THE FBI WANTED A BACKDOOR TO THE IPHONE. TIM COOK SAID NO

IN 2016, TIM Cook fought the law—and won.

Late in the afternoon of Tuesday, February 16, 2016, Cook and several lieutenants gathered in the “junior boardroom” on the executive floor at One Infinite Loop, Apple’s old headquarters. The company had just received a writ from a US magistrate ordering it to make specialized software that would allow the FBI to unlock an iPhone used by Syed Farook, a suspect in the San Bernardino shooting in December 2015 that left 14 people dead.

The iPhone was locked with a four-digit passcode that the FBI had been unable to crack. The FBI wanted Apple to create a special version of iOS that would accept an unlimited combination of passwords electronically, until the right one was found. The new iOS could be side-loaded onto the iPhone, leaving the data intact.

But Apple had refused. Cook and his team were convinced that a new unlocked version of iOS would be very, very dangerous. It could be misused, leaked, or stolen, and once in the wild, it could never be retrieved. It could potentially undermine the security of hundreds of millions of Apple users.

In the boardroom, Cook and his team went through the writ line by line. They needed to decide what Apple’s legal position was going to be and figure out how long they had to respond. It was a stressful, high-stakes meeting. Apple was given no warning about the writ, even though Cook, Apple’s top lawyer, Bruce Sewell, and others had been actively speaking about the case to law enforcement for weeks.

The writ “was not a simple request for assistance in a criminal case,” explained Sewell. “It was a forty-two-page pleading by the government that started out with this litany of the horrible things that had been done in San Bernardino. And then this . . . somewhat biased litany of all the times that Apple had said no to what were portrayed as very reasonable requests. So this was what, in the law, we call a speaking complaint. It was meant to from day one tell a story . . . that would get the public against Apple.”

The team came to the conclusion that the judge’s order was a PR move—a very public arm twisting to pressure Apple into complying with the FBI’s demands—and that it could be serious trouble for the company. Apple “is a famous, incredibly powerful consumer brand and we are going to be standing up against the FBI and saying in effect, ‘No, we’re not going to give you the thing that you’re looking for to try to deal with this terrorist threat,’” said Sewell.

They knew that they had to respond immediately. The writ would dominate the next day’s news, and Apple had to have a response. “Tim knew that this was a massive decision on his part,” Sewell said. It was a big moment, “a bet-the-company kind of decision.” Cook and the team stayed up all night—a straight 16 hours—working on their response. Cook already knew his position—Apple would refuse—but he wanted to know all the angles: What was Apple’s legal position? What was its legal obligation? Was this the right response? How should it sound? How should it read? What was the right tone?

Read More

Federal Partnerships Key to Dismantling Online Drug Markets

When Knoxville first responders found a man dead in his home, there was clear evidence on the scene of the heroin that caused his overdose. Also nearby were clues to how the deadly drugs had reached him. Investigators found a padded manila envelope with postage and markings that provided them another link back to the online drug sellers who have proliferated on the Darknet in recent years.

Drug traffickers are increasingly using anonymous online networks to sell narcotics, including potent synthetic opioids like fentanyl, to buyers who can order and receive the drugs without ever leaving home. What can appear to be a regular e-commerce transaction is one of the delivery channels fueling a deadly nationwide epidemic. The Centers for Disease Control and Prevention reports that drug overdose deaths have been on an upward climb for several years, across the United States and across all demographic groups. In 2017 alone, 70,237 people in this country died of a drug overdose; two-thirds of those deaths involved an opioid.

As part of a government-wide effort to address the epidemic, the Department of Justice created the Joint Criminal Opioid and Darknet Enforcement (J-CODE) team in 2018 to leverage the power of federal and international partnerships to combat the complex and deadly threat of online drug sales.

Now in its second year, J-CODE is delivering results through coordinated efforts and the commitment of the nation’s law enforcement agencies to address opioid sales on the Darknet. Building on the success of last year’s Operation Disarray, the J-CODE team led Operation SaboTor between January and March of this year. These concentrated operations in the United States and abroad led to 61 arrests and shut down 50 Darknet accounts used for illegal activity. Agents executed 65 search warrants, seizing more than 299 kilograms of drugs, 51 firearms, and more than $7 million ($4.504 million in cryptocurrency, $2.485 million in cash, and $40,000 in gold).

Read More

FBI thwarts Brinks armed car robbery outside Merrillville Aldi

HAMMOND — “Bingo,” a would-be robber told his accomplice as a Brinks armored truck pulled into their view in Merrillville Monday, federal authorities allege.

Traveling in a black Jeep Cherokee, the suspects began following the Brinks truck to various stops, with the ultimate plan of robbing it, federal prosecutors allege.

But the FBI was reportedly trailing them each step of the way.

A short time later, FBI agents thwarted the robbery by following and arresting the two men outside of the Aldi grocery store in Merrillville, the agency reported.

The men also are suspects in another $500,000 robbery of an armored truck in July, federal law enforcement officials said.

On Wednesday, the U.S. attorney’s office charged Reilly Jackson Jr., 23, of Griffith, with conspiracy to commit robbery after the Merrillville incident.

His alleged companion, Delvin Perkins, 23, of South Holland, was charged with being an armed felon.

Federal prosecutors allege in a criminal complaint that an ongoing FBI investigation of the suspects prompted agents to follow Jackson and Perkins on Monday.

The government alleges the men are suspects in a $500,000 robbery of a Thillens Cagistics armored truck July 25 in Blue Island, Illinois.

The government alleges that robbery was an inside job because Jackson was the armored car driver employed by Thillens Cagistics, and Perkins was the alleged robber.

The FBI said it found a photo in Jackson’s cellphone of Perkins wearing the same clothes in which he robbed that armed truck and concluded the pair worked together to commit the Blue Island robbery.

An FBI surveillance team was following the two defendants as they traveled in the Jeep Cherokee on Monday. Agents saw the men following a Brinks armed truck as it made multiple stops to collect money from local banks and businesses, the agency reported.

Read More

Treasurer accused of stealing $410,000 from charity for families of slain NYPD officers

The treasurer of a charity that benefits the families of New York Police Department officers who are killed in the line of duty was charged Thursday with stealing more than $410,000 from the fund.

Lorraine Shanley, 68, was charged by federal prosecutors in New York with bank fraud and aggravated identity theft. She will appear Thursday in court after prosecutors said she was stealing more than 20 percent of donations to the charity between 2010 to 2017 at least.

A person with direct knowledge of the matter confirmed to NBC News that Shanley acted as the treasurer for the nonprofit Survivors of the Shield.

The U.S. Attorney’s Office for the Southern District of New York said that Shanley spent the money in a variety of ways — $29,000 for her grandchild’s private school tuition, $32,000 for personal dental expenses, and $25,000 for landscaping.

Shanley is also accused of using about $63,000 of the stolen money to pay for her son’s legal expenses related to criminal cases, prosecutors said.

Her son was reportedly served about three years in prison on drug charges from 2006 to 2009. He was also charged in 2014 with second-degree manslaughter and leaving the scene of an incident without reporting, resulting in death after he crashed his SUV in Manhattan, killing an activist, and fled. The manslaughter charges were dropped.

She also allegedly wrote $45,000 in checks to family members and other people, which she then endorsed herself and deposited into her own account. Prosecutors said Shanley, from Staten Island, also used $1,400 of the stolen money to buy Barbra Streisand tickets and $6,600 more on other event tickets.

According to court documents, 99 percent of the donations to Survivors of the Shield come from New York police officers, and on average, 5,500 NYPD employees donate to the charity each year.

Read More

Former FBI Director Webster Assists Investigation

The heavily accented caller who promised William Webster a grand sweepstakes prize of $72 million and a new Mercedes Benz had done most of his homework on his potential fraud target.

“I know that you was [sic] a judge, you was a lawyer, you was in the U.S. Navy,” the caller told his elderly mark. “I do your background check. You are a big man.”

What the caller, Keniel Thomas, 29, of Jamaica, missed was possibly the most salient detail about his intended victim, who was 90 years old the time: William Webster had served as director of both the FBI and the CIA, and so had a pretty good radar for pernicious criminal schemes—in this case, a Jamaican lottery scam.

Thomas’ persistent calls in 2014 to Webster and his wife, Lynda, followed the familiar arc of scams that target the elderly: The caller promises riches but requires some form of payment to move the process forward. The caller demands more and more, and then resorts to intimidation when the cooperation tapers off.

In the Websters’ case, the former judge was told he had to pay $50,000 to get his prize. When the money wasn’t forthcoming, the frequent calls escalated to scary threats, which led the couple to contact the FBI.

“I don’t know how the conversation turned sour,” said Webster, 95, director of the FBI for a decade beginning in 1978. “But it did. And at that point, he shifted gears. Instead of sweet talk, he began to threaten her.”

In one expletive-filled recorded message left on the Websters’ phone, Thomas threatened to kill them and burn down their house if he didn’t get what he wanted. “You live at a very lonely place,” he said. “And the moment you arrive, I’m gonna put a shot in your head.”

Special agents from the FBI’s Washington Field Office enlisted the Websters’ help in nabbing the caller by recording their phone conversations to build a case and develop a clear picture of the scheme. The legwork ultimately led to Thomas’ arrest in 2017 and his sentencing last month in federal court in Washington, D.C., to nearly six years in prison. It also revealed that Thomas and his relatives in Jamaica had successfully scammed others in the U.S. out of hundreds of thousands of dollars.

Read More

Director Discusses FBI Approach at Cybersecurity Conference

With cyber threats to the United States and across globe reaching unprecedented levels, the FBI uses a full spectrum of expertise, technology, and partnerships to root out cyber criminals, FBI Director Christopher Wray said at the annual RSA Conference in San Francisco yesterday.

“Today’s cyber threat is bigger than any one government agency—frankly, bigger than government itself,” Wray said in an on-stage interview at the cybersecurity conference. “But I think no agency brings the same combination of scope and scale, experience, tools, and relationships that the FBI has.”

From multinational cyber syndicates to foreign intelligence services, hacktivists, and insider threats, Wray explained that the FBI takes a multidisciplinary approach to combating threats. For example, the Bureau has an elite rapid deployment force and Cyber Action Teams that can respond to incidents anywhere in the world. In addition, the FBI has joined other federal, state, and local law enforcement agencies on Cyber Task Forces to coordinate responses. Specially trained cyber agents are also embedded in FBI legal attaché offices in more than 60 countries worldwide.

In addition to law enforcement partnerships, Wray also stressed the importance of public-private partnerships, so prevention and response can be swift and coordinated.

“The key is having the private sector start to form relationships with their local field office beforehand,” Wray said.

As the FBI continues to grow its partnerships, the FBI is also developing its workforce’s cyber expertise. Wray spoke about the FBI’s success in recruiting special agents and professional staff over the past year.

“We’re dealing with the most sophisticated, toughest cyber actors in the world, and if you want the ability to take on those people, to be on the front lines of that battle, dealing with incredibly cutting-edge technology … you would be in the right place,” Wray said of FBI cyber careers.

View Source

Three Sentenced in Public Corruption Case

An Alabama legislator who was bribed by a corporation to represent the company’s interests—instead of his constituents’—is now serving prison time, and the two men who paid him will be serving time as well.

Former state representative Oliver Robinson, Jr., 58, agreed to a community outreach contract with a law firm that represented Drummond Company, Inc., a Birmingham, Alabama-based coal company. The contract paid Robinson $375,00 over two years. While the contract itself was not illegal, Drummond executive David Roberson and lawyer Joel Gilbert used it as a bribe to induce Robinson to take official action as a state legislator promoting the interests of the company he was secretly representing—a violation of public corruption law.

The Environmental Protection Agency (EPA) had previously informed a Drummond-owned company of its potential responsibility for environmental pollution in North Birmingham—a liability that could cost the company tens of millions of dollars. So Drummond, along with its attorneys, started a public relations campaign to oppose the EPA’s actions. The company and its representatives told local residents not to allow the EPA to test their soil and that their housing values would plummet if the EPA placed the community on its Superfund National Priorities List. Part of the overall strategy was the outreach contract with Robinson to help the company get those messages out.

In early February 2015, Robinson signed a letter (secretly authored by Gilbert) in his official legislative capacity to the Alabama Environmental Management Commission against the EPA’s actions. Later that month, Robinson signed the contract and received his first check from Gilbert’s law firm for $14,000. Four days later, he represented Drummond’s position at an Alabama Environmental Management Commission public meeting, where he claimed to be representing his constituents and did not disclose his financial relationship with the coal company or law firm.

Read More

Fraudsters Told Prisoners’ Families They Could Buy Sentence Reductions

The sales pitch was enticing: Families with loved ones in prison could hire investigators to provide information to the government that would result in a reduction in their family members’ sentences.

It sounded too good to be true—because it was.

A group of fraudsters who made this pitch to more than 20 inmates’ families were paid more than $4 million, but neither the prisoners nor their relatives ever received any benefit.

It is possible under certain circumstances for incarcerated individuals to get a sentence reduction for providing information to the government, but they never have to pay for that. Also, those cases typically involve an incarcerated person providing information regarding their own co-defendants.

Alvin Warrick and several co-conspirators set up a company called Private Services in Texas, but the word—and the scam—quickly spread across the country. Warrick and his associates communicated primarily through email and phone and used pseudonyms in an attempt to cover their tracks. They told the families their investigators were making undercover drug buys and that those “investigations” would lead to sentence reductions for their family members. They repeatedly lied to their clients, telling them that the investigations were ongoing and working their way through the legal system.

“That is just not how the system works, but many of these families didn’t know that,” said Special Agent Tracy Masington, who investigated this case out of the FBI’s Houston Field Office along with the Department of Justice’s Office of the Inspector General (OIG).

Masington noted that at least one victim was in another country trying to get his son out of prison. Another victim was an elderly woman who, on her deathbed, made her daughter promise she’d continue paying Private Services to try to free her son from prison after her death.

Read More

Cryptocurrency Fraudster Sentenced

Even in the world of virtual currency, where value and possession exist largely in the digital realm, laws still apply and the repercussion of breaking them are very real.

The victims of Homero Joshua Garza’s virtual currency scam lost more than $9 million, and Garza will spend 21 months in prison followed by three years of supervised release after pleading guilty to one count of wire fraud. He has also been ordered to pay restitution to his victims.

In charging documents, prosecutors contend Garza founded and operated several Connecticut-based businesses (GAW Miners, ZenMiner, and ZenCloud) between 2014 and 2015 that sold bitcoin-mining hardware, offered shares in a virtual currency mining operation, and created and sold a virtual currency called PayCoin. None of these businesses would have been illegal if conducted properly, but through a series of misleading and false statements about his companies’ capabilities, partnerships, and financial backing, Garza fraudulently drew investors to his enterprises and eventually resorted to Ponzi-scheme tactics to delay detection of his fraud.

“Garza got into this market at the right time,” said Special Agent Mark Munster, who investigated this case from the FBI’s New Haven Field Office. “The interest and enthusiasm for these currencies was high, and he was able to market himself and the business very effectively. The problem was that much of what Garza was marketing was a lie.”

The first iteration of Garza’s companies sold the computer equipment virtual currency enthusiasts use to mine, or solve the complex equations required to attain a bitcoin or other virtual currency. Munster said Garza’s business started as a legitimate operation with a clever hook—he wanted to make it easier for people who didn’t have a technical background to access cryptocurrencies.

The initial currency-mining equipment business turned into one that offered to purchase a currency miner on the customer’s behalf and set it up at the GAW Miners data center. The customer could then direct the miner’s activities and reap its profits. Garza then moved into selling shares, or “hashlets,” that represented a percentage of the profits being made by his company’s purportedly robust bitcoin mining efforts. These hashlets, Garza assured investors, would always be profitable.

Mining bitcoins at the volume needed to generate the type of value Garza was promising requires a staggering amount of computing power. These powerful computers are expensive, as is the electricity required to run them. “There were data centers,” said Munster, “but not nearly the capacity that they were representing.” Without the actual infrastructure to support the shares he was selling, returns fell far short of what was promised to investors, and Garza began using new investments in the company to pay returns to others.

Read More

Prominent Gallery Owner Sentenced for Defrauding Clients

The fine art world trades largely on names—names like da Vinci, Picasso, and Cézanne that can make the value of a canvas soar, and the names of dealers and gallery owners who operate in this rarified air by virtue of their own reputation and renown. Ezra Chowaiki was one of those dealers, and his gallery on New York’s Park Avenue catered to art collectors, buyers, and sellers from around the globe.

But in September 2018, Chowaiki was sentenced to 18 months in federal prison for carrying out what the United States Attorney for the Southern District of New York called “an elaborate scheme to defraud art dealers and collectors of millions of dollars.” Chowaiki’s name and his word, as it turned out, were not worth much.

According to an online biography, the company Chowaiki founded with partners in 2004 “established itself as a prominent gallery managing the acquisition and sale of art by Impressionist, Modern, Post-War, and Contemporary masters.” The gallery was also known for hosting exhibitions of major works.

“Chowaiki had been in the art world for a while and had completed plenty of legitimate deals,” said Special Agent Christopher McKeogh with the FBI’s Art Crime Team in the New York Field Office. “Most of the illegal activity was relatively recent.” But McKeogh stressed that once it began, “the schemes and thefts were coming at a fast and furious clip.”

When the investigation reached the FBI in November 2017, Chowaiki’s gallery had just filed for bankruptcy, and the New York Police Department was already identifying and interviewing victims of bad deals. The FBI became involved because of the expertise of its Art Crime Team as well as the interstate and international nature of the crimes. The biggest concern: 25 stolen masterworks by Marc Chagall, Piet Mondrian, Alexander Calder, Fernand Léger, and others.

“The case came with a true sense of urgency,” said McKeogh. “We needed to get the scheme under control and get the artwork back before it changed hands again and disappeared.”

According to court documents and the case agent, Chowaiki was actively carrying out both frauds and thefts. McKeogh said the frauds usually involved Chowaiki overselling the value of a painting. For example, he would reach out to an individual with whom he had a relationship and offer that person the opportunity to buy a share of a work, claiming it could be resold for a quick profit. He would then offer the same deal to a second person and then to a third. Sometimes they were paintings in which Chowaiki had no actual control or ownership stake, but he would collect more than 100 percent of their value. “It was like me selling you a piece of the Brooklyn Bridge,” said McKeogh.

Read More