Seattle Times, WA
Aug 11 2007

Local post offices hit by new breed of identity theft

By David Bowermaster
Seattle Times staff reporter

In mid-July, three men left their homes near Los Angeles and traveled
to Seattle to buy postage stamps.

But these were no ordinary collectors. Armed with at least 27 stolen
credit-card numbers, federal prosecutors say, Artem Danilov, Stephan
Melkonyan and Karapet Kankanian fraudulently purchased more than
3,200 books of stamps worth nearly $24,000 from Seattle-area post
offices in just more than a week. A federal grand jury Thursday
charged the men with an assortment of crimes.

Following a pattern that Postal Service investigators have uncovered
in at least five Western states, the men made mass purchases of
stamps after normal working hours from automated postal machines,
which are accessible 24 hours a day in the lobbies of many post
offices around the country, prosecutors allege.

The illegal stamp-buying scheme appears to be a novel breed of
identity theft, one that blends high-tech thievery, online commerce
and the retro currency of the U.S. mail.

James Vach, a spokesman for the U.S. Postal Inspection Service in
Seattle, said investigators first encountered a wave of fraudulent
stamp buys in the Los Angeles area late last year.

Since then, the Postal Service has uncovered illegal stamp-buying
schemes in Washington, Oregon, Arizona and Colorado.

In the Puget Sound area alone, according to court papers, the scam
has cost the Postal Service more than $62,000 since January.

Investigators do not know exactly how many people are involved, but
Vach said "we suspect it’s a larger ring." The source of the stolen
credit-card numbers is also under investigation, Vach said. Many of
the numbers used last month in the Seattle area were also used at a
carwash in Southern California, Vach said, but he declined to
disclose additional details because an investigation in California is
continuing.

Investigators are also trying to figure out exactly where all the
purloined postage has gone, but much of it appears to have been sold
online through eBay, said assistant U.S. Attorney Nicholas Brown.

The latest wave of suspicious stamp buying in the Seattle area
occurred from July 18-26, according to court papers.

Danilov, Melkonyan and Kankanian allegedly used a credit-card reader
to embed the stolen credit-card numbers onto the magnetic strips of
gift cards from a variety of retailers, Brown said, a process that
allows the gift cards to function like credit cards.

They then used the adulterated gift cards to repeatedly buy books of
stamps from postage machines in one post office after another.
Customers used to be able to buy dozens of books of stamps per
transaction from the automated postage machines, but the Postal
Service has since limited the number to try to fight such fraud.

Danilov and Melkonyan are Russian nationals, Brown said, and
Kankanian is Armenian.

Melkonyan is a legal U.S. resident, Brown said, so he has been
released on bond. Danilov and Kankanian are in custody at the federal
detention center in SeaTac. Lawyers for the three men could not be
reached for comment.

During their July shopping spree, investigators said, the three men
illegally bought stamps from at least 11 different post offices in
locations ranging from Kent to Bellevue to Queen Anne.

After getting a tip about suspicious buying activity, on July 26 a
team of U.S. postal inspectors led by Jerry Styers, along with local
police, staked out area post offices.

At around 7 p.m., Styers saw three men in a van arrive at the Kent
post office. One of the men, whom Styers identified as Danilov, went
into the lobby and made several purchases at the automated postage
machine. He "put multiple credit-card devices into the slot over and
over again," Styers said in court papers.

The van was then driven to the Renton post office, where other postal
inspectors conducting surveillance allegedly saw Danilov and
Kankanian make another series of suspicious purchases, and then go to
a nearby strip mall.

King County sheriff’s deputies subsequently stopped the van and took
the three men into custody. They found "dozens of access-type credit
cards that appeared as gift cards," but, oddly, no stamps.

But when investigators subsequently searched the Super 8 Motel room
in SeaTac, where Melkonyan had been staying, they found a credit-card
reader, multiple gift cards, two laptop computers, several cellphones
and a plane ticket to Moscow in Danilov’s name for a flight later
that day. They also found 546 books of "forever stamps," worth more
than $4,000.

The Postal Service began selling "forever stamps" in May. The stamps
are always valid for first-class postage regardless of increases in
their price. Nearly 500 of the books of "forever stamps" were in an
unsealed U.S. Express mail envelope. Investigators believe the group
may have been mailing the stamps back to California for resale,
rather than carrying them back themselves.

A federal grand jury on Thursday charged Danilov, Melkonyan and
Kankanian each with one count of conspiracy to commit access-device
fraud, one count of possession of unauthorized access devices, 27
counts of making transactions with access devices issued to another
person, and one count of aggravated identity theft, a charge that
carries a mandatory minimum two-year prison sentence.

The three men are scheduled to be arraigned in U.S. District Court in
Seattle on Thursday.

From: Emil Lazarian | Ararat NewsPress