Video question and answer

Video transcript below: Where you see the passing of time.  

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With more than 150 million computers in use around the world, modern society is increasingly dependent on them for everything from national defense to personal finance. But the explosive growth in the computer industry brought with it an explosion in crime, as high-tech outlaws launch attacks from a new electronic underworld.

The most highly desired criminal over the next 30 or 40 years is going to be the computer hacker. That’s what we used to call the geek, the kid we used to laugh at in high school, with the little white plastic thing in his shirt pocket, and all the pens sticking out, and the little slide rule, and the thick glasses. Don’t laugh anymore.

It turns out that with the advent of the computer age, some of those geeks set their sights on breaking into sophisticated government and corporate computer systems to wreak as much havoc as they could, sometimes just for the fun of it. One of the most notorious of the new outlaws was a man named Kevin Mitnick.

In Raleigh, North Carolina, the world’s most wanted computer hacker was zapped into a federal courthouse today under tight security. Kevin Mitnick is accused of billions of dollars in cyber-piracy, using phones and high-tech know-how to tap into corporate computer files.

Mitnick was arrested first at the age of 17 for stealing telephone company computer manuals. He quickly graduated to bigger crimes involving computers. He became obsessed, a defense lawyer later said, addicted to roaming through cyberspace and hacking with a vengeance. Then in 1988, he was arrested yet again, this time for breaking into corporate computers and causing millions of dollars in damages.

This afternoon, Mitnick stood before a federal judge to plead innocent. A federal grand jury charged him with using unauthorized long distance codes to tap college computers in London and computers at the University of Southern California. He is also accused of causing $4 million damage to a computer at the Digital Equipment Corporation. Federal prosecutors say Mitnick even used computers here at the USC computer lab to break into some top secret national security computer systems.

Mitnick was convicted and sentenced to a year in prison. After his release, he began court-ordered counseling for compulsive behavior disorders. But in 1992, he broke probation and went underground, and promptly resumed his attacks on computers around the world.

There was a federal warrant for his arrest, and he’s been a fugitive for over two years.

On the run, Mitnick was accused of infiltrating the cellular telephone network to steal credit card numbers and corporate software– and secret techniques for breaking into more computers. And as he got away with more and more, he became more and more brazen, deliberately infiltrating the computers of top security experts.

Mitnick might never have been caught if he hadn’t invaded the personal computer files of Tsutomu Shimomura, called by many a genius in computer security.

It’s like having to walk through your house, or someone break into your house and walk through. I had data belonging to me, things that I work on, and proprietary information belonging to other companies I do work with. And that’s mostly what he got.

The break-in took place on Christmas Day of 1994, and for the next eight weeks, Shimomura followed Mitnick’s trail from one computer to another.

It’s like good old-fashioned detective work, but the clues are different. Instead of having fingerprints, bloodstains, a bloody glove, whatever the case may be, you have other kinds of evidence. You have network traffic records. Shimomura was relentless, undeterred by threatening phone calls.

Don’t you know who I am? Me and my friends, we’ll kill you.

Ah, Tsutomu, my learned disciple. Have I not taught you, grasshopper? You must learn from the master.

From California, Shimomura began helping the FBI. They traced Mitnick to a cellular phone near the Raleigh-Durham airport and then followed his signal to this apartment complex, where Mitnick was working the phones even as agents pounded on the door.

The real pursuit here was about a week. A pretty intense week, working without sleep or going as fast as we can. Because we know that he can– if we go slowly, he’s going to find out that we’re on to him. He may go somewhere else and be much harder to find.

So in a way, it’s a game. He’s trying to get away with something, and we’re trying to catch him. And once we had to pretty good idea as to where he was by looking through his cellular billing records, we were able to go out there and physically home in on him.

When Mitnick was arraigned in federal court, Shimomura and his quarry finally came face-to-face.

And he looks at me, and his eyes go wide. And I think suddenly, it became clear to him how he’d been caught. And at that moment, I think it occurred to both of us that it wasn’t a game. After the hearing, as he was being led away by the marshals, he said to me, I respect your skills.

Mitnick pled guilty to possessing stolen cellphone gear. The case was moved then to Los Angeles, where he was charged with an additional 25 felony counts, ranging from the theft of computer passwords to 14 counts of wire fraud for stealing proprietary software. So one of the nation’s most notorious computer criminals was finally out of action, thanks to Shimomura’s persistence.

Mr. Shimomura’s an extremely knowledgeable computer expert.

Could you have caught him without Shimomura?

The answer’s probably yes, but Shimomura played a significant role in the investigation.

Mitnick was only the most prominent of a mushrooming group of illegal hackers. But it wasn’t always so. The term hacker began benignly enough. The word “hack” originated at MIT to refer to general student pranks. By the 1960s, the term “hacker” referred specifically to students who had figured out ingenious ways to use computers.

The first generation of computer hacking, one could say, was in the universities in the late ’60s, early ’70s, when computers started getting hooked together. And that was the beginning of hacking, was technical pranksterism and challenges amongst peers. And it was an intellectual exercise. There was nothing criminal about it.

In fact, hackers had a code.

The hacker ethic is to do no harm, do no damage, do no intentional or accidental damage upon a system. To go inside, look around, poke around, learn about the system, explore it, find out everything that you can, and leave quietly. Hackers were not interested in stealing things that were not theirs.

The advent of low-cost personal computers in the ’70s and ’80s put computer power into the hands of millions of new users. And with those new users came a new generation of hackers less concerned with ethics.

What happened was a few bad apples gathered some of the knowledge and started applying it in malicious ways.

Ronald Austin is accused of illegally tapping into 14 separate computer systems. The 19-year-old former UCLA student even managed to gain access to a special computer network that stores information on research projects for several government agencies, including the Defense Department.

He is only 15, but he’s a member of the country’s most celebrated gang of computer invaders.

It was pretty simple to get in, my standpoint, to get into some of these computers.

By telephone hookup, this young man and a half-dozen friends were able to dial into a computer network that stretches across the continent. In Los Angeles, they accessed a computer at the Security Pacific Bank. In New Mexico, they tapped into the Los Alamos National Laboratory. In New York, they read and accidentally altered some files at the Sloan-Kettering Cancer Center.

Hackers also enjoyed writing programs that could tell another computer what to do, and it wasn’t long before those programs turned into viruses that moved from computer to computer like an invading disease.

A virus is merely a way of getting a set of information from one point to another unknown to the user. What the virus does is part and parcel of the payload that it is delivering.

Once inside a computer, a virus can go into action immediately or sit quietly in the computer’s memory, like a time-bomb, primed to go off on a certain date or after some particular action by the user. Once activated, viruses can cause untold damage inside thousands of computers.

The FBI put out a nationwide alert today about a so-called computer virus set to go off Friday. It’s nicknamed Michelangelo, but its masterpiece is far from the ceiling of the Sistine Chapel. It’s a lowdown work of sabotage that could wreck millions of computer programs around the world.

Computer operators scrambled to purge the virus before it erased all the software and data stored inside their computer systems. In some cases, they were too late.

In South Africa, Michelangelo hit hard. There, the electronic virus spread rampantly, and somewhat ironically, in the computers of hundreds of pharmacists.

In the region is 1,350 PCs have in fact gone through the damage process of Michelangelo.

But in the United States, Michelangelo seems to have been the virus that cried wolf. There are only a few reports of computer memories being destroyed when machines were switched on this morning.

Far more disruptive was a virus released in 1988 by a young graduate student.

Someone is sabotaging nationwide computer networks linking US government defense researchers and major universities. Mode of attack? A so-called computer virus. That’s a renegade set of instructions sent inside computers, spreading from computer to computer.

Robert Morris, the son of a well-known computer security expert, wrote the virus as an exercise in programming. But, he says, he made a small mistake, thus turning a benign program into the most disruptive virus in computer history.

In this case, the virus told computers it entered to stop whatever else they were doing, to reproduce copies of the virus endlessly, and then send those copies to every other computer that could be contacted. With computer age speed, the virus soon filled computers from coast to coast.

The Morris virus infected more than 6,000 computers and cost millions of dollars in lost time and shutdowns before it could be stamped out.

A computer expert who paralyzed thousands of computers nationwide with a renegade program was sentenced today– community service, three years’ probation, and a $10,000 fine.

It wasn’t long before sophisticated corporate raiders began turning to hacking to spy on their competitors. And what were they looking for?

Everything from trade secrets, chemical formulas, software, shuttle designs, high-speed research out of government-sponsored projects, stealing aerodynamic data from Boeing– work your way down the list.

Federal prosecutors say these tapes show to Hitachi executives buying stolen IBM computer parts and programs to keep their company competitive. After its executives were caught, Hitachi admitted it had spent $540,000 for the information.

You’re under arrest. FBI. You’re under arrest, Mr. [INAUDIBLE].

The FBI calling this one possibly the biggest case of industrial espionage in history, but the Japanese calling it a piece of political provocation laced with entrapment.

Altogether, 21 were indicted, including 13 employees of Hitachi and five from Mitsubishi, two of Japan’s biggest electronics firms. It was apparent computer crime was part of a growing trend.

Currently, corporate espionage is on the increase at 142% a year. There’s been a 500% increase in the last six years. And there are 122 countries around the world that use online, computerized industrial espionage efforts against the United States.

And when it comes to government computers, more than corporate secrets are at stake.

What you’re talking about, in the case of dealing with the Department of Defense, is that’s espionage.

The film War Games told the story of an All-American teenage hacker who managed to break into Pentagon computers and almost trigger a nuclear war. Well, that is no longer completely science-fiction.

Some of our military computers here in the United States have been successfully hacked into recently, no?

Yes.

Serious?

Yes.

During Operation Desert Storm, for example, industry insiders say that some Dutch hackers broke into US military computers to get information on troop and personnel movements. The Pentagon denies that, but they don’t deny that other hackers have managed to access data on everything from ballistic missiles to advanced aircraft design. And yet another hacker used the internet to break into the computers at Griffiths Air Force Base in New York state.

And that was tracked back to a 16-year-old in Great Britain.

Another serious case involved a German spy.

When you first discovered that somebody was breaking into your computer, who did you think it was?

Surely it’s going to be some– some innocent kid who’s just having fun, fooling around on my computers in Berkeley.

But it wasn’t. It was a West German computer expert working for the Russian KGB. He was using astronomer Cliff Stoll’s university computer system as a gateway to military computers across the nation.

I’m myself convinced that we stumbled onto a spy ring that was stealing information– military information, commercial information– from American computers and selling it to the Russians.

That’s exactly what US and German authorities believe. Almost three years from the day Cliff Stoll first noticed the hacker, Marcus Hess, a 28-year-old computer programmer, was charged with espionage in West Germany.

Hess and two men charged as his accomplices were convicted, but their sentences were suspended when US authorities would not confirm the hackers had stolen classified information. The electronic break-in raised serious alarms about the security of both military and corporate computer systems.

Who’s watching me? Who’s securing these computers? Who’s making sure that these systems are tied down and that outsiders can’t get in? Who’s locking those doors?

As more and more experts began to worry about computer security, a new breed of criminal began to emerge– one more interested in stealing the computer hardware than the information it contains. And unlike hackers, many of these crooks use guns.

Five armed bandits burst into this small computer company and tried to steal millions of dollars worth of chips. They shot and beat half a dozen employees.

Nearly 130 suspects were targeted in yesterday’s sweep of the San Jose area, the finale to an 18-month-long investigation of sometimes violent computer chip thefts.

Employees were terrorized, typically confronted at gunpoint. Some were pistol-whipped.

And as this surveillance tape shows, stealing computer parts is no small operation. It has grown into a multi-billion-dollar enterprise, bigger even than the damage done by the hackers’ piracy of information. In fact, it’s so big that computer parts have been used as currency in illegal drug deals, because they’re just as good as cash and they are far less traceable.

[MAN SHOUTING]

Surveillance video has shown criminals at work as the black market in computer chips grows. The armed gang that hit this Oregon semiconductor company grabbed $2 million in chips.

It’s almost like robbing a bank.

It’s better than robing a bank. It’s like having a handful of diamonds. I mean, they’re very expensive.

Much more valuable than drugs, even, pound for pound.

This is a small, highly concealable, very valuable piece of equipment. Chips are the dope of the ’90s.

Chips are the small but complex circuits that make up a computer’s electronic brain. Because they are so lightweight and so expensive, chips are more valuable, ounce for ounce, than gold. And they’re almost impossible to trace.

The biggest chip right now, the Pentium, is like 1 and 1/4 inch square.

Weighs ounces?

Approximately an ounce, or less. And its worth, retail value, is approximately $600.

Jason Smith went to prison for stealing $1.6 million worth of computer chips by breaking into computer stores and other small companies.

If you slip out one box of them out the overhead door or whatever, into the garbage or whatever, whole box would be worth hundreds of thousands.

Stuff like this sells anywhere from 15 to 18 times in the first 72 hours after it’s stolen.

Jason Smith found buyers for his loot by looking through ads in computer magazines.

As you can see, “Top Cash Paid for CPUs, Memory, DRAM, Hard Drives, Systems, and Components. IBM or Mac.” Here’s a number and a pager number. And there’s many ads like this.

And they buy–

No questions asked.

No questions.

No questions asked. They pay cash, and it’s gone. And then they turn around and sell it at full retail.

And who ends up with the stolen hardware?

It could be inside anybody’s laptop. You don’t know what’s inside there. You don’t know if it’s a stolen chip or if it was not a stolen chip. Or that chip could have been stolen two or three times. And you really don’t know.

One of the most lucrative markets for stolen chips is in Asia, in places like Hong Kong or Taiwan. The stolen chips can help Asian computer companies compete with American manufacturers at a much lower cost.

Most of Taiwan’s computer companies are small mom-and-pop operations. In particular, no-questions-asked operations where price is everything.

How much and how many? That’s what it comes down to.

Dan Grove is a private investigator who’s been in Asia for 18 years. Using a hidden camera, we went with Grove and an associate to a shop in Taipei’s electronics district.

It’s new.

Brand new. OK.

There, the shop owner said he could easily sell us those brand-new American-made Pentium chips– a lot of them.

Can this gentleman supply me with, say, 1,000 to 2,000 of these?

Yeah. No problem.

No problem?

Yeah.

The authorities say that the odds are high, very high, that they got there illegally, either stolen outright or laundered through a network of computer-chip brokers. But the shop owner wasn’t finished. He kindly told us to watch out for other criminals, people who changed the labels on low-speed computer chips and sell them as the latest, fastest models.

But the lettering is different on this, slightly.

Yeah, this is–

[INAUDIBLE].

And of course, hardware is not the only target for computer criminals. The programs, or the software, that turn a computer into a word processor or an electronic accountant can cost hundreds of dollars. But the programs are relatively easy to duplicate and are therefore easy to steal.

David LaMacchia’s a junior at MIT and a computer whiz, and he’s in big trouble. LaMacchia used computers like these at MIT to set up his own electronic bulletin board, where computer users pass messages. The government claims he allowed copies of $1 million worth of commercial software programs to be put on his bulletin board where they could be copied for free.

Prosecutors say what young LaMacchia did was just like burlgarizing a software store and then inviting everybody else in.

Even if it were a crime, David LaMacchia wouldn’t be guilty of it, because he didn’t exchange any software. All he did was run the bulletin board system on which it was done by other people.

Most businessmen who’ve been hit by hackers are too embarrassed to admit the loss of valuable corporate secrets. But one victim, James Lennane, who develops computer software, told us he had just started to market a new word-processing program called DeScribe when a customer phoned him to say that it was suddenly available worldwide on the internet, free of charge to anyone who wanted it. The hackers had struck again.

And now it’s all over the world. It can never be recovered. So it’s out there. Basically, you can get DeScribe for nothing. So that’s happened.

How much did you have invested in this software?

I personally invested $10 million in it, and it’s yet to turn one cent of profit.

It’s costing the United States, depending upon whose numbers you listen to, between $5 and $25 billion a year in lost intellectual property values from the software industry alone.

Computers have turned up everywhere in the American economy, helping to run everything from the nation’s banks to the corner grocery store. So it is no surprise that a new generation of thieves and scam artists have rushed to cash in at the new electronic frontier. Only this time, they’re not holding up banks or corporations with guns. They’re doing it with a keyboard.

In the old days, you see, I would go into a bank with a gun and say, give me your cash or your life. Well, he doesn’t have a lot of cash laying around anymore. But he’s got a computer. And guess what? Money’s being transferred, as I’m standing there. In a millisecond, hundreds, thousands, millions of dollars are moving back and forth.

It was one of the biggest, most ambitious bank jobs in American history. Computer expert Stanley Mark Rifkin, arrested last November, charged with rigging Security Pacific National Bank’s computers to cough up $10 million, part of which, the FBI charged, he used to buy Russian diamonds, money and the diamonds both confiscated when Rifkin was arrested.

Robbing banks by keyboard isn’t confined to the United States.

Computer hackers in Russia reportedly succeeded in breaking into the electronic money-transfer system of Citibank and stole more than $10 million before they were caught. Court documents unsealed here in New York today said the money was shifted to bank accounts in seven countries. Citibank says the money was recovered. Six people are under arrest.

Electronic thieves aren’t just interested in money. They’re also going after credit card numbers.

Police in San Diego say they have cracked a nationwide network of young computer criminals. The hackers were able to make illegal credit card purchases by breaking into confidential computer files. Police say the illegal charges could total millions of dollars.

If someone was so inclined, they could make reservations, rent limos, take airplane flights.

All on somebody else’s credit card?

Well, actually, they could make it so it really was just free, and wasn’t billed to anybody.

How do you do that?

Well, if you break into the computer system, you don’t really have to charge it to anybody.

Just the credit card companies that are forced to absorb the loss. Also absorbing the loss are the nation’s telephone companies, who are annually defrauded of millions of dollars by thieves who break into the huge computers that run the nation’s phone systems, making free long-distance phone calls and stealing access codes.

It’s as easy as going into a store, buying a piece of candy.

These two teenagers are about to show you just how simple it is to penetrate an AT&T system. This is Alan and his partner Bob. They’re in the illegal business of breaking into the phone systems. They asked us to disguise their faces and alter their voices.

Is it tough to get into a company’s phone system?

No. I call a number and I get your computers. And then from that computer, I just own your whole phone system. And then I could call into a number and get your dial tone, and then call out with your dial tone.

Let’s see what we’ve got. Listen.

[MODEM SCREECHES]

That is a modem carrier, and we’ve just connected to it.

You’re in someone’s phone system right now?

Yes. See, this is a private system. Reach out and phreak someone.

Elapsed time– less than four minutes. And keep in mind, these teens claim they infiltrate hundreds of different phone systems every year. And they’re not alone. There are hundreds of phone hackers like them across the country who steal telephone codes. It’s a booming business.

Once you get these numbers, what do you do with them?

Sell them.

Who buys them?

People on the street, who sells them to normal people to call their home country.

What do you charge your customers for these numbers?

For 10 numbers, $2,000 even.

Tracking down modern computer thieves has been compared to tracking down ghosts. After committing a crime, modern electronic thieves simply vanish into cyberspace, and that’s convenient if you happen to be an embezzler.

The fear is that the very men who design and operate these systems are in a position to commit some of the biggest bank heists in history. It has already begun. In Chicago, the Cosmopolitan Bank lost $7 million a few years back. It was basically a bad check scheme, but one of the bank officers used its computer to cover up the fraud. In New York, the Union Dime Savings Bank had a chief teller steal $1 and 1/2 million dollars, covering up through the computer. Bankers admit that there are many more cases that never reach court because banks don’t want bad publicity.

Thieves frequently break into computer systems by stealing passwords, the codes that tell a computer who is an authorized user. And there are even computer programs designed especially to figure out passwords.

There are programs that were developed for law enforcement that unfortunately have kind of gotten out there.

That program could pick out secret passwords because when analyzed electronically, they stand out from the rest of the words in a file. Alan Brill was able to find my secret password within just seconds.

The machine believes that your password was Zina.

There it is.

With that password, I can get in and I can be you.

And that’s exactly the kind of nightmare that worries computer security experts.

The point is that organized crime, gangs, they’re going to get involved in this because it is stupid for them not to get involved with it. And this is the point that a lot of people are missing, is that criminals have always been one step ahead of the good guys. It’s in their best interest to.

There’s a percentage of the US population that’s up to no good. So they’re going to look at this technology and say, how can I commit fraud using this technology? How can I steal property using this technology? How can I injure people, if they’re so inclined, using this technology.

So the John Gottis of the future will be hackers. Or the grandsons of hackers.

Correct.

But it’s not just organized crime that’s turn to computers. Drug dealers, especially the international cartels, rely increasingly on computers and other high-tech tools.

A classified videotape just released of a Colombian cartel headquarters shows the gangs had more computer power and communications gear than many small nations. They traced every call made to the American embassy and listened to virtually every call made by the police.

Any phone calls that would go into a DEA agent, any phone calls into a Colombian national police installation, they would follow that, and they’d follow the surveillance teams. It’s mind-boggling, the power that this group had eventually amassed over 15 years.

All this computer crime is just the beginning. Just over the horizon? Criminal exploitation of the internet, a vast network linking millions of computers around the world. The explosive growth of the internet has given crooks and spies and terrorists a new superhighway to crime.

Everybody’s telling you how great it is to get your company on the information superhighway.

Right.

But they don’t tell you that on this superhighway, it’s car-jackings, it’s drive-by shootings. And some of the rest stops are pretty dangerous places to hang around.

Over the past few months, using the internet, hackers have managed to penetrate the computer files of scores of top US corporations, reading all kinds of sensitive, strategic, highly confidential information. They’ve even managed to penetrate the US National Weather Service. And if it weren’t for the Service’s backup system, the results of that penetration could have been disastrous.

They were very close to the point where they could have shut down or damaged the computer systems. If that had happened, no pilot would be able to get a weather forecast for his airplane. Commercial aviation probably would’ve ground to a halt.

In 1991, fewer than three million computers were wired into the internet. By 1996, that number had ballooned to more than 55 million worldwide. And experts say it’s growing at nearly 200% per year. It’s this vast network that gives criminals access to so many computers.

It is an ethos. There are no rules. There are no laws. It is anarchy. The internet is a bad neighborhood.

A breeding ground for all kinds of crime.

US federal agents raided more than 100 homes nationwide in the first-ever major crackdown on interstate trafficking of child pornography by computer network.

And more than just pictures are involved, for in some cases, pedophiles have used internet contact with children to develop personal relationships.

For the last two years, George Burdynski of Brentwood, Maryland has been on a mission.

That’s my main goal, is that Junior’ll be brought home.

Junior is Burdynski’s 10-year-old son, who disappeared in 1993. Police believe he was abducted by a child molester he met through a computer online service.

It’s hard. I mean, there’s days that go by, you call the police, and you feel that, you know, they don’t call you back.

But Junior’s case led the FBI to launch Innocent Images, a major investigation of computer kiddie porn, which the agency announced today has led to at least 12 arrests and raids on more than 120 homes nationwide.

Reveal that the utilization of online services or bulletin board systems is rapidly becoming one of the most prevalent techniques by which individuals share child pornographic images.

Concern about the availability of internet pornography prompted the Congress to pass the Communications Decency Act in February of 1996, making it illegal to transmit so-called indecent material over the internet.

Sexual predators cruise the information superhighway to lure children into the inappropriate discussions and conduct, and the cloak of secrecy is used by a few to terrorize innocent victims.

But in June of 1996, a federal court ruled the Communications Decency Act was unconstitutional.

Free speech advocates were jubilant, shooting off fireworks in cyberspace. Today’s ruling was a stern denunciation of the