Police Plug Into Computer Criminals : Officers Go High Tech to Uncover Electronic Trails Left by Thieves
When managers of the Los Angeles Department of Water and Power, the nation’s largest municipally owned utility, discovered that a saboteur’s “logic bomb” had “exploded” inside one of their huge IBM computers, they took an unusual step. They called the police.
Their call was handled in an even more remarkable manner. It was routed to the Los Angeles Police Department’s month-old computer fraud unit, one of the first specialized details established by the nation’s local law enforcement agencies to combat the growing number of criminals who have exchanged their handguns, crowbars and double-entry ledgers for modems, floppy disks and microcomputers.
Long ignored by many corporate managers, who tended to regard them as electronic illiterates, local police and prosecutors are becoming increasingly conversant in the high-technology language of bits and bytes and the sophisticated techniques of extortionists, embezzlers, con artists and vandals who use computers.
Police officials, prosecutors, private computer security consultants and other experts across the country interviewed by The Times attributed law enforcement’s rising interest in electronic crime-fighting to:
- A greater incidence and variety of crimes involving computers.
- A growing public awareness that such crimes pose a serious threat to individual as well as corporate privacy.
- An increased willingness by private companies to cooperate in computer crime investigations.
- A rush by legislatures in 38 states to enact laws that make it a crime to invade someone else’s computer.
The types of crimes that can be committed with the use of a computer are as diverse as the criminals who sit behind the keyboards, experts say.
Contrary to the popular image of the teen-age whiz kid who, for a challenge, uses his personal computer and the telephone system to crash into corporate data bases, most computer criminals are actually old-fashioned thieves, said Jay J. BloomBecker, executive director of the National Center for Computer Crime Data in Los Angeles.
Their crimes are as mundane as using a stolen credit card and personal identification number to make unauthorized withdrawals from an automatic teller machine and as daring as manipulating a financial institution’s central computer, as a Wells Fargo Bank employee did a half-dozen years ago, to embezzle millions of dollars.
In recent years, criminals also have used computers to pilfer trade secrets, appropriate personal credit histories, illegally purchase stereos, telephones and other merchandise, change university grade records, sabotage the files of former employers and manage criminal organizations specializing in stolen auto parts, illegal gambling, narcotics and prostitution.
“There is no such thing as a specific type of computer crime,” said Donn B. Parker, one of the nation’s leading experts on the subject. “Computers can be involved in many ways across the entire spectrum of crime.”
The tools of electronic crime--a personal computer and a modem, which is a device that links computers via telephone lines--are readily available to anyone who has as little as several hundred dollars to spend, BloomBecker said.
No one knows exactly how much computer crime costs American businesses, government agencies and individuals, but the experts said the cost is high--and growing.
In a 1984 survey of 283 Fortune 500 corporations and other institutions, the American Bar Assn. reported that 72 organizations sustained verifiable losses resulting from computer crime that totaled between $145 million and $730 million in one year.
Given the multimillion-dollar loss suffered by the small survey group, the report stated, " . . . It takes little imagination to realize the magnitude of the annual losses sustained on a nationwide basis.”
While the Los Angeles Police Department is one of the few so far to formally create a separate computer fraud unit, police officials and prosecutors in cities as far-flung as Atlanta, San Jose, New Orleans, Chicago, San Diego, Philadelphia, Oakland, Orlando and Minneapolis are training investigators to deal with computer criminals.
Same Skills Needed
Not that police officers are about to turn in their badges to become computer programmers or system operators.
“In my opinion, a good crack computer fraud detective . . . doesn’t really have to have all of that technical knowledge,” said Lt. Fred Reno, who oversees the Los Angeles computer fraud unit.
“What (the detective) does need to know,” Reno said, “is how to investigate a crime, how to pursue leads, and then he needs to be comfortable with how the computer operates. He needs to be comfortable when he’s listening to a programmer talk. He needs to be able to visualize what’s going on.”
For example, when Los Angeles police Detectives James Black and George Nielsen began looking into the Department of Water and Power case, they already understood that the “logic bomb” they were tracking was a program planted, probably by a department employee, in the IBM computer. At a preset time, the “bomb” cut off DWP’s access to key computer files.
Despite the enthusiasm of some police departments and prosecutors, other law enforcement officials cautioned that not every jurisdiction has the need or the resources to establish a special staff of detectives to investigate computer-related crimes. In an era of limited resources, they said, departments must make violent crime their first priority.
Even agencies that have trained computer-crime investigators frequently find it difficult, because of tight budgets, to provide them with tools of their trade.
Many of the cities where interest in computer crime is the greatest are financial centers or homes for the high-tech companies that are in the vanguard of the electronics revolution.
In Santa Clara County, where many of the country’s major manufacturers of computers and microchips have their headquarters, the local prosecutor’s office, with a $200,000 grant from the state, has assembled the District Attorney’s Technology Theft Assn.
With members from every local police department and several federal agencies, the organization helps law enforcement agencies solve crimes that involve not only computers, but also the theft of trade secrets and high-tech equipment, including chips.
But the interest in computer crime is not limited to America’s Silicon Valleys.
Officials at the federal government’s two training centers for computer crime investigators--the FBI Academy in Quantico, Va., and the Federal Law Enforcement Training Center in Glynco, Ga.--report that police departments throughout the country are clamoring to enroll officers in their courses.
Since its program began in 1976, the FBI has trained 153 non-federal law enforcement agents in Virginia and another 995 in four-day “field courses” conducted throughout the country.
“There’s quite an extensive waiting list for people from non-federal agencies to get in here,” said Carlton W. Fitzpatrick, who directs the federal training program in Georgia.
One graduate of Fitzpatrick’s course, a fraud investigator for the Tampa, Fla., Police Department, has gone so far as to create on his home computer an electronic “bulletin board” that serves 400 subscribers, all Florida law enforcement agents.
Some police departments have received training from less orthodox sources.
In Minneapolis last December, police called on 15-year-old Peter Leppik, a computer buff who had earlier run afoul of the law by “hacking” into a computer system, to help investigate a child molestation case.
Police had arrested Lyle Patton, a 37-year-old computer programmer, for allegedly having sex with a 12-year-old boy. When they searched Patton’s apartment, they found a personal computer whose files police could not penetrate.
After Leppik broke through Patton’s computer security system, police discovered that Patton had recorded on magnetic computer disks a diary of his sexual encounters with young people. Patton subsequently pleaded guilty to two counts of criminal sexual conduct and was sentenced to 30 months in state prison.
Need Became Evident
In Los Angeles, officers in the Police Department’s bunco-forgery division began considering a separate computer fraud unit last year, said Reno, who heads the bunco squad.
“We figured out that we have taken on at least one computer fraud case at least every 40 days for the last couple of years,” Reno said. Encouraged both by his new captain, who has his own personal computer, and Police Chief Daryl F. Gates, Reno assigned two men from other units to the new detail in late January.
Work was not long in coming.
On the morning of March 11, technicians working at the Los Angeles Department of Water and Power’s headquarters at 111 N. Hope St. were confronted with a vexing problem. No matter how hard they tried, they could not gain access to personnel and new customer records stored in the utility’s main IBM computer.
Suspecting nothing more sinister than an equipment failure, DWP managers called in IBM. When the IBM experts eventually discovered what they believed to be a logic bomb buried in the computer’s operating program, utility officials decided to call the police.
“We were concerned it was an inside job, and we wanted whatever pressure it took brought to bear, and hopefully the arrest of the person who screwed up the system,” said DWP Director of Public Affairs Steve Hinderer.
“I think they put the fear of God into a lot of people. They were around here with badges on, they were very noticeable, and I think that’s healthy. . . . I think it’s wonderful that the police are acquiring these skills.”
The case is still under investigation, largely because the computer detectives interrupted their work in April to track down two 15-year-olds from Northern California who allegedly attempted to extort money from the operator of an Encino computer bulletin board by electronically destroying files in his computer.
The Police Department’s computer fraud detail will work closely with the electronic crime section of the Los Angeles County district attorney’s office, which was established in 1979, the year the Legislature passed a computer trespassing law. Deputy Dist. Atty. Clifton H. Garrott, who heads the unit, is regarded as one of the country’s leading prosecutors of computer crimes, experts said.
In Atlanta, Ga., Fredric W. Tokars, an assistant district attorney for Fulton County, has been specializing in computer-related crime since he joined the office two years ago, shortly after Georgia passed a computer crime statute.
A certified public accountant who earned a master’s degree in business administration before he became a lawyer, Tokars at first found computer cases a struggle. Now he is offering computer crime seminars to law officers in Georgia, including investigators for the district attorney’s office.
A year or so ago, Tokars’ office accepted guilty pleas from the operators of an illegal gambling operation that used a $100,000 IBM computer to track bets made at 36 suburban offices equipped with IBM personal computers.
In Oakland, Alameda County Assistant Dist. Atty. Donald G. Ingraham began investigating computer-related crime a dozen years ago when a program was stolen from a local computer service company. “At that point, nobody knew anything about how to do it,” Ingraham said in a recent interview.
Since then, Ingraham has become a nationally recognized expert in drafting search warrants for computer-related investigations, perhaps one of the thorniest tasks that confront police agencies.
“Most search warrant law was written with the idea that what (police) were looking for was tangible,” Ingraham said. “But we’re going out to find something that’s always shifting; the data base (in a computer) is always shifting.”
In Philadelphia, Assistant Dist. Atty. Gail Thackeray’s experience with computer crime dates to her days at Syracuse University Law School, when as a student prosecutor she went after an undergraduate who had gained unauthorized access to a university computer. Now she works with a local FBI agent to train police and investigators in the Philadelphia area.
In one of her cases, investigators a year ago caught up with a computer programmer for a small trucking company who quit his job, shut down the company’s computer and then demanded thousands of dollars to get the system going again so the company could find its trucks and their cargoes.
More often than not, however, police and prosecutors say, the computer-related crimes they investigate are less exotic.
“Most of our cases at the moment are thefts from automatic teller machines and employee fraud,” Thackeray said.
“I’m convinced that the real loss in our society (due to computer theft) is all these people nickel-and-diming us to death,” said S. Woodruff Bentley, a criminal investigator for the Department of Defense who teaches computer crime classes for the International Assn. of Chiefs of Police.
Many low-level employees, hardly computer wizards, are using data processing equipment to enrich themselves, Bentley said, “sending checks to vendors who don’t exist and padding the payroll with little people who really aren’t there.”
Experts agree that it is impossible to reliably estimate the annual cost of computer-related crime, largely because very little of it is ever detected and because an even smaller percentage is reported to authorities.
For example, the American Bar Assn. reported in its computer crime survey that 41 organizations, including some companies with revenues of more than $1 billion a year, reported that they had no way to monitor computer crime losses.
But the increasing volume of those losses may be changing the attitude of American business toward computer crime investigations.
Although police continue to be hampered by corporate victims who fear that revelations about their problems may injure their standing in the marketplace, a growing number of managers are willing to report computer crimes, police and prosecutors said.
“We’ve seen a tremendous turn-around in the attitudes of industry,” Ingraham said.
Problem of Ignorance
“One of the frustrations we have had in the past was police and the D.A.'s office not knowing very much” about computer crime, said Hans von Braun, manager of security for the corporate computing center at Palo Alto-based Hewlett-Packard Co., one of the nation’s largest manufacturers of computers and electronic equipment.
The Bay Area Security Interest Group, to which Von Braun belongs, is supporting efforts to improve law enforcement’s computer I.Q., Von Braun said.
State legislatures also have placed more demands on local police agencies by passing laws aimed at stopping computer trespassing.
More than half those statutes were enacted within the last two years, said BloomBecker of the National Center for Computer Crime Data.
“August, 1983, was kind of a watershed date for computer crime,” BloomBecker said. “First there was ‘War Games’ (a film in which a young computer hacker nearly triggered World War III) and then the ‘414' gang in Milwaukee (a group of young hackers who broke into institutional computers throughout the country).
“Just as ordinary folks all around the country are becoming aware that computer crime is an increasing menace, so are police and prosecutors.”
Eventually, said Parker, a consultant with SRI International in Menlo Park, “The concept of a computer crime may disappear, because all business crimes would be essentially computer crimes of some form. I think what we will see is a gradual matching of that phenomenon in police departments. They will gradually develop a capability among all of their detectives to deal with this problem.”