Cyber-sleuths Catching Up to Cyber-crooks

Written by Evan Schuman
April 5th, 2006

When federal authorities started unsealing court documents on April 4 about the Secret Service’s Operation Rolling Stone, they also gave a peek inside how they are trying to combat cyber-crime.

Although the operation’s name is unfortunate?the last thing Homeland Security wants to do is project the image of an aging rock band trying to keep up with much younger audiences?the feds’ efforts are encouraging.

As eWEEK has detailed, the Secret Service probe is a concerted effort by the feds to start to publicly tout that they can be 21st Century crime fighters.

Perhaps some of the announcement was more PR than prosecution, though, with one prosecution source conceding, “Despite the Secret Service statement, this is just a bunch of totally unrelated cases that they’ve bunched together and called Operation Rolling Stone.”

But whether law enforcement has figured out Web procedures may be small comfort when other parts of the government, the banking community and private businesses still treat security lightly and with utter apathy for cyber-crime efforts.

Consider one of the cases. Shawn Mimbs, 27, was arrested by the Secret Service and is now being prosecuted by the Los Angeles District Attorney’s office.

Mimbs is accused of grand theft of U.S. property. Specifically, L.A. officials are charging that he went to public libraries and Internet cafes and used their Web access to visit the H&R Block tax return service Web site.

Once on the H&R Block site, he used stolen Social Security numbers and addresses?often from dead people?to file bogus tax returns and request that the tax refunds be wired to bank cash cards that he could access.

Deputy L.A. District Attorney Jeff McGrath, who is handling the case, said Mimbs took advantage of several loopholes.

What loopholes? First, the H&R Block site didn’t sufficiently authenticate new taxpayer clients who only appear online. Secondly, the IRS system was not matching its records with death certificates. And some banks?in this case, it was the Stillwater National Bank in Oklahoma and the West Suburban Bank in Illinois?allow cash card accounts to be opened with insufficient authentication and then issue cards with no names on them.

So we have the federal government itself?the IRS, which should be the king of suspicion?and major banks with lax procedures. The IRS also is willing to wire funds to an unknown account.

H&R Block should also know better. It’s used to the days when people came to its local storefronts and it was wonderfully personal. With the anonymity of the Web, extensive authentication is necessary. Will it be inconvenient? Certainly, but not nearly as inconvenient as letting customers get ripped off.

A fascinating part of the court documents unsealed April 4 was the peek inside the fake-credit-card world that they offered. Of the several sites mentioned in our story, my personal favorite was, which court papers identify as standing for the International Association for the Advancement of Criminal Activity.

That has simply got to be right up there with James Bond’s SPECTRE (Special Executor for Counter-Intelligence, Terrorism, Revenge and Extortion) and Get Smart’s KAOS.

But the procedures the feds are using are quite serious. However, a close look at six of the seven cases revealed this week?one of them appears to still be sealed?suggests what any fan of murder mysteries already knows: Stupidity on the crook’s part is much more likely to solve a case than an investigator’s brilliance.

Example: The Secret Service agents were quite skilled at tracing IP addresses and using clues in conversations to figure out the evil-doers. The ability to issue subpoenas to the likes of Microsoft or AOL?to pierce the secrecy of a Hotmail account or AOL IM talker?certainly helps, too.

But it was usually careless comments by suspects that actually revealed themselves. One suspect wanted to be paid by eBay’s PayPal, but the Secret Service undercover investigator told him that PayPal “was malfunctioning” and to use Western Union instead.

PayPal’s malfunctioning? It didn’t occur to the cyber-bandit to say, “Wait a few hours and try again”? If you’re engaging in wire fraud and asking for money from a faceless stranger, wouldn’t the suggestion of going to Western Union seem odd?

One suspect even volunteered to not use an anonymous method, but wanted it sent to his real name. It’s hard for the feds to take too many bows when the crooks are that trusting.

Or consider that Mimbs case in L.A. again. He is accused of using the names of dead people and submitting tax returns for them and collecting their refunds. How was he caught? Some of the names he used were actually associated with live people who were also filing real tax returns. (Note to cyber-bandits in training: A caper that works well with dead people may not work as well if the person just has a cold.)

Or another defendant who went through great pains to keep his credit card creation company efforts secret, but proceeded to buy much of his equipment publicly on eBay?using the same name he used for deceptions. Correction: He changed one letter. (Second note to cyber-bandits in training: This is not a job for the lazy.)

The Secret Service has its hands full chasing cyber-bandits who are often much better funded than the feds are. But as long as many of the suspects are this cavalier, we may just have an edge. Then again, banks and merchants are trying to give the edge back to the bandits.


Comments are closed.


StorefrontBacktalk delivers the latest retail technology news & analysis. Join more than 60,000 retail IT leaders who subscribe to our free weekly email. Sign up today!

Most Recent Comments

Why Did Gonzales Hackers Like European Cards So Much Better?

I am still unclear about the core point here-- why higher value of European cards. Supply and demand, yes, makes sense. But the fact that the cards were chip and pin (EMV) should make them less valuable because that demonstrably reduces the ability to use them fraudulently. Did the author mean that the chip and pin cards could be used in a country where EMV is not implemented--the US--and this mis-match make it easier to us them since the issuing banks may not have as robust anti-fraud controls as non-EMV banks because they assumed EMV would do the fraud prevention for them Read more...
Two possible reasons that I can think of and have seen in the past - 1) Cards issued by European banks when used online cross border don't usually support AVS checks. So, when a European card is used with a billing address that's in the US, an ecom merchant wouldn't necessarily know that the shipping zip code doesn't match the billing code. 2) Also, in offline chip countries the card determines whether or not a transaction is approved, not the issuer. In my experience, European issuers haven't developed the same checks on authorization requests as US issuers. So, these cards might be more valuable because they are more likely to get approved. Read more...
A smart card slot in terminals doesn't mean there is a reader or that the reader is activated. Then, activated reader or not, the U.S. processors don't have apps certified or ready to load into those terminals to accept and process smart card transactions just yet. Don't get your card(t) before the terminal (horse). Read more...
The marketplace does speak. More fraud capacity translates to higher value for the stolen data. Because nearly 100% of all US transactions are authorized online in real time, we have less fraud regardless of whether the card is Magstripe only or chip and PIn. Hence, $10 prices for US cards vs $25 for the European counterparts. Read more...
@David True. The European cards have both an EMV chip AND a mag stripe. Europeans may generally use the chip for their transactions, but the insecure stripe remains vulnerable to skimming, whether it be from a false front on an ATM or a dishonest waiter with a handheld skimmer. If their stripe is skimmed, the track data can still be cloned and used fraudulently in the United States. If European banks only detect fraud from 9-5 GMT, that might explain why American criminals prefer them over American bank issued cards, who have fraud detection in place 24x7. Read more...

Our apologies. Due to legal and security copyright issues, we can't facilitate the printing of Premium Content. If you absolutely need a hard copy, please contact customer service.