Entries Tagged "crime"

Page 12 of 39

The Business of Botnets

It can be lucrative:

Avanesov allegedly rented and sold part of his botnet, a common business model for those who run the networks. Other cybercriminals can rent the hacked machines for a specific time for their own purposes, such as sending a spam run or mining the PCs for personal details and files, among other nefarious actions.

Dutch prosecutors believe that Avanesov made up to €100,000 ($139,000) a month from renting and selling his botnet just for spam, said Wim De Bruin, spokesman for the Public Prosecution Service in Rotterdam. Avanesov was able to sell parts of the botnet off “because it was very easy for him to extend the botnet again,” by infecting more PCs, he said.

EDITED TO ADD (11/11): Paper on the market price of bots.

Posted on November 4, 2010 at 7:04 AM • View Comments

Control Fraud

I had never heard the term “control fraud” before:

Control fraud theory was developed in the savings and loan debacle. It explained that the person controlling the S&L (typically the CEO) posed a unique risk because he could use it as a weapon.

The theory synthesized criminology (Wheeler and Rothman 1982), economics (Akerlof 1970), accounting, law, finance, and political science. It explained how a CEO optimized “his” S&L as a weapon to loot creditors and shareholders. The weapon of choice was accounting fraud. The company is the perpetrator and a victim. Control frauds are optimal looters because the CEO has four unique advantages. He uses his ability to hire and fire to suborn internal and external controls and make them allies. Control frauds consistently get “clean” opinions for financial statements that show record profitability when the company is insolvent and unprofitable. CEOs choose top-tier auditors. Their reputation helps deceive creditors and shareholders.

Only the CEO can optimize the company for fraud.

This is an interesting paper about control fraud. It’s by William K. Black, the Executive Director of the Institute for Fraud Prevention. “Individual ‘control frauds’ cause greater losses than all other forms of property crime combined. They are financial super-predators.” Black is talking about control fraud by both heads of corporations and heads of state, so that’s almost certainly a true statement. His main point, though, is that our legal systems don’t do enough to discourage control fraud.

White-collar criminology has a set of empirical findings and theories that are useful to understanding when markets will act perversely. This paper addresses three, interrelated theories economists should know about. “Control fraud” theory explains why the most damaging forms of fraud are situations in which those that control the company or the nation use it as a fraud vehicle. The CEO, or the head of state, poses the greatest fraud risk. A single large control fraud can cause greater financial losses than all other forms of property crime combined they are the “super-predators” of the financial world. Control frauds can also occur in waves that can cause systemic economic injury and discredit other institutions essential to good government and society. Control frauds are commonly able to defeat for several years market mechanisms that neo-classical economists predict will prevent such frauds.

“Systems capacity” theory examines why under deterrence is so common. It shows that, particularly with respect to elite crimes, anti-fraud resources and willpower are commonly so limited that “crime pays.” When systems capacity limitations are severe a “criminogenic environment” arises and crime increases. When a criminogenic environment for control fraud occurs it can produce a wave of control fraud.

“Neutralization” theory explores how criminals neutralize moral and social barriers that reduce crime by constraining our decision-making to honest enterprises. The easier individuals are able to neutralize such social restraints, the greater the incidence of crime.

[…]

White-collar criminology findings falsify several neo-classical economic theories. This paper discusses the predictive failures of the efficient markets hypothesis, the efficient contracts hypothesis and the law & economics theory of corporate law. The paper argues that neo-classical economists’ reliance on these flawed models leads them to recommend policies that optimize a criminogenic environment for control fraud. Fortunately, these policies are not routinely adopted in full. When they are, they produce recurrent crises because they eviscerate the institutions and mores vital to make markets and governments more efficient in preventing waves of control fraud. Criminological theories have demonstrated superior predictive and explanatory behavior with regard to perverse economic behavior. This paper discusses two realms of perverse behavior the role of waves of control fraud in producing economic crises and the role that endemic control fraud plays in producing economic stagnation.

EDITED TO ADD (11/11): Related paper on the effects of executive compensation on the abuse of controls.

Posted on November 1, 2010 at 6:02 AM • View Comments

Electronic Car Lock Denial-of-Service Attack

Clever:

Inspector Richard Haycock told local newspapers that the possible use of the car lock jammers would help explain a recent spate of thefts from vehicles that have occurred without leaving any signs of forced entry.

“We do get quite a lot of car crime in the borough where there’s no sign of a break-in and items have been taken from an owner’s car,” Inspector Haycock said. “It’s difficult to get in to a modern car without causing damage and we get a reasonable amount of people who do not report any.

“It is a possibility that central locking jamming is being used,” he added.

Devices that block the frequency used by a car owner’s key fob might be used to thwart an owner’s attempts to lock a car, leaving it open for waiting thieves. A quick search of the internet shows that devices offering to jam car locks are easily available for around $100. Effectiveness at up to 100m is claimed.

I thought car door locks weren’t much of a deterrent to a professional car thief.

EDITED TO ADD (10/22): The thieves are not stealing cars, they’re stealing things left inside the cars.

EDITED TO ADD (11/10): Related paper.

Posted on October 21, 2010 at 2:07 PM • View Comments

Cloning Retail Gift Cards

Clever attack.

After researching how gift cards work, Zepeda purchased a magnetic card reader online, began stealing blank gift cards, on display for purchase, from Fred Meyer and scanning them with his reader. He would then return some of the scanned cards to the store and wait for a computer program to alert him when the cards were activated and loaded with money.

Using a magnetic card writer, Zepeda then rewrote one of the leftover stolen gift card’s magnetic strip with the activated card’s information, thus creating a cloned card.

Posted on August 13, 2010 at 7:36 AM • View Comments

Violating Terms of Service Possibly a Crime

From Wired News:

The four Wiseguy defendants, who also operated other ticket-reselling businesses, allegedly used sophisticated programming and inside information to bypass technological measures—including CAPTCHA—at Ticketmaster and other sites that were intended to prevent such bulk automated purchases. This violated the sites’ terms of service, and according to prosecutors constituted unauthorized computer access under the anti-hacking Computer Fraud and Abuse Act, or CFAA.

But the government’s interpretation of the law goes too far, according to the policy groups, and threatens to turn what is essentially a contractual dispute into a criminal case. As in the Lori Drew prosecution last year, the case marks a dangerous precedent that could make a felon of anyone who violates a site’s terms-of-service agreement, according to the amicus brief filed last week by the Electronic Frontier Foundation, the Center for Democracy and Technology and other advocates.

“Under the government’s theory, anyone who disregards—or doesn’t read—the terms of service on any website could face computer crime charges,” said EFF civil liberties director Jennifer Granick in a press release. “Price-comparison services, social network aggregators, and users who skim a few years off their ages could all be criminals if the government prevails.”

Posted on July 19, 2010 at 1:11 PM • View Comments

"Don't Commit Crime"

This sign is from a gas station in the U.K.

<img alt=”sign saying ‘Police Notice: Don’t Commit Crime'” src=”/images/dont-commit-crime.jpg” width=500 height=400″>

My first reaction was to laugh, but then I started thinking about it. We know that signs like “No Shoplifting” reduce shoplifting in the area around the sign, but those are warnings against a specific crime. Could a sign this general be effective? Clearly some comparative studies are needed.

EDITED TO ADD (7/7): This is part of a larger sign. Presumably, whoever put up the sign I saw cut the top and bottom off.

Posted on July 7, 2010 at 9:20 AM • View Comments

Buying an ATM Skimmer

Interesting:

ATM skimmers—or fraud devices that criminals attach to cash machines in a bid to steal and ultimately clone customer bank card data—are marketed on a surprisingly large number of open forums and Web sites. For example, ATMbrakers operates a forum that claims to sell or even rent ATM skimmers. Tradekey.com, a place where you can find truly anything for sale, also markets these devices on the cheap.

The truth is that most of these skimmers openly advertised are little more than scams designed to separate clueless crooks from their ill-gotten gains. Start poking around on some of the more exclusive online fraud forums for sellers who have built up a reputation in this business and chances are eventually you will hit upon the real deal.

Generally, these custom-made devices are not cheap, and you won’t find images of them plastered all over the Web.

EDITED TO ADD (6/23): Another post.

Posted on June 22, 2010 at 6:49 AM • View Comments

Dating Recordings by Power Line Fluctuations

Interesting:

The capability, called “electrical network frequency analysis” (ENF), is now attracting interest from the FBI and is considered the exciting new frontier in digital forensics, with power lines acting as silent witnesses to crime.

In the “high profile” murder trial, which took place earlier this year, ENF meant prosecutors were able to show that a seized voice recording that became vital to their case was authentic. Defence lawyers suggested it could have been concocted by a witness to incriminate the accused.

[…]

ENF relies on frequency variations in the electricity supplied by the National Grid. Digital devices such as CCTV recorders, telephone recorders and camcorders that are plugged in to or located near the mains pick up these deviations in the power supply, which are caused by peaks and troughs in demand. Battery-powered devices are not immune to to ENF analysis, as grid frequency variations can be induced in their recordings from a distance.

At the Metropolitan Police’s digital forensics lab in Penge, south London, scientists have created a database that has recorded these deviations once every one and a half seconds for the last five years. Over a short period they form a unique signature of the electrical frequency at that time, which research has shown is the same in London as it is in Glasgow.

On receipt of recordings made by the police or public, the scientists are able to detect the variations in mains electricity occurring at the time the recording was made. This signature is extracted and automatically matched against their ENF database, which indicates when it was made.

The technique can also uncover covert editing—or rule it out, as in the recent murder trial—because a spliced recording will register more than one ENF match.

Posted on June 16, 2010 at 7:00 AM • View Comments

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Sidebar photo of Bruce Schneier by Joe MacInnis.