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List:       isn
Subject:    [ISN] Phantom Mobsters (Forbes smokes out more fake stories)
From:       mea culpa <jericho () dimensional ! com>
Date:       1998-08-29 4:04:24
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Phantom mobsters

By Adam L. Penenberg

Nothing makes for better copy in a big-city newspaper than a
techno-mobster story. In a June 17 story that appeared on page 3 of the
New York Post, Beth Piskora, a business reporter with the Rupert
Murdoch-owned tabloid, writes that at a conference on organized crime
sponsored by Kroll Associates, the big-time New York-based business
intelligence firm, she learned of a high-tech scam being perpetrated by an
unnamed organized crime family. 

According to Piskora, the mob had set up a phony consulting company to
help companies solve their Y2K-related problems. She claims the
consultancy had even published a web site and offered a toll-free number,
as well as other features, in an attempt to appear legit. 

"Then," she writes, "they started to fix things, all right." 

Piskora claims the mob-hired programmers rewrote financial software to
redirect payments to mob-controlled accounts. She also says that this is
"just one example of the way the mob is using technology and Wall Street"
and that the FBI was investigating. 

Various people present at this conference, however, including Steven
Cohen, a former mob prosecutor who was on the conference panel, and
several FBI agents say Piskora's account is news to them. They've never
heard of such a scam and say they would know if there was one going on. In
addition, no one at the FBI that Forbes Digital Tool contacted had heard
of any such investigation. 

"The first time any of us had heard of that story was when it appeared in
the New York Post," says Cohen, who is now a partner with the Manhattan
law firm Kronish, Lieb Weiner & Hellman. "It bothers me that this type of
story was reported without checking it out first." 

FBI special agent Jim Margolin, a spokesman for the Bureau's New York
office, says, "I am not aware of any organized crime tech-scam like this
and I checked with people in a position here who should know." 

This colorful mob anecdote was also picked up as news by Information Week
News Editor at Large John Soat, who, in his June 22 column "I.T. 
Confidential," mentioned the scam without crediting the New York Post. 

Soat initially directed the Tool to James Bucknam, a managing director of
Kroll Associates. But Bucknam says, "I can tell you unequivocally that I
am not the source of information on any Y2K-related scams for either Beth
Piskora or John Soat." 

When confronted with this statement, Soat admitted his information came
secondhand. "I got a tip from one of my reporters and it came from the New
York Post." 

According to Cohen, Seth Farber, a former federal prosecutor and a partner
at Dewey Ballantine, as well as several FBI agents and other conference
attendees, it is true that Lewis D. Schiliro, assistant director in charge
of the FBI's New York office and also a conference panelist, did field a
question from an audience member about any connection between the mob and
the Y2K problem, but he responded by saying that he was not aware of any. 

"When a man in the audience asked the question, 'Has the mob done anything
to exploit the Y2K problem,' we thought it was a funny line,"  recounts
Cohen. "Lewis Schiliro told him that to the best of his knowledge, no, the
mob has not gotten involved in Year 2000 work. And based on my experience
with Schiliro, he is briefed on everything the Feds have going on in this
area." 

Queries directed at Schiliro by the Tool were handled by agency spokesman
Margolin. 

Piskora says she doesn't recall anyone from the audience asking about any
relationship between the mob and the Y2K problem, but admitted that didn't
mean the question wasn't raised. She claims she picked up the anecdote
right after the conference.  "A group of us were talking and one guy told
me he was with the FBI,"  Piskora says. "I asked whether the mob was
involved with Y2K and he said, ‘yes.'" 

When asked if she could recall the agent's name, she said she could not,
that she would have to check her notes. After talking it over with Post
Business and Financial Editor, Xana Antunes, Piskora said she saw no
reason to share a "confidential source" with Forbes Digital Tool. 

But did Piskora check her source's identification? She says she didn't ask
for a badge or identification but that she was sure that he worked for the
bureau. Why? Because he said he did, and the conference was filled with
FBI agents and Kroll Associates detectives. 

What about the web site and toll free numbers? Did she actually see them? 

No. Piskora says she was the one who raised the issue of the web site,
toll free phone and other tools of business legitmacy in the form of a
question and her mystery source said "‘Yes,' then clammed up." 

Antunes says the Post "stands fully"  by the story. "No one from the FBI
ever called me for a retraction, so we're not going to do anything about
this. [The fact that no one can confirm the story] is not my problem." 

Agent Margolin says the FBI rarely asks for retractions, and only in
instances that seriously affect bureau business--for instance, if an agent
is misquoted in a manner that could jeopardize public trust or affect
ongoing investigations. He says it never occurred to him to contact the
Post to complain about the inaccuracies. 

What is not at issue is the fact that such a scam could indeed occur. Anup
Ghosh, in his book E-Commerce Security: Weak Links, Best Defenses, relates
the story of the German hacker group, Chaos Computer Club.  The group
demonstrated on German TV how an ActiveX control could be used to transfer
money from a person's bank account to one belonging to Chaos without the
account holder's knowledge. 

The group had hidden the ActiveX control on a web page and attracted
traffic with the slogan: "Becoming a millionaire in five minutes." The
hackers designed their ActiveX control to work with Quicken and to
transfer the money at some point in the future so that the victim wouldn't
find out about it until after he received his banking statement. (See
"Downloader beware). 

And what of Piskora's mystery man?  Maybe he does exist, but the Feds
adamantly deny he's one of theirs. As Cohen remarked, "Why would an FBI
agent at a conference contradict what his boss just said?" 

Cohen says the worst thing about the Post's reporting an apocryphal story
is that it could lead to copycats.  "When you publicize any criminal scam,
odds are that some clever criminal is going to pick up on it and make it a
reality." 


-o-
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