FBI Databases Used for Stock Fraud

Phronesis writes "The Associated Press reports that two FBI agents have been indicted for conspiring with the owner of InsideTruth.com to short stocks and then leak information from the FBI's internal databases (e.g., unpleasant personal information about corporate officers). They also allegedly blackmailed companies with the threat of revealing such information. This case illustrates the failure of law enforcement agencies to implement adequate protection against the abuse of information they collect."

Which leads one to wonder

Why these guys were collecting such information in the first place. Seriously, there are a lot of privacy activists out there, but it seems to me that the vast majority of them are complaining about the cookie-of-the-month problem when what they should really be looking at are the kinds of scams government data collecting enables. Identity theft, for instance, wouldn't be possible if not for the ubiquity of Social Security numbers as a "citizen ID" of sorts.

Hmmmm

So yet another case of government intruding privacy, and yet the same government is against encryption, embraces companies that sell privacy info and can't make a proper bill about privacy?

Little wonder we trust them.

Remember John Hanssen...

It is theoretically nice to have a trusted someone that checks all our correspondence, etc., but any organisation is full of human beings who may be fallible.

Anyone who thought that the FBI is beyond reproach only had to look at the Hanssen case. This one, however, is even more interesting because it represents commercial use of sensitive information. I will treasure this as an example of why Governments should also have a 'need-to-know' applied to them.

Stop this from happending in the eu

Help stopping a propsal that will force the ISP's in the EU to store info on their users for several years.

info at http://stop1984.com/index2.php?text=letter.txt [stop1984.com]
I guess we're heading the same way as you guys

As usual its an inside job

This illustrates once again that the most frequent abuses of security are inside jobs. The vast majority of cases where security systems are breached for personal gain are done by people inside the organisations keeping the data.

How much bigger would this story be if the data had come from hackers penetrating the FBI? Since its an inside job, its not front page news.

We don't need huge security structures and new laws to keep out black hat hackers, we need a closer watch on people inside companies and organisations keeping data. And, if the data isn't needed for a clear purpose, it shouldn't be collected.

And that applies as much to government agencies as companies, since the people inside those, as this case proves, can't be trusted either.

How should privacy violators be punished?

Here's my suggestion: Have the FBI, or even some more reputable organization, run a full-bore background check on them, followed by total surveillance for some period of time from 30 days to life, depending on the seriousness of the violation.

Then post the results, complete with photos and video clips, on a website for the duration of the sentence.

I see that privacyviolators.com is available, as is publicstockade.com.

penalties

if convicted of all counts, Royer and Elgindy could receive 65 years in prison. Wingate faced up to 45 years in prison if convicted, and the other defendants, Cleveland and Troy Peters, each could be given 40-year prison terms.

If only we had similar penalities for spammers.

I wish I could make a joke about Wingate, (there has to be one someplace) but I don't realy have enough coffee in me yet.

Bad agents

Come on. We've known forever that the FBI has huge files on tons of people, there where stories about the FBI file on einstein on here a week or so back. Had it been the actual FBI selling this information and not a couple of bad apple agents pissed they didn't get a raise this year then perhaps it would be a huge story.

As it is, this just shows they need a little stronger check as to who has access to what, but they did catch the people so I am assuming some checks are already there.

Stock Fraud...

Stock Fraud [bestfoods.com.jo]

Glad to see the FBI is doing something useful :-)

The corruption runs deep

I can see how many are afraid of the deeds of organizations such as the KGB, GRU, Gestapo, Stazi, and FBI/CIA. This gives a fear of any form av compulsory identification, and a misstrust of the goverment agencies for law enforcement.

The problem here is that system is rotten, and with presidents who are obviously lying their pants off (pun very much intended) constantly, these FBI agents probably didn't feel bad about doing these deeds.

So off course we are afraid of the information collected, since it not only can, but apparently will be used against us. That is the problem, that the information that is supposed to protect us, is used against us.

I don't have a clue on how to fix a system this corrupt, with indivudauals this ruthless. The only advice I can give you all is to not act like these peoples and be a good role model for your friends and family.

Mr. Smith

Replace them with robots

otherwise they are just normal people. FBI employees around 30 000 people. A little city. I bet they use the database for criminal purposes hundreds of times every day.

A clip from here [time.com]:
" The Webster commission is expected to recommend limiting highly sensitive files to those with a strong need-to-know -- "role-based access," in FBI jargon. "

'Expected to recommend...' exactly what is the procedure currently?!?! These systems and their databases are extremely scary.

Predictable...

Reminds me of that old, old quote:

• Power corrupts.
• Absolute power corrupts absolutely.

As governmental databases will reach critical mass, especially with cross-indexing and cross-searches are made more and more common (Oracle database proposals anyone?), I can safely predict that this kind of abuse will only become more and more common.

Do you still think your government does not spy on you? Think again...

Wait a moment

I am in Australia but we are talking about the American Government here dealing on your behalf.

On a persoanl level (and I work for the military so I know about security), what are you afraid of? My wife is Moslem so no doubt we have been checked ten times over or more. Shouldn't you be clamouring over your ten rights of citizenship (I just cannot remember the proper name). You should stop defending how and start defending why.

Fundamental Misunderstanding of Reality

This case illustrates the failure of law enforcement agencies to implement adequate protection against the abuse of information they collect.

No. Fundamentally, this case illustrates the corruption of power. Governments are made up of lots of individuals, with their own problems, stresses and challenges. They are not angels. If the opportunity to profit from their position appears, many will take it. Putting more levels of bureaucracy and control is just a form of "moving the problem around."

If you want to grant the government more power to accomplish things, abuse of power is the natural, and practically inevitable result. Get used to it. It will happen more and more often over time as we surrender more and more of our freedoms. Especially for the never-ending war on terrorism.

The question we should be asking is "Why does the FBI have this data in the first place?", not "why aren't there sufficient controls to protect this data?"

Where's the integrity?

This is an outrage! FBI agents using personal information collected by the agency on citizens to promote their own interests? Obviously we just need to change the administration of the FBI; after all, this would have never happened under the first and greatest FBI chief, J. Edgar Hoover!

Er... wait a minute...

Seriously, I've just come to expect that the FBI is going to be corrupt and incompetant until the day that it is disbanded and replaced by another institution, which will probably just follow suit anyhow. The place just begs for it; national authority, minimal oversight, intentional segregation from other government offices, a long history of this sort of abuse with little public repercussion, etc.

Where in the hell else do you think our extremists, fascists, and power-hungry psychos are going to try to get into? It sucks that there are actually some good people that work in the FBI since they have to get caught up in this crap as well, but at least there are good parts to it. But I'll be damned if I'm ever going to trust the FBI in general, given, oh, decades of an example to go by. The USA PATRIOT act did us a favor by potentially saving us a fortune in investigations by making legal what the FBI was going to do on their own anyhow.

The Myth of Government Making us Safe

"This case illustrates the failure of law enforcement agencies to implement adequate protection against the abuse of information they collect."

This case illustrates the failure of trusting and empowering large beaurocratic entities to snoop into everyone's lives in the mistaken notion that will somehow make us all "safer."

Individuals have never come close to committing the level and magnitude of atrocities that governments, including our own (USA), have, in terms of lives destroyed and even taken, not to mention human suffering in unthinkable numbers. Consider WW I, WW II, the Nazi regime, the Stalin regime, the Mao regime, the Khmere Rouge regime, the Saddam Hussein regime, and the Taliban regime. Even Osama bin Laden, with government support was unable to match any of those in shere atrocities committed (and what Osama "the fallatio queen" bin Laden did manage to do he likely couldn't have pulled that off without ongoing aid and support from the Taliban regime).

If events like these do not illuminate the fallacy of giving up freedom and handing the government authority over our lives in the mistaken notion that it will keep us safer, then really nothing will and our society as such is doomed.

Here is the insidetruth.com mirror

http://web.archive.org/web/20010924124338/http://i nsidetruth.com/

Why? [pcgem.com]

I don't get it...

I don't get it. They inform investors about the shady past of executives. Who wouldn't want to know that???

"But I have nothing to hide..."

This sort of thing is the answer to that constant refrain when one tries to protest or object to the ever-increasing government surveillance, information and data interception and storage. "I've done nothing wrong, so I've got nothing to hide." You may not have broken the law, but mebbe your husband would be interested to know about that drunken fling a couple of years ago at the office christmas party, and say, aren't these expenses claims a bit... creative? And tell me, why ARE you browsing gay porn from home, what with you being married with kids? and so on, and on. Humans are of course the weakness in all these systems promoted by clue-lite technocrats - those politicians who advocate technological solutions to everything, but who don't read the RISKS digest, or CryptoGram, or Incidents, Bugtraq, "Crash!" (the Tonty Collins book, not the Ballard one...) and so on.

The problem here isn't lacking a privacy policy...

The real problem here is that our government is so powerful that it is allowed to collect such information on us in the first place. Look, people: it's an intelligence organization. Once they have the information, they are unaccountable to anyone as to what they do with it. There is no public oversight of the FBI, because that would violate "national security."

So, you think, "I'm not so important. The FBI isn't coming after me." Repeat the litany about not speaking up for the Jews, etc. and realize that this particular abuse is only one of countless ways in which our too-powerful federal government violates our rights on a daily basis.

Don't be so quick to give up rights you don't exercise: instead, think of what kinds of rights you exercise that the majority might not care about (fair use, use of strong cryptography, etc.), and realize that if you have the ability to surrender their rights, they have the ability to surrender yours.

Do you want small government? Join the Libertarian Party [lp.org].

Amazing.

Twice as many messages about kazaa than about this (posting time nonwithstanding).

Fraud? Hunh.
Financial ruin? Feh.
Futz with my free junk? Aiiiiiiii!

on the bright side

At least our tax dollars aren't paying for this - that's a relief

Why did the system fail?

After all, they did catch them, and they are going to jail. While you shouldn't let law enforcement agents look at anything they want, making them fill out a form everytime they search for a criminal record would be pretty excessive. And it probably wouldn't have stopped these guys anyway.

Ultimately, you have to trust people with information, and tell them that they will go to jail if they divulge it. You can only control it so much. Since these people were caught and will be put on trial, I fail to see how it's an example of how the system doesn't work.

Here's an informative book link

Here's a book (Translucent Databases) written by Slashdot regular, Peter Wayner. It might be informative and helpful to those who face the same problems with insiders abusing information. From my understanding, the techniques aren't always useful, but they can help in many cases. http://www.wayner.org/books/td/ [wayner.org]

National ID cards

Gee, I can't wait to get my National ID card!

[sigh]

So this Is what they need all that money for

Seems interesting that in two places where the FBI has screwed up royally in the past decade they have agents on the take.

Albuquerque=Wen Ho Lee Scandal, where the FBI lied to a Federal Judge to keep an innocent man in solitary confinement for almost a year. This prompted the Federal Judge to apologize on behalf of the Judicial Branch of the Federal Government for the treatment that Wen Ho Lee received.

Oklahoma City=Timothy McVee bombed a Federal Building, and the FBI was clueless until the bomb went off that the building was a target.

Now we know what the FBI was doing in those cases: lining their pockets selling our trust for cold hard cash. Not investigating, not doing THEIR JOBS, but letting people's lives get ruined while they made FAT PILES OF MONEY. That's just great.

Obviously FBI agents don't get paid enough to protect the United States; it is far more valuable to use the tools at their disposal to make piles of cash from insider trading.

Corruption in U.S. government agencies...

I wrote a (free) book about how corruption in U.S. government agencies contributes to violence: What should be the Response to Violence? [hevanet.com]

Note that the FBI is now a world-wide police agency, operating in numerous countries.

How does this relate to carnivore?

I know this is paranoid, but it is interesting to note that the same agents could have access to information gathered from the carnivore tool db and use it to threaten internet users for not paying tax on time or whatever if given some cash by certain other companies. The opportunities for abuse are boundless when the system itself is corrupt.

Changing Legality

It's amazing how as more and more police powers are being granted that the whole innocent until proven guilty thing is going out the window.

These days they collect information on bad tips, and hunches. The lack of oversight is appalling. I do admit that some of the laws where overly tight. The whole must get a warrant for each device for tapping is a bit extreme, even as a privacy advocate. What I don't like are the fishing expeditions that they're engaging in now. Especially they're imply threats against those who don't cooperate. The whole "your unamerican and not patriotic" if you don't wholly bend over and take it from law enforcement is a bit much.

Speeding for me is a great example. Arbitrarily enforced and most often broken by officers without need (no lights or sirens). It seems that many officers take their badge as a right to be outside the law. TV shows and movies make police look bad, but when some of the real stories come out... it's usually so much worse then the fiction that you wonder why we ever wanted to trust these people.

I will also be the first to admit that law enforcement is a thankless task. I do appreciate those individuals that are honestly serving.

You just can't win.

PATRIOT was wrong

This is a perfect example of why ALL law enforcement agencies NEED judicial oversight before they can look into any type of comunications. The founders of our constitution new this.

All the PATRIOT bill did by removing this oversight is to give the same tools to our FBI to protect our citizens that the old KGB had to protect theirs

NYTimes site HTML sucks

This is OT for the FBI scandel, but perhaps of interest to geeks everywhere anyway. Did anyone else notice that the page rendering for the NTYTimes login page takes forever? I'm using Netscape 4.77 on a dual processor 533MHz G4 Power Macintosh with 256 MB of RAM (no slouch processor wise) running System 9.1, and when I scroll the page down, it takes about 20 seconds to render. Netscape doesn't cache stuff either (it is 4.77 of course). A look at the code reveals that these people really need to learn about the ROWSPAN attribute for tables, as well as design their popup menus better (50+ items in one isn't a good thing).

Dammit, what webmaster do I complain to?

Quis Custodiet ipsos Custodes

"Who will watch the guardians?"

There is only one way to fix this problem: hire only trustworthy employees. This idea that bad private behavior can be separated from public office is absurd; should a man who makes "inapropriate intimate contact" with a subordinate be given the nuclear launch codes? If he cannot make good decisions on minor things, shall we trust him on major things?

Jefferson wrote that the best disenfectant is daylight.

Utterly unavoidable. Now DEAL WITH IT!!!

"This case illustrates the failure of law enforcement agencies to implement adequate protection against the abuse of information they collect."

Michael, take a deep breath. You're starting to sound like Jon Katz.

This case illustrates exactly why mandatory encryption key repositories are a bad idea. It illustrates why keeping excessive information is a problem. It highlights the fact that we don't live in a safe world.

We will never. Ever. Ever! eliminate leaks, corruption, and fraud. If the information exists at all, then there's no way of protecting it perfectly from unintended use. (Which, it occurs to me, is exactly why people have argued against copy-protection. Hmmm...) Sooner or later someone will find a way of getting to it and exploiting it.

Note also that (as others have pointed out), the law enforcement agencies worked!" The perps were caught and punished, exactly like they should be.

The only answer we have to threats like this goes as follows.

1) Limit the amount of information collected to what's necessary. (in this case, the info. was necessary. Private key repositories are definitely not)
2) Limit the amount of cross-referencing between separate databases.
3) Implement and enforce legal protections on the data.
4) Implement and enforce technical protections on the data.
5) (really 3a) When things are abused or leaked, punish the perpetrators and reevaluate policies 1-4.

This is old, old, OLD stuff but is changing now for a few reasons. Massive networking, storage, and databases are fundamentally contrary to items (1) and (2). Technology moving as fast as it is makes (4) a difficult moving target. The fact that too many people (legislators and judges especially included) consider this to be a different situation than it was 25 years ago makes (3) more complicated than it should be.

In other words, reevalutate, enforce, and repeat.

InsideTruth.com had some good information

Archive.org [archive.org] has old copies of InsideTruth.com, so you can read what they were actually saying.

Most of their disclosures about companies seem to be based on public information. Court records are a major source. Here's a sample report, on SeaView Video Technologies [archive.org].

The "inside information" from the FBI may have only been hints as to what court records to look at. Court records are public, but not well indexed. Law enforcement generally has better indexing of court records than the courts themselves. So this guy may have been using the FBI mostly as a search engine for public documents.

It's legal to issue reports on a stock that you're trading, provided that you disclose that you're doing so. That's very common, and a source of much of the hype coming from Wall Street analysts.

The press reports don't say that this guy's information was wrong.

Who do these guys think they are?

Who do these guys think they are the CIA???

Re:at-least-they're-good-for-something

Don't forget - you may get to pay for the defendant's lawyers as well!

What happened to my wallet

The correct translation is (LOL)

I am only cleaning the place so why was my wallet stolen?

Better to think

Cuiusvis hominis est errore: nullius nisi insipientis in errore perserverare.

It that you James Joyce?

I thought you were dead.