----------------------- U.S. Agents Go On Line And After Fraud Suspects Clifford J. Levy The New York Times September 12, 1995 -------------------------------------------------------------------------------- The United States Secret Service put together a computer bulletin board to troll for people who illegally traffic in the codes that program cellular phones. The sting is the latest indication that law enforcement agencies are being forced to try novel strategies to keep up with the growth in computer-assisted crime. According to the criminal complaint in the case, the Secret Service used the Internet to announce that the bulletin board catered to those involved in breaking into computers and in cellular-phone and credit-card fraud. The sting led to the arrests of at least six suspected hackers. ---------------- Secret Service Goes On Line and After Hackers Copyright 1995 Chicago Tribune Company Chicago Tribune -------------------------------------------------------------------------------- It was a classic sting operation, the kind of undercover gambit that has nabbed bad guys for decades: Federal agents disguised as big-time thieves set up shop and put the word out on the street that they were eager for business. Soon shifty characters were stopping by, officials said, peddling stolen goods that were worth millions of dollars. But as the agents revealed yesterday, the meeting place for this subterfuge was not some grimy storefront. It was a computer bulletin board that the United States Secret Service had rigged together to troll for people who are illegally trafficking in the codes that program cellular phones. The "computer service," which led to the arrests of at least six suspected hackers and the possibility of more, is the latest indication that law enforcement agencies are being forced to try novel strategies to keep up with the startling growth in computer-assisted crime. Cellular-phone fraud alone cost companies $482 million last year, the cellular-phone industry estimates. According to the criminal complaint in the case, a Secret Service agent used the Internet, the global computer network, to announce that the bulletin board catered to those involved in breaking into computers and in cellular-phone and credit-card fraud. "People all over the country responded," said Peter A. Cavicchia 2d, the special agent in charge of the Newark office of the Secret Service, which ran the investigation. "They felt they could do this with impunity." The Secret Service, which is the Federal agency charged with going after cellular phone and credit card fraud, has long been known to monitor commercial computer on-line services like Prodigy and America Online, as well as smaller, private computer bulletin boards, for illegal activities. But officials said this case represented the first time that the Secret Service had created an entirely new computer bulletin board, which is basically a system that links different computer users, allowing them to chat with and leave messages for each other. There have been a few instances of other law enforcement agencies creating bulletin boards for investigations. "If they are selling the stuff in cyberspace, law enforcement has to be willing to go there," said Donna Krappa, an assistant United States Attorney in Newark, who is on the team prosecuting the case. "And the way to do that is to have a fence in cyberspace." As Federal law enforcement officials detailed it, the investigation unfolded much like a traditional sting that draws in people hawking stolen televisions, jewelry or cars. The agents made contact with the suspects, then worked to gain their confidence and allay their suspicions. The difference, of course, was that most of these discussions were conducted with computers talking over telephone lines. Last January, a Secret Service special agent, Stacey Bauerschmidt, using the computer nickname Carder One, established a computer bulletin board that she called Celco 51. It is relatively easy to put together a private computer bulletin board, requiring only a computer, a modem, phone lines and communications software. Special Agent Bauerschmidt was assisted by an informer with experience as a computer hacker, officials said. The equipment and phone line for the scheme were located in a Bergen County, N.J., apartment building. After buying hundreds of the stolen phone codes, the Secret Service conducted raids in several states late last week, arresting the six people and seizing more than 20 computer systems, as well as equipment for making cellular phones operate with stolen codes, said the United States Attorney in Newark, Faith S. Hochberg. Officials said that of those arrested, two of them, Richard Lacap of Katy, Tex., and Kevin Watkins of Houston, were particularly sophisticated because they actually broke into the computer systems of cellular phone companies to obtain the codes. It is more common for thieves to steal the codes by using scanners that intercept the signals that the phones send when making calls. "We consider this to be one of the most significant of the wireless fraud busts that have come down so far," said Michael T. Houghton, a spokesman for the Cellular Telecommunications Industry Association, a trade group. "These guys took it another degree." The others arrested were identified as Jeremy Cushing of Huntington Beach, Calif.; Al Bradford of Detroit, and Frank Natoli and Michael Clarkson, both of Brooklyn. ---------------------- ON-LINE STING JUST THE BEGINNING, SAYS CYBER-SLEUTH SQUAD Copyright 1995 Chicago Tribune Company Chicago Tribune -------------------------------------------------------------------------------- Federal agents say the computer hacker called "Alpha Bits" was looking to sell stolen cellular phone account information when he ventured into "Celco 51," an Internet bulletin board that veteran cyber-crooks treated as an on-line black market. "Celco 51" was known as the place to sell ill-gotten credit card numbers and cellular phone accounts, all from the comfort of your home computer, authorities allege. But "Alpha Bits" and other computer hackers didn't know that the fencing operation was run by the U.S. Secret Service in what agents say might be the first on-line sting operation in this country's history. "We created a thieves' den and invited them in," Secret Service Special Agent Peter A. Cavicchia II said Tuesday. Last week, agents arrested Jeremy Golle Cushing, 22, a Huntington Beach resident who goes by the moniker "Alpha Bits," and five other people as part of "Operation Cybersnare." Cushing awaits extradition to New Jersey to face federal fraud charges. Cavicchia said the effort is just the first new battlefront in the war on fraud. "They can't hide anymore. The same computers and technology they use to commit crime are now coming back to bite them." The Secret Service's bulletin board was up and running only a few hours before the first prospective customer, a computer user calling himself "Black Knight," visited the electronic clearinghouse with hopes of peddling credit card account information, Cavicchia said. Soon others, with monikers such as "Chillin" and "Barcode" also came in search of money, the veteran agent said. One of the others who allegedly sought out the "Celco 51" bulletin board to fence electronic data was "Alpha Bits," an alias that agents said belongs to Cushing. Cushing was on probation when Secret Service agents from Los Angeles arrested him. Last year, he finished up a one-year jail stay after pleading guilty to 18 felony charges, including passing bad checks, possession of stolen goods and computer-related crimes. The computer expert, a former Ocean View High School student, was a familiar face to Huntington Beach Police Officer Mike Reynolds, who said he has arrested Cushing numerous times. "He is a very sophisticated young man," Reynolds said Tuesday night. "This kid is gonna be an economic crime expert for the rest of his life. The problem is he is involved in crimes that are very rarely investigated." Cushing and five others were arrested in four states during a sweep last week by federal agents. Another 14 raids spread over eight states led to the confiscation of 31 computers, 65 illegally programmed phones and 14 "readers," devices used to illegally pluck cellular phone numbers and serial codes from cellular phone transmissions, authorities said. Those phone numbers and serial codes can be used by thieves to steal cellular phone air-time and charge it to unsuspecting consumers. Cushing was charged with trafficking "cloned" cellular phones -- the phones that have been reprogrammed with the stolen information -- and possession of stolen access codes, Cavicchia said. If convicted, Cushing faces up to 15 years in prison and $250,000 in fines. Cushing's mother described him Monday as a former honors student who became consumed by the heady thrills of the hacking lifestyle. Vickie Cushing said witnessing her son's addiction to using the computer was "like watching the disintegration of a person." The family declined further comment on the case Tuesday, but Vickie Cushing repeated her warning to parents who encourage their children's use of computers but don't monitor the nature or extent of that use. "It can be so, so destructive," she said. Cavicchia said the public's view of hacking as "a harmless thing done for kicks by kids and geeks" seriously underplays a broad range of financial crimes that cost information and financial industries millions and can wreck the finances of unsuspecting consumers. "A crook is a crook," he said. "This is not a victimless crime. If these guys get hold of your information, it wrecks your credit rating for years and leaves you with a huge mess to clean up. And they're gone, $5,000 or $10,000 ahead." Jim Goode, the manager of fraud control at LA Cellular, said the cellular phone carriers in North America project a 1995 loss of more than $500 million because of fraud involving cloned phones and stolen access numbers. Goode said his team of investigators works closely with local and federal investigators and sees more than 200 arrests a month in the company's four-county service area. The data thieves use "readers" to scan cellular transmissions for the signatures of the phones being used by consumers, Goode said. When the scanning devices lock onto the phone number and serial code of a particular phone, the thieves have what amounts to an electronic fingerprint of that phone's account information. The thieves then use other equipment to reprogram a second phone with that stolen information, creating a "cloned" phone. All calls made on the second phone are then illegally billed to the account of the first phone, Goode said. PAGE 20 Los Angeles Times, September 13, 1995 Los Angeles Times September 13, 1 The use of personal identification numbers to "lock" account information has dissuaded some thieves, and a new tracking system that will be operating in coming months will put a further dent into the number of cloned phones. "The new system will be able to distinguish a legitimate call from a call made on a counterfeit phone," Goode said. "It's just another tool to shut these guys down." Cavicchia, who described himself as a member of the "pinball generation," said he is both impressed and intimidated by his field office's foray into high-tech crime-busting. Most exciting, he said, is that other newly devised tactics in the months and years to come promise to further complicate the lives of computer and cellular crooks. Hoping to keep the keyboard criminals off balance, he declined to say what form those new tactics might take. --------------------- COMPUTER HACKER SNARED IN CYBER-STING Copyright 1995 Chicago Tribune Company Chicago Tribune -------------------------------------------------------------------------------- A Huntington Beach computer hacker known on-line as "Alpha Bits" was among six suspects arrested in four states by the U.S. Secret Service for allegedly using technology to steal credit card and cellular phone information worth millions of dollars, authorities said Monday. Jeremy Golle Cushing, 22, on Monday waived extradition proceedings before a U.S. magistrate in Orange County and will be ferried by marshals to Newark, N.J., within three weeks to be arraigned on federal computer fraud charges, authorities said. Cushing is suspected of trafficking in cloned cellular telephone equipment and stolen-access devices used to program cellular phones. He was already on probation after pleading guilty last year to 18 felony charges, including passing bad checks, theft of cards or codes for financial access and receiving stolen property, officials said. The arrest of Cushing and others Friday in New York, Texas and Michigan were part of "Operation Cybersnare," a sting operated via the Internet. Agents set up and advertised a computer bulletin board called "Celco 51" in Bergen County, N.J., as a clearinghouse of sorts for stolen data. An agent, using the computer moniker "Carder One," posed as the board's operator and offered to fence stolen data for hackers, officials said. The bulletin board was targeting the hackers who pilfer the electronic serial numbers and mobile identification numbers used to encode cellular telephones. With those codes, a computer criminal can program any cellular phone to bill all its calls to the person whose code numbers have been stolen, officials said. Cushing, who spent a year in jail for his past offenses, now faces 15 years and $250,000 in fines if found guilty of the latest charges. The case is being prosecuted by the U.S. attorney's office in Newark, N.J., according to Secret Service Special Agent Jim Bauer of the Los Angeles office. The suspect's mother, Vickie Cushing of Huntington Beach, said the arrest has left her family humiliated and searching for answers. "These kids get involved in all this computer stuff, it becomes a game to them, then it's addictive," Cushing said, sobbing. "It can be destructive too. When Jeremy got involved in computers, we thought, 'Isn't this marvelous?' We PAGE 23 Los Angeles Times, September 12, 1995 Los Angeles Times September 12, 1 were naive. Parents need to be very alert about computers. If I had a youngster today, I'd tell them, 'No modems.' " * Vickie Cushing, an Orange County social worker, said her son's fascination with computers began during his sophomore year at Ocean View High School. The honor student fell in with a crowd who delighted in testing the boundaries of their computer expertise, she said. As they got older, some in the group began turning their skills toward illegal profit. For Jeremy Cushing, hacking consumed his life, his mother said. "It was like watching the disintegration of a person," she said. On Monday, Vickie Cushing and her husband, Jeffrey, made the hard decision not to put their home up to secure bail for their only child. "I couldn't do that," she said. "The bottom line is he had choices. He had the opportunity to stop. He's a very bright young man. It's a waste." The other suspects arrested were Richard Lacap of Katy, Tex., who uses the computer alias "Chillin," and Kevin Watkins of Houston, known on-line as "Led." They were charged with conspiring to break into the computer system of an Oregon cellular telephone company. Frank Natoli, also known as "Mmind," of Brooklyn, N.Y., was charged with trafficking in stolen access devices. Michael "Barcode" Clarkson, also of Brooklyn, was charged with possessing and trafficking in hardware used to obtain unauthorized access to telecommunications services. Al Bradford of Detroit, who calls himself "Cellfone," was charged with trafficking in unauthorized access devices. Agents seized more than 20 computer systems during the arrests. Cushing was arrested Friday in Huntington Beach without incident, Bauer said. ------------------ ON-LINE 'SWAG SHOP' STING YIELDS 6 ARRESTS Copyright 1995 Chicago Tribune Company Chicago Tribune -------------------------------------------------------------------------------- An on-line invitation to buy stolen cellular telephone and credit card data led to the arrest of six people and the seizure of more than 20 computer systems, authorities said Monday. During an eight-month investigation, an undercover Secret Service agent using the name "Carder One" and a confidential informant operated a private computer bulletin board system called "Celco 51," authorities said. Through the Internet, the undercover team advertised that Celco 51 catered to those involved in computer fraud, court papers said. "What we really did was set up an old-fashioned 'swag shop' in cyberspace," said Assistant U.S. Atty. Donna Krappa, who is prosecuting the case. A swag shop is where stolen goods are traded. Two of the suspects were accused of conspiring to break into the computer system of McCaw Cellular in Portland, Ore., now AT&T Wireless. The others were accused of selling the numbers to peoples' cellular phones. AT&T Wireless says the loss of a single cellular phone code costs them $500. The six people were arrested in California, Michigan, Texas and New York City. ------------------------ 6 HACKERS ARRESTED IN COMPUTER FRAUD Copyright 1995 Chicago Tribune Company Chicago Tribune -------------------------------------------------------------------------------- A Huntington Beach computer hacker -- known on-line as "Alpha Bits" -- was among six suspects arrested in four states by the U.S. Secret Service for allegedly using technology to steal credit card and cellular phone information worth millions of dollars, authorities said Monday. Jeremy Golle Cushing, 22, on Monday waived extradition proceedings before a U.S. magistrate in Orange County and will be taken by U.S. marshals to Newark, N.J., within three weeks to be arraigned on federal computer fraud charges, authorities said. Cushing is suspected of trafficking in cloned cellular telephone equipment and stolen access devices used to program cellular phones. He was already on probation after pleading guilty last year to 18 felony charges, including passing bad checks, theft of cards or codes for financial access and receiving stolen property, officials said. The arrests of Cushing and others Friday in New York, Texas and Michigan were part of "Operation Cybersnare," a sting operated via the Internet. Agents set up and advertised a computer bulletin board called "Celco 51" in Bergen County, N.J., as a clearinghouse of sorts for stolen data. An agent, using the computer moniker "Carder One," posed as the board's operator and offered to fence stolen data for hackers, officials said. The bulletin board was targeting the hackers who pilfer the electronic serial numbers and mobile identification numbers used to encode cellular telephones. With those codes, a computer criminal can program any cellular phone to bill all its calls to the person whose code numbers have been stolen, officials said. Cushing, who spent a year in jail for his past offenses, faces 15 years and $250,000 in fines if found guilty of the latest charges. The case is being prosecuted by the U.S. attorney's office in Newark, according to Secret Service Special Agent Jim Bauer of the Los Angeles office. The other suspects arrested were Richard Lacap of Katy, Tex., who uses the computer alias "Chillin," and Kevin Watkins of Houston, known on-line as "Led." They were charged with conspiring to break into the computer system of an Oregon cellular telephone company. Frank Natoli, also known as "Mmind," of Brooklyn, N.Y., was charged with trafficking in stolen access devices. Michael Clarkson, known as "Barcode," also of Brooklyn, was charged with possessing and trafficking in hardware used to obtain unauthorized access to telecommunications services. Al Bradford of Detroit, who calls himself "Cellfone," was charged with trafficking in unauthorized access devices. Agents seized more than 20 computer systems during the arrests. Cushing was arrested Friday in Huntington Beach without incident, Bauer said.