Ego-Trip Through Cyberspace Yields Riches

Crime doesn’t pay? Cheaters never prosper? The meek shall inherit the Earth?

Ha!

Those precepts hardly account for the likes of Kim Schmitz, an egomaniacal mass of a 27-year-old with a criminal record for high-profile computer hacking who is now living in the fast lane and claims to be worth at least $200 million.

Schmitz’s metamorphosis from cyberspace outlaw to new-economy mogul is a story that has produced more resentment and envy among his fellow Germans than inspiration for young entrepreneurs. In fact, the ex-con businessman recently has had to defeat the jealous and the judgmental once again in securing his latest venture, which he expects will earn him further millions.

The baby-faced entrepreneur, who stands 6 feet 7 and tips the scales at 330 pounds, managed to overcome bad publicity and bureaucratic nit-picking to round up investors for a $50-million bailout of the bankrupt online shopping club LetsBuyIt.com.

“We believe the business model is good, that the idea of increasing consumers’ buying power can be very profitable,” Schmitz says from the head of a giant black marble conference table in one of Munich’s sleek new office buildings. “It worked in the old economy and made its developers into billionaires.”

Becoming a billionaire is one of Schmitz’s goals for the next decade--and not just any billionaire but one of the world’s 10 richest.

While such an unabashed quest for wealth is accepted in many countries as a worthy pursuit, in Germany those aspirations are shunned as immodest to the point of being indecent. And therein lies the instigation for another of Schmitz’s resolutions--to get his countrymen to lighten up and let those who are successful enjoy their money.

Schmitz, the youngest of three children, was born in the port of Kiel to a sea captain father and a mother who worked as a cook. He was 9 when he began his unlikely path to mega-prosperity, teaching himself computer languages. By his early teens, now living in Munich with his divorced mother, he had begun cutting legal corners to violate copyright protections on computer games. Because modem connection costs were high in the 1980s, he learned how to hack into calling card systems so that he could spend time in cyberspace for free.

Code Name Kimble

By his late teens, he was running afoul of the law in spectacular fashion, hacking into computer databases belonging to everyone from Citibank to the Pentagon and NASA, brashly leaving a data footprint of two skulls and crossbones and the code name Kimble--after the hero of the film and TV series “The Fugitive.”

His stealthy trips through some of the world’s most secret records were staged mostly to stroke his ego by embarrassing the big and powerful, he says. But he also stole account security information from bank archives to obtain “double-digit thousands” of German marks from automated teller machines.

“I saw it as a kind of game. Every hack is a trophy, and you don’t think about the damage. I felt like Robin Hood fighting against these evil big companies,” Schmitz recalls of his criminal youth.

Hacking into public utility systems gave him a sense of power, he says, recalling the rush he would get from realizing that he could darken an entire city or manipulate a satellite if he wanted. But he insists that he inflicted only financial damage or professional humiliation, such as when he released photos of himself in the cockpit of a parked airliner after he broke through security at Munich’s airport, which had been promoting itself as Europe’s safest hub.

His ego trips through cyberspace came to a halt in 1994, when federal authorities tracked him down through his association with other hackers who had been less efficient in covering their tracks, Schmitz says. He spent two months in jail before being released pending trial, which took place four years later and ended with the relative wrist-slap of two years’ probation because he had been a juvenile at the time of his crimes.

“While I was still on the hacking scene, before I was busted, I liked being recognized as one of the most successful hackers. I had this big ego,” recalls the businessman, whose self-esteem since then hasn’t noticeably suffered. “But when I was in jail, I had a lot of time to think about what I had been doing, and I realized that with the know-how I have, I could easily make money on the legal side.”

So in 1997, Schmitz founded a business called Data Protect, to test private companies’ computer systems for vulnerability to hackers--a service he sold to thousands of firms along with a money-back guarantee if he failed to find an unauthorized path into their systems. That has happened only once, he says.

“I was in the lucky situation that, because of the press coverage of my case, a lot of companies wanted to hire me,” he says, noting that air carrier Lufthansa was among the first major businesses to seek his help in protecting themselves from people like him.

Last year, he sold off 80% of Data Protect to finance his new venture, the holding company Kimvestor, which has launched two new technology companies and is negotiating to start others, as well as supervising the LetsBuyIt.com rescue.

Schmitz expects LetsBuyIt.com to reach profitability by the end of 2002, now that it has shaved 200 of its 350 jobs and closed seven of 12 European offices. But his rescue bid almost failed when German media reported “irregularities” in Kimvestor, scaring off some established businesspeople who had seemed ready to invest.

“The only thing ‘irregular’ is that Kimvestor is not yet listed in the trade registry, so it doesn’t have its six-digit number,” Schmitz says of the code needed for reporting transactions to authorities.

Insisting that there was nothing illegal about proceeding with the bailout before having his company’s papers in order, Schmitz accuses the media and competitors of “jumping all over this” discrepancy to put him in what they see as his place.

“The media cast me as a criminal even though my trial was in 1998 and my two years of probation is over,” he says, contending that there are no further charges pending against him in Germany and that he is now a legitimate businessman.

Extravagant Lifestyle

He blames the retreat of certain financiers who had initially expressed interest in the online wholesaler on what he sees as contempt for his opulent lifestyle.

“I live very extravagantly,” says Schmitz, who posts photos from his globe-trotting lifestyle on an Internet site, https://www.kimble.org, showing him frolicking with models on Caribbean beaches, back-road racing in Thailand and deplaning from his private jet in the giant designer suits he has custom-made.

“I live my dreams, and I do this to provoke the German people to change the way they treat people who have money and success and have achieved something in life,” he says. “A person ought to be able to enjoy his money if he has earned it.”

But that amounts to blasphemy in the climate of political correctness in Germany, where wealth is hidden and luxuries are indulged in discreetly. As proof, Schmitz cites the opposite views of his experience held on the two sides of the Atlantic.

“I get 100 e-mails a day from Americans who say, ‘What you’re doing is cool--can we work for you?’ From Germans I also get 100 e-mails a day, saying, ‘You fat pig!’ or ‘You’re a liar and a criminal!’ ” Schmitz says. “I’m trying to change this.”

Although Schmitz has achieved fame and fortune, his past behavior has cost him one freedom he covets: the right to visit the U.S. without fear of arrest and prosecution.

“I don’t know of any formal charges, but with all the fingerprints I left and all the coverage of my trial here, I suspect there is something pending,” Schmitz says of the likelihood of outstanding U.S. warrants.