1995-09-11 -- Cybersnare Sting -- Arrests -- News Release Six alleged computer "hackers" arrested in undercover Secret Service investigation dubbed "Operation Cybersnare" hack0911.rel MORRISTOWN, NJ -- Six alleged computer "hackers" have been arrested and more than 20 computer systems seized in a seven- state U.S. Secret Service undercover investigation, dubbed "Operation Cybersnare," targeting persons who used the Internet and a private bulletin board system to allegedly deal in stolen cellular telephone and credit card data worth millions of dollars, Secret Service Special Agent in Charge Peter A. Cavicchia II announced today. The arrests of defendants in Huntington Beach, California; Brooklyn, New York; Detroit, Michigan; and Houston, Texas capped a sting operation in which an undercover Secret Service Special Agent operated a Bergen County, New Jersey-based bulletin board system called "Celco 51," according to U.S. Attorney Faith S. Hochberg. In addition to search warrants executed in the states in which the defendants were apprehended, search warrants were also executed for computer hardware and data in New Jersey, Virginia, Connecticut and Alaska. The arrests and warrants flowing from the investigation mark the first successful law enforcement "sting" operation that identified persons allegedly involved in the intrusion of telecommunication computer networks, the computer theft of credit card account numbers and related personal information, and the theft of information used to obtain free cellular telephone service, Cavicchia said. Arrested late Friday were Richard Lacap, of Katy, Texas, who used the computer alias of "Chillin" and Kevin Watkins, of Houston, Texas, who used the computer alias of "Led." Lacap and Watkins were charged by criminal Complaint with conspiring to break into the computer system of an Oregon Cellular Telephone company; Jeremy Cushing, of Huntington Beach, California, who used the computer alias of "Alpha Bits," was charged with trafficking in cloned cellular telephone equipment and stolen access devices used to program cellular telephones; Frank Natoli, of Brooklyn, New York, who used the computer alias of "Mmind." Natoli was charged with trafficking in stolen access devices used to program cellular telephones; Al Bradford, of Detroit, Michigan, who used the computer alias of "Cellfone," was charged with trafficking in unauthorized access devices used to program cellular telephones; Michael Clarkson, of Brooklyn, New York, who used the computer alias of "Barcode," was charged with possessing and trafficking in hardware used to obtain unauthorized access to telecommunications services. Lacap and Watkins face maximums of five years in federal prison and $250,000 fines if convicted on the charge. Natoli, Bradford, and Clarkson each face a maximum of 10 years in federal prison, $250,000 fines or twice the value of the property obtained by the offense, if convicted. Cushing, if convicted, faces a maximum of 15 years in prison and a fine of $250,000 or twice the value of the property obtained by the offense. Under U.S. Sentencing Guidelines, the judge to each defendant's case is assigned would, upon conviction, determine the actual sentence based upon a formula that takes into account the severity and characteristics of the offense, and the defendant's criminal history, if any, Hochberg said. Parole, however, has been abolished in the federal system. Under Sentencing Guidelines, defendants who are given custodial terms must serve nearly all that time, Hochberg explained. All six were to have made initial appearances over the weekend before U.S. Magistrate Judges in the federal districts in which they were arrested. Bail was to be set for each defendant. All were to be ordered to make an initial appearance in Newark Federal Court before U.S. Magistrate Judge Dennis M. Cavanaugh, on Sept. 19, 1995, at 2:30 P.M., Hochberg said. In addition to the many computer systems seized by secret service agents from the arrested individuals, special agents in New Jersey, Alaska, Connecticut and Virginia seized computer systems from six other alleged "hackers" identified as a result of the New Jersey investigation. According to the Criminal complaints filed against the six alleged hackers arrested on Friday, the investigation began in January of 1995 when a Special Agent for Secret Service, acting in an undercover capacity, established the "Celco 51" computer bulletin board ("BBS"). A computer "hacker" is an individual with expertise in gaining unauthorized entry into computer systems. Celco 51 was established through the use of a telephone facility subscribed to a location in Bergen County, New Jersey. A computer bulletin board is an electronic meeting place where individuals using computers may exchange information. Although many bulletin board systems are operated as national commercial services available to the public, thousands of smaller computer bulletin boards are privately owned, the attachments to the Complaints state. The components necessary to establish a bulletin board include a computer system, modem, telephone line, and communications software. A computer bulletin board may also include various peripheral hardware, software, networking hardware and software, passwords and data security devices, data, and documentation. During the course of the investigation law enforcement identified persons who were involved in the intrusion of telecommunication computer networks and the theft of information used to obtain free cellular telephone service. Through computer contact via the Internet, the undercover agent advertised that Celco 51 was a bulletin board catering to individuals involved in unauthorized computer intrusion and all aspects of computer fraud, including cellular telephone fraud, according to the federal Complaints. The type of cellular telephone fraud targeted in this case has been frequently accomplished through the theft of Electronic Serial Numbers ("ESNs") and Mobile Identification Numbers ("MINs") (collectively "ESNs and MIN pairs"), which constitute the information used to encode and program cellular telephones. These pairs are programmed into a cellular telephone to provide the telephone user with telephone service and to permit the establishment of a billing account for each the user. In recent years, individuals with computer expertise have gained unauthorized entry into computer systems operated by cellular telephone providers and stolen blocks of ESNs and MIN pairs, according to court documents. After an active ESN and MIN pair is stolen, it may be programmed into a cellular telephone such that this "cloned" telephone may be used to make unauthorized telephone calls that will be charged to the account of the individual whose cellular telephone legitimately possesses the ESN and MIN pair. Such fraud is generally not discovered until the legitimate owner reviews his or her monthly bill and discovers the unauthorized telephone calls reflected on it. The cellular industry has estimated that it suffers losses in excess of $1 million per day as a result of cellular telephone fraud. Cavicchia credited the cooperation provided by AT&T Wireless Communications; The Cellular Telecommunications Industries Association; and numerous cellular telephone providers and landline companies for their cooperation during the investigation. The United States is represented in court by Assistant U.S. Attorneys Donna Krappa and Elliot Turrini, of the U.S. Attorney's Criminal Division in Newark. --30-- hack0911.rel Cybersnare Sting -- Arrests News Release -- 1995-09-11 U.S. Attorney for the District of New Jersey Faith S. Hochberg, United States Attorney 970 Broad Street, Seventh Floor Newark, New Jersey 07102 Main Office Number: 201-645-2700 Public Affairs Office: 201-645-2888 Dick Lavinthal: Spokesman and Public Affairs Specialist Jennifer Salvato: Public Affairs Specialist DOJ Eagle: ANJ01(PUBAFAIR) Internet Mail -- rlavinth@justice.usdoj.gov World Wide Web -- http://www.usdoj.gov/press.html Gopher -- gopher://gopher.usdoj.gov