textfiles/news/modbust.txt

 * Originally By: Randy Edwards
 * Originally To: All
 * Originally Re: NEW YORK COMPUTER CRIME INDICTMENTS
 * Original Area: <FIDO> U.S. News & World Report
 * Forwarded by : Blue Wave v2.10

 Via The NY Transfer News Service 718-448-2358, 718-448-2683
 Subject: New York Computer Crime Indictments
  Date: 10 Jul 92 21:14:29 EDT
  From: mcmullen@well.sf.ca.us
  alt.society.cu-digest Sun Jul 12 18:18:52 1992

  NEW YORK, N.Y., U.S.A., 1992 JULY 9 (NB) -- Otto G. Obermaier, United
States Attorney for the Southern District of New York, has announced the
indictment of five "computer hackers" on charges of computer tampering,
computer fraud, wire fraud, illegal wire tapping and conspiracy. The
announcement was made at a press conference at 2:00 PM on Wednesday, July
8th at the Federal Court hose in Manhattan

  Named in the indictment were Julio Fernandez, 18, known as the "Outlaw";
John Lee, 21, a/k/a "Corrupt"; Mark Abene, 20, a/k/a "Phiber Optik"; Elias
Ladopoulos, 22, a/k/a "Acid Phreak"; and "Paul Stira, 22, a/k/a "Scorpion."
In addition to alleged specific illegal acts involving computers, the five
individuals were also charged with conspiracy.

  According to the indictment, the five were members of a group known as MOD
(standing for either "Masters of Disaster" or "Masters of Deception") and
the goal of the conspiracy was "that the members of MOD would gain access to
and control of computer systems in order to enhance their image and prestige
among other computer hackers; to harass and intimidate rival hackers and
people they did not like; to obtain telephone, credit, information, and
other services without paying for them; and to obtain. passwords, account
numbers and other things of value which they could sell to others."

  The indictment defines computer hacker as "someone who uses a computer or
a telephone to obtain unauthorized access to other computers."

  Obermaier stated that this investigation was "the first investigative use
of court-authorized wiretaps to obtain conversations and data transmissions
of computer hackers." He said that this procedure was essential to the
investigation and that "It demonstrates, I think, the federal government's
ability to deal with criminal conduct as it moves into new technological
areas." He added that the interception of data was possible only because the
material was in analog form and added "Most of the new technology is in
digital form and there is a pending statute in the Congress which seeks the
support of telecommunications companies to allow the federal government,
under court authorization, to intercept digital transmission. Many of you
may have read the newspaper about the laser transmission which go through
fiber optics as ernment needs the help of Congress and, indeed, the
telecommunications companies to able to intercept digital While all of those
indicted were charged with some type of unlawful access to one or more of
computer systems belonging to the following: Southwestern Bell, BT North
America, New York Telephone, ITT, Information America, TRW, Trans Union,
Pacific Bell, the University of Washington, New York University, U.S. West,
Learning Link, Tymnet and Martin Marietta Electronics Information and
Missile Group, Fernandez and Lee were also charged with selling illegally
obtained credit information to a person that later re-sold the information
to private detectives.

  Assistant United States Attorney Stephen Fishbein announced that Morton
Rosenfeld has been indicted and pled guilty to purchasing credit information
and access codes from persons named "Julio" and "John." Fishbein said that
Rosenfeld, at the time of his arrest on December 6, 1991, has approximately
176 TRW credit reports in his possession. Rosenfeld, 21, pled guilty on June
24, 1992 and is scheduled to be sentenced on September 9th. He faces a
maximum of five years imprisonment and a fine of the greater of $250,000 or
twice the gross gain or loss incurred.

  Fishbein also announced the outcome of a "separate but related court
action, Alfredo De La Fe, 18, pled guilty on June 19, 1992 to the use and
sale of telephone numbers and codes for Private Branch Exchanges (PBX's). De
La Fe said that he had sold PBX numbers belonging to Bugle Boy Industries to
a co-conspirator who used the numbers in a call-selling operation. He also
said that he and a person that he knew as "Corrupt" had made illegal long
difference conference calls. De La Fe faces the same maximum penalty as
Rosenfeld and is scheduled for sentencing on August 31st.

  Among the charges against the five charged as conspirators is the
allegation that Fernandez, Lee, Abene and "others whom they aided and
abetted" performed various computer activities "that caused losses to
Southwestern Bell of approximately $370,000. When asked by Newsbytes how the
losses were calculated, Fishbein said that there was no breakdown beyond
that stated in the indictment -- "expenses to locate and replace computer
programs and other information that had been modified or otherwise
corrupted, expenses to determine the source of the unauthorized intrusions,
and expenses for new computers and security devices that were necessary to
prevent continued unauthorized access by the defendants and others whom they
aided and abetted."

  In answer to a Newsbytes question concerning the appropriateness of making
an intruder into a computer system totally responsible for the cost of
adding security features "which possibly should have been there to begin
with," Obermaier said "That theory would make the burglar the safety expert
since one can't have people going around fooling around with other people's
relatively private information and then claiming that I'm doing it for their
good."

  Paul Tough of Harper's Magazine followed up on the same topic by saying
"In the Craig Neidorf case a regional telephone company claimed that a
document was worth over $100,000. When it was found to be worth only $12,
the case was thrown out. In view of that, are you concerned that they
(Southwestern Bell) may have overreported? In response, Obermaier "No, we
are not concerned. It's a matter of proof and, if the accused stand trial
and have a similar experience to as happened the case you cite, not in this
district, then the results predictably will be the same." Fishbein said that
the conspiracy change carries a maximum sentence of five years imprisonment
while each of the other counts (there are 10 additional counts) carries a
maximum of five years imprisonment and a fine of the greater of $250,000 or
twice the gross gain or loss incurred. A single exception is a count
charging Fernandez with possessing fifteen or more unauthorized access
devices. That count carries a maximum penalty of ten years imprisonment.

  In response to a statement by Alex Michelini of the New York Daily News
that "What you've outlined, basically, except for the sales of credit
information, this sounds like a big prank, most of it," Obermaier said
"Really, Well, I suppose, if you can characterize that as a prank but it's
really a federal crime allowing people without authorization to rummage
through the data of other people to which they do not have access and, as I
point out to you again, the burglar cannot be your safety expert. He may be
inside and laugh at you when you come home and say that your lock is not
particularly good but I think you, if you were affected by that contact,
would be somewhat miffed"

  Obermaier also said that "The message that ought to be delivered with this
indictment is that such conduct will not be tolerated, irrespective of
tensible purpose."

   Obermaier also said that "The message that ought to be delivered with
this indictment is that such conduct will not be tolerated, irrespective of
the ag of the particular accused or their ostensible purpose."

  Others participating in the news conference were Raymond Shaddick, United
States Secret Service assistant director - Office of Investigations; William
Y. Doran, FBI special agent in charge, New York criminal division; Scott
Charney, United States Dept. of Justice chief of computer crime unit. All
stressed the cooperation that had gone on between the various law
enforcement agencies during the investigation.

  Charney told Newsbytes that, in spite of the fact that the search warrants
executed on Stira and Ladopoulos preceded those executed on Lee and
Fernandez by almost two years and that the last specific allegation against
Stira proceeds the first against Lee by 16 months and the first against
Fernandez by 21 months, there is evidence that links them together in the
conspiracy. Charney also told Newsbytes that the counts against Abene were
not related to a misdemeanor conviction in early 1991 for which he served
community service. Those indicted have been asked to present themselves at
New York Service Services headquarters at 9:00 AM on July 8th for
fingerprinting. Arraignment for the indicted is scheduled for Thursday, July
16th.

  Abene told Newsbytes that while he couldn't comment on anything related to
the indictment until he obtained legal counsel, "I've been participating i
conferences with law enforcement personnel and guest lecturing to college
classes for the last year and a half. In every case, I have said how those
responsible for information about us have the responsibility to protect that
data. I have also tried to explain the great difference between a true
hacker and a person who uses computers for criminal profit. I hope that I
have increased understanding with these efforts."

  (Barbara E. McMullen & John F. McMullen/Press Contacts:Federico E.
Virella, Jr., United States Attorney's Office, 212 791-1955; Betty Conkling,
United States Secret Service, 212 466-4400; Joseph Valiquette, Jr, Federal
Bureau of Investigation, 212 335-2715/19920709)

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