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Indictment scuttled alleged credit-card hacker’s plea

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Alleged hacker Albert "Segvec" Gonzalez was close to signing off on a comprehensive plea agreement that would have settled all pending charges when he was indicted on new counts Monday, according to a published report that cited his lawyer.

Gonzalez, who was already awaiting trial on charges he stole data for hundreds of millions of credit cards, was close to taking responsibility for those crimes and agreeing to a sentence of about 20 years, according to this article on The New York Times Bits Blog, which cited defense attorney Rene Palomino Jr. The proposed deal, which was to settle all pending investigations, was scuttled when the new charges were filed.

"We are giving it our best shot trying to resolve these cases and to prevent the government from wasting all these millions of dollars to bring to trial all these cases," Palomino said. "We were very close."

Erez Liebermann, an assistant US Attorney in New Jersey who helped bring the new charges, declined to comment. Monday's indictment claimed Gonzalez was the ringleader in a hacking circle that stole information for more than 130 million credit cards from card payment processor Heartland Payment Systems and retailers Hannaford Brothers and 7-Eleven. It's the biggest credit card heist ever prosecuted.

Palomino also filled in conspicuous blanks contained in the indictment concerning two of the unnamed individuals who allegedly worked with Gonzalez. The unindicted co-conspirator identified only as "P.T." is Damon Patrick Toey, one of 10 individuals indicted in August along with Gonzalez for attacks on TJX Companies, BJ's Wholesale Club, Dave & Busters and others. In September, Toey agreed to plead guilty and testify against his former cohorts.

The defense attorney said he was prepared to argue at trial that Toey, not Gonzales, headed the operation that was charged in Monday's indictment.

Palomino also said one of the two unidentified suspects in Monday's indictment was Maksym Yastremskiy (aka Maksik), a Ukrainian fraudster linked to the TJX hack who was sentenced in January to a 30-year prison sentence in Turkey on unrelated charges.

The revelations came as a security blogger offered new technical details about how the hackers may have been able to penetrate the Heartland network, which processes some 100 million transactions per month for about 250,000 merchants.

The attackers used an SQL injection to gain a toehold into a system outside Heartland's transaction processing network and then gradually worked their way into the servers that handle the card transactions, according to the Securosis Blog, citing an unnamed individual who was briefed on the attack. The weak link in the chain appeared to be a virtual private network that connected a workstation with the processing network.

Prosecutors have said only that Gonzalez was able to install sniffer software on the networks of Heartland and the other victims using a SQL injection attack. This decade-old technique exploits web applications that fail to adequately scrutinize text that visitors type into search boxes and similar website fields that accept user-supplied input. ®

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