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According to the FBI, the related indictment, unsealed Friday, said the gang "stole the money by exploiting a gap--which required multiple withdrawals all within 60 seconds--in Citibank's electronic transaction security protocols." The gang predominantly targeted casinos and resorts in Las Vegas and southern California.
The FBI last week arrested 13 of the accused gang members in the Los Angeles area. But one of the alleged gang members, Levon Karamyan, 58, remains at large.
According to court documents, accused ringleader Ara Keshishyan, 29, recruited other members of the gang to open multiple Citibank checking accounts, which he filled with seed money. "When inside the casino, the conspirators, including Keshishyan, used cash advance kiosks at casinos in California and Nevada to withdraw -- all within 60 seconds -- several times the amount of money deposited into the accounts, by exploiting the Citibank security gap they discovered."
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The gang reportedly also kept each individual withdrawal below $10,000, which is the threshold at which casinos must report the transaction to federal authorities. "After the cash was collected from the casino 'cages,' Keshishyan would typically give conspirators their 'cut' -- and keep the remainder of the stolen funds -- which were often used to gamble," according to the FBI. "The casinos frequently 'comped' the conspirators with free rooms due to their extensive gambling activity."
The facilities targeted were the Agua Caliente, Chukchansi, Morongo, Pechanga, San Manuel and Spa Resort casinos in California; Harrah's in Laughlin, Nev.; as well as Bicycle, Tropicana, Wynn, and Whiskey Pete's casinos in Las Vegas.
The cash-advance-kiosk attacks are notable for highlighting how motivated attackers might benefit from even the tiniest information security misstep. "While advancements in technology have created a world of accessibility to users and a convenience for consumers, they have also left room for criminals to exploit even the smallest of loopholes," said FBI special agent Daphne Hearn in a statement. The flaw exploited by attackers has reportedly now been fixed.
The fraud was spotted by Citibank. "Through our own security measures and the diligence of our people we identified the fraudulent account activity and immediately notified the authorities. No customer accounts were affected by the fraudulent activity," said Citibank spokeswoman Catherine Pulley, speaking by phone. "We will continue to work with the FBI on their investigation."
All accused members of the gang have been charged with conspiracy to commit bank fraud and conspiracy to illegally structure financial transactions to avoid reporting requirements, which carries a maximum jail sentence of five years, as well as a $250,000 fine. The alleged ringleader, Keshishyan, also has been charged with 14 counts of bank fraud, each of which carries a prison sentence of up to 30 years, as well as a $1 million fine. All of the accused could see any ill-gotten gains forfeited, if the charges against them are proven.
The defendants, who have been arraigned, are next due back in court Nov. 30.
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