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Meanwhile, the other group of agents entered the Quality Market and arrested 46-year-old Betya Kogan, who, according to court records, told investigators that she did not have a purse with her when they asked if she had identification. In Russian, she told a store clerk to "go to the back and bring only my wallet from my purse, and bring it here." But this time there was a problem. Court records say Fred Ponomarenko, an investigator with the San Francisco District Attorney's Office, happened to be standing next to Betya, and he understands Russian quite well.
In her purse, agents found a bundle of 15 stolen credit cards wrapped in their mailers, along with slips of paper containing personal information on the card owners. When police accompanied a handcuffed Betya to get her car keys from the store safe, they found another surprise: a semiautomatic handgun on its top shelf.
Boris and Betya Kogan were released on bail shortly after their arrests. Six months later, the San Francisco Examiner featured Betya and the market on the cover of the paper's Epicure section, in a story that explained how Russian Jewish immigrants were bringing new culture to San Francisco.
The following December, Betya pleaded guilty to felony charges of receiving stolen property, and Boris pleaded guilty to misdemeanor burglary. They were both sentenced to three years' probation.
Despite the wealth of information they'd gained by following and taping Igor Kogan and other members of his Russian crime network, investigators remained stumped on one particular question: How were the thieves gaining access to the accounts? Somehow, they were managing to get new, stolen credit cards authorized for use.
Of course, there were hints. A few of the shoppers federal agents managed to interview made reference to bigger players in the crime network, players who had mysterious connections who authorized stolen cards. There were rumors that shadowy government officials and corporate insiders played a role in the scam, and that a mysterious 800 number was used in the process.
Finally Dortch interviewed a lower-level thief who'd been busted for shopping with a stolen credit card. Among her belongings was a small slip of paper on which an 800 telephone number had been scrawled. Dortch called the number, and found himself talking to Backcheck, an investigations company in Texas that also did business as a public records research firm called Biosearch.
Accompanied by a Texas Ranger, Postal Inspector Dortch called on the firm, located in a nondescript office in a nondescript strip mall in San Antonio. Biosearch was owned by Daniel Coonan, a former Air Force officer, who, after retiring from military service, began a private investigative firm specializing in background checks for businesses in California and Texas.
Coonan was apparently operating under the mistaken impression that his firm was doing a lot of business for a group of European businessmen who dealt with real estate investments and required background information as part of title searches. Because these supposed businessmen had problems paying their bills at one point, Biosearch had set up a system that allowed them to pay through a deposit-only account at Bank of America.
And that was that. One phone call with the name and address of a card owner (taken from the mailer around a stolen card), a deposit of Biosearch's $90 fee at the bank, and the firm produced a Social Security number and date of birth for the card owner. Armed with that information, a thief like Kogan would call the credit card company, which would authorize the card for use (without the call having come from the home phone of record, another way of automatically authorizing the card).
Coonan soon began reporting to federal agents each time the account was used, and by whom, according to court records.
The Biosearch account, investigators say, was originally opened by a man who was arrested several times during the mid- to late 1990s on theft and assault charges in San Francisco and San Mateo counties, most related to alcohol. Investigators say the man liked to brag about his business in bars populated by Russian immigrants on the west side of San Francisco. Also, he had the outward trappings of success, including expensive cars and clothing, and appeared to have connections; he could, it became known, make stolen credit cards work.
The aura the man built around himself, investigators say, helped to popularize the credit card theft business in the Russian crime community. Actually, though, how this particular thief learned to activate stolen credit cards was a less-than-impressive story. It was a story in which dumb luck and pathetic romance played leading roles.
The start of the story involves the man's arrest, in 1996 on a charge he'd assaulted his girlfriend. After the charges were dropped for lack of evidence, he returned home to find that the girlfriend had left. Desperate to find her, the man opened the San Francisco Yellow Pages, apparently looking for a private investigator, and found an advertisement for Biosearch, the San Antonio firm. The company supposedly provided enough information to the man to locate his lost love -- and to help him conceive the idea at the heart of the Russian credit card game.
