OAKLAND (CBS SF) — Two Southern California men have been sentenced in federal court in Oakland to five years in prison for conspiring to defraud banks by using nearly 1,000 phony bank cards created with stolen information.

Eduard Arakelyan, 21, of North Hollywood, and Arman Vardanyan, 23, of Montebello, were sentenced Tuesday by U.S. District Judge Claudia Wilken.

The two men each pleaded guilty before Wilken in March to one count of conspiracy to defraud banks, one count of bank fraud and one count of aggravated identity theft.

U.S. Attorney Melinda Haag said the pair admitted during the plea to one count of aggravated identity theft.

U.S. Attorney Melinda Haag said the pair admitted during the plea that they possessed 952 cards encoded with stolen information and that they drove to Northern California last year to withdraw as much money as they could from ATMs with the cards.

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

Investigators found the 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, prosecutors said in a sentencing brief. Each card was encoded with stolen account information and had a stolen personal identification number, or PIN, written on the outside.

Haag said the scam was linked 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.

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 fraudulent pads were equipped with Bluetooth technology that enabled the perpetrators to retrieve the information wirelessly.

Arakelyan was born in Azerbaijan and came to the United States at age 8, and Vardanyan was born in Armenia and moved to this country at age 13, their lawyers said in sentencing briefs.

In addition to being given prison terms, the two men were ordered to pay $42,043 in restitution to banks and credit unions.

Prosecutors said in court papers that the restitution amount was based on losses reported by six of the 89 banks that had accounts encoded onto the fraudulent cards held by the two men.

(Copyright 2012 by CBS San Francisco and Bay City News Service. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)


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