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IMPORTANT NOTE: We have decided to not generally include any future news
features on hacking or phreaking. Occasionally we may include one or two if we
feel that they have not been covered elswhere. Our decision is based on the
fact that Phrack, a long-standing electronic publication devoted to the hacker
community, does an excellent job of collecting them. There is no use in both
of use publishing the same stories over and over. We do plan to keep stories
concerning fraud, government, and other goodies not normally addressed by
Phrack. SO, for most hacking and phreaking news stories check out Phrack.
=====================================
Wireless Cable Lottery Spurring Scams
=====================================
WASHINGTON, D.C., U.S.A., 1992 APR 15 (NB) -- The Federal
Communications Commission's lottery of rights to operate wireless
cable systems is becoming a hotbed for con-men, according to
federal and state officials.
The Bush Administration has said it wants to end the lottery
process and award new frequencies based on auctions, while
Congress wants hearings and awards based on a "public interest"
test. But until all that is sorted out, lotteries, in which people
file applications and the agency chooses winners by lot, are the
way the agency will allocate rights.
The current controversy involves wireless cable television, a
technology using microwave radio technology to transmit TV
programs to viewers' homes, bypassing wired cable systems. The
low capacity of such systems, compared with the high capacity of
existing wired cable systems, makes them a risky business
proposition in large cities wired for cable, but that has not
stopped the con artists.
So far, 18 state securities agencies have investigated or taken
action against suspected scams in Georgia, with Illinois and Florida
adding their voices in the form of press releases and warnings from
state officials. The Federal Trade Commission has also been
investigating lottery fraud, and has filed three lawsuits.
Florida Comptroller, Gerald Lewis, who regulates the state's
banks, claimed at a news conference that "boiler room" operations
touting license lotteries have taken in $50 million nationwide.
He said the con artists claim that for $5,000 they can virtually
guarantee a successful application. The actual filing fee is
$155, and over 36,000 applications have been received so far,
according to the FCC.
Illinois Secretary of State George Ryan estimated in a press
statement that investors have risked $75 million on the schemes,
and his office has taken action against two such companies in that
state. The FCC has been granting wireless cable licenses for nine
years, but fewer than 170 such systems are actually up and running,
he added, indicating the business risk is considerable since
wireless cable works only in a "line of sight" from a central antenna
to a subscriber.
Later this year, the FCC will launch a second and, perhaps, more
lucrative lottery process. This will be for new frequencies to
run communications adjuncts to interactive TV systems like that
offered by TV Answer of Reston, Virginia. TV Answer has won
agreement from Hewlett-Packard to make set-top converters for
its system, which will offer banking, shopping, information, and
games. In this lottery, however, winning bidders will be forced
to build-out at least half their systems before selling their
interests. Applications will cost about $5,000-$10,000, depending
on the size of the market applied for, and total costs to winning
bidders are estimated at $150,000-$250,000, again depending
on the size of the market.
- ------------------------------------------------------------------------------
==============================
SPA Raids Grand Central Camera
==============================
WASHINGTON, DC, U.S.A., 1992 APR 8 (NB) -- On March 25, U.S.
Marshals and representatives of the Software Publishers
Association raided grand Central Cameras (AKA GCT Photo Dealers)
based on charges that the company had been making illegal copies
of software and selling computers preloaded with the programs in
violation of U.S. copyright laws.
SPA member companies whose software has allegedly been copied
include Lotus, Microsoft, WordPerfect, Datastorm Technologies,
Fifth Generation Systems, Interplay Productions, and Sphere.
Copied software was found on 25 seized floppy diskettes which
allegedly served as duplication masters. In addition, sales
records with names of customers were also taken and will
reportedly be used to determine if those obtaining pirated
software will be named in the case against the store.
Also seized in the raid, which was based on a federal court order
issued in the United States Court for the Southern District of
New York, were three desktop computers and two laptops which the
SPA says contained illegal or pirated copies of software.
Grand Central Cameras has agreed to submit to, and the court
subsequently entered, a preliminary injunction forbidding
unauthorized software copying by the reseller.
The SPA maintains an anti-piracy hotline, 800-388-7478, which
collects information from people wishing to report software
copyright violations.
To get a copy of the SPA Self-Audit Kit and SPAudit inventory
management program, companies should write to: SPAudit Software
Publishers Association 1730 M. Street, NW, Suite 700 Washington,
D.C. 20036.
- ------------------------------------------------------------------------------
===================================================
MCI Nixes Billing For Problem Pay-Per-Call Services
===================================================
WASHINGTON, D.C., U.S.A., 1992 APR 1 (NB) -- MCI
Communications has announced it is no longer accepting
applications for the more dubious firms offering financial
services on its premium-rated "900" area code lines.
Specifically, MCI is prohibiting companies offering credit card
and loan advice services on the premium rate services. Newsbytes
notes that the majority of these companies are usually only
dispensing common-sense rules on building credit ratings up and
charging heavily for the privilege.
One "900" number that Newsbytes called in the US recently in
connection with a financial feature turned out to be a thinly-
disguised mail-order operation with a "Gold card" membership
costing $50 that allowed members to buy mail order goods at
normal prices. Considering that callers to the "900" number paid
$10 for the call itself, this was clearly a scam.
In addition to the financial services block on "900" lines, MCI
has also ceased handling billing for job agencies which offer
generic job descriptions and suggestions on how to get a job.
The changes, which take effect from April 1, are in addition to a
previously-announced block on adult services on "900" numbers.
"MCI has instituted these policies to further ensure that consumers
are protected and are subjected to less confusion and fewer
incidences of abusive sales tactics by some 900 information
providers," said Carol Herod, MCI senior vice president for
business marketing, announcing the block.
"While we have previously taken strong policy steps that are
consistent with FCC rules, these additional safeguards can help
to protect consumers during uncertain economic times. At the
same time, we want them to be able to take advantage of the
numerous consumer and business-oriented programs which
offer legitimate and valuable services," she added.
The "900" area code service changes, which were notified to its
major subscribers in February of this year, are likely to cause a
major contraction in the number of companies offering premium
services, Newsbytes notes. MCI, ironically, was one of the first
telecommunications companies to offer "900" area code premium
rate services at the beginning of last year.
- ------------------------------------------------------------------------------
=================================================================
Electronic Filing Breeds Tax Fraud Scams; Include Illegal Refunds
=================================================================
Los Angeles Times, Apr 14, 1992
Los Angeles - Jerome Hearne used to rob people for a living, but sometime
in the late 1980s or early 1990s he turned to a more lucrative livelihood:
robbing the U.S. Treasury.
Hearne's adopted brand of crime was electronic tax fraud.
He and a band of Los Angeles cohorts joined a fast-growing group of crooks
who are raiding millions of taxpayer dollars every year by filing false
returns and getting quick, illegal refunds in the form of bank loans.
The scams bring together clever ringleaders and large numbers of co-
conspirators, often unemployed or homeless people who are willing to have
their real names and Social Security numbers used on fake tax returns.
In Georgia, such fraud is a growing problem, partly because electronic tax
filing has been in place for only three years. "All of the kinks and bugs are
going to have to be ironed out," said Loretta Bush, a spokeswoman for the
Internal Revenue Service in Atlanta.
However, she said, intensified efforts by the government to fight
electronic filing fraud are working. Two Riverdale men recently pleaded guilty
to filing false tax returns electronically. It was the first criminal
prosecution of its kind in the Northern District of Georgia.
The government charged that the men prepared tax returns for clients and,
then without the clients' knowledge, altered the filings and claimed larger
refunds than legally were due.
The men arranged "refund anticipation loans" for their clients, using the
returns with the inflated refunds.
When a bank issued checks for the loans, the men endorsed the clients'
names on the back of the checks, the government said. Then they deposited the
money in their own accounts.
The men then issued checks to their clients for the amount they were
legally owed - and pocketed the difference.
In Los Angeles, the fraud also involved bank loans.
The crooks filed fraudulent returns electronically using the government's
computerized tax-return system. Then they applied for bank loans based on the
anticipated return. It takes only two to three days for the bank to approve
such loans and for the scam artists to have checks in their hands.
By the time IRS auditors discover what has happened, everyone involved
usually has disappeared with the money - sometimes a great deal of it. Hearne
and the government dispute the exact size of the take in his scam, but the
total could top $1 million in false returns.
Hearne, who denies he was the group's ringleader but has pleaded guilty to
tax fraud and conspiracy charges, faces sentencing later this month.
Hearne's case - which involved seven other defendants charged with similar
crimes - is the nation's biggest so far. But Hearne has plenty of company in
the electronic tax-scam business.
"This is a major problem for us," said Dennis Crawford, chief of the
criminal investigation division of the IRS's Los Angeles office. "It's what's
hot right now. We've had to pull people off other areas to deal it."
- ------------------------------------------------------------------------------
=============================================
Ads With '800' Numbers Don't Always Ring True
=============================================
Elliott Brack, The Atlanta Constitution, Apr 1, 1992
Hey, no fooling. You may not believe this, but things aren't always what
they seem. Really!
Yet if anyone gave you a 1-800 telephone number, you would automatically
think that it would be a toll-free call, right?
Not always, we have learned. Though in most cases the 1-800 number is
entirely free, the con artists have found another way to work a scam, aimed at
getting into your pocketbook.
You may remember that over the last few months we have reported a wave of
mail to us and other people offering "free gifts," "free vacations" or
"official notices" that you might have won something free. Actually, the
way the message is composed, it appears that you are guaranteed of winning
some major gift.
In all instances, all you have to do is call the telephone number provided
to learn what you have won. Up to now, it has been a 1-900 number for you to
call, which should have told you it would cost you to dial that number. Yet
the off-chance of winning something big has caused lots of people to pay those
1-900 toll charges - only to find that the prize is either less than they
anticipated or inconsequential.
CHARGES KICK IN IF YOU STAY ON THE LINE
Now comes the new twist.
Recently many people have received notifications, printed like a postcard,
urging them to call a 1-800 number. It goes further than that. It says "call
toll free 1-800 [number] for complete instructions." Now that would make
anyone think there would be no charge for this call, right?
Wrong. When they call the 1-800 number, they are connected to a
computerized voice, which tells them to remain on the line and follow the
instructions. It's here that the computer also warns that they will be billed
for this service if they stay on the line.
But since the postcard said "toll free," many people ignore this warning,
only to find out later they have been billed for the call by their telephone
company.
DON'T BE FOOLED, ESPECIALLY TODAY
If you stay on the line, here's what happens next. The computer asks you to
punch in the 12-digit ID number listed on the postcard, as well as your
telephone number and ZIP code, before the prize will be revealed.
In other words, if you stay on the line, the con artists get enough
information to bill you for telling you what you might have won. The 1- 800
number was used to lure callers, but what eventually happens is just like
calling a 1-900 number.
It all amounts to what appears to be one thing, but is distinctly another.
This reminds me of what consumer advisers continually tell people: Don't give
out your credit card numbers on the phone. Only this time, you also should not
be giving out your telephone number, or else you'll get a bill from what
appeared to be a 1-800 toll-free call.
Today is April Fool's Day. Make a call to a 1-900 number, or even in some
instances to a 1-800 number, and you could be fooled any day of the year.
Things are not always what they seem.
- ------------------------------------------------------------------------------
====================================================================
Teen Accused of Avoiding Payment on $41,000 Worth of Phone-Sex Calls
====================================================================
Jeff Schultz, Atlanta Constitution, Apr 9, 1992
The first bombshell - to outward appearances a normal, $25, no-calls- to-
Uncle-Fred-in-Pago-Pago telephone bill - arrived in the mail in December.
Dorothy Brown opened it, waded through the stack of computer printed pages,
and . . . and . . .
"I nearly had a heart attack," she said. "I mean, $13,000! I thought that
was bad enough. Then I got the next one."
Ms. Brown's next bill from United Telephone arrived at her Mountain City,
Tenn., home in January - this one in excess of $27,000. She still hasn't
gotten over the shock, but at least now there's some knowledge to go with the
palpitations.
Christoper Brown, her 19-year-old son, has been indicted by a grand jury on
a charge of attempting to avoid payment for services valued at more than $500.
The services were phone-sex numbers. The total was nearly $41,000.
Mr. Brown, who is accused of making 746 calls in a two-month period, was
arrested Tuesday and is being held in Johnson County Jail in lieu of $10,000
bond. He will be arraigned May 1.
This is the first time AT&T - the long-distance provider of the 900
services - and United Telephone have indicted somebody for telephone fraud
related to such services. Tennessee is trying the case as a felony theft,
punishable by a prison term, fines and restitution.
Her son's future is only one of many concerns facing Ms. Brown, a machine
operator at Levi Strauss and Co.
During a 15-minute phone interview - she called collect - she asked a
reporter numerous times, "This won't hurt my credit, will it?" and, "Am I
going to have to pay for these calls?"
She said she struggles to support herself and two sons in Mountain City
(population 2,000) and added, "I'm having quite a bit of financial trouble
as it is. I can't afford an attorney."
Neither would she post bond for her son when he called her at work from
jail at 10:30 a.m. Tuesday. "He still didn't act like he was sorry when I
talked to him," she said. "He was kind of giving smart answers. I told him I
couldn't [post bond]. He said, 'Yes, you can. You get down here and sign it.'
I told him, 'No, you should've known better.' "
Ms. Brown said that when she received the first bill, her son denied
placing the calls. She suspected that a prisoner in the state penitentiary, 15
miles from her house, was billing calls to her number.
"Then I started seeing tablets around the house with those numbers written
on it. They're those romance numbers. I know he got them on TV. He don't have
a job so he's home all day. I asked him about the numbers, but he said, 'Oh,
it's nothing.' "
She said that only after the second bill did Mr. Brown, , who last month
was laid off from his job at a chair manufacturer, admit to the calls.
Jim Cosgrove, a spokesman for United Telephone, said telephone fraud
affects the industry to the tune of $500 million annually, "but it's difficult
to get enough evidence to press charges."
- ------------------------------------------------------------------------------
==========================================
Privacy Is Hot-Selling Item At $2 A Minute
==========================================
Marilyn Kalfus, The Orange Country Regester, Apr 2, 1992
Richard Koch says he has no clue who his customers are.
That's the point.
Mr. Koch sells privacy - at $2 a minute.
His Untraceable Phone Calls, based outside Boston, is a nationwide service
that prevents people's telephone numbers from being identified and keeps their
calls from being traced.
So, just who's using this service?
"I'm completely in the dark," Mr. Koch said. "It's kind of a strange
business."
When callers dial Mr. Koch's 900 number, they reach a computer near Las
Vegas. The computer, which connects them to a nationwide long- distance line
Mr. Koch buys from AT&T, gives them a dial tone.
The number? 1-900-Stopper.
"This is not a sleazy 900 service," Mr. Koch said. "It's quite the
opposite.
"The people who call want to have privacy," he said. "The only call that
shows up on their phone bill is the 1-900-Stopper call."
The cost is $2 a minute for calls inside the United States, $5 a minute for
international calls.
The service can be used for local calls, long-distance calls and calls to
800 lines, but not for calls to 900 lines. That way he avoids having to pay
for 900-line calls that charge more than $2 a minute.
Mr. Koch figures his service is especially popular in states that have
approved Caller ID.
"When any call you make or receive can end up in a marketing database, it's
time for concern," he said.
Mr. Koch also says his service is valuable for anyone who doesn't want his
or her phone records showing up in court records.
Daisy Ottmann, a spokeswoman for AT&T, confirmed that it works.
Mr. Koch concedes that some people might use the service to hide criminal
activity, calling it "a double-edged sword."
But he said, "Criminals use the U.S. mail, and we don't keep track of
everyone's mail. Criminals can go out and use a pay telephone and do the same
thing."
Indeed, anyone can conceal his calls by using a pay phone, Mr. Koch and Ms.
Ottmann noted.
"I just provide the convenience of using your home telephone," Mr. Koch
said. "You don't have to stand in line at a pay phone and hope no one's
looking over your shoulder."
He estimates that more than 200,000 untraceable calls have been made on the
system since it started two years ago.
"They can't all be criminals," he said.
- ------------------------------------------------------------------------------
========================================
Italian Crooks Let Others Pay Phone Bill
========================================
Translated from "Tagespiegel" (The Berlin Daily Newspaper), Feb 22, 1992
Lui, Rome, 21. February 1992. [...] Half a million Italians are the proud
owners of portable telephones. The cordless appliance has become the favorite
toy of the Southerners, but the game may soon be over: the "telefonini" are not
protected.
Under the motto "Buy one, pay for two", crooks sell manipulated phones that are
used so that the buyer has to pay for the toll calls of the seller. The trick
works like this: the crooks take a computer with a computing program [whatever
that may be--ed.] like the ones uses to crack automatic teller machines, and
fuss with it until they find the secret code for the telephone. The code is a
combination of the telephone number and the serial number that is supposed to
only be available to the telephone company SIP. When the code has been
cracked, it is no problem to transfer it to a second telephone, so that both
telephones have the same license number. One phone is sold "under the hand" by
the crooks. As an added deal, the buyer not only gets to pay his own phone
bill, but the fees run up on the second phone as well. The Italian underworld
is especially keen on using this method.[...] The mafia uses the "portabili"
for conducting their unclean business.
[... The police] have not been able to find the instigators, but they suspect
that employees of the telephone manufacturing company are involved, as they
have the knowledge of how the phones are constructed. [...] The portable
telephone is well-known for the ease of tapping the telephone conversations
[which cannot, however, be traced to the place of origin. A book calle "Italy,
I hear you calling" with some of the more interesting tapped conversations has
just been published.]
- ------------------------------------------------------------------------------
===========================
Robber 'Foiled Bank System'
===========================
The Independent (Uk), Mar 13, 1992
An electronics expert stole more than (pounds) 17,000 in a high-tech
robbery spree, plundering dozens of accounts from automatic cash dispensers
at banks, Paisley [Scotland] Sheriff Court was told yesterday.
Clydesdale Bank chiefs claimed their dispensing system was foolproof and told
angry customers that members of their own households must have been responsible
for making withdrawals without their knowledge.
Anthony Pratt, 32, a bank engineer, used a hand-held computer inside bank
premises to record transactions being made by customers at "hole-in-the-wall"
machines outside. He recorded the customer's secret number and later used it
on plastic cards he made with magnetic strips. Pratt, of East Kilbride, was
finally arrested after he took cash from a machine in Glasgow. He admitted
conspiracy to rob and robbery. Sentence was deferred for reports until 2 April.
- ------------------------------------------------------------------------------
===============================================
FBI Fear Phone Advances Will Hamper Wiretapping
===============================================
LA Times, Mar 7, 1992
Washington- The FBI, contending that rapidly developing telecommunications
technology is hampering the vital tool of wiretapping, proposed legislation
Friday that would require the industry to ensure that improvements do not
interfere with the ability to secretly record conversations.
It also proposed that consumers pick up the cost of changing current
wiretapping equipment to keep pace with new technology.
If the problem is not solved, "terrorists, violent criminals, kidnapers, drug
cartels and other criminal organizations will be able to carry out their
illegal activities using the telecommunications system without detection." FBI
Director William S. Sessions said. [...]
At issue is the rapid move toward digital telephone communications and
fiber-optic systems in which thousands of conversations can be carried by
filaments roughly the size of a strand of human hair.
William A. Bayse, assistant FBI director for technical services, and other FBI
officals contend that the transmission of hundreds and sometimes thousands of
digital conversations over a single link prevents current wiretapping
technology from isolating conversations for recording as required under the
1968 federal wiretap law. [...]
Other FBI offical said the expense could be passed on to telephone users at a
cost of "probably less than 20 cents an average per month." [...]
FBI officals maintained, however, that they already have encountered
difficulties in recording digitally transmitted conversations, now used by
about 10% of the nations phones. They declined, however, to give any examples
of such difficulties.
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