On Q Professional Investigations

Duke University has pipped companies such as Google and Microsoft to the post to develop an indoor GPS system that can locate users as accurately as 1.6 meters.

It could have a host of applications, says Romit Roy Choudhury, associate professor of computer engineering at Duke, for example allowing shoppers at stores to use their phones to learn more about the products in front of them, or helping parents to locate their children in malls. It could also help navigation in hospitals or smart homes.

The system, dubbed UnLoc, short for unsupervised indoor localization, is based on the way people use landmarks in outdoor environments. If Alice is in Bob’s neighborhood and calls him for directions, she can tell Bob she is standing in front of a fountain, and he can guide her from there.

“Our technique adopts the same intuition – it takes advantage of ‘invisible’ landmarks in indoor environments that a mobile phone can sense using its built-in sensors,” says Choudhury.

“Example landmarks could be distinct motion signatures created by elevators or stairwells, because the phone can detect motion, or certain dead spots where WiFi or 3G signals are absent.”

Once such an invisible landmark is sensed, the phone can work out its current location, and then track its forward path using motion sensors such as accelerometers, compasses and gyroscopes.

While the tracking can become inaccurate over time, the phone can continuously correct its location as it discovers other landmarks.

“The best part of the application is that it is recursive, which means that it starts with zero knowledge but ‘learns’ over time,” says He Wang, lead PhD student on the project.

“Therefore, it becomes more and more accurate the more it is used in a given building.”

Crucially, UnLoc doesn’t require any pre-deployment effort, or ‘wardriving’, whereby every location needs to be visited and calibrated to create a database of per-location fingerprints. This is expensive even as a one-off, and often needs to be repeated periodically.

It’s also less battery-hungry than GPS, thanks to the use of energy-efficient inertial sensors, available in almost all smartphones.

In tests at the Northgate shopping mall in Durham, NC, and on Duke’s campus, UnLoc achieved 1.6 meter accuracy on average.

“Further improvement is feasible by learning more landmarks and improving the tracking algorithms,” says Duke undergraduate Alex Mariakakis.

Read more

The FBI plans to test by 2014 a database for searching iris scans nationwide to more quickly track criminals, according to budget documents and a contractor working on the project.

The Next-Generation Identification system, a multiyear $1 billion program already under way, is expanding the server capacity of the FBI’s old fingerprint database to allow for rapid matching of additional physical identifiers, including facial images and palm prints.

Today, iris scans conjure images of covert agents accessing high-security banks and laboratories. But, increasingly, law enforcement agencies are spending state and federal funds on iris recognition technology at jails to monitor inmates. Some Missouri prisons are buying the same system the FBI acquired, partly so that they can eventually exchange iris images with federal law enforcement officials. And many counties are storing pictures of prisoner irises in a nationwide database managed by a private company, BI2 Technologies.

The FBI expects to collect many of these state and local iris images, according to B12 officials and federal documents.

A May 17 budget justification document states one of the “planned accomplishments for BY13” — the budget year that begins Oct. 1 — is to “demonstrate iris recognition capabilities via the iris pilot.”

A June FBI advisory board memo that Nextgov reviewed states, “supervised release/corrections are candidates for the pilot, being that many already have the capability in place. The additional goal is to start to build an iris repository.” Iris recognition is a helpful identification tool, according to the memo, because it “is very accurate,” does not require human intervention and “the hardware footprint is also very small [due] to the size of the iris image.”

The aim of iris recognition at corrections facilities, according to law enforcement officials, is to promptly catch repeat offenders and suspects who try to hide their identities.

Building a Repository

Officials at the Pinal County Adult Detention Center in Florence, Ariz., appreciate the nonintrusiveness of the BI2 iris recognition system, which does not touch prisoners’ faces when snapping photos of irises or scanning eyes for recognition. The inmates place their eyes three to 10 inches away from binocular-like lenses, which record the iris image, so wardens stay out of harm’s way during head counts, county officials said. The technology also ensures the center does not mistakenly release similar-looking siblings, twins or parents, when one family member comes up for parole, they added.

President and Chief Executive Officer Sean G. Mullin said BI2 Technologies has been working closely with the FBI unit chief responsible for implementing NGI. “BI2 Technologies provided the FBI [Next-Generation Identification system] over 12,000 iris images from current law enforcement agency clients for analysis and testing by NGI,” he said. Company officials said they were not aware of a specific pilot program that has been undertaken to demonstrate iris searching capabilities.

Mullin said his company was told the FBI plans to conduct an iris pilot in 2014. Local agencies in 47 states now participate in B12’s nationwide Inmate Identification and Recognition System, or IRIS, which has been operating for six years, he said.

FBI officials declined to comment on progress using NGI for iris matching. “Because we are in the early stages of development of additional biometric capabilities, including the facial recognition pilot, there is no new information to report at this time,” said Stephen G. Fischer Jr., a spokesman for the FBI’s criminal justice information services division.

The interstate network that BI2 maintains uses a high-resolution camera to obtain an image of an offender’s iris during the booking process. Special software then transforms the picture into a digital file that is encrypted and stored with the company. For recognition purposes, the camera takes a live shot of an individual’s iris and the software then compares the new image with archived iris pictures collected during intake to confirm the person’s identity.

“Everybody that gets booked into our adult detention center, we get a capture of their iris. That gets hooked to their photo. And then everybody that’s being released goes through the system again to make sure we’re getting ready to release the same person,” said James Kimble, deputy chief of the Pinal County Adult Detention Center.

Pinal County used $30,000 in state funds to buy three cameras, supporting devices and access to BI2’s nationwide iris database, he said. Within a few months, some Pinal patrol officers will receive a handheld recognition tool that synchs with the database through an iPhone app.

The Yavapai County Sheriff’s Office in Arizona also is using iris recognition for many of the same safety purposes, said Dwight D’Evelyn, media/crime prevention coordinator for the office. Yavapai contracts with BI2 using in-house jail enhancement funds. “The data is stored in both the system of record at the Yavapai County Sheriff’s Office and the national server,” he said. “The iris images are stored, accessed and utilized by participating agencies on the national server, which is located at a secure site in Texas.”

D’Evelyn stressed that the iris files are the property of the sheriff’s office and, “during transmission, the iris images are always encrypted.”

Security Concerns

Jennifer Lynch, a staff attorney at the Electronic Frontier Foundation, a digital rights group, found the concept of a privately run, national iris network disconcerting because of the many recent data breaches at businesses. She cited financial institutions exposing customer account data and passwords stolen from job seekers using the professional networking website LinkedIn.

“That’s really concerning to me — the fact that they are held by a private company,” Lynch said. “You can change your credit card data. But you can’t change your biometric data.”

Oftentimes, however, the data cribbed during these incidents was not adequately encrypted, cybersecurity experts are quick to note.

BI2’s iris images are “encrypted using strong cryptographic algorithms to secure and protect them,” the company website states. “Thus, standing alone, biometric templates cannot be reconstructed, decrypted, reverse-engineered or otherwise manipulated to reveal a person’s identity. In short, biometrics can be thought of as a very secure key: Unless a biometric gate is unlocked by using the right key, no one can gain access to a person’s identity.”

The average iris recognition time — from when an image is captured to when an officer receives a response — is 7.8 seconds, Mullin said.

“No agency — and there are more than 400 BI2 systems in operation across the nation — that has implemented BI2’s IRIS technology has ever had an erroneous or mistaken release because of an identification error,” he said.

During a six-month period at the Los Angeles County Sheriff’s Department, BI2’s system immediately spotted 119 repeat offenders previously booked by the department who provided different names and identification to avoid detection, Mullin said.

The June FBI advisory board memo states the bureau has chosen an L-1/MorphoTrust iris capture system for NGI. (L-1 Identity Solutions was acquired in 2011 by Safran and reorganized as MorphoTrust.) In 2011, the Missouri Sheriff’s Association bought the same system using federal grant money partly so the association’s database could eventually interface with NGI, said Jeff Merriman, a grant consultant for law enforcement agencies. He also works part time for the Jasper County Sheriff’s Office in Missouri, where he was a former police commander.

Jasper and more than 50 other Missouri agencies are hooked up to the association’s central system for statewide sharing, he said.

“Not only are we capturing multibiometrics at jails and prisons, we are also linking dozens of disparate criminal records systems across the state, connecting the dots between all the offenders and using that information tactically to combat crime,” Merriman said.

But the Missouri iris scans can’t get to the FBI. The problem is the Missouri State Highway Patrol, which is responsible for sharing criminal history records with the FBI, doesn’t have an iris database to collect the state’s iris files, he said. The FBI visited the Missouri Sheriff’s Association biometric system as part of the bureau’s NGI research, according to Merriman.

Now, he is working with law enforcement agencies in Oklahoma and Tennessee to acquire grant money for starting iris database systems that can connect with the Missouri Sheriff’s Association biometric system.

Separately, York County Prison in Pennsylvania has been using an LG Electronics iris recognition system for about a decade, prison spokesman Joe Borgiel said.

The Electronic Frontier Foundation’s Lynch said she was concerned by the breadth of iris recognition in the law enforcement realm. That said, she added, iris scans can be less sneaky than facial searches, which governments and social networks such as Facebook are embracing. Nextgov reported in 2011 that the FBI would begin a limited trial of facial recognition in early 2012.

“With iris scans and facial recognition, one of the differences is you can take a picture of a face surreptitiously,” Lynch said.

Thomas E. Bush III, who helped develop NGI’s system requirements when he served as assistant director of the FBI’s criminal justice information services division between 2005 and 2009, acknowledged people will worry about authorities combing through candid videos and photos for suspects, and, inadvertently, collecting images of innocent passersby.

“I’m an American citizen. I get that,” he said, but, “no, we will obtain these from the people who come into contact with law enforcement.”

Bush, now a private consultant, added, “It’s not public source data.” And, the FBI would not upload a bank vault’s iris database into NGI. “The FBI’s No. 1 priority is protection of civil rights,” he said.

In 2008, the bureau distributed a privacy impact assessment describing controls to ensure NGI complies with federal privacy regulations. FBI officials have said the bureau has an elaborate system of checks and balances to guard irises, palm prints, mug shots and all manner of criminal history data.

“The information sharing of the future is biometrically based,” Bush said. “That’s when you know that you have Tom Bush. This makes me more confident that I do have the right [bad] Tom Bush and then the good Tom Bush goes on his merry way. It’s about getting the right bad guy . . . We’ve got limited resources.”

Read more

Spouses with wandering eyes should take notice – slipping off your wedding band might not let you off scot-free, anymore.

The blogosphere is buzzing over a new ring that promises to keep spouses faithful by imprinting the words, “I’m married” into the wearer’s finger. The declaration is carved into the inside of the band.

The cost of fidelity? Just $550.

The titanium rings are sold on the website TheCheeky.com.

“With Arnold, Tiger and two timing IMF guy in mind, we have created this wedding ring for people intent on cheating,” the company writes, poking fun at some high-profile cases of infidelity.

Read more

Enrique “Ricky” Prado’s resume reads like the ultimate CIA officer: veteran of the Central American wars, running the CIA’s operations in Korea, a top spy in America’s espionage programs against China, and deputy to counter-terrorist chief Cofer Black — and then a stint at Blackwater. But he’s also alleged to have started out a career as a hitman for a notorious Miami mobster, and kept working for the mob even after joining the CIA. Finally, he went on to serve as the head of the CIA’s secret assassination squad against Al-Qaida.

That’s according to journalist Evan Wright’s blockbuster story How to Get Away With Murder in America, distributed by Byliner. In it, Wright — who authored Generation Kill, the seminal story of the Iraq invasion — compiles lengthy, years-long investigations by state and federal police into a sector of Miami’s criminal underworld that ended nowhere, were sidelined by higher-ups, or cut short by light sentences. It tracks the history of Prado’s alleged Miami patron and notorious cocaine trafficker, Alberto San Pedro, and suspicions that Prado moved a secret death squad from the CIA to Blackwater.

“In protecting Prado, the CIA arguably allowed a new type of mole — an agent not of a foreign government but of American criminal interests — to penetrate command,” Wright writes.

In this sense, there are two stories that blur into each other: Prado the CIA officer, and Prado the alleged killer. The latter begins when Prado met his alleged future mob patron, Alberto San Pedro, as a high school student in Miami after their families had fled Cuba following the revolution. Prado would later join the Air Force, though he never saw service in Vietnam, and returned to Miami to work as a firefighter. But he kept moonlighting as a hitman for San Pedro, who had emerged into one of Miami’s most formidable cocaine traffickers, according to Wright.

San Pedro hosted parties for the city’s elite, lost a testicle in a drive-by shooting outside of his house, rebuilt his house into a fortress, tortured guard dogs for sport, and imported tens of millions of dollars’ worth of cocaine into the United States per year, Wright adds. His ties reportedly included an aide to former Florida Governor Bob Graham, numerous judges, lobbyists and a state prosecutor. His ties also included a friendship with former CNN anchor Rick Sanchez, then a local TV reporter.

Prado, meanwhile, was dropping bodies, alleges Wright. Investigators from the Miami-Dade Police Department’s organized crime squad suspected him of participating in at least seven murders and one attempted murder. He attempted to join the CIA, but returned to Miami after not completing the background check (due to his apparent concern over his family ties). But was admitted after the Reagan administration opened up a covert offensive against leftist Central American militants, where he reportedly served training the Contras.

More startling, the Miami murders allegedly continued after Prado joined the CIA. One target included a cocaine distributor in Colorado who was killed by a car bomb. Investigators believed he was killed over concerns he would talk to the police.

Years later, in 1996, Prado was a senior manager inside the CIA’s Bin Laden Issue Station, before the Al-Qaida mastermind was a well-known name. Two years later, the bombings of the U.S. embassies in Kenya and Tanzania elevated Prado to become the chief of operations inside the CIA’s Counterterrorist Center, headed by then-chief Cofer Black, later an executive for the notorious merc firm Blackwater. “As the title implied, the job made Prado responsible for all the moving pieces at the CTC — supervising field offices on surveillance, rendition, or other missions, and making sure that logistics were in order, that personnel were in place,” according to Wright.

Prado was also reportedly put in charge of a “targeted assassination unit,” that was never put into operation. (The CIA shifted to drones.) But according to Wright, the CIA handed over its hit squad operation to Blackwater, now called Academi, as a way “to kill people with precision, without getting caught.” Prado is said to have negotiated the deal to transfer the unit, which Wright wrote “marked the first time the U.S. government outsourced a covert assassination service to private enterprise.” As to whether the unit was then put into operation, two Blackwater contractors tell Wright the unit began “whacking people like crazy” beginning in 2008. Prado also popped up two years ago in a report by Jeremy Scahill of The Nation, in which the now ex-CIA Prado was discovered to have built up a network of foreign shell companies to hide Blackwater operations, beginning in 2004. The Nation also revealed that Prado pitched an e-mail in 2007 to the DEA, explaining that Blackwater could “do everything from everything from surveillance to ground truth to disruption operations,” carried out by foreign nationals, “so deniability is built in and should be a big plus.”

But it’s hard to say where Prado’s alleged criminal ties end. It’s possibly his ties dried up, or moved on. Even mobsters, like Alberto San Pedro, retire. Another theory has it that Prado wanted to break his ties to the Miami underworld — and San Pedro — all along, and sought out legitimate employment in the military, in firefighting and the CIA as an escape. But, the theory goes, he stayed in because he still owed a debt to his patrons.

The other question involves the CIA itself. It’s no secret the agency has associated with dubious types, but the agency is also “notoriously risk averse,” Wright writes. Yet the agency is also protective. And letting Prado on board wouldn’t be the agency’s first intelligence failure.

Read more

The FBI orchestrated a two-year cybercrime sting that resulted in 24 arrests, with some alleged hackers facing more than 20 years in prison for allegedly profiting from stolen information such as credit card and bank account numbers, law enforcement authorities announced today.

The U.S attorney’s office in Manhattan and the FBI announced the arrests and provided details of the sting operation, which involved FBI agents posing as hackers while the bureau set up a fake “carding” forum, according to the press release (see the full release below). Carding is the term for crimes associated with exploiting stolen personal information for profit. The forums helped “carders” communicate and, in some cases, find mailing addresses — usually empty apartments or houses — for products purchased with stolen credit-card data.

While the sting netted 24 arrests across eight countries, authorities only shared the charges of 12 alleged hackers. These individuals were charged with several counts of fraud, including selling personal data, using stolen information to purchase or obtain products, and selling tools to aid hackers in stealing information.

The FBI claims it prevented 400,000 potential cybercrimes via this operation.

These three alleged hackers face the heaviest sentences:

Ali Hassan, aka “Badoo,” faces charges that carry a total maximum sentence of 37 years for selling credit card information — some of which reportedly came from hacking an online hotel booking site. The credit card information, described as “fulls,” by hackers, included cardholder name, address, social security number, birth date mother’s maiden name, and bank account information. Hassan, 22, is a resident of Milan, Italy.

Mark Caparelli, aka “Cubby,” who faces charges that carry a maximum of 30 years total. Capparelli, 20, of San Diego, Calif., reportedly used stolen credit cards and Apple product serial numbers to get replacement products under defective product claims. A credit card is required in case the defective product isn’t mailed back to Apple. Using this technique Capparelli allegedly sold and shipped four iPhone 4 devices to an undercover FBI agent.

Michael Houge, aka “xVisceral,” allegedly sold malware, including remote access tools (RATs) that allowed users to take over and remotely control an infected computer. Houge’s alleged RAT gave users the ability to turn on Web cams and record keystrokes. According to the release, Houge, a 21-year-old Arizona resident, sold the tool for $50 a pop and bragged about infecting between 50 to 100 computers himself and selling the RAT to others who infected thousands of computers. His charges carry a maximum of 20 years total.

Read more

The covert operation started with the opening of a sliding-glass door. Mark Derr peered through his binoculars. He spotted his mark. In minutes Derr’s team swooped in.

With the girl by their sides, the men flashed their guns when guards approached. The men backed off.

They escorted her to the car and headed toward Charlotte.

A tale like one you’d read in a page-turning novel, Derr experienced while rescuing victims of human trafficking — modern-day slaves.

A Lincolnton bail bondsman, Derr also heads up a rescue team called RPR Services, which stands for “rescue, protect, recovery.”

The four-man team mostly serves as bodyguards for special events. But their services expanded when Derr was contacted by a church in California. The church had got-ten messages online from an enslaved woman in Atlanta. She and other women spent months in a condo where they were forced into prostitution.

“If any of them tried to leave, they were threatened with being hurt or killed,” Derr said.

She pleaded for help. The church put Derr on the job.

Derr communicated with the woman online, devising a plan to “pull her out.”

It was the first time Derr was exposed to the reality of human trafficking. He and his team rescued the woman from the secret prison and flew her out to California where she was linked to an organization that helps victims of human trafficking.

Women ‘for sale’ online

Derr said he was amazed at the business set up where the woman was kept.

“It was very crazy how big of an operation this guy had — from Atlanta to Texas,” he said.

Derr videoed the rescue and turned information over to local police.

He interviewed the young woman who said she’d been held captive for two months. She told Derr that her captor planned to sell her, posting her picture on Craigslist.

Derr did some investigating and saw where women’s pictures were being posted online with “for sale” stamped across their faces.

Many of those ads were on Craigslist, according to Derr. Craigslist cracked down, but if people in the human trafficking business get pushed off one website, they’ll just find another, Derr said.

“It’s crazy. These girls are being advertised for sale on the Internet,” he said.

N.C. among top-10 worst states

And if those sales cross international borders, it’s virtually impossible to get the women back home, he said.

Derr’s team has only worked a handful of similar cases, but those few instances opened Derr’s eyes to the disturbing multimillion-dollar sex-slave industry.

N.C. has consistently been ranked in the top 10 states for human trafficking. That number could jump significantly when the Democratic National Convention comes to Charlotte in August.

Human trafficking victims’ advocacy groups are spreading the word to hotel workers to be on the lookout. The thought is that with world travelers coming in for the big event, pimps will bring in more enslaved women than ever.

An estimated 200,000 to 300,000 American children are trafficked into the commercial sex industry each year.

The life expectancy of someone involved in human trafficking is five years.

“Once these girls are used up, they’re killed or you don’t ever see them again,” Derr said. “They think they’re going to be taken care of, and they get forced into slavery.”

Read more

Law enforcement officials searching for an easier way to confirm someone’s identity may have a solution in sight. A new device is nearing the mass production stage that combines iris, facial and fingerprint recognition scanning into a smartphone, giving nearly instantaneous identification results to an officer using it in the field.

First tested in 2010, the handheld Mobile Offender Recognition and Information System (MORIS) connects to a smartphone and allows a user to take a snapshot of a person’s face or iris, or a fingerprint scan, and then transmit the data over a secure wireless network to a national database. If a match is found, seconds later the officer using the device is given confirmation on the person in question, including any previous criminal history.

The biometric technology itself isn’t new. Created by Biometric Intelligence and Identification (BI2) Technologies, MORIS is based on the company’s Inmate Identification and Recognition System (IRIS), which has been used at jails and detention centers for the past few years to identify and record the scans and information of inmates and sex offenders.

Sean Mullin, CEO of BI2 Technologies, said the smallest IRIS device weighs 12 to 15 pounds and had to be tethered to a server or laptop. But after getting some feedback from clients that agencies wanted their officers to have the same functionality in the field, his company focused on miniaturizing its product and combining all three scans — iris, face and fingerprint — into a mobile platform.

In comparison to the MORIS devices that were tested in 2010, Mullin said the ergonomics were changed from a “boxy” configuration to a more hand-friendly shape. Another change included decreasing the amount of steps required in the capture recognition process.

“The fewer times the user has to hit a button or type something in, the better,” Mullin said. “I think we reduced it down to … about three button clicks.”

The company is in the process of getting its app and the MORIS hardware approved for use on Android devices and Apple’s iPhone. BI2 will also assemble and produce the finished device. The total price for each unit, including the smartphone, will be roughly $3,000, plus an annual maintenance fee, which Mullin priced at approximately 18 percent of the acquisition price.

Mullin said MORIS should be ready for a full rollout by early fall and will be available only to government agencies and officials.

“It’s a game-changer for law enforcement,” said Paul Babeu, sheriff of Pinal County Ariz., who recently saw a demo of the mobile system at a meeting of Arizona sheriffs.

Babeu said that because his jurisdiction is larger than the state of Connecticut, it can sometimes take officers up to two hours to get back to the main office to verify someone’s identity. But with MORIS, Babeu is confident officers will be able to get that information in seconds and know what type of person they are dealing with, from minor offenders to wanted terrorists, and take the appropriate actions.

“The greatest benefit is timeliness,” Babeu said. “In 10 to 15 seconds you’re going to find out if that person is in our database.”

Mullin said an iris scan sent over the network will usually yield a result in five to seven seconds, depending on whether a person is located in a building or out in the open. Facial recognition results take a bit longer, averaging from 45 seconds to just more than a minute. Fingerprint results can vary as well, but take typically around a minute, according to Mullin.

Making a Connection

The algorithms used by IRIS and MORIS scan matches through various law enforcement databases. Mullin said fingerprints and facial recognition scans are compared against the Integrated Automated Fingerprint Identification System (IAFIS) biometric database, which is maintained by the FBI.

The FBI database contains mug shot photos, fingerprints and criminal history for more than 66 million people, including fingerprints from 73,000 known and suspected terrorists, according to the FBI’s website.

Mullin and Babeu both called scans of a person’s iris the most accurate form of identification, however, iris scans taken by MORIS are judged against a completely separate records system. That information resides in a system built by BI2 Technologies in conjunction with the National Sheriffs’ Association.

While Mullin said the iris database doesn’t have as many records nor is as widely used as IAFIS, he expects that to change over time.

“To give you an idea, it is getting filled quickly and in a period [from] November and December 2010 to January 2011, this database performed 3.12 billion cross-matches successfully without one false match,” Mullin said.

Babeu, whose department currently uses IRIS, was confident in the accuracy of the system and the technology behind it. “There has not been one false positive,” Babeu said regarding scans taken by his department using IRIS. “Every part of the information has been accurate.”

Looking Ahead

MORIS, however, does have at least one drawback. It can’t simultaneously take and submit all three channels of information — iris, facial, fingerprint — and get one all-encompassing result. But Mullin hinted that advancement could be on the horizon.

“Today, except for what we are working on — in some let’s call it ‘department of defense-type intelligence applications,’ which are not publicly available — no one has put together what we call the ‘fusion’ algorithm,” Mullin said.

Babeu said he hasn’t seen anything else out there in the market that provides this sort of mobile technology and revealed that he has already placed an order for 75 MORIS devices. But he also added that a lot more law enforcement agencies need to commit to the technology for it to really become a force multiplier across the country.

“My only concern is that there is a building time,” Babeu said. “Even though we’re fully embracing it … for this to work to its maximum potentially, we need to roll this out nationally.”

Read more

Someday, it will go down in history as the first trial of the modern American mafia. Of course, you won’t hear the recent financial corruption case, United States of America v. Carollo, Goldberg and Grimm, called anything like that. If you heard about it at all, you’re probably either in the municipal bond business or married to an antitrust lawyer. Even then, all you probably heard was that a threesome of bit players on Wall Street got convicted of obscure antitrust violations in one of the most inscrutable, jargon-packed legal snoozefests since the government’s massive case against Microsoft in the Nineties – not exactly the thrilling courtroom drama offered by the famed trials of old-school mobsters like Al Capone or Anthony “Tony Ducks” Corallo.

But this just-completed trial in downtown New York against three faceless financial executives really was historic. Over 10 years in the making, the case allowed federal prosecutors to make public for the first time the astonishing inner workings of the reigning American crime syndicate, which now operates not out of Little Italy and Las Vegas, but out of Wall Street.

The defendants in the case – Dominick Carollo, Steven Goldberg and Peter Grimm – worked for GE Capital, the finance arm of General Electric. Along with virtually every major bank and finance company on Wall Street – not just GE, but J.P. Morgan Chase, Bank of America, UBS, Lehman Brothers, Bear Stearns, Wachovia and more – these three Wall Street wiseguys spent the past decade taking part in a breathtakingly broad scheme to skim billions of dollars from the coffers of cities and small towns across America. The banks achieved this gigantic rip-off by secretly colluding to rig the public bids on municipal bonds, a business worth $3.7 trillion. By conspiring to lower the interest rates that towns earn on these investments, the banks systematically stole from schools, hospitals, libraries and nursing homes – from “virtually every state, district and territory in the United States,” according to one settlement. And they did it so cleverly that the victims never even knew they were being ­cheated. No thumbs were broken, and nobody ended up in a landfill in New Jersey, but money disappeared, lots and lots of it, and its manner of disappearance had a familiar name: organized crime.

In fact, stripped of all the camouflaging financial verbiage, the crimes the defendants and their co-conspirators committed were virtually indistinguishable from the kind of thuggery practiced for decades by the Mafia, which has long made manipulation of public bids for things like garbage collection and construction contracts a cornerstone of its business. What’s more, in the manner of old mob trials, Wall Street’s secret machinations were revealed during the Carollo trial through crackling wiretap recordings and the lurid testimony of cooperating witnesses, who came into court with bowed heads, pointing fingers at their accomplices. The new-age gangsters even invented an elaborate code to hide their crimes. Like Elizabethan highway robbers who spoke in thieves’ cant, or Italian mobsters who talked about “getting a button man to clip the capo,” on tape after tape these Wall Street crooks coughed up phrases like “pull a nickel out” or “get to the right level” or “you’re hanging out there” – all code words used to manipulate the interest rates on municipal bonds. The only thing that made this trial different from a typical mob trial was the scale of the crime.

USA v. Carollo involved classic cartel activity: not just one corrupt bank, but many, all acting in careful concert against the public interest. In the years since the economic crash of 2008, we’ve seen numerous hints that such orchestrated corruption exists. The collapses of Bear Stearns and Lehman Brothers, for instance, both pointed to coordi­nated attacks by powerful banks and hedge funds determined to speed the demise of those firms. In the bankruptcy of Jefferson County, Alabama, we learned that Goldman Sachs accepted a $3 million bribe from J.P. Morgan Chase to permit Chase to serve as the sole provider of toxic swap deals to the rubes running metropolitan Birmingham – “an open-and-shut case of anti-competitive behavior,” as one former regulator described it.

More recently, a major international investigation has been launched into the manipulation of Libor, the interbank lending index that is used to calculate global interest rates for products worth more than $3 trillion a year. If and when that case is presented to the public at trial – there are several major civil suits in the works here in the States – we may yet find out that the world’s most powerful banks have, for years, been fixing the prices of almost every adjustable-rate vehicle on earth, from mortgages and credit cards to interest-rate swaps and even currencies.

But USA v. Carollo marks the first time we actually got incontrovertible evidence that Wall Street has moved into this cartel-type brand of criminality. It also offered a disgusting glimpse into the enabling and grossly cynical role played by politicians, who took Super Bowl tickets and bribe-stuffed envelopes to look the other way while gangsters raided the public kitty. And though the punishments that were ultimately handed down in the trial – minor convictions of three bit players – felt deeply unsatisfying, it was still a watershed moment in the ongoing story of America’s gradual awakening to the realities of financial corruption. In a post-crash era where Wall Street trials almost never make it into court, and even the harshest settlements end with the evidence buried by the government and the offending banks permitted to escape with no admission of wrongdoing, this case finally dragged the whole ugly truth of American finance out into the open – and it was a hell of a show.

1. THE SCAM
This was no trial scene from popular lore, no Inherit the Wind or State of California v. Orenthal James Simpson. No gallery packed with rapt spectators, no ceiling fans set whirring to beat back the tension and the heat, no defense counsel’s resting a sympathetic hand on the defendant’s shoulder as opening statements commence. No, the setting for USA v. Carollo reflected the bizarre alternate universe that exists on Wall Street. Like so many court cases involving big banks, the proceeding looked more like a roomful of expensive lawyers negotiating a major corporate merger than a public search for justice.

The trial began on April 16th in a federal court in Lower Manhattan. The courtroom, an aerielike setting 23 stories up, offered a panoramic view of the city and the East River. Though the gallery was usually full throughout the three-plus weeks of testimony, the spectators were not average citizens come to witness how they had been robbed blind by America’s biggest banks. Instead, there were row after row of suits – other lawyers eager to observe a long-awaited case, one that could influence the outcome in a handful of civil suits pending across the country. In fact, the defendants themselves, whom the trial would reveal as easily replaceable cogs in a much larger machine of corruption, were barely visible from the gallery, obscured by the great chattering congress of prosecution and defense attorneys.

Only the presence of the mostly nonwhite and elderly jury, which resembled the front pew of a Harlem church, served as a reminder that the case had any connection to the real world. Even reporters from most of the major news outlets didn’t bother to attend. The judge in the trial, the right honorable and amusingly cantankerous Harold Baer, acknowledged that the case was not likely to set the public’s pulse racing. “It is unlikely, I think, that this will generate a lot of media publicity,” Baer sighed to the jury in his preliminary instructions.

Read more

Online dating scams have become a worldwide issue. A study presented at the annual meeting of the British Psychological Society in London found that people with strong romantic beliefs who idealize their romantic partners are most likely to fall victim to online dating scams. Meanwhile, the U.S. Department of State has posted an advisory warning Americans to “be alert to attempts at fraud by persons claiming to live outside of the U.S., professing friendship, romantic interest, and /or marriage intentions over the Internet.”

According to the State Department, the following red flags can be used to identify a potential romance scam:

The scammer and the victim meet online – often through Internet dating or employment sites.

The scammer asks for money to get out of a bad situation or to provide a service.
Photographs that the scammer sends of “him/herself” show a very attractive person. The photo appears to have been taken at a professional modeling agency or photographic studio.

The scammer has incredibly bad luck– often getting into car crashes, arrested, mugged, beaten, or hospitalized — usually all within the course of a couple of months. They often claim that their key family members (parents and siblings) are dead. Sometimes, the scammer claims to have an accompanying child overseas who is very sick or has been in an accident.

The scammer claims to be a native-born American citizen, but uses poor grammar indicative of a non-native English speaker. Sometimes the scammer will use eloquent romantic language that is plagiarized from the Internet.

Many dating sites and online communities have turned to device identification leader iovation Inc. for help. iovation works with global dating websites and social networks to protect their members from behind the scenes by eliminating scammers before they’ve had a chance to case harm. iovation has already prevented more than 50 million online scams, spam, solicitations, fake profiles and phishing attacks in their attempt to make the Internet a safer place to do business and interact.

Read more

HUNTSVILLE, Alabama — Forget the key card to your office building? Just wave your hand at the door, and you’re in. “You don’t have to stop at a station. Nobody checks your ID. You just walk through,” explains Clemson-educated physicist Joel Burcham of his new Huntsville company called IDair.

IDair makes a machine that Burcham says can photographically capture a fingerprint from as far away as six meters in enough detail to match against a database. Add facial and iris-recognition technology, Burcham said, and you have the basis for a good biometrics system that can control access to any building or room within a building.

Who needs this level of security? “Sooner, rather than later, we’re all going to need it,” Burcham said in a recent interview at his office at Huntsville’s HudsonAlpha Institute for Biotechnology.

HudsonAlpha, known for human genome and other biological research, gave Burcham a desk for his startup company – “one desk,” he said – because Burcham plans to expand to latent print imaging, a process that involves biological questions of the kind routinely investigated at HudsonAlpha.

Currently, IDair’s customers are military. The system can be used, for example, to tell the difference between friendly locals and potential terrorists while soldiers stay safe behind blast walls.

But the future lies in commercial use. A 24-hour fitness center chain is beta-testing the system now as a way to stop access key sharing by friends or roommates, he said. Ultimately, Burcham said, the vision is that “when you walk into Target and run the items you want to buy across the checkout counter, you aren’t going to have to pull out your wallet or dig out your credit card, which is easily stolen and getting easier to steal every day.”

How does the IDair unit work? Burcham says it’s closer to the way satellites process ground images than the way Photoshop refines our vacation pictures. “There is a little bit of pattern recognition,” he said, “but a lot of it is different ways of sharpening the image … a lot of edge detection, things like that.”

Using image processing means there’s no need for the subject to touch the scanner to get a reading. That eliminates problems associated with oil or dirt on the finger. The basic IDair machine now, which costs under $2,000, processes one finger’s print. That’s good enough to get into a building, when added to iris or face-recognition software, but ironically it isn’t good enough to make a commercial transaction. Four fingers is the standard for that level of identification, he said.

Burcham understands the privacy concerns raised by fingerprint capture. His systems are not connected to major databases such as the FBI’s, he said, so there is no chance you will be screened for outstanding arrest warrants, for example, when you enter a building using the IDair system.

“What realistically happens is you’re an employee of a company,” Burcham said. “The company wants to put one of these devices on the door. You enroll in the system right there and then. They are not connected to anywhere else. You give your prints to the system, and they are collected on the system.”

It’s the security of the fingerprint database that concerns privacy experts such as Lee Tien, a senior staff attorney at the Electronic Frontier Foundation. “There are so many steps where a (digital) fingerprint can leak,” Tien said.

Tien said electronic fingerprints can be like Social Security numbers. He calls them “coat hangers” on which a lot of identifying information can be hung. In other words, with a Social Security number, you can find out many other things about someone. Fingerprints could be same way, he said, and “someone else could use it to pretend to be me.”

“Yes, it can be abused,” Burcham agreed. “Anything can be abused. The point is, are there restrictions in place to not abuse it?” The answer with IDair is yes, he said. “But what it’s going to come down to is: Do you want to go through that door? Do you want to buy something with Amazon?”

IDair is a spin-off of Advanced Optical Systems, and Burcham said two of the company’s officers are investors in the new company, which has three employees and an intern today. It will grow soon, he said. The company, which has a website at IDair.com, will seek a second round of financing soon, Burcham said, and investor interest is welcome.

Read more