* JULY 13, 2009
CIA Had Secret Al Qaeda Plan
Initiative at Heart of Spat With Congress Examined Ways to Seize, Kill Terror Chiefs
By SIOBHAN GORMAN
WASHINGTON -- A secret Central Intelligence Agency initiative terminated by Director Leon Panetta was an attempt to carry out a 2001 presidential authorization to capture or kill al Qaeda operatives, according to former intelligence officials familiar with the matter.
Sen. Dianne Feinstein said CIA Director Panetta, above, told lawmakers Vice President Cheney ordered information be withheld from Congress.
The precise nature of the highly classified effort isn't clear, and the CIA won't comment on its substance.
According to current and former government officials, the agency spent money on planning and possibly some training. It was acting on a 2001 presidential legal pronouncement, known as a finding, which authorized the CIA to pursue such efforts. The initiative hadn't become fully operational at the time Mr. Panetta ended it.
In 2001, the CIA also examined the subject of targeted assassinations of al Qaeda leaders, according to three former intelligence officials. It appears that those discussions tapered off within six months. It isn't clear whether they were an early part of the CIA initiative that Mr. Panetta stopped.
The revelations about the CIA and its post-9/11 activities have emerged amid a renewed fight between the agency and congressional Democrats. Last week, seven Democratic lawmakers on the House Intelligence Committee released a letter that talked about the CIA effort, which they said Mr. Panetta acknowledged hadn't been properly vetted with Congress. CIA officials had brought the matter to Mr. Panetta's attention and had recommended he inform Congress.
Neither Mr. Panetta nor the lawmakers provided details. Mr. Panetta quashed the CIA effort after learning about it June 23.
The battle is part of a long-running tug of war between the executive branch and the legislature about how to oversee the activities of the country's intelligence services and how extensively the CIA should brief Congress. In recent years, in the light of revelations over CIA secret prisons and harsh interrogation techniques, Congress has pushed for greater oversight. The Obama administration, much like its predecessor, is resisting any moves in that direction.
Most recently, House Speaker Nancy Pelosi, in a dispute over what she knew about the use of waterboarding in interrogating terror suspects, has accused the agency of lying to lawmakers about its operations.
Republicans on the panel say that the CIA effort didn't advance to a point where Congress clearly should have been notified.
CIA spokesman Paul Gimigliano said the agency "has not commented on the substance of the effort." He added that "a candid dialogue with Congress is very important to this director and this agency."
One former senior intelligence official said the program was an attempt "to achieve a capacity to carry out something that was directed in the finding," meaning it was looking for ways to capture or kill al Qaeda chieftains.
The official noted that Congress had long been briefed on the finding, and that the CIA effort wasn't so much a program as "many ideas suggested over the course of years." It hadn't come close to fruition, he added.
Michigan Rep. Pete Hoekstra, the top Republican on the House Intelligence Committee, said little had been spent on the efforts -- closer to $1 million than $50 million. "The idea for this kind of program was tossed around in fits and starts," he said.
Senior CIA leaders were briefed two or three times on the most recent iteration of the initiative, the last time in the spring of 2008. At that time, CIA brass said that the effort should be narrowed and that Congress should be briefed if the preparations reached a critical stage, a former senior intelligence official said.
Amid the high alert following the Sept. 11 terrorist attacks, a small CIA unit examined the potential for targeted assassinations of al Qaeda operatives, according to the three former officials. The Ford administration had banned assassinations in the response to investigations into intelligence abuses in the 1970s. Some officials who advocated the approach were seeking to build teams of CIA and military Special Forces commandos to emulate what the Israelis did after the Munich Olympics terrorist attacks, said another former intelligence official.
"It was straight out of the movies," one of the former intelligence officials said. "It was like: Let's kill them all."
The former official said he had been told that President George W. Bush and Vice President Dick Cheney didn't support such an operation. The effort appeared to die out after about six months, he said.
Former CIA Director George Tenet, who led the agency in the aftermath of the 2001 attacks, declined through a spokesman to comment.
Also in September 2001, as CIA operatives were preparing for an offensive in Afghanistan, officials drafted cables that would have authorized assassinations of specified targets on the spot.
One draft cable, later scrapped, authorized officers on the ground to "kill on sight" certain al Qaeda targets, according to one person who saw it. The context of the memo suggested it was designed for the most senior leaders in al Qaeda, this person said.
Eventually Mr. Bush issued the finding that authorized the capturing of several top al Qaeda leaders, and allowed officers to kill the targets if capturing proved too dangerous or risky.
Lawmakers first learned specifics of the CIA initiative the day after Mr. Panetta did, when he briefed them on it for 45 minutes.
House lawmakers are now making preparations for an investigation into "an important program" and why Congress wasn't told about it, said Rep. Jan Schakowsky, an Illinois Democrat, in an interview.
On Sunday, lawmakers criticized the Bush administration's decision not to tell Congress. Senate Intelligence Committee Chairman Dianne Feinstein, a Democrat from California, hinted that the Bush administration may have broken the law by not telling Congress.
"We were kept in the dark. That's something that should never, ever happen again," she said. Withholding such information from Congress, she said, "is a big problem, because the law is very clear."
Ms. Feinstein said Mr. Panetta told the lawmakers that Mr. Cheney had ordered that the information be withheld from Congress. Mr. Cheney on Sunday couldn't be reached for comment through former White House aides.
The Senate's second-ranking official, Democratic Sen. Dick Durbin of Illinois, and Vermont Democratic Sen. Patrick Leahy, chairman of the Senate Judiciary Committee, echoed those concerns and called for an investigation, an indication of how the politics of intelligence continues to bedevil the CIA.
Separately, Attorney General Eric Holder is considering whether to order a criminal probe into whether treatment of terrorism detainees exceeded guidelines set by the Justice Department, administration officials said.
President Barack Obama and Mr. Holder have said they don't favor prosecuting lawyers who wrote legal justifications for interrogation methods that the president and his attorney general have declared to be torture. They have sought to protect CIA officers who followed the legal guidelines.
"The Department of Justice will follow the facts and the law with respect to any matter," said Matthew Miller, a department spokesman. "We have made no decisions on investigations or prosecutions, including whether to appoint a prosecutor to conduct further inquiry."
Sunday, July 12, 2009
Wednesday, July 8, 2009
Your SSN Can Now Be Accurately Guessed Using Date and Place of Birth
It seems that nothing is safe any more. And now your Social Security Number, the lynchpin to you credit score, taxes, government benefits and more, is under attack. It can be guessed, with a staggering degree of accuracy, using simple information you probably have on sites like Facebook and MySpace.
We have all heard the stories about Identity Theft and we all take precautions to be careful with our SSN. In fact, these days I’ll only put it down on a form if I absolutely have to; that includes medical forms that you often have to fill out when you visit a GP or specialist. But that may now be a moot point, because two Carnegie Mellon researchers have basically reverse-engineered the SSN formula to gain access to that most precious and private number.
John Timmer of Arstechnica.com reported yesterday that these two bright sparks used two practices that had been designed to protect the number, and make it fraud-proof, as a way to discover the code from those two simple facts – date of birth, and place of birth; two facts that are on most public profiles.
To know how they did it, you need to know the basic structure of the SSN. As John describes it, it splits into three zones:
The first three digits are based on the state where the SSN was originally assigned, and the next two are what's termed a group number. The last four digits are ostensibly assigned at random. Since the late 1980s, the government has promoted an initiative termed "Enumeration at Birth" that seeks to ensure that SSNs are assigned shortly after birth, which should limit the circumstances under which individuals apply for them later in life (and hence, make fraudulent applications easier to detect).
From there, the article gets pretty heavily into some technical data and statistics that I won’t bore you with here. If you’re interested, read all the details of the algorithm that reconstructs your Social Security Number. But all you really need to know is that if the SSN code has been cracked, or hacked, then it won’t be long before that information gets into the wrong hands.
So, should you be worried, and what can you do?
Well, as John Timmer explains, although some of the SSN digits are relatively easy to obtain, others are more tricky:
Getting the last four digits right was substantially harder. The authors used a standard of getting the whole SSN right within 10 tries, and could only manage that about 0.1 percent of the time even in the later period. Still, small states were somewhat easier—for Delaware in 1996, they had a five percent success rate.
BUT, and this is a big but, it seems as though modern security systems and automated forms DO NOT REQUIRE the whole SSN. As long as it is cross-referenced with the date and place of birth, up to two numbers can be incorrect. John continues:
They often allow several failed verification attempts per IP address before blacklisting it. Given these numbers, the authors estimate that even a moderate-sized botnet of 10,000 machines could successfully obtain identity verifications for younger residents of West Virginia at a rate of 47 a minute.
Think about it: 47 a minute! Considering how prevalent ID theft is around the world, and how sophisticated thieves are becoming, I think this is enough to cause concern for the average US citizen. And as such, it may be time to start taking precautions.
First, see if you can remove your private information, or replace your place and date of birth with something more vague on your social networking sites and other public profiles. That one should be relatively easy, if a little time consuming.
Second, continue to practice good personal security. Shred any important documents that you are throwing out, and don’t leave sensitive data in a place where thieves could easily find it. I know a lot of people throw things in the car and forget about it, but if the car were stolen or broken into, it could be the start of much bigger problems.
Third, keep on top of your credit reports. You are allowed one free each year from each of the three major credit bureaus. DO NOT use freecreditreport.com, they charge. Instead, go to Annual Credit Report here. If you see anything suspicious or just plain wrong, contact the bureau immediately.
Finally, consider some ID theft protection. I use LifeLock because I got a great deal on it, and although not 100% effective, it does cover me if anything should happen. But LifeLock is basically just a method of putting 90-day fraud alerts on your credit reports, which you can do yourself for free. You can find the information for each bureau here:
EXPERIAN
EQUIFAX
TRANSUNION
For further reading, visit the FTC’s site. It has some great information. Stay safe folks.
We have all heard the stories about Identity Theft and we all take precautions to be careful with our SSN. In fact, these days I’ll only put it down on a form if I absolutely have to; that includes medical forms that you often have to fill out when you visit a GP or specialist. But that may now be a moot point, because two Carnegie Mellon researchers have basically reverse-engineered the SSN formula to gain access to that most precious and private number.
John Timmer of Arstechnica.com reported yesterday that these two bright sparks used two practices that had been designed to protect the number, and make it fraud-proof, as a way to discover the code from those two simple facts – date of birth, and place of birth; two facts that are on most public profiles.
To know how they did it, you need to know the basic structure of the SSN. As John describes it, it splits into three zones:
The first three digits are based on the state where the SSN was originally assigned, and the next two are what's termed a group number. The last four digits are ostensibly assigned at random. Since the late 1980s, the government has promoted an initiative termed "Enumeration at Birth" that seeks to ensure that SSNs are assigned shortly after birth, which should limit the circumstances under which individuals apply for them later in life (and hence, make fraudulent applications easier to detect).
From there, the article gets pretty heavily into some technical data and statistics that I won’t bore you with here. If you’re interested, read all the details of the algorithm that reconstructs your Social Security Number. But all you really need to know is that if the SSN code has been cracked, or hacked, then it won’t be long before that information gets into the wrong hands.
So, should you be worried, and what can you do?
Well, as John Timmer explains, although some of the SSN digits are relatively easy to obtain, others are more tricky:
Getting the last four digits right was substantially harder. The authors used a standard of getting the whole SSN right within 10 tries, and could only manage that about 0.1 percent of the time even in the later period. Still, small states were somewhat easier—for Delaware in 1996, they had a five percent success rate.
BUT, and this is a big but, it seems as though modern security systems and automated forms DO NOT REQUIRE the whole SSN. As long as it is cross-referenced with the date and place of birth, up to two numbers can be incorrect. John continues:
They often allow several failed verification attempts per IP address before blacklisting it. Given these numbers, the authors estimate that even a moderate-sized botnet of 10,000 machines could successfully obtain identity verifications for younger residents of West Virginia at a rate of 47 a minute.
Think about it: 47 a minute! Considering how prevalent ID theft is around the world, and how sophisticated thieves are becoming, I think this is enough to cause concern for the average US citizen. And as such, it may be time to start taking precautions.
First, see if you can remove your private information, or replace your place and date of birth with something more vague on your social networking sites and other public profiles. That one should be relatively easy, if a little time consuming.
Second, continue to practice good personal security. Shred any important documents that you are throwing out, and don’t leave sensitive data in a place where thieves could easily find it. I know a lot of people throw things in the car and forget about it, but if the car were stolen or broken into, it could be the start of much bigger problems.
Third, keep on top of your credit reports. You are allowed one free each year from each of the three major credit bureaus. DO NOT use freecreditreport.com, they charge. Instead, go to Annual Credit Report here. If you see anything suspicious or just plain wrong, contact the bureau immediately.
Finally, consider some ID theft protection. I use LifeLock because I got a great deal on it, and although not 100% effective, it does cover me if anything should happen. But LifeLock is basically just a method of putting 90-day fraud alerts on your credit reports, which you can do yourself for free. You can find the information for each bureau here:
EXPERIAN
EQUIFAX
TRANSUNION
For further reading, visit the FTC’s site. It has some great information. Stay safe folks.
Wednesday, June 10, 2009
The Improbable Rise and Fall of E-Gold
MELBOURNE, Florida — In a sparsely decorated office suite two floors above a neighborhood of strip malls and car dealerships, former oncologist Douglas Jackson is struggling to resuscitate a dying dream.
Jackson, 51, is the maverick founder of E-Gold, the first-of-its-kind digital currency that was once used by millions of people in more than a hundred countries. Today the currency is barely alive.
Stacks of cardboard evidence boxes in the office, marked “U.S. Secret Service,” help explain why, as does the pager-sized black box strapped to Jackson’s ankle: a tracking device that tells his probation officer whenever he leaves or enters his home.
“It’s supposed to be jail,” he says. “Only it’s self-administered.”
Jackson, whose six-month house arrest ends this month, recently met with Wired.com for his first in-depth interview since pleading guilty last year to money laundering-related crimes, and to operating an unlicensed money transmitting service. His tale is one of countless upstarts and entrepreneurs who approached the internet with big dreams, only to be chastened by sobering realities. But his rise and fall also offers a unique glimpse at the web’s frontier halcyon days, and the wilderness landscape that still covers much of the unregulated and un-policed web, where fraud artists prospect for riches alongside pioneers, and sometimes stake, and win, a claim on their territory.
Despite the shackle, Jackson’s conviction isn’t black and white. In a twist still unacknowledged by prosecutors, Jackson turned E-Gold for a time into one of law enforcement’s most productive honey pots, providing information that helped lead to the arrest and conviction of some of the web’s most wanted credit card thieves and hackers. He’s now working with regulatory agencies to try to bring back E-Gold, steps he says he would have taken voluntarily years ago if authorities had given him a chance.
Following his story, the picture that emerges of Jackson is not a portrait of a calculating criminal. Rather it is one of a naive visionary who thought his dream was bigger than any financial regulations, who got in over his head, and who finally struggled, too late, to make up for his missteps.
“There was no indication at all that anyone had a problem with what he was doing,” says Richard Timberlake, a former economics professor at the University of Georgia and author of several books on U.S. banking. Timberlake visited Jackson at his E-Gold office in 1997 and vouches for Jackson’s innocent intentions. “He was always very honest and very forthright in what he was trying to do as a business. Even the Federal Reserve believed it was legitimate.”
—
The story of the first digital currency backed entirely by gold and silver began in 1995, while Jackson was still treating cancer patients. A longtime student of economic history, Jackson was convinced that gold was a superior currency to paper money, despite the consensus among professional economists that a gold-standard prevented governments from responding quickly to monetary crises; when an economy faltered, treasuries couldn’t easily manufacture gold bars to stimulate it.
The United States dropped its reliance on gold in 1971, but Jackson doubted the wisdom of this move. “Many a paper currency has spun out of orbit in a calamitous trajectory,” he once wrote. “There has never been an instance of gold or silver being discarded as worthless.”
It was time, Jackson mused, for a radical rethink of money. Had he been born in another era, he could scarcely have acted on his beliefs. But the nascent internet changed everything. The international, 24-hour churn of e-commerce cried out for a monetary system that transcended borders and time zones. So in early 1996, Jackson began programming a back-end system for a new electronic currency, practicing medicine by day, and coding by night.
He hired a software engineer to create the user interface, and four months later launched E-Gold.
As Jackson envisioned it, E-Gold was a private, international currency that would circulate independent of government controls, and stand impervious to the market’s highs and lows. Brimming with evangelical enthusiasm, Jackson proclaimed it a cure for the modern monetary system’s ills and described it at one point as “an epochal change in human destiny” and “probably the greatest benefit to humanity that’s ever been thought of.”
Though E-Gold would fail to change the world, libertarians and privacy-conscious netizens liked the service, which allowed them to open accounts anonymously. And international sellers appreciated the ease with which they could transact across borders
Over the next few years, Jackson drained his retirement accounts, sold his medical practice and charged credit cards to raise more than $1 million to nurture the fledgling venture. Cynics might have considered him just another internet hustler looking to strike it rich, but those who knew him say he was a true believer. “He truly thinks that having a gold-backed currency is what’s needed in the world,” says James Clement, a libertarian attorney who met Jackson in 2003. “I don’t think anyone would have stuck with it … other than that he thinks it’s extremely important and somebody has to do this.”
Jackson drew his inspiration from economist Vera Smith’s influential 1936 treatise The Rationale of Central Banking and the Free Bank Alternative, which challenged the tenets of banking. “She wrote in the depths of the Depression, and poses some of the most compelling questions about central banking systems,” Jackson says. “Central banks should attenuate monetary disorder and prevent fluctuations, but ironically they sometimes amplify it.”
His commitment started to pay off in 2000, when some 50,000 transactions suddenly passed through his system in just two months — more than the previous three and a half years combined. By that November, E-Gold, now with 20 employees, had processed 1 million transactions, and Jackson’s business reputation was growing. He was invited to speak at the prestigious World Gold Council conference in Rome, the gold mining industry’s leading event. In 2001, the growth continued, with customer accounts expanding from 134,000 to nearly 288,000, holding about $16 million in value.
Initially, Jackson stored the company’s reserves of sovereign coins and ingots in safety deposit boxes in banks around town. When this proved inconvenient for auditing, the company bought an office safe to hold the gold and platinum. “The silver was just stacked around the office,” Jackson says. Ultimately, he converted the sovereigns and ingots to bars and moved them to bank vaults in London and Dubai. At E-Gold’s peak, the currency would be backed by 3.8 metric tons of gold, valued at more than $85 million
Despite the sudden burst of success, the venture was plagued with setbacks. E-Gold’s servers buckled under the growing traffic load, hanging transactions and frustrating users. Copycat entrepreneurs erected their own gold-backed systems — e-Bullion, GoldMoney and OSGold – and poached E-Gold customers. When Jackson finally scaled up his infrastructure in 2003, solving the performance problems, cyber scammers entered the scene, launching a sortie of phishing attacks against users, tricking thousands of them into disclosing their E-Gold passwords, then draining the accounts.
Eventually Jackson deployed an anti-phishing remedy, and business rebounded in September 2004. A year later, customer accounts numbered about 3.5 million in 165 countries, with 1,000 new accounts opening every day. Millions of dollars were zipping through E-Gold’s system 24-hours-a-day, bouncing between the U.S. and Europe, South America and Asia. E-Gold collected 1 percent of every transaction, with a cap at 50 cents.
E-Gold was now second only to PayPal in the online payment industry. At last, Jackson says, he felt relief.
“We had been stuck year-in and year-out on whatever crisis-du-jour required our immediate attention,” he says. Now “we felt like we’d finally achieved a turning point.”
But E-Gold’s increasing popularity with customers drew less-welcome attention as well.
The federal government began to take notice in 2003, when the Secret Service launched an undercover operation against a website called Shadowcrew — a legendary forum for “carders” who trafficked in stolen credit and debit card numbers. Cyber crooks in Eastern Europe were stealing millions of card numbers in phishing and skimming scams, then passing the data to accomplices around the world. The low-end cashers coded the numbers onto blank cards, then siphoned money from ATMs and transmitted the bulk of proceeds back to the former Soviet bloc.
When authorities monitored the criminals’ communications, they discovered that E-Gold was among the carders’ preferred money-transfer methods, because the system allowed users to open accounts and transfer funds anonymously anywhere in the world.
When the Shadowcrew investigation wrapped in October 2004 with the shuttering of the site — and the arrest of more than a dozen members — the Justice Department turned its sights on E-Gold. Its goal was to force the service to comply with regulations governing money-transmitting services like Western Union and Travelex. Federal regulations required those businesses to register with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), to be licensed in states that required it, to diligently authenticate the identity of customers and to file suspicious activity reports on shady-looking customers. But E-Gold wasn’t doing this.
Jackson believed E-Gold was exempt from regulation because it was a payment system not a money transmitter. And although it did transfer money, customers could park balances in their accounts, as with a bank.
But Jackson insisted E-Gold wasn’t a bank, either. It was something new — something the world and the U.S. government hadn’t seen before. He wasn’t alone in this view. Many internet-based payment services, including PayPal during its early years, believed they were exempt from regulation. They mostly flew under the radar of prosecutors until something brought them into the spotlight.
Jackson says he got the first inkling of the rampant, organized crime in his system when he read a June 2005 New York Times story about the growth of the carding forums. “To my horror … E-Gold is mentioned in this ghastly, horrible way of it being, you know, the bitch of criminals,” he says.
He concedes he knew that Ponzi schemers and other scammers sometimes used his system , but he’d always responded to government subpoenas for information about suspicious customer accounts. So he contacted the Secret Service to ask why the agency hadn’t sought his help to track the crooks in the Times story. The agency, which was already secretly targeting E-Gold, ignored him. (The Secret Service didn’t respond to interview inquiries for this story.)
The hammer dropped on E-Gold around 5 p.m. on a mild day in mid-December 2005. A herd of Chevy Suburbans wheeled up to Jackson’s house and expelled more than a dozen FBI and Secret Service agents. Simultaneously across town, the Justice Department’s “Operation Goldwire” unfolded with more agents raiding the offices of Gold and Silver Reserve, the company that operates E-Gold. A third group descended on a co-location facility in Orlando where E-Gold Limited, a holding company for E-Gold’s assets, racked its database servers.
The feds carted away more than 100 boxes of electronic records and paper files, including birth certificates, photos and a deed to the Jackson family burial plot. The gold and silver reserves remained safe overseas, but the government froze the company’s domestic bank accounts. Jackson’s venture was dissolving around him.
Jackson wasn’t sure what the feds hoped to find in all those records; once E-Gold got its systems back online he turned to his database for answers.
He scoured the system for suspicious transactions using key words like “cvv,” dumps” and “cob,” and the names of carders he’d read in the Times. He quickly discovered the disturbing truth about what his libertarian dream had become. “I found out there was quite a bit of stuff going on which law enforcement knew about, but wasn’t asking us about,” he says. “I found, holy smokes, there is a continuing pattern of these so-called carders. There’s, like, a ring that I can distinguish.”
One user named “Segvec” received more than half a million dollars from four others, including a Ukrainian named “Maksik” who sent a rapid stream of cash totaling $300,000. In the “memo” field of the transactions — where the sender can state a reason for the payment — Maksik noted that $17,000 was “for beer.” Another three transactions totaling $89,000 sent over a week’s time were supposedly for Sony Vaio computers.
A New York account-holder named “Potluck” had a pattern of buying $6,000 in postal money orders twice a month, then exchanging them for e-Gold to send to Ukraine. Over a year, he’d transmitted about $150,000.
Jackson had uncovered a constellation of shady accounts doing business with one another. He watched in amazement as the criminal activity expanded before his eyes, and balances in several accounts ballooned, with no sign that the account holder intended to move it out. Segvec alone amassed more than $700,000 in digital gold.
“They weren’t just using us as a good vehicle to trade their data, they were parking value in our system,” Jackson says. E-Gold had unwittingly become banker to the underworld.
Because users could sign up for E-Gold with aliases, there was no easy way for Jackson to determine the real identity of many of his suspects. But the criminals became vulnerable the moment they converted their virtual currency to local cash. This required them to do business with an E-Gold money exchanger — the online equivalent of currency exchangers at international airports — who’d ask for valid ID and contact information. Sometimes the criminals wanted their cash loaded to a debit card and mailed to a drop address, or wired to a traditional bank account; exchangers would have this data, too.
Jackson reached out to about a dozen exchangers in Europe and elsewhere with the account names he was tracking. Some criminals had provided the exchangers with fake credentials, but a surprising number had given their real names or addresses. Jackson soon had the identities of some of the most wanted figures in the underground.
One money exchanger in Northern Ireland revealed that “Segvec” routinely had packages sent to a Tokyo remailer, who forwarded them to a “Stephen Ceres” in Miami. The same exchanger also sold “Stephen Ceres” a Card One debit card with a daily load limit of $9,500. Jackson obtained a list of transactions on the card that linked it to a slew of ATM withdrawals in Miami suburbs. A storm of withdrawals during one five-minute period yielded the cardholder $8,000 in cash.
Jackson, who had been snubbed by the Secret Service and FBI, took the information he uncovered to the U.S. Postal Inspector Service, providing investigators with names, addresses and transaction histories. The postal inspectors passed the information to overseas allies, the FBI, and eventually to the Secret Service as well.
It was a devil’s bargain. Once the feds got a taste of what Jackson could provide, the postal agents began peppering him with requests for more data on other accounts, promising Jackson they’d follow up with a formal court order or subpoena later. He cooperated fully, despite the fact that it violated his user agreement with customers. “We never did get any legal cover whatsoever,” he says ruefully. “We never got our trap-and-trace. We never got our pen register.”
In March 2006, inspectors asked him for information on a carder named “Jilsi,” whom Jackson traced to a money exchanger in the United Kingdom. The exchanger gave him a real name — Renu Subramaniam — a 2-year-old confirmed phone number and the time and location of deposits Subramaniam had made to two London banks. Jackson passed the information to inspectors who told him that the phone number, if correct, would be “the break in the case we have been waiting for, for quite a long time.”
It wasn’t long before carders were being taken down. In May 2007, Markus Kellerer, aka Matrix 001, was arrested in Germany. In July 2007, Subramaniam, who had been an administrator on a carding site called DarkMarket, was arrested in Britain. That same month, authorities in Florida arrested Julio Lopez, aka Blinky, who was connected to a ring of Cuban carders. And last year in Miami, authorities arrested Albert Gonzalez, aka Segvec, allegedly one of the masterminds behind the hack of TJX and other businesses. Jackson had provided authorities with information on all of them.
An FBI agent who was involved in the arrest of a number of carders, but asked not to be identified because he wasn’t authorized to speak, acknowledged that information Jackson provided was “instrumental in helping track people down.”
A year after he began his probe, Jackson began blocking the accounts responsible for the suspicious activity, preventing suspected crooks from getting their loot. E-Gold was on its way to becoming clean, relatively speaking.
As far as the feds were concerned, however, it was too late. A few months later, in April 2007, the Justice Department wrapped up its four-year-long investigation by indicting Jackson and his colleagues on federal charges of money laundering, conspiracy and operating an unlicensed money transmitting business.
“Douglas Jackson and his associates operated a sophisticated and widespread international money remitting business, unsupervised and unregulated by any entity in the world, which allowed for anonymous transfers of value at a click of a mouse,” said U.S. Attorney Jeffrey A. Taylor for the District of Columbia in a press release. “Not surprisingly, criminals of every stripe gravitated to E-Gold as a place to move their money with impunity. As alleged in the indictment, the defendants in this case knowingly allowed them to do so and profited from their crimes.”
Clement, the attorney, disputes the government’s depiction of Jackson. “They automatically assume that E-Gold somehow made it easy for these people involved in money laundering, or [sought criminals] as clients,” says Clement. “But that’s completely the opposite of Doug’s attitude toward any kind of illegal behavior. It would be crazy for somebody to seek out that kind of business.”
Jackson, who’d hocked his future to start E-Gold, now faced the potential of a federal prison term. He was frustrated and confused.
“It never crossed my mind that anyone could seriously want people like us in prison,” he says. “But I guess my bigger fear was that we would go bankrupt, and there would be a train wreck of people that had trusted value to us who couldn’t get their money.”
Timberlake, the economics professor, is convinced that Jackson’s radical dream, his goal of upsetting the economic status quo and overturning the government’s monopoly on money, is what really got E-Gold targeted.
“No matter how innocent a person is you can always find a law that government agents can use to convict him of something,” Timberlake says, “And this is a perfect example of it. Any time anybody tries to produce money, the federal government is going to be on their tail.”
After a year-and-a-half of court wrangling and negotiations, Jackson pleaded guilty last year to conspiracy to operate an unlicensed money transmitting service and conspiracy to commit money laundering. In November he was sentenced to 36 months of supervised released — including six months of house arrest and electronic monitoring, and 300 hours of community service. In addition to forfeiting about $1.2 million to the government, his two companies — Gold and Silver Reserve and E-Gold Limited — were fined $300,000, to be paid in $10,000 monthly installments beginning last month.
The plea agreement is conditional on Jackson revamping his business to comply with regulations governing money-transmitting services — a goal that, Jackson concedes, faces many hurdles. To begin the process of compliance, he suspended the creation of new accounts. Existing customers are now required to submit a government-issued photo ID and proof of residence to authenticate their name, address and other details, and are limited to $1,000 to $3,000 a month in transactions until they pass muster. Customers in high-risk countries — such as Nigeria, Russia and Ukraine — are suspended from making any transactions at all for now. Their money is locked indefinitely in E-Gold’s servers.
Jackson, who always considered himself one of the good guys, acknowledges today that he might have done a better job of policing his system from the start. “In hindsight there’s any number of things that would have been a smarter or better way of approaching things,” he says.
Back in his Melbourne office, the blinds are drawn against the harsh sun, and a wall calendar serves as the room’s sole decor. A belt and freshly dry-cleaned dress shirt, still swathed in plastic wrap, hang from a metal shelf. A one-pound plastic jug of protein powder on Jackson’s desk serves as a reminder of the weight he’s lost since his legal troubles began. When asked what toll the trouble has taken on his family – Jackson and his wife are currently living in different states — there’s a long silence before he clears his throat.
“It’s been a source of distress,” he says finally. “Ten years ago I was an affluent physician.”
Although E-Gold was occasionally profitable, Jackson only drew a salary, like his employees. The two upscale homes he once owned with his wife are long gone. Now his wife and 12-year-old son occupy half a duplex in Pennsylvania near her family, and Jackson lives in a one-bedroom apartment in Melbourne with his 17-year-old son, while the latter finishes high school, and Jackson and his staff attempt to rebuild the business.
Jackson has finally registered E-Gold with FinCEN, and has begun applying to states for money transmitting licenses. The company is also blocking people who appear on the Treasury Department’s list of Specially Designated Nationals and plans to follow bank procedures for verifying customer income and sources of transmitted funds. There are other plans in works to clean up the system as well.
There’s a daunting hill to climb before E-Gold will be operational again, and it remains to be seen whether there will be a market for a scrubbed-down, government-compliant E-Gold. But Jackson seems relieved to be headed in this direction.
“One of the biggest results of this is that we’re getting to the place we wanted to be anyway, which is to have some sort of an explicit set of standards to build against,” he says.
He maintains that he would have done what authorities now want him to do, if they’d just worked with him to devise a plan, instead of treating him like a criminal.
Now, after all of E-Gold ups and down, Jackson hasn’t lost his optimism for the venture, or his knack for florid prose. As he wrote on his blog last year, he looks forward to transforming E-Gold from a marginal player to a respected institution — one, he says, that will serve to “advance the material welfare of mankind.”
Jackson, 51, is the maverick founder of E-Gold, the first-of-its-kind digital currency that was once used by millions of people in more than a hundred countries. Today the currency is barely alive.
Stacks of cardboard evidence boxes in the office, marked “U.S. Secret Service,” help explain why, as does the pager-sized black box strapped to Jackson’s ankle: a tracking device that tells his probation officer whenever he leaves or enters his home.
“It’s supposed to be jail,” he says. “Only it’s self-administered.”
Jackson, whose six-month house arrest ends this month, recently met with Wired.com for his first in-depth interview since pleading guilty last year to money laundering-related crimes, and to operating an unlicensed money transmitting service. His tale is one of countless upstarts and entrepreneurs who approached the internet with big dreams, only to be chastened by sobering realities. But his rise and fall also offers a unique glimpse at the web’s frontier halcyon days, and the wilderness landscape that still covers much of the unregulated and un-policed web, where fraud artists prospect for riches alongside pioneers, and sometimes stake, and win, a claim on their territory.
Despite the shackle, Jackson’s conviction isn’t black and white. In a twist still unacknowledged by prosecutors, Jackson turned E-Gold for a time into one of law enforcement’s most productive honey pots, providing information that helped lead to the arrest and conviction of some of the web’s most wanted credit card thieves and hackers. He’s now working with regulatory agencies to try to bring back E-Gold, steps he says he would have taken voluntarily years ago if authorities had given him a chance.
Following his story, the picture that emerges of Jackson is not a portrait of a calculating criminal. Rather it is one of a naive visionary who thought his dream was bigger than any financial regulations, who got in over his head, and who finally struggled, too late, to make up for his missteps.
“There was no indication at all that anyone had a problem with what he was doing,” says Richard Timberlake, a former economics professor at the University of Georgia and author of several books on U.S. banking. Timberlake visited Jackson at his E-Gold office in 1997 and vouches for Jackson’s innocent intentions. “He was always very honest and very forthright in what he was trying to do as a business. Even the Federal Reserve believed it was legitimate.”
—
The story of the first digital currency backed entirely by gold and silver began in 1995, while Jackson was still treating cancer patients. A longtime student of economic history, Jackson was convinced that gold was a superior currency to paper money, despite the consensus among professional economists that a gold-standard prevented governments from responding quickly to monetary crises; when an economy faltered, treasuries couldn’t easily manufacture gold bars to stimulate it.
The United States dropped its reliance on gold in 1971, but Jackson doubted the wisdom of this move. “Many a paper currency has spun out of orbit in a calamitous trajectory,” he once wrote. “There has never been an instance of gold or silver being discarded as worthless.”
It was time, Jackson mused, for a radical rethink of money. Had he been born in another era, he could scarcely have acted on his beliefs. But the nascent internet changed everything. The international, 24-hour churn of e-commerce cried out for a monetary system that transcended borders and time zones. So in early 1996, Jackson began programming a back-end system for a new electronic currency, practicing medicine by day, and coding by night.
He hired a software engineer to create the user interface, and four months later launched E-Gold.
As Jackson envisioned it, E-Gold was a private, international currency that would circulate independent of government controls, and stand impervious to the market’s highs and lows. Brimming with evangelical enthusiasm, Jackson proclaimed it a cure for the modern monetary system’s ills and described it at one point as “an epochal change in human destiny” and “probably the greatest benefit to humanity that’s ever been thought of.”
Though E-Gold would fail to change the world, libertarians and privacy-conscious netizens liked the service, which allowed them to open accounts anonymously. And international sellers appreciated the ease with which they could transact across borders
Over the next few years, Jackson drained his retirement accounts, sold his medical practice and charged credit cards to raise more than $1 million to nurture the fledgling venture. Cynics might have considered him just another internet hustler looking to strike it rich, but those who knew him say he was a true believer. “He truly thinks that having a gold-backed currency is what’s needed in the world,” says James Clement, a libertarian attorney who met Jackson in 2003. “I don’t think anyone would have stuck with it … other than that he thinks it’s extremely important and somebody has to do this.”
Jackson drew his inspiration from economist Vera Smith’s influential 1936 treatise The Rationale of Central Banking and the Free Bank Alternative, which challenged the tenets of banking. “She wrote in the depths of the Depression, and poses some of the most compelling questions about central banking systems,” Jackson says. “Central banks should attenuate monetary disorder and prevent fluctuations, but ironically they sometimes amplify it.”
His commitment started to pay off in 2000, when some 50,000 transactions suddenly passed through his system in just two months — more than the previous three and a half years combined. By that November, E-Gold, now with 20 employees, had processed 1 million transactions, and Jackson’s business reputation was growing. He was invited to speak at the prestigious World Gold Council conference in Rome, the gold mining industry’s leading event. In 2001, the growth continued, with customer accounts expanding from 134,000 to nearly 288,000, holding about $16 million in value.
Initially, Jackson stored the company’s reserves of sovereign coins and ingots in safety deposit boxes in banks around town. When this proved inconvenient for auditing, the company bought an office safe to hold the gold and platinum. “The silver was just stacked around the office,” Jackson says. Ultimately, he converted the sovereigns and ingots to bars and moved them to bank vaults in London and Dubai. At E-Gold’s peak, the currency would be backed by 3.8 metric tons of gold, valued at more than $85 million
Despite the sudden burst of success, the venture was plagued with setbacks. E-Gold’s servers buckled under the growing traffic load, hanging transactions and frustrating users. Copycat entrepreneurs erected their own gold-backed systems — e-Bullion, GoldMoney and OSGold – and poached E-Gold customers. When Jackson finally scaled up his infrastructure in 2003, solving the performance problems, cyber scammers entered the scene, launching a sortie of phishing attacks against users, tricking thousands of them into disclosing their E-Gold passwords, then draining the accounts.
Eventually Jackson deployed an anti-phishing remedy, and business rebounded in September 2004. A year later, customer accounts numbered about 3.5 million in 165 countries, with 1,000 new accounts opening every day. Millions of dollars were zipping through E-Gold’s system 24-hours-a-day, bouncing between the U.S. and Europe, South America and Asia. E-Gold collected 1 percent of every transaction, with a cap at 50 cents.
E-Gold was now second only to PayPal in the online payment industry. At last, Jackson says, he felt relief.
“We had been stuck year-in and year-out on whatever crisis-du-jour required our immediate attention,” he says. Now “we felt like we’d finally achieved a turning point.”
But E-Gold’s increasing popularity with customers drew less-welcome attention as well.
The federal government began to take notice in 2003, when the Secret Service launched an undercover operation against a website called Shadowcrew — a legendary forum for “carders” who trafficked in stolen credit and debit card numbers. Cyber crooks in Eastern Europe were stealing millions of card numbers in phishing and skimming scams, then passing the data to accomplices around the world. The low-end cashers coded the numbers onto blank cards, then siphoned money from ATMs and transmitted the bulk of proceeds back to the former Soviet bloc.
When authorities monitored the criminals’ communications, they discovered that E-Gold was among the carders’ preferred money-transfer methods, because the system allowed users to open accounts and transfer funds anonymously anywhere in the world.
When the Shadowcrew investigation wrapped in October 2004 with the shuttering of the site — and the arrest of more than a dozen members — the Justice Department turned its sights on E-Gold. Its goal was to force the service to comply with regulations governing money-transmitting services like Western Union and Travelex. Federal regulations required those businesses to register with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), to be licensed in states that required it, to diligently authenticate the identity of customers and to file suspicious activity reports on shady-looking customers. But E-Gold wasn’t doing this.
Jackson believed E-Gold was exempt from regulation because it was a payment system not a money transmitter. And although it did transfer money, customers could park balances in their accounts, as with a bank.
But Jackson insisted E-Gold wasn’t a bank, either. It was something new — something the world and the U.S. government hadn’t seen before. He wasn’t alone in this view. Many internet-based payment services, including PayPal during its early years, believed they were exempt from regulation. They mostly flew under the radar of prosecutors until something brought them into the spotlight.
Jackson says he got the first inkling of the rampant, organized crime in his system when he read a June 2005 New York Times story about the growth of the carding forums. “To my horror … E-Gold is mentioned in this ghastly, horrible way of it being, you know, the bitch of criminals,” he says.
He concedes he knew that Ponzi schemers and other scammers sometimes used his system , but he’d always responded to government subpoenas for information about suspicious customer accounts. So he contacted the Secret Service to ask why the agency hadn’t sought his help to track the crooks in the Times story. The agency, which was already secretly targeting E-Gold, ignored him. (The Secret Service didn’t respond to interview inquiries for this story.)
The hammer dropped on E-Gold around 5 p.m. on a mild day in mid-December 2005. A herd of Chevy Suburbans wheeled up to Jackson’s house and expelled more than a dozen FBI and Secret Service agents. Simultaneously across town, the Justice Department’s “Operation Goldwire” unfolded with more agents raiding the offices of Gold and Silver Reserve, the company that operates E-Gold. A third group descended on a co-location facility in Orlando where E-Gold Limited, a holding company for E-Gold’s assets, racked its database servers.
The feds carted away more than 100 boxes of electronic records and paper files, including birth certificates, photos and a deed to the Jackson family burial plot. The gold and silver reserves remained safe overseas, but the government froze the company’s domestic bank accounts. Jackson’s venture was dissolving around him.
Jackson wasn’t sure what the feds hoped to find in all those records; once E-Gold got its systems back online he turned to his database for answers.
He scoured the system for suspicious transactions using key words like “cvv,” dumps” and “cob,” and the names of carders he’d read in the Times. He quickly discovered the disturbing truth about what his libertarian dream had become. “I found out there was quite a bit of stuff going on which law enforcement knew about, but wasn’t asking us about,” he says. “I found, holy smokes, there is a continuing pattern of these so-called carders. There’s, like, a ring that I can distinguish.”
One user named “Segvec” received more than half a million dollars from four others, including a Ukrainian named “Maksik” who sent a rapid stream of cash totaling $300,000. In the “memo” field of the transactions — where the sender can state a reason for the payment — Maksik noted that $17,000 was “for beer.” Another three transactions totaling $89,000 sent over a week’s time were supposedly for Sony Vaio computers.
A New York account-holder named “Potluck” had a pattern of buying $6,000 in postal money orders twice a month, then exchanging them for e-Gold to send to Ukraine. Over a year, he’d transmitted about $150,000.
Jackson had uncovered a constellation of shady accounts doing business with one another. He watched in amazement as the criminal activity expanded before his eyes, and balances in several accounts ballooned, with no sign that the account holder intended to move it out. Segvec alone amassed more than $700,000 in digital gold.
“They weren’t just using us as a good vehicle to trade their data, they were parking value in our system,” Jackson says. E-Gold had unwittingly become banker to the underworld.
Because users could sign up for E-Gold with aliases, there was no easy way for Jackson to determine the real identity of many of his suspects. But the criminals became vulnerable the moment they converted their virtual currency to local cash. This required them to do business with an E-Gold money exchanger — the online equivalent of currency exchangers at international airports — who’d ask for valid ID and contact information. Sometimes the criminals wanted their cash loaded to a debit card and mailed to a drop address, or wired to a traditional bank account; exchangers would have this data, too.
Jackson reached out to about a dozen exchangers in Europe and elsewhere with the account names he was tracking. Some criminals had provided the exchangers with fake credentials, but a surprising number had given their real names or addresses. Jackson soon had the identities of some of the most wanted figures in the underground.
One money exchanger in Northern Ireland revealed that “Segvec” routinely had packages sent to a Tokyo remailer, who forwarded them to a “Stephen Ceres” in Miami. The same exchanger also sold “Stephen Ceres” a Card One debit card with a daily load limit of $9,500. Jackson obtained a list of transactions on the card that linked it to a slew of ATM withdrawals in Miami suburbs. A storm of withdrawals during one five-minute period yielded the cardholder $8,000 in cash.
Jackson, who had been snubbed by the Secret Service and FBI, took the information he uncovered to the U.S. Postal Inspector Service, providing investigators with names, addresses and transaction histories. The postal inspectors passed the information to overseas allies, the FBI, and eventually to the Secret Service as well.
It was a devil’s bargain. Once the feds got a taste of what Jackson could provide, the postal agents began peppering him with requests for more data on other accounts, promising Jackson they’d follow up with a formal court order or subpoena later. He cooperated fully, despite the fact that it violated his user agreement with customers. “We never did get any legal cover whatsoever,” he says ruefully. “We never got our trap-and-trace. We never got our pen register.”
In March 2006, inspectors asked him for information on a carder named “Jilsi,” whom Jackson traced to a money exchanger in the United Kingdom. The exchanger gave him a real name — Renu Subramaniam — a 2-year-old confirmed phone number and the time and location of deposits Subramaniam had made to two London banks. Jackson passed the information to inspectors who told him that the phone number, if correct, would be “the break in the case we have been waiting for, for quite a long time.”
It wasn’t long before carders were being taken down. In May 2007, Markus Kellerer, aka Matrix 001, was arrested in Germany. In July 2007, Subramaniam, who had been an administrator on a carding site called DarkMarket, was arrested in Britain. That same month, authorities in Florida arrested Julio Lopez, aka Blinky, who was connected to a ring of Cuban carders. And last year in Miami, authorities arrested Albert Gonzalez, aka Segvec, allegedly one of the masterminds behind the hack of TJX and other businesses. Jackson had provided authorities with information on all of them.
An FBI agent who was involved in the arrest of a number of carders, but asked not to be identified because he wasn’t authorized to speak, acknowledged that information Jackson provided was “instrumental in helping track people down.”
A year after he began his probe, Jackson began blocking the accounts responsible for the suspicious activity, preventing suspected crooks from getting their loot. E-Gold was on its way to becoming clean, relatively speaking.
As far as the feds were concerned, however, it was too late. A few months later, in April 2007, the Justice Department wrapped up its four-year-long investigation by indicting Jackson and his colleagues on federal charges of money laundering, conspiracy and operating an unlicensed money transmitting business.
“Douglas Jackson and his associates operated a sophisticated and widespread international money remitting business, unsupervised and unregulated by any entity in the world, which allowed for anonymous transfers of value at a click of a mouse,” said U.S. Attorney Jeffrey A. Taylor for the District of Columbia in a press release. “Not surprisingly, criminals of every stripe gravitated to E-Gold as a place to move their money with impunity. As alleged in the indictment, the defendants in this case knowingly allowed them to do so and profited from their crimes.”
Clement, the attorney, disputes the government’s depiction of Jackson. “They automatically assume that E-Gold somehow made it easy for these people involved in money laundering, or [sought criminals] as clients,” says Clement. “But that’s completely the opposite of Doug’s attitude toward any kind of illegal behavior. It would be crazy for somebody to seek out that kind of business.”
Jackson, who’d hocked his future to start E-Gold, now faced the potential of a federal prison term. He was frustrated and confused.
“It never crossed my mind that anyone could seriously want people like us in prison,” he says. “But I guess my bigger fear was that we would go bankrupt, and there would be a train wreck of people that had trusted value to us who couldn’t get their money.”
Timberlake, the economics professor, is convinced that Jackson’s radical dream, his goal of upsetting the economic status quo and overturning the government’s monopoly on money, is what really got E-Gold targeted.
“No matter how innocent a person is you can always find a law that government agents can use to convict him of something,” Timberlake says, “And this is a perfect example of it. Any time anybody tries to produce money, the federal government is going to be on their tail.”
After a year-and-a-half of court wrangling and negotiations, Jackson pleaded guilty last year to conspiracy to operate an unlicensed money transmitting service and conspiracy to commit money laundering. In November he was sentenced to 36 months of supervised released — including six months of house arrest and electronic monitoring, and 300 hours of community service. In addition to forfeiting about $1.2 million to the government, his two companies — Gold and Silver Reserve and E-Gold Limited — were fined $300,000, to be paid in $10,000 monthly installments beginning last month.
The plea agreement is conditional on Jackson revamping his business to comply with regulations governing money-transmitting services — a goal that, Jackson concedes, faces many hurdles. To begin the process of compliance, he suspended the creation of new accounts. Existing customers are now required to submit a government-issued photo ID and proof of residence to authenticate their name, address and other details, and are limited to $1,000 to $3,000 a month in transactions until they pass muster. Customers in high-risk countries — such as Nigeria, Russia and Ukraine — are suspended from making any transactions at all for now. Their money is locked indefinitely in E-Gold’s servers.
Jackson, who always considered himself one of the good guys, acknowledges today that he might have done a better job of policing his system from the start. “In hindsight there’s any number of things that would have been a smarter or better way of approaching things,” he says.
Back in his Melbourne office, the blinds are drawn against the harsh sun, and a wall calendar serves as the room’s sole decor. A belt and freshly dry-cleaned dress shirt, still swathed in plastic wrap, hang from a metal shelf. A one-pound plastic jug of protein powder on Jackson’s desk serves as a reminder of the weight he’s lost since his legal troubles began. When asked what toll the trouble has taken on his family – Jackson and his wife are currently living in different states — there’s a long silence before he clears his throat.
“It’s been a source of distress,” he says finally. “Ten years ago I was an affluent physician.”
Although E-Gold was occasionally profitable, Jackson only drew a salary, like his employees. The two upscale homes he once owned with his wife are long gone. Now his wife and 12-year-old son occupy half a duplex in Pennsylvania near her family, and Jackson lives in a one-bedroom apartment in Melbourne with his 17-year-old son, while the latter finishes high school, and Jackson and his staff attempt to rebuild the business.
Jackson has finally registered E-Gold with FinCEN, and has begun applying to states for money transmitting licenses. The company is also blocking people who appear on the Treasury Department’s list of Specially Designated Nationals and plans to follow bank procedures for verifying customer income and sources of transmitted funds. There are other plans in works to clean up the system as well.
There’s a daunting hill to climb before E-Gold will be operational again, and it remains to be seen whether there will be a market for a scrubbed-down, government-compliant E-Gold. But Jackson seems relieved to be headed in this direction.
“One of the biggest results of this is that we’re getting to the place we wanted to be anyway, which is to have some sort of an explicit set of standards to build against,” he says.
He maintains that he would have done what authorities now want him to do, if they’d just worked with him to devise a plan, instead of treating him like a criminal.
Now, after all of E-Gold ups and down, Jackson hasn’t lost his optimism for the venture, or his knack for florid prose. As he wrote on his blog last year, he looks forward to transforming E-Gold from a marginal player to a respected institution — one, he says, that will serve to “advance the material welfare of mankind.”
Tuesday, June 2, 2009
Wednesday, May 6, 2009
Stalking Goes High Tech (and How to Protect Yourself)
It’s easier than ever to stay in touch with people you know — including the ones you really don’t want to hear from.
Growing numbers of men and women report being pursued by stalkers via cell phones, Internet services, GPS systems, wireless video cameras, and other technologies, according to law-enforcement agencies and victims’ groups.
“Technology is more widely available, and so stalkers have more tools to use against their victims,” says Will Marling, executive director of the National Organization for Victim Assistance.
Of the 3.4 million Americans who reported being stalked between 2005 and 2006 — up from 1.4 million annual cases a decade earlier — according to the U.S. Department of Justice, 27% reported being cyberstalked, or stalked through computer programs, while one in 13 said their stalkers used tracking devices to monitor their locations.
E-mail and instant messaging are the most common stalking methods, according to the Justice Department— 83% of victims reported getting unwanted e-mails from their stalkers and 35% reported getting instant messages.
Six percent said that their stalkers stole their identities to open or close financial accounts in their names, steal funds from their existing accounts, or make unauthorized charges to their credit cards.
Marling recalls one man whose ex-girlfriend infiltrated his computer via a Wi-Fi account and repeatedly posted content onto his Web site in his name.
“People who become tech-savvy, as perpetrators they can find weak spots,” he says.
High-tech stalking comes in many forms:
• Caller ID. The Caller ID systems on many new phones reveal callers’ names and locations. Using an online phone directory, a stalker can pinpoint a victim’s new place of residence.
• Cell phones. Whenever a victim’s cell phone is in analogue mode, a radio scanner can intercept it.
• GPS services. A Wisconsin woman wondered at her ex-boyfriend’s ability to continually find her whenever she was driving her car. Then she discovered the global positioning device he had installed beneath her car ’s front grill. Many stalkers use these devices, which pinpoint carriers’ exact locations, to track victims. Telephone-based instant-messenger services and some cell phones’ location services are also potential tracking tools.
“Every cell phone has its own identifier, so you can theoretically know the location someone is in,” says Marling. “It’s definitely a growing problem.”
• Spyware. A Michigan man remotely installed a software program on his estranged wife’s computer; the program would e-mail him daily notifications listing all the sites she visited and the contents of every e-mail she sent or received. Stalkers can also use keystroke loggers, which record every key typed and thus disclose passwords, PINs, Web sites, and e-mails.
• Cameras. Cameras today are more powerful, less expensive, smaller, and easier than ever to secretly place inside a wall. A New Jersey man monitored his ex-wife daily through a video camera in her bedroom.
• Public databases. A surprising amount of information about individuals is public record. For example, the court system of Montgomery County, Pennsylvania, publishes the names and addresses of individuals who obtain protective orders.
• Headers on fax documents. One woman fled an abusive partner, but had to send him papers. She faxed her attorney papers from her shelter’s fax machine, and he in turn faxed them to the abusive partner’s attorney, who passed them along to him. The woman’s partner spotted the shelter location on the fax head and tracked her down, forcing her to relocate a second time.
• E-mail and instant messages. Stalkers send their victims abusive messages. They can also impersonate their victims by sending out messages in the victims’ names. One abuser changed his wife’s e-mail password and sent threatening messages to himself from her e-mail account. Then he took the messages to the police and convinced them to arrest her.
Defending against Stalkers.
Stalkers who use e-mail and other electronic means are sometimes harder for law enforcement to stop. Michelle Garcia, executive director of the Stalking Resource Center, notes that many investigators don’t know how to prove that a stalker’s e-mails came from the stalker — consequently, they don’t count e-mails as evidence.
“We have to get our responders up to speed on how to trace those technologies back to the offenders,” she says.
Technology can also protect victims, however. The Internet is a means to find counselors, employment agencies, housing opportunities, shelters, and support services. It also provides forums for victims to share their stories with each other.
Meanwhile, communities have become much better-equipped to confront stalking. In the last 10 years, new programs for training law enforcement officers, new victims’ support services, and tougher laws have all been introduced.
The Justice Department report offers some advice for keeping safe from stalkers:
• Know who calls you. Use per call (*67) when you get an unknown call, and make sure your phone has caller ID.
• Keep your contact information private. Clear your name from any database that might be published or sold from one company to another.
• Do not send any confidential information via a personal computer. Use a library computer, which a stalker will not be able to track. Marling further advises destroying as much personal information as possible and routinely checking your computer for viruses and intruder programs.
“You have to be smarter than your stalker,” says Marling.
Growing numbers of men and women report being pursued by stalkers via cell phones, Internet services, GPS systems, wireless video cameras, and other technologies, according to law-enforcement agencies and victims’ groups.
“Technology is more widely available, and so stalkers have more tools to use against their victims,” says Will Marling, executive director of the National Organization for Victim Assistance.
Of the 3.4 million Americans who reported being stalked between 2005 and 2006 — up from 1.4 million annual cases a decade earlier — according to the U.S. Department of Justice, 27% reported being cyberstalked, or stalked through computer programs, while one in 13 said their stalkers used tracking devices to monitor their locations.
E-mail and instant messaging are the most common stalking methods, according to the Justice Department— 83% of victims reported getting unwanted e-mails from their stalkers and 35% reported getting instant messages.
Six percent said that their stalkers stole their identities to open or close financial accounts in their names, steal funds from their existing accounts, or make unauthorized charges to their credit cards.
Marling recalls one man whose ex-girlfriend infiltrated his computer via a Wi-Fi account and repeatedly posted content onto his Web site in his name.
“People who become tech-savvy, as perpetrators they can find weak spots,” he says.
High-tech stalking comes in many forms:
• Caller ID. The Caller ID systems on many new phones reveal callers’ names and locations. Using an online phone directory, a stalker can pinpoint a victim’s new place of residence.
• Cell phones. Whenever a victim’s cell phone is in analogue mode, a radio scanner can intercept it.
• GPS services. A Wisconsin woman wondered at her ex-boyfriend’s ability to continually find her whenever she was driving her car. Then she discovered the global positioning device he had installed beneath her car ’s front grill. Many stalkers use these devices, which pinpoint carriers’ exact locations, to track victims. Telephone-based instant-messenger services and some cell phones’ location services are also potential tracking tools.
“Every cell phone has its own identifier, so you can theoretically know the location someone is in,” says Marling. “It’s definitely a growing problem.”
• Spyware. A Michigan man remotely installed a software program on his estranged wife’s computer; the program would e-mail him daily notifications listing all the sites she visited and the contents of every e-mail she sent or received. Stalkers can also use keystroke loggers, which record every key typed and thus disclose passwords, PINs, Web sites, and e-mails.
• Cameras. Cameras today are more powerful, less expensive, smaller, and easier than ever to secretly place inside a wall. A New Jersey man monitored his ex-wife daily through a video camera in her bedroom.
• Public databases. A surprising amount of information about individuals is public record. For example, the court system of Montgomery County, Pennsylvania, publishes the names and addresses of individuals who obtain protective orders.
• Headers on fax documents. One woman fled an abusive partner, but had to send him papers. She faxed her attorney papers from her shelter’s fax machine, and he in turn faxed them to the abusive partner’s attorney, who passed them along to him. The woman’s partner spotted the shelter location on the fax head and tracked her down, forcing her to relocate a second time.
• E-mail and instant messages. Stalkers send their victims abusive messages. They can also impersonate their victims by sending out messages in the victims’ names. One abuser changed his wife’s e-mail password and sent threatening messages to himself from her e-mail account. Then he took the messages to the police and convinced them to arrest her.
Defending against Stalkers.
Stalkers who use e-mail and other electronic means are sometimes harder for law enforcement to stop. Michelle Garcia, executive director of the Stalking Resource Center, notes that many investigators don’t know how to prove that a stalker’s e-mails came from the stalker — consequently, they don’t count e-mails as evidence.
“We have to get our responders up to speed on how to trace those technologies back to the offenders,” she says.
Technology can also protect victims, however. The Internet is a means to find counselors, employment agencies, housing opportunities, shelters, and support services. It also provides forums for victims to share their stories with each other.
Meanwhile, communities have become much better-equipped to confront stalking. In the last 10 years, new programs for training law enforcement officers, new victims’ support services, and tougher laws have all been introduced.
The Justice Department report offers some advice for keeping safe from stalkers:
• Know who calls you. Use per call (*67) when you get an unknown call, and make sure your phone has caller ID.
• Keep your contact information private. Clear your name from any database that might be published or sold from one company to another.
• Do not send any confidential information via a personal computer. Use a library computer, which a stalker will not be able to track. Marling further advises destroying as much personal information as possible and routinely checking your computer for viruses and intruder programs.
“You have to be smarter than your stalker,” says Marling.
Tuesday, April 21, 2009
Live Piracy Maps
Live piracy maps (see samples below) and live piracy reports are available from the ICC International Maritime Bureau, a specialised division of the International Chamber Of Commerce (ICC).
Monday, April 13, 2009
790 Million Reasons The Madoff Feeder Funds Stayed Quiet
Why was it so easy for Bernie Madoff to pull off a massive Ponzi scheme? Because the funds who led their clients to slaughter fattened up on almost $800 million in fees and really didn’t think it was a good idea to ask too many questions.
This tasty nugget came out of the court documents as prosecutors and plaintiffs’ attorneys try to hunt down ill-gotten gains of Madoff and the cadre of people around him who got rich. Whether any of that money comes back to Madoff clients is another story.
Among the big fee winners, according to the WSJ:
•Banco Santander earned $52.7 million in 2007 and $43.3 million in 2006 in "investment manager's fees."
•A unit of Tremont Group Holdings could have collected as much as $34 million in fees annually.
•J. Ezra Merkin took in almost $170 million from Madoff vehicles over 12 years, according to a complaint against him.
•The granddaddy of Madoff feeder funds, Fairfield Greenwich, collected at least $400 million between 2005- 2008, according to Massachusetts securities regulators.
This tasty nugget came out of the court documents as prosecutors and plaintiffs’ attorneys try to hunt down ill-gotten gains of Madoff and the cadre of people around him who got rich. Whether any of that money comes back to Madoff clients is another story.
Among the big fee winners, according to the WSJ:
•Banco Santander earned $52.7 million in 2007 and $43.3 million in 2006 in "investment manager's fees."
•A unit of Tremont Group Holdings could have collected as much as $34 million in fees annually.
•J. Ezra Merkin took in almost $170 million from Madoff vehicles over 12 years, according to a complaint against him.
•The granddaddy of Madoff feeder funds, Fairfield Greenwich, collected at least $400 million between 2005- 2008, according to Massachusetts securities regulators.
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