said he expects the high court to set a schedule that will require briefs be submitted within 30 to 60 days, and oral arguments in early 2012.
