Category Archives: Digital Forensics

Cyber-thieves increasingly aiming at cellphones

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Addicted as we are to our online life and our mobile devices, it’s no surprise that a growing number of cybercriminals are lurking out there with us.

Their newest target is right in our hands: our cell phones.

Complaints of cybercrime topped 314,000 in 2011 — up 3.4 percent from the prior year, according to a report issued Thursday by the Internet Crime Complaint Center, a partnership of the FBI, the National White Collar Crime Center and the U.S. Department of Justice.

Online crime occurs in varied forms, from identity theft that uses personal information to commit fraud, to phony job schemes involving bad check deposits, to “romance scams” that seduce the lovelorn to send money to a pseudo-suitor. Nationwide, the average victim who filed a complaint last year was duped out of $4,187, reported the Internet complaint center.

The FBI said the most common scams are identity theft, advance-fee and nondelivery scams. For instance, victims can be defrauded on Craigslist by sending money for items that never arrive or by applying for job offers that involve wire transfers of phony checks.

Cybercrime is thought to be a much larger problem than the numbers released Thursday suggest. Internet crime is “grossly underreported” nationally, said William Hinerman, the crime center’s unit chief. “We know there are tens of millions of computer users in the United States, and everybody who gets email gets spam.”

In announcing the annual Internet crime statistics, the center’s deputy director, Ken Brooks, said he was excited by the increase in complaints because it means more Americans are aware of online crime and realize they have somewhere to report it.

California, the nation’s most populous state, posted the highest total number of Internet crime complaints last year, with 34,169. Next came Florida, then Texas, New York and Ohio.

On a per-capita basis, however, California was No. 13 in the nation. Based on complaints per 100,000 population, the most fraud was reported in Alaska, the District of Columbia, New Jersey, Nevada and Colorado.

California ranked last in reported losses per 100,000 population, at $14.73. That compares with Washington, D.C., which was No. 1 with $1,119.70 in losses per 100,000 people.

While cybercrime has been around for years, the newest frontier for scam artists is mobile phones, the Internet crime center said.

It’s fertile territory. According to a recent Pew survey, about 83 percent of U.S. adults have a cellphone. An estimated 42 percent of those have smartphones that can access email and the Internet.

Michael Parker, a retired rancher in Sacramento, Calif., has already seen cyber-thieves sneak onto his T-Mobile cellphone. Last month, he had two text messages, purportedly from Wal-Mart, declaring he’d “won” a $1,000 gift card. To claim his prize, he was instructed to click on a website.

Parker didn’t bite. “Being a cynic helps,” he said. “I’m not a Walmart shopper, so that was one tipoff it was a scam.”

Instead of clicking on the link, he called a local Walmart manager to ask if the discount chain was giving out gift certificates by cellphone. The manager, Parker said, was “shocked, dismayed and not happy” to hear about the attempted scam, which likely was an attempt to install malware on Parker’s computer or trick him into giving out bank account or other financial information.

Parker also reported the phony texts to the Sheriff’s Department and signed up his cellphone for the national “Do Not Call” registry at www.donotcall.gov .

Romance scams proved especially lucrative for scammers last year, according to complaint center statistics. At a rate of 15 complaints a day, the scams saw reported losses of roughly $138,000, or more than $5,700 every hour. The average victim’s loss: $8,900.

How can you protect yourself from being swindled? The FBI’s Bryant said individuals should “never give out any personal or financial information over the phone or Internet, unless he or she has personally initiated the communication.”

Do your homework to verify the source of any online offers or official-sounding requests for your personal account information. In general, be skeptical of anything that sounds too good to be true.

Cyber-thieves increasingly aiming at cellphones.

SoCal Manager of International Computer Hacking Ring Sentenced to Five Years in Federal Prison for Defrauding Banks

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A principal figure in the domestic arm of an international “phishing” operation that used spam e-mails and bogus websites to collect personal information used to defraud American banks was sentencing this morning to five years in federal prison.

Nichole Michelle Merzi, 26, of Oceanside, was sentenced in the fraud case by Senior United States District Judge Terry J. Hatter, Jr.

After a six-week trial last year, Merzi was found guilty of bank and wire fraud conspiracy, aggravated identity theft, computer fraud conspiracy, and money laundering conspiracy charges.

Along with her then-boyfriend—Kenneth Joseph Lucas, II—Merzi was a lead defendant named in an indictment returned in the fall of 2009 as part of Operation Phish Phry, a multinational investigation conducted in the United States and Egypt that led to charges against 100 individuals—the largest number of defendants ever charged in a cybercrime case. As a result of Operation Phish Phry, 47 people have been convicted in federal court in Los Angeles. Lucas was sentenced in 2011 in two federal cases—one stemming from the phishing scheme and one from a indoor marijuana grow operation that he constructed—to a total of 13 years in federal prison (see: http://www.justice.gov/usao/cac/Pressroom/2011/092.html).

Operation Phish Phry revealed how Egyptian hackers obtained bank account numbers and related personal identification information from bank customers through phishing—a technique that involves sending e-mail messages that appear to be official correspondence from banks or credit card vendors. Bank customers who received the spam e-mails were directed to phony websites purporting to be linked to financial institutions, where the customers were asked to enter their account numbers, passwords, and other personal identification information. Because the websites appeared to be legitimate—complete with bank logos and legal disclaimers—the victims did not realize that the websites were not related to legitimate financial institutions.

Armed with the bank account information, members of the conspiracy hacked into accounts at two banks. Once they accessed the accounts, the individuals in Egypt coordinated transfers of funds from the compromised accounts to newly created fraudulent accounts and other accounts used as part of the scheme. “Records at trial show that, from February 2008 through September 2008, defendant [Merzi] opened numerous BOA [Bank of America] accounts in her name at a variety of branches, and the amount of unlawful ‘phishing’ transfers into those accounts alone was $14,000,” prosecutors wrote in a sentencing memorandum filed with the court. From October 2008 to early 2009, Merzi and Lucas also had the individuals in Egypt make unlawful transfers from phished accounts to other fraudulent accounts opened in Southern California and elsewhere.

The United States part of the ring was overseen by Lucas, who directed associates to recruit “drops” to set up and use bank accounts where stolen funds could be held. A portion of the illegally obtained funds were transferred via wire services to the Egyptian co-conspirators. When Lucas was sentenced, a federal judge determined the total amount of intended loss in the case was more than $1 million.

“The harm done by [Merzi]’s activities is undisputed,” according to the goverment’s sentencing memo. “Although BOA and Wells Fargo reimbursed the individual victims whose accounts were compromised, it is undeniable that the scheme affected a large number of victims,” given that the illegal phishing transfers “occurred in amounts around $1,000 at a time.”

Marzi has been in custody since she was found guilty at trial in March 2011.

The investigation in the United States was conducted by the Federal Bureau of Investigation, which received support from the Electronic Crimes Task Force in Los Angeles and the Social Security Administration’s Office of Special Investigations.

FBI — SoCal Manager of International Computer Hacking Ring Sentenced to Five Years in Federal Prison for Defrauding Banks.

Courts grapple with how to use computer data as evidence

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The headlines were as much about the evidence a London, Ont., jury never heard as they were about the evidence used to convict child-killer Michael Rafferty.

Disturbing web searches and downloads from his laptop were kept from the jury that still convicted him of the murder of eight-year-old Victoria (Tori) Stafford. The exclusion had to do with the search warrants police had obtained for his two addresses, which did not separately cover his laptop. The move reflected an emerging point of law that computers and other digital devices contain so much personal data that police need special permission to sift through them.

It’s the latest in a stream of cases that illustrate the legal world’s struggle to adapt long-held principles to a rapidly changing digital age. Judges, police and lawyers are facing a shifting legal landscape as the justice system grapples with the question of when and whether the vast amounts of data stored on computers and smartphones can be used in court.

At issue is how to preserve constitutional rights to privacy and to the protection from unreasonable searches in the face of the exponential growth in valuable data that now sits on your iPhone or laptop for the taking.

Every e-mail or text you send, everything you buy or search for online, is silently filed electronically. The question of who can use that information extends into almost every possible court fight, not just high-profile criminal trials: wrongful dismissal cases, insurance claims and child-custody battles. And it is an area of the law that is shifting quickly, although not as quickly as the technological change driving it.

The ruling that excluded Mr. Rafferty’s laptop followed a 2009 decision in the trial of Chris Little, a Markham man charged with a double murder, that faulted police for failing to obtain a second warrant to examine the contents of his cellphone, which they had seized from the murder scene. At the core of both cases is the notion that a laptop or smartphone, because of its vast stores of data about every portion of its owner’s life, is not just another object that can be picked up in a police search. It is now legally considered another “place” to be searched, and police must be specific about the information they are seeking there.

“You can see them as portals to vast amounts of information,” said Abby Deshman, a lawyer with the Canadian Civil Liberties Association. “The privacy implications of giving police an untrammelled right to sift through personal details on a home computer are quite vast.” Ms. Deshman points out that police can still get access to a suspect’s computers and smartphones – they just have to get proper warrants, proving that they believe relevant evidence is there to be found.

Other cases that confront new problems are working their way through the system. The Supreme Court of Canada is poised to hear a challenge of an Ontario Court of Appeal ruling that said a high-school teacher from Sudbury, Ont., was entitled to a right to privacy on a work-issued laptop where it is alleged that nude pictures of an underage student were found. The appeal court ruling appeared to upend an established notion in employment law that work computers and cellphones, and the data on them, are the property of the employer.

Meanwhile, the case of a Toronto man accused in a gunpoint robbery is headed to the Ontario Court of Appeal, as the defence tries to have photos from the man’s cellphone – seized by police when he was arrested – thrown out. And last year, the province’s appeal court ruled that the Crown could pursue charges based on child pornography found on a seized computer, despite the fact that the initial search was in connection with fraud allegations.

High-profile cases have been vexing U.S courts as well. Just this week, a New Jersey court ruled that a trucker accused of smuggling marijuana did not have to hand over his BlackBerry password to police, although a recent federal court ruling allows police to search cellphones without a warrant. The New York Court of Appeal also ruled this week that merely viewing child pornography online was not the same as possessing it, throwing out a conviction.

The law may differ on both sides of the border, but one thing is clear: The courts are in a constant state of rewriting the rules.

“I don’t think it’s about reinventing the wheel. I think courts are going to have to adopt … a ‘living tree’ approach, where they revisit all these questions in light of dynamic change,” said University of Ottawa law professor Karen Eltis, author of Courts, Litigants and the Digital Age.

Having the government try to legislate new rules would be pointless, she adds: “By the time the ink dries, and the political compromises are reached, the law is probably outdated.”

Courts grapple with how to use computer data as evidence – The Globe and Mail.

For Hudson Jurors, Cell Phone Forensics Were Key

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It all came down to cell phone records.

With a mountain of circumstantial evidence to consider, the twelve jurors who convicted William Balfour on Friday said they needed to understand the chain of events in order to see the case more clearly. They were able to do that, they said, with testimony from a forensic investigator who helped triangulate the location of Balfour’s phone on the morning that Oscar-winning actress Jennifer Hudson‘s mother and brother were found slain.

“Once we were able to piece the timing together, where we realized that he could not be at two places at one time… We were able to put a timeline together,” said juror Paula Holcomb “At such and such a time he was here, at such and such a time he was here, at such and such a time the phone was no where on the radar.”

Jurors deliberated for three days before reaching their verdict against Balfour, a former gang member who was the estranged husband of Hudson’s sister at the time of the murders.

Just an hour before their unanimous verdict on all counts, they sent a note to the judge that three jurors still weren’t fully convinced of his guilt.

“There were three of us who just needed to see the picture a little clearer,” said juror Jacinta Gholston.

Jurors told reporters afterward that their deliberations were thorough and cordial, and that Jennifer Hudson‘s celebrity didn’t influence them.

“This wasn’t a case about Jennifer Hudson for us,” said Gholston. “This was a case about William Balfour, and so for us her celebrity really had nothing to do with it. It’s unfortunate that it was her family, but this was not, for us, the Jennifer Hudson case. This was the people of Illinois against William Balfour.”

The jury foreman said he hoped the verdict would bring Hudson closure.

“I hope she can put this thing behind her and get on with the rest of her life,” Robert Smith, a 47-year-old employee at Chicago Public Schools told reporters outside court.

The jurors said the case was a difficult one to consider and conceded that they even felt sorry for the man whose fate they held in their hands. Balfour’s 31st birthday was Thursday.

“Some of us tried to make him innocent, but the facts and everything just wasn’t there. We tried. That’s what took us so long. We had to pick everything apart. … at some points we all did feel sorry for him,” said juror Tracie Austin.

For Hudson Jurors, Cell Phone Forensics Were Key | NBC New York.

Electronic Evidence Could Track Down Hackers

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A council in Wales has called in computer experts to determine whether hackers left behind any evidence.

Llanelli Town Council‘s website was hacked and during the period showed the Libyan flag, the Llanelli Star reported.

The council is hiring experts to try and establish where the attack originated, as well as finding out if any electronic evidence has been left behind by the hackers.

“I would like to identify if any information has been secured by the hackers and will refer the matter to the police if it has been,” council leader Carl Lucas told the source.

He explained that he did not believe the council were the only site to be targeted but sought to put minds at rest by stating there were no personal detailed collected or stored on the website.

When files are accessed it lays down a digital footprint that can be used as evidence.

Electronic Evidence Could Track Down Hackers | DFI News.

Interpol to Crack Down on Cyber Crime

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Interpol said it is making the war against cyber crime a main priority this year as online fraud crosses borders and increases in scope.

Khoo Boon Hui, president of the global police network, told a conference of 49 European member states that cyber crime is becoming more transnational. He pointed to a study published in March by the London Metropolitan Univ. that found 80 percent of online crime is connected to cross-border organized gangs.

“Organized crime is now able to recruit members from countries without diplomatic ties to commit crimes overseas operating from temporary safe bases in third countries equipped with the latest technology,” he said.

Hui said Malaysian police last month arrested more than 200 cyber criminals from China and Taiwan who operated online scams through two syndicates under the instructions of a common Taiwanese boss.

By using temporary safe bases around the far East, the online scammers netted billions of dollars via soccer and gambling websites along with credit card and bank fraud schemes, he said. He said hackers even penetrated the Interpol website this year.

Hui said cyber crime costs Europe about 750 billion euros, or more than $977 billion, a year. Israel alone deals with more than 1,000 Web attacks a minute, he said.

To help train police worldwide in online law enforcement, Hui said Interpol will open a cyber crime and digital security complex in Singapore in 2014.

This week’s conference also addressed other issues including international terrorism, the drug trade and human trafficking.

Source: The Associated Press, Daniella Cheslow

Interpol to Crack Down on Cyber Crime | DFI News.