November 2008

Cyberthieves mine online for corporate data nuggets

An innocuous posting appeared on a Houston-based technology company's internal website on a recent Friday afternoon.  A couple of workers saw it, and obeyed instructions to click on a Web link. The posting seemed trustworthy. It was on an employees-only message board. And the link referenced news about a favorite company charity.  By clicking on the link, the workers infected their PCs with a virus that shut down the company's antivirus defenses, says Don Jackson, director of Threat Intelligence at Atlanta-based SecureWorks, who investigated the break-in. As a rule, tech security firms help clients under non-disclosure agreements.  The virus swiftly located — and infected — some 300 other workstation PCs, silently copying the contents of each computer's MyDocuments folder. It transmitted the data across the Internet to a gang of thieves operating out of Turkey…That Sept. 19 caper underscores an alarming shift in the teeming world of Internet crime. In the past year, cybercriminals have begun to infiltrate corporate tech systems as never before. Knowing that some governments and companies will pay handsomely for industrial secrets, data thieves are harvesting as much corporate data as they can, in anticipation of rising demand…..(USA Today, 12 Nov 08)

Express Scripts customers threatened on data breach

Express Scripts Inc said on Tuesday a "small number" of its clients have received letters threatening to expose customers' personal information, an apparent connection to an earlier extortion threat made against the company.  The large U.S. pharmacy benefit manager said last week it received an extortion letter threatening to expose millions of patient records and warned of a "potential large data breach."  The letters sent to its clients are similar in form to the one received by Express Scripts in early October from an unknown person or persons. Express Scripts clients are employers, unions, governments and other pharmacy plan sponsors.  An Express Scripts spokesman declined to specify further how many clients were threatened.  The company announced a $1 million reward for people who provide information resulting in the arrest and conviction of those responsible. …..(Reuters, 11 Nov 08)

Former Intel engineer indicted for stealing trade secrets

A former Intel design engineer has been indicted by a federal grand jury in Boston for allegedly stealing trade secrets from the chipmaker while secretly working for rival Advanced Micro Devices.  The indictment was handed down on Wednesday against Biswamohan Pani, according to R. Bradford Bailey, Pani's attorney and a defense lawyer with Denner Pellegrino in Boston… According to an affidavit filed with the courts, Pani began working at Intel's Hudson, Mass., research and development facility in 2003. Among other projects, Pani worked on the design of the Intel Itanium processor.  Pani resigned from Intel in late May, saying he was going to work at a hedge fund and would take accrued vacation time until his last official day on June 11, according to the affidavit. However, it was noted in the court document that Pani began working for AMD on June 2, when he was still employed by Intel.  Between June 8 and June 10, while working for both chipmakers, Pani allegedly remotely accessed and downloaded 13 top secret documents from an encrypted system at Intel. Some of the downloaded documents allegedly include design details on Intel's newest chips.  The FBI allegedly found eight Intel documents totaling more than 100 pages and 19 computer-aided design drawings — all classified as confidential, secret or top secret — during a search of his house on July 1, according to the affidavit…The affidavit noted that during an interview with the FBI, Pani admitted to downloading the files but said he wanted the information to help his wife, an Intel employee who was transferring from California to the Hudson facility. Russell added in the affidavit that the work assigned to Pani's wife had no connection with the information in the files.  Intel discovered the problem when another employee heard a rumor that Pani was working at AMD while still working at Intel. That employee pulled up a report showing Pani's access and download history on the encrypted system……(Computerworld, 10 Nov 08)

DuPont Files Federal Lawsuit Against INVISTA to Protect Intellectual Property

DuPont (NYSE: DD) today filed a lawsuit claiming INVISTA is infringing a DuPont patent and has misappropriated DuPont trade secrets and proprietary information relating to DuPont's nylon engineering resins business. The suit was filed in U.S. Federal Court in the Southern District of New York.  DuPont is seeking a permanent injunction, declaratory relief and damages relating to the INVISTA production of nylon 6,6 engineering resins. DuPont claims INVISTA misappropriated DuPont trade secrets, infringed on the company's patents and breached a Patent and Technical Information Agreement. Under the terms of this agreement, INVISTA is not allowed to use DuPont technology to make nylon 6,6 engineering resins for several years.  "As a science company, DuPont has long been committed to protecting its patents, trade secrets and proprietary technology,"….(Press Release, 11 Nov 08)

Intel Insider Indicted for Stealing $1 Billion in Trade Secrets

A former Intel employee has been charged with stealing trade secrets worth about $1 billion.

The case of Biswamohan Pani, 33, is being seen as representative of the growing threat of malicious insiders.
“IP [intellectual property] is the lifeblood of the high-tech industry and for us it represents billions and billions of dollars of investment,” Chuck Malloy, an Intel spokesman, told SCMagazineUS.com Monday.  Pani was working as a design engineer in Intel's Massachusetts Microprocessor Development Center (MMDC) in Hudson, Mass., when he obtained a position with Advanced Micro Devices (AMD), a competing microprocessor designer and manufacturer.  According to a U.S. District Court indictment, Pani quit his position at Intel on May 29 and said his last day would be June 11 but that he would be out of the office using vacation time he had accrued…Security experts said this case highlights the need for implementing systems that continuously monitor user activity in databases and other critical documents.  Michael Maloof, chief technology officer of TriGeo Network Security, told SCMagazineUS.com Monday that individuals with access rights pose real problems for companies…..(SC Magazine, 10 Nov 08)

Engineer convicted in Saab blackmail case

The 48-year-old engineer charged with attempting to blackmail Saab Microwave Systems for 16 million kronor ($2.1 million) was sentenced on Monday to four years in prison. He was convicted of serious unauthorized possession of classified information, bribery, as well as attempted bribery, but was acquitted on charges of industrial espionage.  The man, who worked as a consultant at Saab Microwave Systems, obtained various sensitive documents which he threatened to make public of the company didn’t pay him several million kronor.
According to the prosecutor, the documents contained company secrets which were also considered classified military secrets.  The man has confessed that he tried to get the company to buy back the secret documents, but denied his guilt.  He claims that he was forced into the deal by a man referred to as Defense Harry, a person who police and prosecutors have yet to locate……(Local, 10 Nov 08)

Judge orders newly hired Apple VP to stop work

A federal judge on Friday ordered a former IBM executive who was recently hired by Apple Inc. to stop working for the company, court documents showed.  U.S. District Court Judge Kenneth Karas ruled that Mark Papermaster, who was announced as Apple's new vice president of devices hardware engineering only last Tuesday, must "immediately cease his employment with Apple Inc. until further order of this court." Karas did not explain his reasons for the order, saying only that he would issue an opinion at a later date.  Friday's move was the result of an IBM motion for a preliminary injunction designed to block Papermaster's move to Apple. On Oct. 22, IBM sued Papermaster, claiming that a non-competition agreement he signed in 2006 bars him from working for competitors for a year after leaving the company. According to IBM, Papermaster had information of "highly confidential IBM trade secrets" that would "irreparably harm" the company if he's allowed to work for Apple…..(Computerworld, 9 Nov 08)

Von Roll USA settles claims against 4 former employees accused of espionage

Von Roll USA Inc. said Friday it has settled its lawsuit against four former employees it had accused of corporate espionage.  In a U.S. District Court filing last December, the Swiss-based company claimed the employees, including former Chief Executive Jack Craig, were using stolen information to set up a rival company, Craig Wire Products LLC.  The suit even claimed that the employees — the others were Brett Portwood, Brad Archambeau and Linda Belcher — remotely accessed confidential information on Von Roll computers in its plant in Rotterdam.

Belcher and Archambeau are former managers at Von Roll's Rotterdam plant, court papers say.  On Friday, Von Roll in a written statement said "all claims and counterclaims in the case have now been settled and the lawsuit will be discontinued in its entirety."…..(Times Union 8 Nov 08)

FBI Investigating Threat Against Express Scripts Customers

One of the nation's largest processors of pharmacy prescriptions said this week that extortionists are threatening to disclose personal and medical information about millions of Americans if the company fails to meet payment demands.  St. Louis-based Express Scripts said Thursday that in early October it received a letter that included the names, birth dates, Social Security numbers and, in some cases, prescription data on 75 of its customers. The authors threatened to expose millions of consumer records if the company declined to pay up, Express Scripts said in a statement.  Chief executive George Paz said in the statement that Express Scripts has no intention of paying and that his company is working with the FBI to track down those responsible for the scam…..(Washington Post, 8 Nov 08)

Ex-AMD employee allegedly stole $1B Intel secrets

A former Intel Corp. engineer has been charged with stealing trade secrets worth $1 billion from the chip maker while he worked for its main rival, Advanced Micro Devices Inc.  Federal prosecutors in Massachusetts alleged this week in a five-count indictment that Biswamohan Pani, 33, illegally downloaded more than a dozen confidential documents from Intel's computer system in California during a four-day stretch in June. He had already resigned from Santa Clara, Calif.-based Intel, but remained on the payroll and still had access to the company's computers while he burned unused vacation days.  What Pani's supervisors didn't know then is that instead of taking the time to investigate a hedge fund job Pani claimed he was considering, he had actually started working for AMD and for a brief period was on both companies' payrolls……(AP, 6 Nov 08)

Ex-Intel Corp engineer Biswamohan Pani indicted
A former employee of Intel Corp. who was charged with trade-secret theft in September was indicted by a federal grand jury yesterday on four additional counts of wire fraud regarding the alleged theft from Intel.   The indictment alleges the trade-secret information was worth $1 billion in research and development costs, and included mission-critical details about Intel’s processes for designing its newest generation of microprocessors.   Biswamohan Pani, 33, of 600 Main St., Apt. 2008, was a design engineer at Intel’s Hudson computer chip-making plant when he was hired by Intel rival Advanced Micro Devices Inc. in June, according to U.S. Attorney Michael J. Sullivan’s office. From June 8 through 11, Mr. Pani allegedly remotely accessed Intel’s computer system numerous times and downloaded 13 “top-secret” Intel documents, along with other confidential and proprietary information, the indictment states, including a document explaining how the encrypted documents could be reviewed when not connected to Intel’s computer system...Mr. Pani told investigators that he had taken the information to assist his wife, who is also an Intel employee.  But officials at Santa Clara, Calif-based Intel told investigators that his wife would not have worked with those documents.  Prosecutors allege that Mr. Pani planned to use the documents to advance himself at his new position at AMD……(Telegram & Gazette, 6 Nov 08)

Man indicted for stealing Intel trade secrets

Federal prosecutors in Massachusetts have charged a man who worked for Advanced Micro Devices Inc. (AMD) with stealing more than $1 billion worth of trade secrets from Intel Corp., according to a report Wednesday (Nov. 5) by the Boston Business Journal.  Biswamohan Pani, 33, allegedly took confidential documents while he worked for Intel, prior to joining AMD, according to the report.  Prosecutors said AMD was not aware of Pani's alleged theft….(EE Times, 6 Nov 08)

Ex-Intel worker charged with $1B IP theft

Prosecutors on Wednesday charged a Worcester, Mass. man with stealing trade secrets worth more than $1 billion. Biswamohan Pani, 33, was indicted for allegedly stealing trade secrets from Intel Corp.’s facility in Hudson, Mass., and downloading confidential documents from the company’s offices in California. Pani was hit Wednesday with four new counts after being initially charged on Aug. 28 with one count of theft of trade secrets.  According to the indictment, Pani gave notice to leave Intel (Nasdaq: INTC) and told his superiors he was using up about a week of vacation while looking for a job at a hedge fund.  In reality, according to the indictment, he had taken a job at Intel rival Advanced Micro Devices (NYSE: AMD) and, while using up vacation time at Intel, was downloading valuable trade secrets.  Over four days, the government alleges, he took information Intel characterized as “top secret.”  When the FBI searched Pani’s house on July 1, agents allegedly found eight documents described by Intel as “confidential,” “secret” or “top secret.”……(Boston Business Journal, 5 Nov 08)

October 2008

Three Charged with Illegal Export of Material to China Space Agency

Three people have been charged of conspiracy to export space and weapons materials to China illegally. The three men -- one of whom lives in New York, while the other two are in Singapore -- allegedly tried to send carbon fiber to the China Academy of Space Technology; one of several academies responsible for building satellites used by the Chinese government. There is growing concern that the Chinese space program could easily turn into a militarized space program capable of launching attacks from space.  China successfully destroyed an aging weather satellite in January, which worried officials from several western governments…..(Daily Tech, 30 Oct 08)

Singapore residents indicted for illegal export

For over a year, the company, Firmspace (Singapore), appears to have not had any business.

But it has not laid off any employees and was even able to pay its staff promptly, said its receptionist, who only wanted to be known as Ms Vera…Firmspace :lists research and development for electronics and photonics and general import and export as its business activities.  It emerged yesterday that two Singapore residents affiliated with Firmspace have been indicted in a United States court alongside a Chinese national charged with conspiring to export carbon-fibre material to a Chinese space agency that builds satellites and spacecraft. Carbon-fibre can also be used to enrich uranium, which in turn, can be used to develop nuclear weapons.  Today understands that Mr Ding Jian Wei is a supervisor at Firmspace, whileMr Lim Kok Tong left the company about one-and-a-half years ago. It is unclear if the men were employed in other companies. The third man, Chinese national Cheng Ping, is a US resident …The Associated Press reported that the two Singapore men allegedly ordered the carbon-fibre material from an unnamed company based in Minnesota, wiring large sums of money from Singapore to pay for the materials.  Mr Ding and Mr Lim are said to have shipped the materials from Minnesota to New York, where Mr Cheng was to inspect and store them.  None of the three employees working in Firmspace knew what was sustaining the business, Ms Vera said. But she stated that Firmspace had been “involved in a few projects” -- she didn’t know the nature of these projects, though -- since it stopped its import and export business, but none of them were successful.  According to media reports, the US Justice Department said the carbon-fibre material was headed to the Chinese Academy of Space Technology -- which builds satellites for the Chinese government.

TODAY’s checks revealed that Chinese nationals Mr Hou Xinlu and Mr Gao Xiang are listed as Firmspace’s directors. It is believed they are based in China.….(Today Online, 30 Oct 08)

iPod used as data stealing tool in Indian corporate espionage

…a rather bizarre example of corporate espionage, an iPod was used to steal data…in India. Investigators found that an iPod was used to beat a rival bid for a lucrative construction contract.  According to the Times of India, a construction firm was baffled at the close margin its bid for a tender lost. They figured it improbable that the winner of the contract could have come up with a sum so close to theirs, as if the rival had known the figure to beat.  Which was precisely the situation.   Investigations proved their suspicions correct – the documents had been leaked and soon the search was on to find the spy in their midst. Few were aware of the tender details and these were the most trusted individuals in the firm. Never had there been such an incident in the company’s history either.  Soon forensic tests revealed that a Universal Serial Bus (USB) port had been used to access the documents and from tests discovered the data had been downloaded…to an iPod. Said data was then passed on and sold to the rival company for a price, the data deleted from the iPod. But investigators managed to retrieve it with advanced software.  A similar case had also occurred where an IT company found its software source code stolen, an iPod also used to download the code and spread it to pirates. Neither case was publicized mentioning the companies’ names, however…So when even iPods can be used to steal data, it might soon herald a day when iPod users are persona non grata in firms with sensitive data to protect…..(Blorge, 30 Oct 08)

iPod as device for stealing data

Just a month ago, a Bangalore-based construction company lost a multi-crore tender by a thin margin. Baffled company officials vowed there was no way the rival firm could have come so near to their bid. Soon, investigation proved them right and it was found the tender documents were leaked. The company was in a dilemma to find the mole. Only a few persons were aware of the tender details and they were the most trusted ones. Also, such an incident had never happened in the company…..(Times of India, 29 Oct 08)

Corporate Espionage on the Rise

The scourge becomes common as criminals master the Internet and take advantage of lax security prevalent in companies.  In 2002, the war between Dell Computer and its rivals in the personal computer market was hotting up. Dell had made gains in market share with its cheaper PCs, which it sold direct to the end-user, obviating the costs and mark-ups associated with many of its competitors' dealer networks.  Now there were rumours that Dell was poised to enter the printer and peripheral market too. The PC giant would be going head-to-head with many established companies in this niche – including HP.  Galvanised into action, HP dispatched its 'competitive intelligence unit' to find out more about Dell's plans. It successfully managed to gain access to detailed information relating to Dell's soon-to-be-released printers.  The facts about HP's covert intelligence-gathering operation may have remained a secret, but they came to light last year (2007) in documents linked to a messy court battle – relating to another matter – involving HP and former employee Karl Kamb.  Kamb, according to legal documents, accused HP of hiring former Dell employees to supply information about the company's plans to enter the printer business back in 2002.  HP denied the accusations and the case was eventually dismissed, but the episode serves as a reminder of just how extensive, sophisticated and sometimes ruthless corporate 'snooping' operations can become…..(IT Web, 29 Oct 08)

Duo Charged In Hacking, Stealing Trade Secrets

Two former employees of a fashion industry company have been charged with computer hacking and stealing trade secrets.  Jeffrey White, 27, of Brooklyn and Morgan Gantt, 24, of Jersey City, NJ,  face charges arising out of an alleged scheme to hack into a computer network belonging to ENK International LLC (“ENK”) and to steal confidential business information from ENK.  White and Gantt are former employees of ENK, a trade show organization based in Manhattan that serves the fashion industry. ENK terminated White’s employment in July.  Gantt was terminated on Aug. 21 after ENK management learned through investigation that she was operating, during her ENK work hours, a temporary employment agency targeting exhibitors at fashion shows, including shows sponsored by ENK, and that Gantt was using ENK resources to operate her outside business.  As Gantt was preparing to leave ENK’s offices on the day she was fired, ENK management allegedly saw her remove a portable USB computer storage drive from her ENK computer. Gantt refused to turn over or show the contents of the USB drive to ENK management, and left ENK’s offices, prosecutors say… A forensic analysis was conducted of the contents of the ENK Blackberry device and the ENK computer Gantt used during the course of her employment at ENK. Gantt surrendered the ENK Blackberry device back to ENK the day her employment was terminated.  Prosecutors say the forensic analysis of the ENK Blackberry device revealed a series of text messages between Gantt and White on Aug. 13 in which White instructed Gantt to access and send certain ENK electronic documents to White’s personal e-mail address… The forensic analysis revealed another series of text messages between Gantt and White on or about Aug. 15,  in White instructed Gantt to download confidential ENK files to a USB storage device. An analysis of the ENK computer used by Gantt revealed that Gantt downloaded those files, which contain sensitive information relating to ENK’s trade show business.  They are charged with one count of conspiracy to commit unauthorized computer access, and one count of conspiracy to commit theft of trade secrets…..(North Country Gazette, 27 Oct 08)

Singapore residents indicted for illegal export

For over a year, the company, Firmspace (Singapore), appears to have not had any business.

But it has not laid off any employees and was even able to pay its staff promptly, said its receptionist, who only wanted to be known as Ms Vera … Firmspace lists research and development for electronics and photonics and general import and export as its business activities. It emerged yesterday that two Singapore residents affiliated with Firmspace have been indicted in a United States court alongside a Chinese national charged with conspiring to export carbon-fibre material to a Chinese space agency that builds satellites and spacecraft.  Carbon-fibre can also be used to enrich uranium, which in turn, can be used to develop nuclear weapons.  Today understands that Mr Ding Jian Wei is a supervisor at Firmspace, while Mr Lim Kok Tong left the company about one-and-a-half years ago. It is unclear if the men were employed in other companies. The third man, Chinese national Cheng Ping, is a US resident … The Associated Press reported that the two Singapore men allegedly ordered the carbon-fibre material from an unnamed company based in Minnesota, wiring large sums of money from Singapore to pay for the materials.  Mr Ding and Mr Lim are said to have shipped the materials from Minnesota to New York, where Mr Cheng was to inspect and store them. None of the three employees working in Firmspace knew what was sustaining the business, Ms Vera said. But she stated that Firmspace had been “involved in a few projects” -- she didn’t know the nature of these projects, though -- since it stopped its import and export business, but none of them were successful.  According to media reports, the US Justice Department said the carbon-fibre material was headed to the Chinese Academy of Space Technology -- which builds satellites for the Chinese government. TODAY’s checks revealed that Chinese nationals Mr Hou Xinlu and Mr Gao Xiang are listed as Firmspace’s directors. It is believed they are based in China.….(Today Online, 30 Oct 08)

3 indicted for illegal export to China space agency

The Justice Department has charged three men with allegedly conspiring to export carbon-fiber material to the Chinese agency that builds satellites and spacecraft. The government says the indictment, returned in federal court in Minnesota, underscores the rise in illegal exports of weapons, military equipment and national security technology to China and Iran. For the past two years, Iran was the top destination for restricted U.S. technology, the Associated Press says.  Of 145 people or companies charged with illegally exporting restricted technology last year, 43% were shipping to Iran and China. Of those, 74 involved Iran and 23 China. More than 60 defendants were charged with illegal exports to Mexico, mostly weapons.  This year has seen a 30% increase in violations… Today's indictment charged Jian Wei Ding, Kok Tong Lim and Ping Cheng with seeking to send carbon-fiber to the China Academy of Space Technology. Besides spacecraft and rockets, carbon fiber is also used to enrich uranium.  Jian Wei Ding and Kok Tong Lim are residents of Singapore and affiliated with a Singaporean import/export company known as FirmSpace, Pte Ltd. Ping Cheng is a resident of New York and the sole shareholder of Prime Technology Corporation…..(USA Today, 29 Oct 08)

Justice: Illegal exports to China, Iran, on rise

Illegal exports of weapons, military equipment and national security-related technology to potentially adversarial nations are on the rise, the Justice Department reported Tuesday. Of 145 people or companies charged with rogue shipments last year, nearly half — or 43 percent — were exporting goods to Iran and China. Federal prosecutors indicted three more men Tuesday for allegedly conspiring to export material used in space and weapons technology to an academy that builds satellites for the Chinese government…An estimated 74 exporters have been charged with sending goods to Iran over the last two years, and another 23 to China over the same period, said Justice spokesman Dean Boyd. Additionally, more than 60 defendants were charged with exports to Mexico — mostly arms shipments, Boyd said.  Tuesday's indictment, returned in federal court in Minnesota, charges Jian Wei Ding, Kok Tong Lim and Ping Cheng with seeking to send to China carbon-fiber material that can be used in rockets, satellites, spacecraft, and to enrich uranium. Highly enriched uranium can be used to develop nuclear weapons.  The Justice Department said some of the carbon-fiber material being exported in the case allegedly was headed to the China Academy of Space Technology. The academy builds satellites for the Chinese government…..(AP, 28 Oct 08)

Three Charged Today in Plot to Export Sensitive Technology to China Space Entity; New Counter-Proliferation Task Forces & Training Part of National Effort  (DOJ Press Release)

Fact Sheet: Major U.S. Export Enforcement Prosecutions During the Past Two Years 

Carbon-Fiber Material with Rocket & Spacecraft Applications to China – On Oct. 28, 2008, a grand jury in the District of Minnesota returned an indictment charging Jian Wei Deng, Kok Tong Lim, and Ping Cheng with conspiring to illegally export to the People’s Republic of China ( PRC ) controlled carbon-fiber material with applications in aircraft, rockets, spacecraft, and uranium enrichment process. According to the indictment, the intended destination for some of the materials was the China Academy of Space Technology, which oversees research institutes working on spacecraft systems for the PRC government. Jian Wei Ding and Kok Tong Lim are residents of Singapore and affiliated with a Singaporean import/export company known as FirmSpace, Pte Ltd. Ping Cheng is a resident of New York and the sole shareholder of Prime Technology Corporation. This investigation was conducted by BIS and ICE.....(DOJ)

Enterprises Face Losses From Trade Secret Thefts

Enterprises are stepping up efforts to counter spying operations that aim to steal their trade secrets, according to a former U.S. Federal Bureau of Investigation agent who now works for Xerox.  Companies such as Wal-Mart, DirecTV and Motorola have in recent years been victimized by employees or others who stole sensitive data, said David Drab, a principal in Xerox's information and content security services section. Drab spent 27 years in the FBI fighting organized crime and economic espionage.  "The payoffs are high and the risks of getting caught are low," Drab said.  A study by PricewaterhouseCoopers found that economic espionage costs the world's top 1,000 companies £22.4 billion (US$34.7 billion) annually, Drab said. Another study by the Society for Competitive Intelligence Professionals found companies spent $2 billion on spying activities in 2004.  "The secret of business is knowing something that no one else knows," Drab said. "That's hard to keep in this world. Keeping critical information is difficult to do."  Enterprises are victimized in a few different ways. One is "walk-offs," where employees steal data and found their own company. Another is "hire-offs" where other employees go and work for the one who stole the data. Those scenarios affected both Applied Materials and Qualcomm, Drab said. Airline manufacturer Boeing was damaged by an employee who was recruited by China to steal information on projects such as the Space Shuttle throughout the 1980s and early 1990s.  Spying operations are very difficult to detect, especially if the person who is carrying it out is professionally trained…..(PC World, 28 Oct 08)

Russian Arms Exporter Sanctioned Over Iran

The State Department has slapped financial sanctions on Russia's state arms exporter for its dealings with Iran, but in an unusual move, it granted the company a partial waiver to permit the sale of nearly two dozen Russian helicopters to Iraq, U.S. officials said yesterday.  The new sanctions -- required by U.S. law to thwart the sale of sensitive technology that could help Iran, North Korea and Syria develop weapons of mass destruction or missile systems -- were also imposed on 12 other companies or organizations based in China, Iran, North Korea, South Korea, Sudan, Syria, the United Arab Emirates and Venezuela.  Russian Foreign Minister Sergei Lavrov denounced the sanctions on Russia's Rosoboronexport, and its subsidiaries, as illegal and unjust. The company had been sanctioned by the United States in 2006 but would have come off the list had the State Department determined that it had not made any suspect sales in the past two years… State Department officials declined to specify why the companies were placed on the list, saying the reasons are classified.……(Washington Post, 25 Oct 08)

U.S. grand jury in San Diego indicted Iranian air force officer, but Thai court barred his extradition

A high-ranking Iranian air force officer facing charges of trying to export U.S. missile parts to Iran was released from custody after a Thai court denied his extradition. Jamshid Ghassemi, 57, was released after a Thai appellate court upheld rejection of the U.S. extradition request, U.S. authorities were told by Thai officials last week.  Ghassemi was charged in October 2006 by a federal grand jury in San Diego with conspiring to buy 12 accelerometers……(AP, 24 Oct 08)

Appellate court reverses Lufkin trade secret conviction

A Texarkana appellate court has reversed a Lufkin jury conviction of an Alto man, ordering he be acquitted of theft of trade secrets because of insufficient evidence.  The Texas Court of Appeals in the sixth district handed down the opinion Oct. 17, acquitting Frank McClain Jr. of stealing trade secrets from his former Lufkin employer, Didrikson and Associates, and throwing out his seven-year prison sentence. Didrikson and Associates, located on Denman Avenue, is a company that services the petrochemical and pipeline industries.  The opinion stated materials, known as backsheets, that McClain took from his employer to open a competing company are not trade secret, which was the basis of the evidence used to convict McClain in 2006. An Angelina County state district judge later sentenced him to seven years in prison……(Lufkin Daily, 23 Oct 08)

How to prevent cyber espionage

This column is about computer-based espionage and how we can defend our organizations against it. But I'd like to start with a mood piece of sorts.  There has been too much noise about information warfare lately. Distributed denial of service and defacement attacks like what happened in Estonia and Georgia come to mind.  The following two stories give a better understanding of what it is really about…The first is a report (without much detail or proof) on North Korea being involved in operations against South Korea using Trojan horses for espionage. The second is a lesson from history called the Farewell Dossier - a collection of intelligence documents KGB defector Colonel Vladimir Vetrov (code-named Farewell) handed over to NATO during the Cold War.  This information led to a mass expulsion of Soviet technology spies. The CIA also mounted a counter-intelligence operation that transferred modified hardware and software designs over to the Soviets, resulting in the spectacular trans-Siberian incident of 1982, in which a huge explosion ripped apart a trans-Siberian pipeline. The resulting explosion was so big, it was supposedly confused for a nuclear explosion by American decision makers until the CIA said, "Oh, that's one of our operations."  It wasn't a bomb that destroyed the natural gas pipeline and sent shock waves through the economy of what was then the Soviet Union. Instead, it was a software virus created by the CIA, according to a book by Thomas Reed, a former US Air Force secretary and National Security Council member....(Computerworld, 23 Oct 08)

Spy Camera Pass Card ideal for Industrial Espionage

The Hong Kong gadget shop Brando is always good for some unique gadget to show up in their offering. The Spy Camera Pass Card even has a questionable purpose.  Many companies or service employees wear security pass cards. This Spy gadget hides behind such official looking card.  With this Spy card you can capture still photo, record video and audio onto built-in 4GB of storage.  So in case you want to uncover some environmental scandal or steal company secrets like how the T-Mobile G2 looks like or the iPhone 4G this gadget is for you. The Spy Pass Card Micro Camera is available on Brando for $174.…..(I4U, 23 Oct 08)

Google Told To Reveal Gmail 'Spybox' Account Info In CTO Espionage Case

In a legal battle to document the alleged industrial espionage of its former chief technology officer, iMerge.nl has obtained a court order requiring Google to release information associated with a Gmail "spybox." IMerge is an e-commerce business incubator based in the Netherlands.  "The suspect was, until September 2006, active as CTO, and had designed the [company's] security network," said Martijn Hoogeveen, CEO of iMerge, in an e-mail. "It is always very difficult to protect against the threat from within."  The former CTO, Hoogeveen claims, had installed a "backdoor" server in the company's hosting center. Although the company had changed all the passwords when the suspect left the company, the backdoor server went undetected. It was revealed when a subsequent network audit showed that financial information had been copied to the server. It turned out that the server had been set up to forward information from a corporate director's mailbox to the so-called spybox, a Gmail account used as a document drop.  Hoogeveen said he'd had suspicions about the CTO, a former partner, for some time because the suspect had been harassing people associated with the company with information that he shouldn't have known……(Information Week, 20 Oct 08)

Beware of spies, Govt agencies told

Government agencies should weigh up the risks to security and New Zealand's wider economic interests before outsourcing IT systems overseas, says the State Services Commission.  The commission has been developing guidelines for agencies considering "off shoring" information processing for 18 months.  An IT industry executive at one multinational says the upshot is that while departments could send processing overseas, it would probably be easier for them to "pass their data centres through the eye of a needle".  Commission spokesman Jason Ryan says the advice stresses the dangers of off shoring, but also sets out how they could be managed.  "That was the intention - to make people well aware of what the risks were and how they could think about mitigating them."  The biggest supplier of IT services to the Government, EDS New Zealand, now a division of Hewlett-Packard, says the framework gives agencies a tool to weigh up the risks. "In the business world, it is accepted that sending work offshore can provide an opportunity to improve service delivery and reduce costs."  But the commission says agencies should create a risk report and look at the "worst case scenario". Risks include industrial espionage, "intelligence-gathering by foreign governments" and the difficulty of enforcing privacy and legal rights in overseas jurisdictions…..(Business Day, 20 Oct 08)

SAP Asks Judge to Dismiss Some Oracle Claims

The latest chapter in the legal saga surrounding Oracle's claims of industrial espionage against SAP today saw the defendant calling for a dismissal of some of the claims filed by Oracle earlier this month.  In a motion filed today, SAP (NYSE: SAP) argued that many of Oracle's (NASDAQ: ORCL) claims in its third amended complaint, which Oracle filed Oct. 8, do not meet legal requirements applicable in U.S. courts.  The move aims to undercut Oracle's claims of copyright infringement. SAP said in its filing (available here in PDF format) that Oracle's initial complaint from March 2007 did not include a copyright infringement claim……(Internet News, 16 Oct 08)

Intelligence Probing Dollar Reserves of Top 4 Companies

President Lee Myung-bak has warned companies against hoarding dollars after receiving a report from the National Intelligence Service.  Sources close to intelligence and large domestic corporations said yesterday that the service probed alleged foreign currency speculation by the country’s four largest companies. The report was then relayed to the presidential office of Cheong Wa Dae.  Since then, intelligence officials have delivered the president’s message of urging the four corporations to prevent the won from depreciating further…Questions have arisen, however, over the role of the spy agency, which is known to have asked certain state-run and private companies to submit reports on their financial support for civic organizations under the previous administration.

Lawyer Jang Yu-shik said, “The National Intelligence Service Act stipulates that the role of national intelligence is limited to gathering, writing and distributing security intelligence (prevention of the overthrow of the government and espionage, anti-terrorism, and fighting international criminal rings). In efforts to prevent espionage, the National Intelligence Agency is only allowed to collect intelligence on corporations to catch industrial spies.”….(Donga, 15 Oct 08)

United States: Baton Down The IT Hatches When It Comes To Exiting Employees

Companies apparently need to be afraid - very afraid - and must be very careful when dealing with exiting employees who have knowledge of corporate information technology.  Indeed, according to a recent survey by Cyber-Ark Software, as many as 88% percent of IT administrators, if laid off tomorrow, would abscond with sensitive company information. Such information includes high-level and privileged passwords, customer databases, R & D plans, financial reports, HR records and merger and acquisition plans.  Privileged password lists are particularly problematical, as they provide the keys to unlock access to information residing on corporate networks. And of the group that said that they would abscond with company information, one-third stated that they would take the privileged password lists.  Because of the danger presented by departing IT personnel who still might be able to access corporate networks, it is important to "secure passwords and related identities as much as possible. Furthermore, passwords should be changed regularly…..(Mondaq, 10 Oct 08)

Treasury Official's Speech on Increased Sharing of AML/CFT Information Domestically and Globally  (Treasury)

China’s Ambition – Eclipse America in Space

…Beijing's space ambitions are an indicator that China is serious about becoming a "peer competitor" to the United States. Some commentators have belittled the Chinese effort as being far behind the achievements of the America space program. Yet, no one else besides the Russians - not even the supposedly more advanced Japanese or Europeans, has accomplished these feats…The problem is not just that China is rising, but that America is falling. NASA will have no way to fly its astronauts into space after the shuttles are retired in 2010, because a replacement spacecraft will not be ready until at least 2015. America will have to pay Russia to supply the international space station…The NASA shuttles were designed in the 1970s. Their onboard computers have been outpaced by what is available to teenagers in their home video game systems. Their engines and structural features predate the leaps in engineering and material science that have taken place in recent decades. The U.S. has been running on momentum, rather than any new energy or desire. The technology now available to a new entrant like China could close the gap in capabilities very quickly. Indeed, the day before the Shenzhou VII, the FBI arrested Shu Quan-Sheng, Chinese-born physicist in Newport News, Virginia, on charges of illegally exporting space launch technical data and services to China beginning in 2003. Shu Quan-Sheng, a naturalized U.S. citizen, was accused of being part of China's "systematic effort to upgrade their space exploration and satellite technology capabilities by providing technical expertise and foreign technology acquisition," according to an FBI statement…..(FSM, 9 Oct 08)

Thailand cannot extradite suspected arms dealer to U.S. - lawyer

A Russian lawyer for a suspected Russian arms dealer detained in Thailand said the United States has no chance of securing his extradition under Thai law.  Viktor Bout, 41, was arrested in March in Bangkok during a joint police operation led by agents from the U.S. Drug Enforcement Administration (DEA).  "As a lawyer I can say with certainty that if the case is reviewed [by Thai court] in line with the law, there is no chance for his extradition whatsoever," Yan Dasgupta said.  DEA prosecutors claim that Bout conspired with others to sell millions of dollars worth of weapons to the Revolutionary Armed Forces of Colombia (FARC), a leftist group listed by the United States as a terrorist organization.  Thailand received in early May a formal request from Washington to extradite Bout to the United States, where he has been indicted on four charges: conspiracy to kill Americans and U.S. officers or employees, conspiring to provide material support to terrorists, and conspiring to acquire and use an anti-aircraft missile….(RIA Novosti, 9 Oct 08)

White House has faced several setbacks in its attempts to extradite Iranians accused of illegally seeking arms and military equipment for Tehran

An aggressive Bush administration campaign to block arms sales to Iran has been dealt a series of setbacks by the refusal of some foreign governments to turn over alleged arms dealers arrested in undercover U.S. law enforcement stings…These cases have frustrated Bush administration officials, who view the accused arms suppliers as part of a vast overseas network that is providing dangerous weapons to the Tehran regime. Though the arrests of the arms dealers do not involve alleged exports of nuclear technology to Iran, they are part of an extensive campaign by the White House to curb Iran's ability to obtain equipment which could be useful either for related military programs—such as its effort to develop longer-range missiles; or to its efforts to maintain and modernize its military forces, which have been decaying since the imposition of sanctions by the United States following the fall of the Shah in 1979.  Tehran is clearly playing hardball with Washington and foreign governments over these cases, U.S. officials believe. Details of arguments the Iranian government made to Thai authorities, in pressing for the recent release of the accused missile-parts smuggler Ghassemi, are contained in an affidavit obtained by NEWSWEEK which was submitted to the Thai courts earlier this year by the Iranian's defense lawyer, Kittipong Kiettanapoom…..(Newsweek, 8 Oct 08)

Industrial Espionage Takes Toll on Korean Industries

Industrial espionage is a serious growing problem for Korean companies. According to the Ministry of Knowledge Economy there were 124 leaks of industrial technology to overseas companies from 2003 to 2007, resulting in losses estimated at over W187 trillion (US$1=W1,329).  This year through July 27, cases were filed with losses already totaling about W1 trillion.  Of all cases filed during the past five years, most came from the electronics industry, followed by information technology, precision instruments, and biotechnology. Most leaks were attributed to former or current employees….(Chosun, 8 Oct 08)

TUF hit with $4.5m trade-secrets theft verdict in US

Thai Union Frozen Products Plc (TUF) and two of its units have been ordered to pay a US food company $4.5 million plus legal fees in a trade-secrets case. Contessa Premium Foods Inc sued two of its former employees and TUF for trade-secret theft in California state court in Los Angeles in February 2006.  Globally, TUF's tuna-canning business is second in size only to that of San Francisco-based Del Monte Foods Co.  The court found that Bryan Rosenberg, TUF's former managing director of sales, and Brenden Beck, the former regional sales manager for retail for TUF, used Contessa sales calls to sell frozen food products made by competing companies.

They were also accused of using Contessa resources to develop design, products, promotional materials, marketing strategies and sales presentations for competitors…..(Bangkok Post, 7 Oct 08)

Man charged in Sweden with espionage against Saab

Swedish prosecutors have charged a man with industrial espionage and extortion against aerospace and defense company Saab AB.  The 48-year-old man was a consultant in 2006 when he allegedly obtained confidential documents belonging to Saab's radar systems unit, Saab Microwave Systems.  The charges filed Monday say he demanded $2.3 million to return the documents and received about one-third of that amount.  Prosecutors say the documents contained secret information about Sweden's defense which could have damaged the country if revealed to a foreign power. They say he is not believed to have passed on the documents…..(AP, 6 Oct 08)

Engineer charged in Saab blackmail case

Formal charges were filed on Monday against a 48-year-old engineer who has been held since July on suspicions of industrial espionage against Saab Microwave Systems in Gothenburg.  Other charges filed by prosecutor Tomas Lindstrand include unauthorized possession of classified information, blackmail, and attempted blackmail…According to the indictment, between December 2007 and July 2008, the engineer tried to convince representatives from Saab to pay him $2.3 million for three separate documents.  He threatened to sell the documents if he didn’t receive the money.  Per the man’s instructions, one third of the money, was placed in a bat which was delivered by a taxi driver on July 10th to a park area in Guldheden in Gothenburg.  The engineer showed up to the drop off point partially disguised and was eventually arrested…..(Local, 6 Oct 08)

Fake Electronic Components Cause Military Malfunctions, Possibly International Espionage

BusinessWeek reports that counterfeit hardware has been found to be the cause of several malfunctions in high-level military machinery. The phony infiltration has a distinct possibility of leading to espionage or sabotage. In other words, move over, Meizu M8: you're not the biggest faker in town anymore.  Several crashes of military aircraft can be attributed to knockoff chips, but more insidiously, internal military data might be at risk. Melissa E. Hathaway, a head of cybersecurity at the FBI, says, "Counterfeit products have been linked to the crash of mission-critical networks, and may also contain hidden 'back doors' enabling network security to be bypassed and sensitive data accessed [by hackers, thieves, and spies]." Robert P. Ernst, who investigates counterfeiting for the U.S. Navy, estimates that 15% of the spare or replacement microchips bought by the Pentagon are fake. Where do these parts actually come from?  Made in, as BusinessWeek colorfully puts it, the "Chinese hinterland," a lot of these components are made on the cheap and sold to the government for much less than name-brands can offer. To be fair, no evidence of terrifying espionage has been found; all of the problems are due to crappy chips failing to work at the worst times, which really should have been expected, since the military has been paying half the price for the same product……(Gizmondo, 4 Oct 08)