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Indictment here marks "new age" of ID theft
[September 07, 2007]

Indictment here marks "new age" of ID theft


(Seattle Times, The (KRT) Via Thomson Dialog NewsEdge) Sep. 7--Like millions of computer users, Gregory Kopiloff used the file-sharing program known as LimeWire to swap digital content with people all over the world.

But federal prosecutors say Kopiloff, 35, was not only using LimeWire to download music, movies or video games.

The Seattle resident allegedly used the peer-to-peer network to infiltrate hundreds of people's hard drives and steal tax returns, student financial-aid forms and other sensitive personal data. According to a federal indictment, Kopiloff then used that information to create bogus credit-card and bank accounts and illegally purchased thousands of dollars in merchandise.



Authorities said they have identified at least 83 victims -- most of whom have teenage children and did not know the file-sharing software was on their computer. But investigators also said they believe the number of people affected was in the hundreds.

"Gregory Kopiloff is a poster child of a 21st-century thief," Assistant U.S. Attorney Kathryn Warma said at a news conference Thursday.


Prosecutors and computer-security experts say the arrest and indictment underscore the problem of a huge number of criminals using LimeWire, Kazaa and other peer-to-peer networks to access credit-card numbers, medical insurance accounts, computer passwords and other sensitive information.

"We are entering a new age of identity theft," said Robert Boback, chief executive of Tiversa, a computer-security firm based in Pittsburgh that has conducted extensive research on peer-to-peer networks. "Tens of thousands of individuals make a living doing this."

Kopiloff was charged Thursday in U.S. District Court in Seattle with mail fraud, accessing a protected computer without authorization in order to further fraud, and two counts of aggravated identity theft.

He did not enter a plea, and his lawyer said she had not had time to review the charges.

Since the rise of Napster in the 1990s, millions of computer users have accessed file-sharing programs to exchange music and all manner of digital content.

Boback said Thursday that as many as 450 million people -- roughly half of all Internet users -- have file-sharing programs on their computers, and up to 12 million people are connected to peer-to-peer networks at any given time.

The networks initially came under fire because they facilitated the illegal distribution of copyright music. Investigators also uncovered cases of people using file-sharing programs to trade child pornography.

But security experts have long warned that such programs could also enable criminals to access sensitive personal and corporate information on computer hard drives.

One problem is that LimeWire and other programs automatically configure firewalls to view the programs as trusted, so external users can evade many security programs when accessing someone else's computer, according to investigators.

Also, early versions of LimeWire automatically exposed a user's entire hard drive to other users on the peer-to-peer network.

More recent versions create a "shared" folder where users can isolate music or video files they want to swap, but many viruses "effectively expand access to [other] areas of the disk drive," according to a search warrant.

To illustrate how criminals try to exploit such security holes, Boback conducted a demonstration during Thursday's news conference at the U.S. Attorney's Office in Seattle. Using his company's technology, he showed -- in real time -- searches being conducted on peer-to-peer networks. As the searches were entered, they scrolled rapidly along the screen of his laptop. Many clearly concerned music files and pornography, but interspersed were scores looking for files that contained terms such as "password" and "medical billing."

M. Eric Johnson, director of the Center for Digital Strategies at Dartmouth College's Tuck School of Business, said "the fact that there's a criminal element trolling the peer-to-peer networks is pretty well documented."

But, Johnson added, the anonymity built into the networks means "it's almost impossible to look and see where the searches are coming from."

Consequently, finding and prosecuting people who are using peer-to-peer networks as part of criminal schemes are extremely difficult.

"There are an amazing number of dots that need to be connected to make a case like this," Warma said.

According to a federal search warrant, evidence of Kopiloff's fraudulent use of LimeWire was confirmed only after his involvement in at least two other more traditional fraud investigations was revealed.

As early as May 2006, according to the search warrant, Kopiloff had used LimeWire to obtain false identities that he then used to make fraudulent purchases online and at traditional retailers. Kopiloff resold the merchandise "for 50 cents on the dollar," according to the indictment.

Investigators said Kopiloff made many of his purchases from Newegg.com, an online electronics merchant. He allegedly bought high-end computers, cellphones and audio players that could easily be resold.

Kopiloff allegedly had the merchandise shipped to UPS stores and to local hotels, including the Seattle Sheraton, Westin and the Hyatt Regency, to avoid detection.

He was arrested after a Texas resident told his company's security officer about how his bank account had been compromised, with someone in Western Washington passing bad checks on his account. The agent forwarded the information to Secret Service agents and police in Seattle, Warma said.

Unfortunately, Boback said, there are still few efficient safeguards against identity thieves using peer-to-peer networks to access personal information, so he expects many more cases like the one against Kopiloff.

"This specific case is literally the tip of the iceberg," Boback said.

Information from The Associated Press is included in this report.

To see more of The Seattle Times, or to subscribe to the newspaper, go to http://www.seattletimes.com.

Copyright (c) 2007, The Seattle Times
Distributed by McClatchy-Tribune Information Services.
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