LOS ANGELES -- Two men were each sentenced to three years in prison for withdrawing tens of thousands of dollars from ATMs with credit union and bank credit card information that was stolen from craft-store retail chain Michaels Stores in 2011.

The defendants, Eduard Arakelyan, 21, and Arman Vardanyan, 23, pleaded guilty to one count each of conspiracy to commit bank fraud, bank fraud and aggravated identity theft. Arakelyan was born in Azerbaijan and came to the U.S. at age 8, and Vardanyan was born in Armenia and moved to this country at age 13.

Prosecutors linked the scam to a larger scheme in which a total of 94,000 bank and credit card numbers, along with PINs, were stolen from customers of Michaels Stores, a nationwide chain of arts and crafts shops. Michaels identified 90 key pads that were tampered with in the states of Illinois, Colorado, Delaware, Georgia, Iowa, Massachusetts, Maryland, North Carolina, New Hampshire, New Jersey, New Mexico, Nevada, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Utah, Virginia and Washington.

Prosecutors said the unidentified perpetrators in the larger scheme replaced the PIN pads at 84 stores in 19 states with fraudulent pads that recorded both the account numbers and PINs of customers.

The two suspects confessed that in July 2011 they obtained more than 950 counterfeit bank cards, which they used to make fraudulent withdrawals at 89 credit union and banks in northern California. The cloned cards contained information that was stolen earlier in 2011 when thieves were able to implant skimming devices on point-of-sales terminals in 84 Michaels stores across 20 states.

The two men must also serve five years of supervised release and pay $42,043 in restitution. Nobody else has been charged in the operation.

Since the breach, there have been tens of thousands of reports of fraudulent activity on customers' credit cards, prosecutors said. They said they hope these arrests will serve as a deterrent for future wannabe fraudsters.

Prosecutors alleged the suspects' scheme began in May 2011 and stopped when the two men were arrested after an ATM withdrawal on July 10, 2011.

Investigators found 952 fraudulent cards, two guns, a GPS navigation system showing ATM locations and $56,599 in cash either with the men or in their car or hotel room. Each card was encoded with stolen account information and had a stolen personal identification number, or PIN, written on the outside.


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