Tuesday, August 14, 2012
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Cyber fraud warnings often appear in this newsletter. A main purpose of this publication is to make our readers aware of dangers that lurk in unexpected forms and places.
Fortunately, law enforcement officials also notice this criminal activity. It's not quite so anonymous anymore. Bad guys are getting caught - and prosecuted.
A Seattle man received one of the harshest penalties to date this past July for his conviction of skimming Chase Bank ATMs in four western states. Beneyam Asrat G-Sellassie was 22 years old at the time of his arrest in June 2011. He'll spend the next five years in prison with another five years of supervised release. He must also pay more than $400,000 in restitution for the fraud he committed.
His crew of ATM skimmers hit more than 2,000 accounts, costing banks and their customers more than $435,000. G-Sellassie would place out-of-order signs on working ATMs, directing customers to those he had compromised. He was eventually caught when a surveillance camera got a picture of him attaching a skimming device to an ATM in Seattle. He had 22 gift cards re-encoded with stolen debit account numbers when he was arrested.
Remember last year's breach at Michaels craft stores? Point of sale (POS) and PIN-entry devices at 84 locations in 20 states were found to have been swapped out with devices that collected card numbers and PINs.
Two men were sentenced last month with the fraud that affected 94,000 debit and credit cards. Eduard Arakelyan, 21, and Arman Vardanyan, 23, were both sentenced to 36 months in prison on charges of conspiracy to commit bank fraud. They each received another 24 months for aggravated identity theft along with five years of supervised release and ordered to pay $42,000 in restitution.
The California men admitted to using the card numbers stolen from Michaels to create nearly 1,000 counterfeit cards later used at ATMs to withdraw funds from bank accounts. Since Michaels uses the same POS equipment at most of its U.S. stores, it was easier for the crooks to perpetrate this fraud.
Authorities say Arakelyan and Vardanyan only executed one aspect of this scheme. More charges may still be filed.
Prosecution in these cases was possible because the crimes were perpetrated in the U.S. International Law still throws a curve in justice.
The International Police Force (Interpol) has a plan for international cooperation against crime that most countries have joined. Most, but not all. Think of Romania as we revealed in the May 24, 2011 edition of GCFlash.
Criminal laws were established at a time when jurisdiction was easily established. Someone had to be physically present in a given country to have a crime committed against them in the given locale.
There is no statute to define the handling of someone in a particular country using servers in several different countries to commit crimes against citizens of several other countries. You would hope those nations involved could come to terms and act in the best interest of all. Yet here in the U.S. we can't even agree on the most basic of social issues. We can't expect people of different cultures and mindsets to come to terms.
Crime is one of the world's oldest professions. And it's harder today to avoid becoming a victim than ever before. Be proactive by monitoring all of your accounts on a regular basis. Alert the affected institution as soon as you notice something amiss. And visit our Security Center regularly to find tips and resources for your online safety.
Walls are erected, prohibiting travel from one side of the city to the other. An Iron Curtain oppresses a country's citizens, preventing them from hearing what transpires outside of their borders.
This is not post-World War II Europe. It's 21st century Middle East. And a sign of wars to come.
Technology has always played a huge role in national defense. From the invention of clubs or complex masting and sail systems found on early warships to the drones and robots protecting the battlefield today, the battle is often won by the entity sporting the highest technology. He who has the best toys wins.
But these toys aren't for amusement purposes. They're built to engage the enemy without endangering human life. They spy, infiltrate, detect, sabotage or destroy.
They have a place in traditional ground battle. Drone strikes pinpoint targets with such accuracy that the civilian casualty rate in Pakistan, where they're carried out against terrorist militants, is near zero. They're called unmanned aircraft, but they are piloted. By a human that can be up to 7,500 miles away.
Robots can navigate minefields and defuse any explosives they may encounter. But they've been doing this since the Korean War. Today's robot does much more.
Humans no longer have to designate a surveillance person to scout an area prior to sending in the troops. The Devil Pup has a high resolution camera that allows you to see what's going on remotely as it maps out terrain with a sophisticated laser system.
BEAR, the Battlefield Extraction-Assist Robot, can rescue wounded soldiers under fire without risking additional lives. Its hydraulic arms lift and carry up to 500 lbs., with hands and fingers to complete fine motor tasks. It maneuvers with a dual-track system that permits it to stand up and balance, and fitted with cameras and sensors.
A group of MIT scientists, in collaboration with researchers at Harvard university and Seoul National University, have created a Meshworm robot that mimics the movement of the common earthworm. It's made of various flexible materials and virtually indestructible. Stomp on it, bash it with a hammer or throw it across the room and it keeps on crawling.
The Meshworm can enter compact spaces and navigate difficult terrain. Its body is comprised of a mesh-type material and the muscle is nickel-titanium alloy. The muscle is soft, flexible and a shape-memory material, allowing it to expand and contract when exposed to heat.
It can be used for spying during reconnaissance missions as well as having applications in the medical field. The shape-shifting muscle material may even appear in cars, cell phones and laptops in the future.
Yet not every invention is of a physical nature. The more threatening among them lurk in cyberspace.
The "Arab Spring" was spawned over the Internet. Anti-government reformers in Middle Eastern countries blogged and emailed announcements of protest rallies, provoking revolts heard around the world.
Repressive government leaders did not take this lying down. Tunisia employed software that blocked access to websites and changed the content of emails in transit. Rather than a date and location, a recipient would receive a "Dear Leader" diatribe. Egypt hired a German company that monitors Internet and cellphone systems.
Officials in Syria and Iran deployed a range of cyber tools to intercept, scan and catalog almost every email sent or received in their country.
The Syrian government has repeatedly shut down Internet access to the rest of the world in order to hide its scope and brutality against protesters. They've arrested hundreds of activists who they tracked down through their Facebook and Twitter accounts.
They also block text messages that contain keywords such as "revolution" or "democracy."
Iran's "cyberpolice" actively ban thousands of websites along with content they deem as insults or false statements. Two citizens were arrested in January for building a Facebook page where visitors could vote on whether photos of people posted were attractive.
Last summer, Iran announced plans to build an internal Internet isolated from the outside world "in an effort to build a lawful network aimed at Muslims on an ethical and moral level." All Iranian Internet users will be moved to the new system within two years, cutting them off from the rest of the world.
Information is powerful, more so in the wrong hands. A tyrannical government can use it as a valuable tool in oppressing its people.
It's all the more powerful yet when used in cyberwarfare between countries. The day will come when war is no longer fought man-to-man on a battlefield, but computer-to-computer in the cloud.
The first strikes have already landed. Remember our coverage of Stuxnet? Already we're seeing related strains such as Duqu, Flame and just this week Gauss.
Do not wonder what's next, as the answer may be just too frightening to bear.
Early in the year, I recounted how a business owner customer summed up his economic expectations for 2012. He stated hopefully that he expected 2012 to be "less terrible." And it is! The constant trickle of economic data, although still gloomy, is way better than the cataclysmic reports of just a couple of years ago.
In the big picture, the markets have clawed back and recouped much of their almost half a decade of losses. Home prices have FINALLY begun to rise again. Most of the "lost wealth" the media was so fond of reminding American's about is no longer lost. The astute would note that the huge asset bubble that created much of that "wealth" was anything but real. Be suspicious if you can afford to retire simply because you sold your vacation home, as many have learned.
Yet the longest and slowest recovery of the century drags on. Some have said that the recession that preceded it was also so severe that the recovery should be expected to take a long time. This view is not consistent with history, however, as some of the most robust recoveries have followed some of the deepest downturns.
For example, the mid-eighties saw growth rates as high as 8% and rapidly declining unemployment (which exceeded 10% at the depth of that recession). More modest recoveries have followed less severe downturns. We saw the brief recession triggered by the September 11th attacks followed by a very modest recovery whereby GDP growth rates barely topped 3%.
So why is the "Great Recession" not followed by a "Great Recovery?"
Certainly there are many possible answers to that question with many different factors at play. However, there is growing support in some circles that we may have entered a "new normal" whereupon rapid recoveries and sustained robust long term growth rates that have made the U.S. such a rich nation are a thing of the past.
This is very much akin to what Europe has been experiencing for the past couple of decades, some say happily. Right up until the time that riots start in a country such as Greece.
So is the U.S. going the way of Europe? And if so, happily? Opinions differ.
One point of view: Many, many Americans place a VERY HIGH value on economic equality. Government actions that attempt to produce a more equal outcome are viewed favorably, even if it is at the expense of higher growth. Or no growth.
One of my colleagues frequently opines to me that the nation is already rich enough and we should have policies focused on redistributing this good fortune. Or as President Obama quipped to a famous plumber four years ago, we should "spread the wealth around."
This is a prevalent point of view, yet it remains to be seen if such a scenario can keep GDP from shrinking. It is notable that the EU economy continues to shrink in the aggregate (although some countries such as Germany still manage to eke out small amounts of growth). My colleague would surely agree such a scenario would be "less terrible" than the economic inequality he perceives.
A second competing point of view: This point of view is that unequal outcome is inevitable and necessary, even desirable, for market based capitalism to create the extraordinary growth rates that have been experienced under such conditions. Hong Kong is the most telling example, with China and even Russia also having moved decidedly in this direction - after centuries of crushing, yet often equal poverty.
Proponents argue (correctly) that the vast majority of the wealth created under such a scenario goes to the lower economic classes, albeit unequally. Such proponents would also likely argue that the economic inequality almost always prevalent under such a scenario is similarly "less terrible" than any low, no, or negative growth scenario.
So it really comes down to a matter of perspective, and you can decide for yourself which point of view is best: High growth at the expense of equality or equality at the expense of little, none or even negative economic growth. Just remember, you almost certainly can't have both, at least there are not yet any examples of that utopia.
Here is an interesting article by Milton Friedman on growth rates which may interest you.
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