Threat Level Privacy, Crime and Security Online

TJX Hacker Gets 20 Years in Prison

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BOSTON — Convicted TJX hacker Albert Gonzalez was sentenced to 20 years in prison on Thursday for leading a gang of cyberthieves who stole more than 90 million credit and debit card numbers from TJX and other retailers.

The sentence for the largest computer-crime case ever prosecuted is the lengthiest ever imposed in the United States for hacking or identity-theft. Gonzalez was also fined $25,000. Restitution, which will likely be in the tens of millions, was not decided Thursday.

Clean-cut, wearing a beige jail uniform and wireframe glasses, the 28-year-old Gonzalez sat motionless at his chair during Thursday’s proceedings, his hands folded in front of him.

Before the sentence was pronounced, Gonzalez told the court he deeply regrets his crimes, and is remorseful for having taken advantage of the personal relationships he’d forged. “Particularly one I had with a certain government agency … that gave me a second chance in life,” said the hacker, who had worked as a paid informant for the Secret Service. “I blame nobody but myself.”

“I violated the sanctity of my parents’ home by using it to stash illegal proceeds,” said Gonzalez. He asked for a lower sentence “so I can one day prove to [my family] that I love them as much as they love me.”

The hacker’s voice cracked and his gaze drifted to the floor as he finished his statement. His father, mother and sister sat in the front row of the gallery; Gonzalez’s father’s eyes reddened and he held a tissue to his face.

Gonzalez, who once dubbed his criminal enterprise “Operation Get Rich or Die Tryin’,” had argued in court filings that his only motive was technical curiosity and an obsession with conquering computer networks. But chat logs the government obtained showed Gonzalez confiding in one of his accomplices that his goal was to earn $15 million from his schemes, buy a yacht and then retire.

The hacker had faced a sentence of between 15 and 25 years for the TJX string of intrusions. The government sought the maximum, while Gonzalez sought the minimum, on grounds that he suffered from Asperger’s disorder and computer addiction, and that he cooperated with the government extensively against his U.S. co-conspirators and two Eastern European hackers (known only as “Grigg” and “Annex”). Gonzalez even provided the government with information about breaches that had not yet been detected.

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Albert Gonzalez at the 2001 DefCon hackers' convention in Las Vegas

A psychiatrist who examined Gonzalez for prosecutors, however, found no evidence of Asperger’s disorder or computer addiction. At Thursday’s hearing, assistant U.S. attorney Stephen Heymann urged the court to hand down a 25-year sentence that would strongly deter future Albert Gonzalezes from a life of cybercrime.

Gonzalez “conned law enforcement once before with the idea that he had seen the error of his ways,” said Heymann. “What matters is that teenagers and young people not look up to him.”

Defense attorney Martin Weinberg argued the minimum 15-year sentence would be sufficient to set an example. “That’s an enormous, devastating sentence … and a compelling and clear message to anyone looking at this case that they would suffer what he has suffered.”

In splitting the difference, U.S. District Judge Patti Saris credited Gonzalez for his apparent remorse, and his bond with his family. But Saris said she was disturbed by the fact that he committed his crimes while working for the government. She explained the low $25,000 fine by predicting her restitution order, to be set at a future hearing, will be sizable.

“You’re never possibly going to be paying back all the restitution that’s going to be ordered,” said Saris.

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WIPO: Dope-Vaporizer Seller Not Bogarting Domain Names

picture-121The German producer of a popular device used to vaporize marijuana is claiming a North American dealer is bogarting its domain names.

But the World Intellectual Property Organization on Thursday sided against Storz & Bickel, the maker of the Volcano Vaporizer, ruling that MSI Imports’ four dozen Volcano-related domains aren’t treading on Storz & Bickel’s trademarks.
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ACTA Draft: No Internet for Copyright Scofflaws

acta1The United States is nudging the international community to develop protocols to suspend the internet connections of customers caught downloading copyrighted works, according to a leaked draft of the Anti-Counterfeiting Trade Agreement.

The United States is leading the 2-year-old, once-secret negotiations over the so-called ACTA accord. The Jan. 18 draft, about 56 pages and labeled “confidential,”  just surfaced, and follows a string of earlier, less comprehensive leaks.

The leak shows that the treaty, if adopted under the U.S. language, would for the first time on a global scale hold internet service providers responsible when customers download infringing material, unless those ISPs take action by “adopting and reasonably implementing a policy to address the unauthorized storage or transmission of materials protected by copyright or related rights.”

The specific ISP policy suggested in a footnote “is providing for the termination in appropriate circumstances of subscriptions and accounts on the service provider’s system or network of repeat infringers.”

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Law Enforcement Appliance Subverts SSL

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That little lock on your browser window indicating you are communicating securely with your bank or e-mail account may not always mean what you think its means.

Normally when a user visits a secure website, such as Bank of America, Gmail, PayPal or eBay, the browser examines the website’s certificate to verify its authenticity.

At a recent wiretapping convention, however, security researcher Chris Soghoian discovered that a small company was marketing internet spying boxes to the feds. The boxes were designed to intercept those communications — without breaking the encryption — by using forged security certificates, instead of the real ones that websites use to verify secure connections. To use the appliance, the government would need to acquire a forged certificate from any one of more than 100 trusted Certificate Authorities.

The attack is a classic man-in-the-middle attack, where Alice thinks she is talking directly to Bob, but instead Mallory found a way to get in the middle and pass the messages back and forth without Alice or Bob knowing she was there.

The existence of a marketed product indicates the vulnerability is likely being exploited by more than just information-hungry governments, according to leading encryption expert Matt Blaze, a computer science professor at University of Pennsylvania.

“If the company is selling this to law enforcement and the intelligence community, it is not that large a leap to conclude that other, more malicious people have worked out the details of how to exploit this,” Blaze said.

The company in question is known as Packet Forensics, which advertised its new man-in-the-middle capabilities in a brochure handed out at the Intelligent Support Systems (ISS) conference, a Washington, D.C., wiretapping convention that typically bans the press. Soghoian attended the convention, notoriously capturing a Sprint manager bragging about the huge volumes of surveillance requests it processes for the government.

According to the flyer: “Users have the ability to import a copy of any legitimate key they obtain (potentially by court order) or they can generate ‘look-alike’ keys designed to give the subject a false sense of confidence in its authenticity.” The product is recommended to government investigators, saying “IP communication dictates the need to examine encrypted traffic at will.” And, “Your investigative staff will collect its best evidence while users are lulled into a false sense of security afforded by web, e-mail or VOIP encryption.”

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Shoplifting Couple Jailed for eBay Toy Sales

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A California couple that bragged on national television about shoplifting toys — which included Lego and Star Wars-themed toys — have been sentenced to more than a year in prison each after being busted selling the hot goods on eBay.

Matthew and Laura Eaton were indicted in September, more than a year after they appeared on the Dr. Phil show bragging about their escapades. They told viewers they earned about $3,500 per week selling the goods they pilfered from outlets surrounding their suburban San Diego home.

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Lawmakers Eyeing National ID Card

Lawmakers are proposing a national identification card — what they’re calling “high-tech, fraud-proof Social Security cards” — that would be required for all employees in the United States.

The proposal by Sen. Charles Schumer (D-New York) and Sen. Lindsay Graham (R-South Carolina) comes as the states are grappling to produce another national identification card at the behest of the Department of Homeland Security. Virtually none of the states are in compliance with this Real ID program — adopted in 2005 — requiring state motor vehicle bureaus to obtain and internally scan and store personal information like Social Security cards and birth certificates for a national database.

Graham, left, and Schumer, are calling for national ID cards to combat illegal immigration.

Graham, left, and Schumer, are calling for national ID cards to combat illegal immigration.
Photo: AP

Now comes a bid for a second card.

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Gonzalez Accomplice Gets Probation for Selling Browser Exploit

ieA computer security professional who sold Internet Explorer exploit code to credit card hacker Albert Gonzalez was sentenced Tuesday in Boston to three years probation and a $10,000 fine.

Jeremy Jethro, 29, was paid $60,000 by Gonzalez for a zero-day exploit against Microsoft’s browser, “the purpose and function of which was to … enable the conspirators to unlawfully gain access to, and redirect, individual’s computers,” according to court records.

Gonzalez led a team of hackers who gained unauthorized access to company networks and stole more than 90 million credit and debit card numbers, though it’s not clear what role, if any, the $60,000 zero-day played in the attacks. Jethro’s attorney, Stacey Richman, told Threat Level the exploit was a dud.

“The exploit never worked,” she said. “None of them worked. There was a question of potentially two [exploits] and neither of them worked.”

Jethro pleaded guilty to a misdemeanor conspiracy charge for providing the malware. Under Tuesday’s sentence, Jethro will be confined at home, under electronic monitoring, for the first six months of his three-year-long probation.

Richman said Jethro did not know Gonzalez’s intended use for the exploit. She also said the judge took into consideration her client’s life change in 2006 when he turned to Christianity and “renounced any aspect of any wrongful behavior.”

She said Jethro, who is currently working in the computer industry “had spent the years since then entirely in a very proper manner.”

He’s the third person to be sentenced for conspiring with Gonzalez in criminal activity. Last December, Stephen Watt, a former coder for Morgan Stanley, was sentenced to two years in prison for providing a sniffer to Gonzalez that helped him siphon card data from TJX’s corporate network. Watt was also ordered to pay restitution to TJX in the amount of $171.5 million.

Earlier this month, Humza Zaman, a former network security manager at Barclays Bank, was sentenced to 46 months in prison and fined $75,000 for serving as a money courier for Gonzalez. He was charged with laundering between $600,000 and $800,000 for Gonzalez.

Gonzalez is scheduled to be sentenced this week in Boston for his role in the hacks of TJX, Dave & Busters, Hannaford Brothers, 7-Eleven and Heartland Payment Systems. He faces a sentence of between 17 and 25 years. Prosecutors are asking for the latter.

18:30:  This article was updated to add comment from Richman, and to correct an error.  Jethro’s charge did not link him to Gonzalez’s credit card thefts.

Image: BlubrNL/Flickr

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Russia Arrests Alleged Mastermind of RBS WorldPay Hack

Russian authorities have nabbed the man accused of masterminding a coordinated global ATM heist of $9.5 million from Atlanta-based card processing company RBS WorldPay.

Viktor Pleshchuk, 28, of St. Petersburg, was arrested by the Russian Federal Security Service, or FSB, according to the Sunday Mail, which broke the story last week in the United Kingdom.

The Financial Times confirmed the arrest this week, adding that Pleshchuk was among “several suspects” arrested. The paper didn’t name the other suspects or say when any of them were arrested. The arrests are being touted by some as signaling a new era of cooperation between Russian and U.S. authorities.

Pleshchuk was indicted in the United States last November with Sergei Tsurikov, 25, of Tallinn, Estonia; Oleg Covelin, 28, of Chisinau, Moldova; and a fourth person identified only as “Hacker 3.” The government described the caper as “perhaps the most sophisticated and organized computer fraud attack ever conducted.”

The hack involved reverse-engineering PINs for payroll debit card accounts — the holy grail of bank card hacking.
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Secret Service Paid TJX Hacker $75,000 a Year

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Convicted TJX hacker Albert Gonzalez earned $75,000 a year working undercover for the U.S. Secret Service, informing on bank card thieves before he was arrested in 2008 for running his own multimillion-dollar card-hacking operation.

The information comes from one of Gonzalez’s best friends and convicted accomplices, Stephen Watt. Watt pleaded guilty last year to creating a sniffer program that Gonzalez used to siphon millions of credit and debit card numbers from the TJX corporate network while he was working undercover for the government.

Watt told Threat Level that Gonzalez was paid in cash, which is generally done to protect someone’s status as a confidential informant. The Secret Service said it would not comment on payments made to informants. Gonzalez’s attorney did not respond to a call for comment.

“It’s a significant amount of money to pay an informant but it’s not an outrageous amount to pay if the guy was working full time and delivering good results,” says former federal prosecutor Mark Rasch. “It’s probably the only thing he was doing — other than hacking into TJX and making millions of dollars.”


Gonzalez’s salary highlights how entwined he was with the government at the time he participated in the largest identity theft crimes in U.S. history. Gonzalez, 28, is set for sentencing this week on three indictments covering nearly every headline-making bank-card theft in recent years, including intrusions at TJX, Office Max, Hannaford Brothers, 7-Eleven and Heartland Payment Systems (which alone exposed magstripe data on 130 million credit and debit cards). The hacker’s plea agreements contemplate a total prison term of between 17 and 25 years.

Rasch says Gonzalez’s $75,000 is nothing compared to the million-dollar payouts some undercover informants get for high-risk, high-value cases such as Mafia investigations. But Gonzalez’s payments dwarf the meager handouts given previous computer crime informants.

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Rich Get Richer in ‘Hot News’ Stock-Tip Fight

screen-shot-2010-03-19-at-124716-pmA well-known financial news aggregator is being ordered by a federal judge to delay publication of prominent financial analysts’ buy and sell recommendations to allow the well-to-do the first crack at capitalizing on that trading research.

The 3-year-old litigation, brought by Barclays Capital, Merrill Lynch, Morgan Stanley and others, rests on the so-called “hot news” doctrine the Supreme Court first recognized in a 1918 case concerning the unauthorized and immediate republication of wire service reports.

A New York federal judge said Theflyonthewall.com breached the doctrine, which allows suits for re-reporting time sensitive “hot news.” Research that Theflyonthewall.com re-posted or alluded to on its site was designated for the banks’ clients that earn the firms not less than $50,000 to $100,000 in trading commissions yearly, U.S. District Judge Denise Cote ruled.

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