A Russian immigrant who got into Canada despite a serious criminal record was sentenced to 15 months' imprisonment yesterday for a sophisticated credit-card and debit-card scam that threatened the integrity of the entire banking system.
In return for a guilty plea to a charge of conspiracy to commit fraud, nine other charges were dropped against organized crime ringleader Yury Dinaburgsky, including one of participating in a criminal organization.
One of dozens of alleged mobsters swept up in co-ordinated police busts in several Canadian cities last December, Mr. Dinaburgsky admitted his role in a series of credit-card thefts that fleeced the banks of more than $500,000. Police wiretaps indicated that Mr. Dinaburgsky was the brains behind the conspiracy.
In addition, assistant Crown attorney Steve Sherriff told the court in an agreed statement of facts that Mr. Dinaburgsky's organization had developed technology capable of stealing the encoded information on debit cards, including the all-important PIN number. That would allow the data to be downloaded without the card ever leaving the consumer's hand.
There is no evidence the technology was used, Mr. Sherriff told the court. Nor -- because of time constraints and yesterday's unexpected outcome -- had the scam definitively been proven to work.
But RCMP computer experts had concluded the scheme was indeed viable and banking security experts agreed, Mr. Sherriff said.
Credit-card theft has been in practice for years, and typically involves "double swiping," in which the card is surreptitiously swiped through a hidden device, commonly concealed under a store counter. The information is then transferred to a phony card and can be used for a few weeks -- until consumers receive their monthly statements.
The ramifications of a "single-swipe" operation targeting debit cards are more sinister.
When a debit card is swiped through a punch pad, an electronic signal is sent to the bank, requesting confirmation that the card holder's credit is good.
Phony punch-pad devices seized by the RCMP in the December raids had two sets of wiring: one to expedite the legitimate purchase, and one to transmit the card's information to a concealed computer.
That data could then be reloaded onto a fake debit card.
Proof the devices were workable is expected to be presented when several of Mr. Dinaburgsky's co-accused appear in court later this year, Mr. Sherriff said.
Those suspects still face prosecution under the 1997 criminal-organization law.
In all, 49 people, most of them from Eastern Europe, were arrested in December on charges ranging from conspiracy to drug importation to fraud. Charges against eight were later dropped, and seven others have so far been convicted.
But the debit-card scam caught particular attention. Hundreds of calls poured into the Newmarket-based Combined Forces Special Enforcement Unit, which targets organized crime. The Mounties never denied the existence of the single-swipe technology.
Requests for comment from the Canadian Bankers Association were referred to security director Gene McLean, who could not be reached.
With a clutch of Russian-speaking friends and relatives in court, including his wife, Svetlana, Mr. Dinaburgsky, 44, displayed no emotion at his sentencing.
He had been in custody since his arrest before dawn at his expensive home in Richmond Hill, north of Toronto, and his quick sentencing occurred as the result of a bail application earlier in the day.
Mr. Justice John Hamilton of the Ontario Superior Court said he was inclined to grant bail, were it not that earlier this year Mr. Dinaburgsky had pleaded guilty to the fraud charge.
At sentencing, no mention was made of Mr. Dinaburgsky's criminal past. A Canadian citizen, he immigrated to this country in 1989 and has no prior criminal record in Canada. But Mr. Sherriff told the earlier bail hearing (at which the customary reporting ban was not requested) that while he was still in the former Soviet Union, he served several years for sexual assault, theft and attempting to escape custody.
Admission of those offences to immigration officials would have precluded his entry to Canada.