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GoodIdea||BadIdea: Ayers Island Challenge?
by Nathan Fain 16 May '04

16 May '04

-----BEGIN PGP SIGNED MESSAGE----- Hash: SHA1 http://www.wired.com/news/privacy/0,1848,63316,00.html "This is going to push the envelope on a lot of fronts," said George Markowsky, president of Ayers Island LLC. "The goal is to detect anyone coming onto the island at any point, and to follow them if they exhibit suspicious behavior." When an envelope is pushed, especially in this case, it does so ALL fronts. The scenario is that *Man creates best-of surveillance and Good-vs-Evil differential/profiling system* with the reaction from this being *Evil changes to look more like Good*. Leaders and people alike often don't see validity in the second. Now don't get me wrong, I want the Ayers Island project to happen. I believe the work put in to this island and the boundaries it will push have already been pushed and are essential if not inevitable to happen in a more public manner. I'm just trying to find a way to use this to remind people of the forgotten effects. So, I'm curious if anyone would want to work together in building a simple online forum for chronicling the eventual subversion of their profiling system? The objective would be to track vulnerabilities in the methods used to determine "suspicious behavior" more so than technical vulnerabilities (such as, say, the fence system.) It would not be directly involved with any activity itself. Example content might be a story from someone that found a way to roam with a false ID, or no ID at all... or footage of reverse surveillance (see: http://wearcam.org/acm_mm96.htm ) fain://nathan http://cypherpoet.com -----BEGIN PGP SIGNATURE----- Version: GnuPG v1.2.3-nr1 (Windows XP) Comment: Using GnuPG with Thunderbird - http://enigmail.mozdev.org iD8DBQFAp0ahveagdEkPM4ARAt2TAKCP/rB5ORnqId+dIAXlB1ivng1ljgCfdKSe qObiGrp0/K4ID/fkPW+jjKw= =j1JH -----END PGP SIGNATURE-----

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Card Seem at Risk? Try a Stunt Double
by R. A. Hettinga 16 May '04

16 May '04

<http://www.nytimes.com/2004/05/16/business/yourmoney/16cred.html?th=&pagewa…> The New York Times May 16, 2004 SPENDING Card Seem at Risk? Try a Stunt Double By JENNIFER BAYOT FTER days of searching the Internet, Gen Tanabe of Palo Alto, Calif., found the rare 19th-century memoir he wanted to buy for his father for Christmas last year. But he had no intention of giving the Web site his credit card number. "The site looked like it might have been run by a teenager in a back room," said Mr. Tanabe, who writes books about college planning and financial aid. "I didn't know how secure it was, or what they would do" with the number. Online vendors typically encrypt credit card numbers at their Web sites, but the numbers must be decoded later to receive payment. And they are often stored in databases that may be vulnerable to hackers or dishonest employees long after the purchase. What if there was a way to fool those who would try to fool us, so that purchases could be made online without any danger of card numbers falling into the wrong hands? A few companies are trying such a plan: think of it as the stunt-double approach to online shopping. Anyone with a credit card from Citibank, MBNA or Discover can request a temporary account number for use when buying online, by telephone or mail order. The temporary numbers are linked to customers' real accounts, but they generally expire after one use, unless the cardholder requests otherwise - for example, by placing a spending limit on the number. Cardholders can get these numbers in one of two ways, depending on their issuer. They can download software that generates such numbers upon request or upon detecting that a cardholder is at the checkout page of an online retailer. Or, in the case of Citibank, which is owned by Citigroup, they can also register online, then revisit the company's site each time they want a new number. To avoid giving his real card number to that small online bookstore, Mr. Tanabe, 32, used a temporary number to buy the present for his father. "I probably wouldn't have bought it otherwise," he said. The temporary numbers can also prevent retailers from renewing purchases like magazine subscriptions or gym memberships without issuing reminders. Many customers forget that vendors may automatically charge their customers' credit cards for such recurring fees. Fraud remains a big concern for many online shoppers. In a survey of 12,000 consumers at the end of 2003, Forrester Research, based in Cambridge, Mass., found that about two-thirds were "very or extremely concerned" about the theft of their credit card numbers during online activity. Chris Hoofnagle, a lawyer for the Electronic Privacy Information Center in Washington, says such temporary numbers ease those worries. Mr. Hoofnagle says he has used them himself, to prevent online retailers from keeping his card number in their files. "If the company stores your credit card number, that database just becomes a honey pot" for hackers, he said. The temporary numbers, he said, also make him more comfortable buying from newer or unfamiliar vendors. The free service has been available for more than a year, but few people seem to know about it. "I think if you interview 100 consumers, you'll find 100 consumers who've never heard of it," said John Gould, director of consumer lending and bank cards for the TowerGroup, a research company based in Needham, Mass., that was acquired recently by MasterCard. Industry analysts say consumers tend to rely on other protections - including the card companies' promise not to charge them for fraudulent transactions. Last month, in fact, American Express stopped offering its temporary-numbers program, called Private Payments, saying that other safety features already offered plenty of fraud protection. Some consumers may think that their credit card accounts are safe because retailers encrypt their card data at the time of purchase. Though the numbers may then be safe in transit, retailers must still decode the numbers to collect payment. Mr. Gould says it is impossible to ensure that all retailers take the next step: encrypting the numbers again, according to rules set by the card networks. "This is too big a territory to patrol; in the U.S. alone, you've got over 400,000 merchants online," he said. "You've always got the issue of the merchant who is careless. But the real problem is, you've got the merchant who's a fraudster, whose intent is to steal your information." ANALYSTS also suggest that the card issuers have done little to promote the feature because customers pay nothing for it. But the companies say that the numbers are still relatively new and need time to catch on, especially because their use requires some effort. "And since it's not being offered by every issuer, you just don't have the repetition or frequency to get people talking about it," said Steve Furman, director of marketing e-commerce at Discover Card. Although many consumers say they worry about fraud risks, some may not want to bother with temporary account numbers. "Consumers will tell you one thing and do another," said James F. McCarthy, senior vice president for emerging products at Visa. "There is only so much they will do to protect themselves." Citibank refers to its temporary numbers as virtual account numbers; information is available at www.citibank.com/us/cards/tour/ cb/shp_van.htm. Discover, meanwhile, calls them single-use numbers and offers them on its Deskshop page (www2.discovercard.com /deskshop). MBNA customers can create the numbers through the company's online ShopSafe program (www.mbnashopsafe.com) The companies have tried to make the numbers easier to use. A cardholder can now charge monthly phone bills and other recurring payments to the same disposable number, rather than entering a new one each time. Similarly, a cardholder can register a number with a favorite merchant for continued use only with that merchant. "You'll never need to reveal your actual credit card number again," said Amy Radin, executive vice president for the e-business unit of Citi Cards, a division of Citigroup. -- ----------------- R. A. Hettinga <mailto: rah(a)ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

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Curb electronic surveillance abuses
by R. A. Hettinga 15 May '04

15 May '04

<http://www.newsday.com/news/opinion/ny-vpsch103794744may10,0,4385336,print.…> Newsday.com: WARRANTS PROVIDE GUARANTEES Curb electronic surveillance abuses As technological monitoring grows more prevalent, court supervision is crucial BY BRUCE SCHNEIER Bruce Schneier is chief technical officer of Counterpane Internet Security Inc. in Mountain View, Calif. He is the author of "Beyond Fear: Thinking Sensibly About Security in an Uncertain World." May 10, 2004 Years ago, surveillance meant trench-coated detectives following people down streets. Today's detectives are more likely to be sitting in front of a computer, and the surveillance is electronic. It's cheaper, easier and safer. But it's also much more prone to abuse. In the world of cheap and easy surveillance, a warrant provides citizens with vital security against a more powerful police. Warrants are guaranteed by the Fourth Amendment and are required before the police can search your home or eavesdrop on your telephone calls. But what other forms of search and surveillance are covered by warrants is still unclear. An unusual and significant case recently heard in Nassau County's courts dealt with one piece of the question: Is a warrant required before the police can attach an electronic tracking device to someone's car? It has always been possible for the police to tail a suspect, and wireless tracking is decades old. The only difference is that it's now much easier and cheaper to use the technology. Surveillance will continue to become cheaper and easier - and less intrusive. In the Nassau case, the police hid a tracking device on a car used by a burglary suspect, Richard D. Lacey. After Lacey's arrest, his lawyer sought to suppress evidence gathered by the tracking device on the grounds that the police did not obtain a warrant authorizing use of the device and that Lacey's privacy was violated. It was believed to be the first such challenge in New York State and one of only a handful in the nation. A judge ruled Thursday that the police should have obtained a warrant. But he declined to suppress the evidence - saying the car belonged to Lacey's wife, not to him, and Lacey therefore had no expectation of privacy. More and more, we are living in a society where we are all tracked automatically all of the time. If the car used by Lacey had been outfitted with the OnStar system, he could have been tracked through that. We can all be tracked by our cell phones. E-ZPass tracks cars at tunnels and bridges. Security cameras record us. Our purchases are tracked by banks and credit card companies, our telephone calls by phone companies, our Internet surfing habits by Web site operators. The Department of Justice claims that it needs these, and other, search powers to combat terrorism. A provision slipped into an appropriations bill allows the FBI to obtain personal financial information from banks, insurance companies, travel agencies, real estate agents, stockbrokers, the U.S. Postal Service, jewelry stores, casinos and car dealerships without a warrant. Starting this year, the U.S. government is photographing and fingerprinting foreign visitors coming into this country from all but 27 other countries. CAPPS II (Computer Assisted Passenger Prescreening System) will probe the backgrounds of all passengers boarding flights. Over New Year's, the FBI collected the names of 260,000 people staying at Las Vegas hotels. More and more, the "Big Brother is watching you" style of surveillance is becoming a reality. Unfortunately, the debate often gets mischaracterized as a question about how much privacy we need to give up in order to be secure. People ask: "Should we use this new surveillance technology to catch terrorists and criminals, or should we favor privacy and ban its use?" This is the wrong question. We know that new technology gives law enforcement new search techniques, and makes existing techniques cheaper and easier. We know that we are all safer when the police can use them. And the Fourth Amendment already allows even the most intrusive searches: The police can search your home and person. What we need are corresponding mechanisms to prevent abuse. This is the proper question: "Should we allow law enforcement to use new technology without any judicial oversight, or should we demand that they be overseen and accountable?" And the Fourth Amendment already provides for this in its requirement of a warrant. The search warrant - a technologically neutral legal requirement - basically says that before the police open the mail, listen in on the phone call or search the bit stream for key words, a "neutral and detached magistrate" reviews the basis for the search and takes responsibility for the outcome. The key is independent judicial oversight; the warrant process is itself a security measure protecting us from abuse and making us more secure. Much of the rhetoric on the "security" side of the debate cloaks one of its real aims: increasing law enforcement powers by decreasing its oversight and accountability. It's a very dangerous road to take, and one that will make us all less secure. The more surveillance technologies that require a warrant before use, the safer we all are. -- ----------------- R. A. Hettinga <mailto: rah(a)ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

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The Doghouse: IQ Networks (Re: CRYPTO-GRAM, May 15, 2004)
by R. A. Hettinga 15 May '04

15 May '04

At 3:46 AM -0500 5/15/04, Bruce Schneier wrote: > The Doghouse: IQ Networks > > > >In general, the Doghouse is a showcase for stupid security companies or >products. Snake-oil cryptography, nonsense computer security, that >sort of thing. But this month we have something different: a company >committing out-and-out fraud. > >IQ Networks claims to have an impressive advisory board: Ross Anderson, >Mihir Bellare, Steve Bellovin, Shafi Goldwasser, Peter Gutmann, Doug >Stinson, Ron Rivest, and Markus Kuhn. Unfortunately, none of these >people had ever heard of the company. Nor did they agree to have >content of theirs on the site. They also claim to be involved with the >Honeynet Project -- none of the Honeynet guys had ever heard of them -- >and Password Safe: I've never heard of them, either. > >They have an impressive customer list. I'll bet anything that all of >them are fabrications, too. Oh; they're under investigation by SANS >for pirating SANS training material. > >The rest of the site is also amusing, with a lot of generic security >gobbledygook and not a whole lot of information. The company claims to >do pretty much anything. > >Would you buy your security services from a company that lies about, >um, everything? > > >Website: ><http://www.iq-net-works.com/> > >Customer list (hard to find, and will probably be deleted soon): ><http://www.iq-net-works.com/clientes_english.html> > >Peter Gutmann sent this link to me a few weeks ago, and has challenged >the company about their use of his name. In response, the company has >pulled their list of technical advisors from its website. It forgot, >however, to pull the list from the Spanish website. ><http://www.iq-net-works.com/spanish/equipo.html> >Look quickly, I expect it will be gone soon. > >You can also look them up on archive.org, which has saved the company's >list of advisors (also in Spanish) from 2003. (This website is great >for finding old versions of webpages, or webpages that are no longer >around.) ><http://web.archive.org/web/20030705082011/www.iq-net-works.com/equipo.h >tml> or <http://tinyurl.com/2dbwj> -- ----------------- R. A. Hettinga <mailto: rah(a)ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

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#331: 05-14-04 DEPARTMENTS OF JUSTICE, HOMELAND SECURITY ANNOUNCE CHILD PORNOGRAPHY FILE-SHARING CRACKDOWN
by R. A. Hettinga 15 May '04

15 May '04

<http://www.usdoj.gov/opa/pr/2004/May/04_crm_331.htm> FOR IMMEDIATE RELEASE FRIDAY, MAY 14, 2004 WWW.USDOJ.GOV CRM (202) 514-2008 TDD (202) 514-1888 DEPARTMENTS OF JUSTICE, HOMELAND SECURITY ANNOUNCE CHILD PORNOGRAPHY FILE-SHARING CRACKDOWN Law Enforcement Initiative Targets Child Pornography Over Peer-To-Peer Networks WASHINGTON, D.C. - The Department of Justice, the Federal Bureau of Investigation, the Department of Homeland Securityms U.S. Immigration and Customs Enforcement, and the Internet Crimes Against Children (ICAC) Task Forces today announced a national law enforcement initiative aimed at combating the growing volume of illegal child pornography distributed through peer-to-peer (P2P) file trafficking computer networks. Attorney General John Ashcroft, Assistant Attorneys General Christopher A. Wray of the Criminal Division and Deborah Daniels of the Office of Justice Programs, Department of Homeland Security Assistant Secretary for Immigration and Customs Enforcement Michael J. Garcia, FBI Deputy Assistant Director Keith Lourdeau, Office of Juvenile Justice and Delinquency Prevention Administrator J. Robert Flores and Sgt. Scott Christensen of the Nebraska State Patrol announced the initiative at a news conference this afternoon in Washington. The law enforcement operation, which began in the Fall of 2003, has already resulted in the execution of hundreds of searches nationwide, and the identification of thousands of suspect computers used to access the child pornography. The FBI, ICE and the ICACs have opened more than 1,000 domestic investigations into the distribution and possession of child pornography and conducted more than 350 searches. More than 65 individuals have been arrested and charged with crimes to date as a result of this law enforcement effort, with coordination by the Child Exploitation and Obscenity Section of the Criminal Division at the Department of Justice and U.S. Attorneysm Offices across the country. These cases have charged not only offenses related to the possession and distribution of child pornography, but also sexual abuse of children. Further, the investigations have identified several individuals who have previously been convicted of sex offenses and several registered sex offenders. lNo one should be able to avoid prosecution for contributing to the abuse and exploitation of the nationms children,n said Attorney General Ashcroft. lThe Department of Justice stands side-by-side with our partners in the law enforcement community to pursue those who victimize our children under the perceived, but false, cloak of anonymity that the peer-to-peer networks provide.n lThis aggressive, multi-jurisdictional enforcement action will help bring justice to those who exploit our children,n said Assistant Attorney General Wray. lThis is an impressive demonstration of how law enforcement can effectively address the problem of technology being used to commit illicit and abhorrent crimes against children.n lThe men and women of state and local law enforcement who comprise the 39 Internet Crimes Against Children task forces are to be commended for their efforts that have resulted in over 50 arrests nationwide,n said Deborah Daniels, Assistant Attorney General for the Office of Justice Programs. lThe unprecedented cooperation of law enforcement to track the sale and trade of child pornography over the Internet has made this country a safer place for our children.n lTodayms announcement sends a clear message that the digital environment will not offer sanctity to those pedophiles who lurk in peer-to-peer networks. We will identify you. We will pursue you. We will bring you to justice,n said FBI Director Robert Mueller. lTodayms announcement also raises public awareness to the inherent risks associated with file-sharing networks. Parents must know that access to these networks is free and exposure to child pornography is often a frightening reality.n lICE will use its technical expertise and its legal authorities to target those who would purchase child pornography over the internet or trade in those despicable images," said Michael J. Garcia, Department of Homeland Security Assistant Secretary for Immigration and Customs Enforcement. lBy partnering with our colleagues at the Department of Justice and in local and state law enforcement, we will uncover these transactions and bring the offenders out of the anonymity of cyberspace and into a court of law.n lAs individuals we have a responsibility to provide love and guidance to our children; as a society, we have a collective duty to defend our children from predators who would stalk them,n said J. Robert Flores, Administrator for the Office of Juvenile Justice and Delinquency Prevention. lThe Internet Crimes Against Children task forces were developed to prevent child abuse and punish abusers and this joint effort between local and federal law enforcement will send a strong message to those who would exploit our children.n The multi-agency, multi-jurisdictional P2P initiative, combining the resources of federal, state and local law enforcement, is part of an ongoing effort to keep pace with emerging technologies that are being used to commit, facilitate and even hide crimes. Unlike traditional computer networks, which employ the use of a server to exchange files, peer-to-peer networks allow users to connect their computers directly to one another, without the use of a central server. Once a user installs a peer-to-peer software application on his or her computer, he or she can directly access and search the files designated for distribution on any of the computers that are using the network at that moment in time, and then download desired files to his or her computer. Investigators and agents from the participating agencies used several techniques - including undercover work - to infiltrate the P2P networks and identify those who have distributed and taken possession of child pornography images. Several cases illustrate the scope of the P2P law enforcement operation: * Investigators in California, working with the Wyoming Attorney Generalms Office, Division of Criminal Investigation, identified a P2P client named Pedokiller. Jimmy Richard Morrison, a 40-year-old male from Modesto, California, allegedly had countless images of underage girls on the wall of his bedroom. A search of his computer revealed thousands of images of child pornography, along with photos and videos from actual victims. Morrison admitted knowingly distributing images of child pornography, and when asked why he used the P2P network to distribute images, he replied, lBecause the cops are in the chat rooms.n Morrison was indicted in the Federal District Court of Wyoming for distribution of child pornography, and also charged with other criminal offenses in the Eastern District of California. The suspect is in custody in California pending trial. * Following a P2P investigation by the Nebraska State Patrol, Jeremiah Zalesky of Lincoln, Nebraska, was arrested on state charges of sexually assaulting a child after evidence developed that Zalesky allegedly molested the young daughter of a couple with whom he had been staying. A subsequent search of his computer found 10 images of child pornography. * An FBI investigation in New York led to the identification of a subject who allegedly distributed, received and possessed child pornography using P2P networks. The investigation also found that the subject, Matthew Fling, allegedly molested two girls, ages 6 and 8, during the past four years. An examination of the subjectms computer revealed hundreds of child pornographic images and movies. In February 2004, Fling was indicted in the Northern District of New York on federal charges child pornography charges, and he was arrested in March 2004. State Police officials are handling the sexual abuse allegations. * Earlier this week, a federal grand jury in Houston, Texas, indicted 28-year-old Stephen Alan Gardner on charges of distributing images of child pornography from his home computer, and possession of child pornography. According to court documents, a file containing movies depicting children being sexually assaulted had been made available for sharing from a computer at Gardnerms home using a P2P software program. Gardner is currently being held without bond in the Harris County, Texas, jail on charges filed in the state of Colorado involving the sexual assault of a six-year-old child. * During the course of a multi-state investigation, ICE agents in Arizona received child pornography from a peer-to-peer application user who they later identified as 19-year-old Marlon Winston. During the investigation, Winston indicated that he started using peer-to-peer applications to access music, but later moved on to images and movies of child pornography. Winston used simple search terms to find the materials, and noted that his habit grew by ljust clickingn image after image. Winston was arrested in December 2003, and pleaded guilty to child pornography charges in February of this year. On May 12, 2004, Winston was sentenced to 37 months in prison and three years' supervised release. Winston will be required to register as a sex offender upon his release from prison. Individuals arrested and charged in connection with this initiative are, of course, presumed innocent until proven guilty in a court of law. The maximum federal sentence for the distribution of child pornography is 20 years in prison. The PROTECT Act, enacted on April 30, 2003, also created a mandatory minimum sentence of five years in prison for this crime. If an individual committed a prior sex abuse offense, the mandatory minimum is 15 years in prison and the statutory maximum is 40 years. The following is a brief rundown of the roles played by various agencies in the P2P operation: Internet Crimes Against Children Task Forces In 1998, the Office of Juvenile Justice and Delinquency Prevention (OJJDP) of the Department of Justice funded ICAC Task Forces in jurisdictions all over the country. There are 39 task forces comprised of more than 175 law enforcement agencies. The 39 ICAC Task Forces conducted an undercover investigation code-named lOperation Peerlessn to investigate the distribution of child pornography over the Internet. Undercover operations have identified more than 3,000 computers worldwide sharing child pornography using the P2P networks. To date, ICACs efforts have resulted in the execution of more than 196 search warrants, and 50 arrests. U.S. Immigration and Customs Enforcement, Department of Homeland Security In September 2003, investigators at the ICE Cyber Crime Center in Virginia initiated a P2P operation known as lOperation Peer Pursuitn to target individuals who exchange child pornography images over the Internet using P2P networks. Working with investigators in ICE offices nationwide, ICACs and other law enforcement agencies, ICE investigators have opened 213 cases, identified 46 foreign leads, executed 72 search warrants and arrested 10 individuals responsible for trading tens of thousands of images of child pornography. Operation Peer Pursuit is an outgrowth of Operation Predator, ICEms comprehensive, nationwide initiative designed to protect young people from pedophiles, human traffickers and other predatory criminals. Since its inception in July 2003, Operation Predator has resulted in the arrest of more than 2,600 child sex predators nationwide. The Federal Bureau of Investigation As part of the FBIms P2P operation, codenamed lPeer Pressure,n FBI agents and prosecutors from the Child Exploitation and Obscenity Section of the Justice Department developed a protocol for investigating the distribution of images of child pornography through P2P networks. Agents, acting in an undercover capacity, were able to successfully conduct 166 on-line sessions in P2P networks, targeting individuals who were openly offering multiple child pornography images. Of the 106 subjects identified as a result of the FBI investigation, 32 were determined to have had access to children, three were registered sex offenders and 23 had criminal histories. Most importantly, FBI agents identified and rescued eight children who had been molested. The FBI operation has led to 103 searches to date, the arrest of seven subjects and nine indictments. The Child Exploitation and Obscenity Section of the Criminal Division, U.S. Attorneysm Offices Through the coordinated efforts of the Child Exploitation and Obscenity Section of the Criminal Division and 29 U.S. Attorneysm Offices across the country, more than a dozen defendants have been charged with federal crimes related to child pornography trafficking over P2P networks. For further information about the P2P operations, please contact the following offices: * Department of Justice, Office of Public Affairs, (202) 514-2007 * Office of Justice Programs, for information about ICAC, Office of Communications, (202) 307-0703 * Federal Bureau of Investigation, Office of Public Affairs, (202) 324-3691 * Department of Homeland Securityms Immigration and Customs Enforcement, (202) 514-2648 ### 04-331 -- ----------------- R. A. Hettinga <mailto: rah(a)ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

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Bring Us Your Small, Unloved Start-Ups
by R. A. Hettinga 15 May '04

15 May '04

<http://www.nytimes.com/2004/05/15/technology/15venture.html?th=&pagewanted=…> The New York Times May 15, 2004 Bring Us Your Small, Unloved Start-Ups By GARY RIVLIN ilicon Valley is littered with hundreds of former start-ups trapped inside larger technology companies that are no longer happy with the ventures they snapped up in the acquisitions frenzy of the 1990's. Now a pair of Silicon Valley-based venture capitalists have opened an unusual $250 million fund intended to buy and rehabilitate such companies, which Terry Garnett, one of the two founders, calls "the orphaned and the unloved." In some cases, the best candidate for running the newly freed company may turn out to be its original creator. "We've heard from a number of founders," Mr. Garnett said, "who told us, 'Gosh, we sold our business four years ago, and now our baby has been all screwed up and we want it back.' '' The new fund, called Garnett & Helfrich Capital, is expected to occupy a long-needed niche within the technology universe's constellation of venture partnerships and private equity groups. Other entities, like Francisco Partners and Silver Lake Partners, specialize in technology buyouts, but they usually focus on deals priced in the hundreds of millions. Garnett & Helfrich intends to concentrate on deals, generally under $50 million, too small for these multibillion-dollar firms. Traditional venture capital outfits occasionally participate in these kinds of deals, sometimes called carve-outs, but only sporadically and often in partnership with others. "There aren't a lot of venture guys doing tech carve-outs, and none are specializing in it," said Allan Thygesen, a managing director in the Carlyle Group's American-based venture capital fund. "It's sort of a forgotten area." Venture capitalists, Mr. Thygesen and others said, are by temperament far more interested in untested, fledgling companies that stir hopes of striking it rich with a new idea rather than those already freighted with baggage. Mr. Garnett was in his prior job as a general partner at Venrock Associates, the venture arm of the Rockefeller family, when he experienced what he described as his "aha" moment. Along with a partner from Doll Capital Management, he was poised to invest in a new software company that would cloak e-mail messages and instant messaging from everyone but the intended recipient. But then Mr. Garnett and his fellow venture capitalist learned that Network Associates, the computer security company, was looking to sell a unit called PGP, which stands for Pretty Good Privacy, with a similar product already on the market. PGP was a proven technology with a sizable customer base. It was also one of more than 40 companies Network Associates bought over three years starting in 1997 - and one of many acquisitions it was actively seeking to shed after hiring a new chief executive at the start of 2001. Venrock and Doll Capital purchased PGP in August 2002 for "significantly less" than the $36 million Network Associates paid for it five years earlier, said Phillip Dunkelberger, the company's original chief executive and once again in charge of PGP. "That was a real proof of concept for me," Mr. Garnett said. "We were able to recast the product and be cash-flow positive six months after buying it." In February 2003, Mr. Garnett and David Helfrich, then a general partner at ComVentures, met for breakfast at Il Fornaio, a popular restaurant in Palo Alto. The two knew each other casually but had grown closer through their daughters, who enjoyed riding horseback in Woodside, Calif. There Mr. Garnett told Mr. Helfrich about PGP. "I knew I was in trouble after I didn't sleep a wink that night," Mr. Helfrich said. Four months after that first breakfast, the two gave notice at their respective firms. That summer, Grove Street Advisors, which makes venture capital investments on behalf of large institutions and wealthy individuals, became the new fund's first investor. The fund's largest investor is the Harvard Management Company, the university's investment arm. "It's quite unique what the two of them are doing," said Catherine A. Crockett, a founder and general partner at Grove Street. The firm is expecting to do one or two deals a year, and six to eight for the life of the fund, because each will require a great deal of time. Mr. Garnett is a former senior executive at Oracle, the big maker of database software that runs large business systems for many major corporations. Mr. Helfrich was a member of the founding team at Copper Mountain Networks, a maker of equipment for high-speed Internet connections, and his risumi includes turns at the 3Com Corporation and Ascend Communications, two other computer networking equipment makers. Certainly the pool of potential orphans is large. From 1999 to 2001, an average of 3,500 mergers and acquisitions (excluding telecommunications deals) took place each year in the American technology community, according to Thomson Financial. That compares with roughly 500 a year in the early 1990's, and 1,500 or so a year in the mid-1990's. "I have absolutely no doubt these guys face a tremendous supply of deal opportunities," said Roger McNamee, a co-founder of Silver Lake Partners. Whether that will translate into attractive profits for the fund's two founders and its investors is another question. "There's typically a high degree of difficulty in these kind of deals," Mr. Thygesen of Carlyle said. Pricing is one issue, Mr. Thygesen said; typically there are no audited numbers associated with a single product or unit inside a larger company. "Another risk is that you're taking on people who haven't been out there hustling, groveling for a living," Mr. Thygesen said. "They're not necessarily entrepreneurs." Should an investment team choose well, though, "there's the potential for a very high value creation," he added. Both Mr. Garnett and Mr. Helfrich said that they intended in most cases to bring in new management to run the company and they see plenty of available executives in waiting. "Nowadays, it's hard to attract a great management team, especially a great C.E.O., to a start-up," Mr. Helfrich said. "It takes two or three years to get a product out, there are three or four rounds of financing to raise, and the success ratio of start-ups is pretty low." The companies they intend to finance, by contrast, will already have an existing business in place. "It's a lot easier to build a company from $50 million in revenues to $100 million,'' Mr. Helfrich said, "than take something from scratch and build it up to $10 million or $20 million." -- ----------------- R. A. Hettinga <mailto: rah(a)ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

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On the Road Again, But Now the Boss Is Sitting Beside You
by R. A. Hettinga 14 May '04

14 May '04

<http://online.wsj.com/article_print/0,,SB108448724279211265,00.html> The Wall Street Journal May 14, 2004 PAGE ONE On the Road Again, But Now the Boss Is Sitting Beside You Workers Chafe as Businesses Embrace GPS Trackers; A Cop Caught Napping By CHARLES FORELLE Staff Reporter of THE WALL STREET JOURNAL May 14, 2004; Page A1 After hearing complaints that police officers in Clinton Township, N.J., were doing a lot of loafing, Sgt. John Kuczynski sprang into action. Without telling the patrolmen, the internal-affairs officer installed a global-positioning-system tracking device behind the front grills of several patrol cars in the spring and summer of 2001. Then he used a laptop to keep track of each car's precise movements on detailed maps. Sgt. Kuczynski soon netted five officers loitering over meals or hanging out in parking lots. Their log books indicated they were patrolling the townships' streets or watching for speeders on its three highways. Four of the officers pleaded guilty that year to charges of filing false records and were barred from working in New Jersey law enforcement. A fifth, Barry Krejdovski, a then-28-year-old officer who was literally caught napping on the job, disputed the charges. He was convicted in November on the records violation and a more serious charge that was later set aside. Three of the officers who pleaded guilty are suing the town to get their jobs back. As employers increasingly turn to GPS technology to keep track of their fleets, more workers are balking at having the boss constantly looking over their shoulders. Independent snowplow drivers in Massachusetts staged a demonstration at the state capitol last year after they were required by the state to carry GPS-enabled cellphones. Washington state garbage collectors are protesting the installation of the devices on their trucks. And Teamsters union officials are watching closely to make sure the devices aren't used to punish employees. Developed in the 1970s for military use, GPS relies on a cluster of satellites orbiting 12,500 miles above Earth. The satellites emit coded signals, which a ground-based receiver can pick up to triangulate its own position. GPS trackers remained expensive niche products through much of the 1990s largely because they were difficult to use and it was expensive to relay location data from a moving truck back to a company's home base. Now, thanks to the spread of cheap cellular-phone service, the devices can send the information as easily as a commuter can make a call from the road. Without clear limits on when the devices can be used to track workers, employers are testing the boundaries of GPS. That's especially frustrating to independent-minded workers such as truckers, who have long treasured their freedom from close supervision. Many of those workers are accustomed to being paid for specific performance -- getting a shipment from one place to another, for instance -- and chafe at the idea of having their routes closely tracked. In King County, Wash., the municipal government is installing GPS receivers on the roughly 200 tractors and trailers that haul solid waste between landfills and transfer stations. Theresa Jennings, the county's solid-waste director, says the primary purpose of the system is to improve efficiency. Supervisors, for example, can automatically determine which trailers of trash have been waiting longest at depots. But last year, Teamsters Local 174 filed an unfair-labor-practice charge with the state's public-employee commission, arguing that the installation needs to be subject to collective bargaining. The union contended that drivers have been told they could be in trouble if the tracker reports they are straying from their routes. The union missed a filing date to provide more information, and the charge was dismissed, though the union says it will refile if a driver is disciplined. That hasn't yet happened, and the union has sought written assurance from the county that it won't. George Raffle, the union organizer who was responsible for the filing, says trucks follow set routes, so there's no need to use the GPS devices for routing. A driver might exercise his judgment to avoid a traffic jam or slick roads, but a supervisor might see that as an unauthorized detour to a side road, Mr. Raffle says. The trackers "don't take into account all the unknown factors: road conditions, weather conditions, what's the load," he says. Ms. Jennings says that the county doesn't as yet plan to use GPS tracking to punish drivers, and so no bargaining is necessary to install the trackers. The national Teamsters union is closely watching a plan by United Parcel Service Inc. to include GPS capabilities on its next generation of delivery scanners -- the electronic tablets that store delivery data. A Teamsters spokesman said the union isn't necessarily against the use of tracking technology but stressed that safeguards need to be in place to "ensure that it doesn't result in an invasion of privacy or is used to "get" an employee." UPS officials say the company is as much as two years away from actually using GPS on the scanners. They say that the company would use the technology to improve customer service -- for example, to quickly reroute packages in transit -- and not driver discipline. UPS already has GPS devices on its tractor-trailer trucks, which haul packages between warehouses. Last December, snowplow operators in Massachusetts marched outside the state capitol to protest a new requirement that they carry cellphones with GPS receivers. As independent contractors paid by the hour, they feared the highway department would use the tracking data to unfairly squeeze their payments. Satellite tracking equipment, they complained, could wrongly label a plower stuck in a traffic jam as napping by the side of the road. The Massachusetts highway department said that it is confident the devices can accurately track plowers. After hundreds of plowers packed a rowdy legislative hearing at Boston's State House, the highway department partially backed down. The compromise: Drivers began carrying the GPS phones but are being paid according to the old-fashioned paper timesheets they submit. The contract runs until the end of the year. In Mecklenburg County, N.C., a sprawling district encompassing the Charlotte metropolitan area, officials say a new GPS-enabled dispatch and routing system has shaved 10% off the time it takes ambulances to respond to emergency calls. The system automatically tells 911 dispatchers which ambulance is closest to the call and provides the best route to an address. The system, based on software from California vendor ESRI Inc., also captures historical data about travel speeds, allowing dispatchers to route ambulances around potential rush-hour trouble spots. Sabby Nayar, a marketing manager for MapInfo Corp., a Troy, N.Y., maker of mapping software, says the benefit of GPS trackers on police cruisers is obvious. "If the officer is injured, you know where he is, and you know where his car is," Mr. Nayar says. In Clinton Township, the devices were installed specifically to check up on the officers. Some of the officers were missing for hours at a time, sometimes on daytime shifts, but Mr. Krejdovski was unaccounted for less than two hours in the middle of the night. According to Mr. Krejdovski's activity logs, he checked a residence, a cemetery and a cluster of car dealerships in the early morning hours. But the GPS showed his cruiser, unmoving, for much of that time in a McDonald's parking lot, overlooking a car wash and a Japanese restaurant nestled at the intersection of two highways. The three officers who are suing the town to get their jobs back claim that idling was a department-wide practice in the two-dozen-member force. The activity reports used to build the town's case against them were simply "busy sheets," intended to demonstrate that the officer was on duty, not precise records of his movements, one officer testified at Mr. Krejdovski's trial. They also claim they were deliberately singled out for the tracking because superiors wanted a pretext to get rid of them. The township's attorney declines to comment on the case. Sgt. Kuczynski, the internal-affairs officer, said in an interview that his tracking program "may appear to be extreme" but that the department had a "systemic" absence problem. Mr. Krejdovski, now 31, declined to comment on the case. He testified at his trial that his GPS-tracked nap occurred because he was exhausted from a stomach virus, compounded by the flu medication he was taking. He admitted that he waited until shortly before the end of his shift at 7 a.m. to fill out most of his reports and that they were sloppy and incorrect. "I was just trying to guesstimate at what time I had gone through those areas," he said on the witness stand. Testimony established that his reports deviated from his actual location, as determined by the GPS, for about 76 minutes. Mr. Krejdovski's lawyer, Walter Lesnevich, argued that his client was a young cop who made a mistake and was unfairly swept up in a dragnet aimed at catching more-serious offenders. When he was tracked another night, Mr. Krejdovski's log matched up with the GPS tracker. The jury convicted Mr. Krejdovski on both charges he faced. New Jersey Superior Court Judge Victor Ashrafi was not so convinced. He set aside the jury's verdict on the official misconduct charge -- which would have carried jail time -- and sentenced Mr. Krejdovski to probation and community service. His conviction means he will never be able to work in law enforcement again. The nap, the judge ruled, "did not result in any actual damage or loss to the public, other than the loss of Officer Krejdovski's services during a period of fewer than 90 minutes." -- ----------------- R. A. Hettinga <mailto: rah(a)ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

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Wyoming agent develops touted porn tracking software
by R. A. Hettinga 14 May '04

14 May '04

<http://www.usatoday.com/tech/news/2004-05-14-cp-program_x.htm> USA Today Wyoming agent develops touted porn tracking software By Sarah Cooke, Associated Press CHEYENNE, Wyo. - A Wyoming law enforcement agent was credited Friday with developing software that weeds out child pornography in file-sharing networks, resulting in at least 1,000 investigations and 65 arrests nationwide. The software, written last year by Division of Criminal Investigation special agent Flint Waters, cracks down on the growing use of "peer-to-peer" or P2P networks. The networks allow users to connect computers directly with one another to exchange files. Officials say they provide greater anonymity than traditional Internet servers that are easier to track. They can also be much quicker and easier to access. "This problem was so widespread that it was clearly easier for a child to obtain these images than it would be for them to buy a magazine depicting adult pornography," Attorney General Pat Crank said Friday. After testing the software last fall, Waters and other DCI officials offered it free of charge to local, state, national and even international law enforcement agencies. The results surprised even the most veteran officers. Images of children as young as 7 years old were being trafficked worldwide through file-sharing networks easily accessible to children, such as Kazaa. Some images took as little as 14 seconds to load. "We hit everyone from 13-year-olds to 55-year-olds with active molests on children," Waters said. Charges against the 65 people arrested so far have included possession and distribution of child pornography and sexual abuse of children. The 1,000 investigations have involved more than 350 searches of computers and other property, officials said. Specific cases include Jimmy Richard Morrison, a California man who faces federal pornography distribution charges in Wyoming alleging he was a P2P client named "Pedokiller." Morrison, of Modesto, Calif., told authorities he used the P2P networks because police were known to be examining Internet chat rooms for child pornography activity, Waters said. "This guy had pictures of two of his victims on an ID card around his neck," Waters said. To date, more than 3,100 computers have been identified exchanging child pornography. Of these, nearly 2,000 were discovered by Wyoming DCI special agents. "Law enforcement has a new tool to combat the targeting of our children for sexual exploitation," Gov. Dave Freudenthal said. "As a governor, and even more so as a parent, I am extraordinarily grateful for the work Special Agent Waters and the Wyoming DCI have done. Their dedication means that purveyors and users of child pornography might have fewer places to hide." -- ----------------- R. A. Hettinga <mailto: rah(a)ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

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In a Road That's All Eyes, the Driver Finds an Ally
by R. A. Hettinga 14 May '04

14 May '04

<http://nytimes.com/2004/05/13/technology/circuits/13next.html?pagewanted=pr…> The New York Times May 13, 2004 WHAT'S NEXT In a Road That's All Eyes, the Driver Finds an Ally By IAN AUSTEN BOUT 12 years ago, Martin Dicks was trapped in dense fog during a harrowing four-hour commute to his job as a firefighter in central London. "Virtually all I could see on the road was a cat's-eye reflector every now and then," Mr. Dicks said, recalling his trip down one of Britain's major highways. "I figured that if I could make the cat's-eyes more visible, I could probably save more lives than I could in the fire service." A back injury forced Mr. Dicks out of the fire department shortly afterward, giving him the time to pursue that goal. His training as an electrical engineer provided the necessary skills. Now, after perfecting illuminated markers that are embedded in the road surface to guide motorists through bad weather or warn of dangerous conditions, Mr. Dicks's company, Astucia Traffic Management Systems, is going a step further. Its latest creation is an embedded stud equipped with a camera that catches speeders, monitors traffic for criminals or stolen cars and even checks for bald tires on the fly. "Nobody knows it's a camera or a speed trap," Mr. Dicks said of his latest creation. Mr. Dicks's original idea was quite simple in concept. He wanted to create an illuminated road marker containing its own power source, a solar cell. At night or in bad weather, light from approaching vehicles would generate enough power to light up the marker, which consisted of light-emitting diodes. An illuminated marker would be more visible than a plain reflector, and the idea was that a car passing over the markers would cause them to stay illuminated long enough so that they would provide a warning trail of lights for any vehicles close behind. The trouble, at first, was the technology available in the early 1990's. Photovoltaic cells were not as efficient as they are today. And at the time, Mr. Dicks recalled, "the concept of a white L.E.D. was nowhere." Working mostly with family members at first, Mr. Dicks produced a prototype marker within two years. He dodged the white L.E.D. problem by combining the glow from red, green and blue arrays. The group not only overcame the limitations of solar cells, but also managed to engineer markers that turned red to warn when the gap between two cars was dangerously small. Mr. Dicks said the technology both impressed and alarmed British government highway officials. "They were frightened about everyone using the product on roads from one end of the country to the other," he said. "They thought it would make their budgets disappear." The first markers cost roughly twice the price of conventional embedded road studs. As a result, their use was restricted at first to especially fog-prone or dangerous sections of roads as well as crosswalks, including some in the United States. Mr. Dicks was not the only person with a desire to illuminate to road markers. After a friend struck and killed a pedestrian in 1991 at a crosswalk in Santa Rosa, Calif., Michael Harrison developed a system that uses flashing L.E.D.'s in the road surface to make crosswalks more visible. The company he founded in 1994, LightGuard Systems, now has about 700 installations in the United States. A study of 100 illuminated crosswalks by Katz, Okitsu & Associates, a traffic engineering firm based in Southern California, estimates that adding the blinking L.E.D.'s to crosswalks can reduce pedestrian accidents by 80 percent. The original Astucia markers were glued onto the road surface. That left them vulnerable to snowplow blades and to constant pounding from car and truck tires. Mr. Dicks wanted to put the markers into holes drilled into the road surface. The key, he said, was finding self-healing resins for the top lenses that would be flush with the surface and subjected to much wear and tear. "It's like running your fingernail on a rubber sheet," he said of the plastics' behavior. "The mark it leaves goes away." Advances in solar-panel technology also allowed Astucia to develop markers that could store electricity all day and then constantly illuminate particularly dangerous sections of roads at night. Other features followed. Optical systems inside the casing are able to monitor the atmosphere for fog. Electrical resistance detectors can check for standing water. The addition of a thermometer allows the marker to predict ice. But getting high-resolution digital cameras into the flush-mounted housings was a more difficult task. It ultimately required the development of a special series of lenses that in effect allowed the camera to look upward and forward from its subsurface location. The cameras (the system can use either normal or infrared sensors) provide remarkably detailed images, according to Mr. Dicks. "You can clearly see everything underneath a vehicle, although I'm not sure why you'd want to do that," he said. The police, however, are likely to be interested in seeing the license plates of vehicles traveling above the speed limit or through red lights. To that end, Astucia has developed a system that is operating on a highway in Scotland. It employs three embedded cameras to give front, rear and side views of passing vehicles. Other embedded sensors project two infrared beams over the road that are used to time traffic and determine its speed. The images and the speed data travel under the road by cable to a computer. It in turn relays the data by satellite to Astucia's offices. The system is currently being used to monitor traffic slowdowns. When it detects them, it turns on illuminated markers farther up the road as a warning. Mr. Dicks said that its speed measurements were accurate within 0.5 percent, well within the tolerances demanded for traffic enforcement. Similarly, he said, the systems can be combined with optical character recognition software to automatically track stolen vehicles or cars believed to be used by suspected criminals or terrorists. The United States branch of Astucia began demonstrating the camera system - which costs about $50,000 for a package of three cameras, sensors and supporting electronics - to police and highway officials less than a month ago. John Kerridge, the subsidiary's president, reported considerable interest in the system for both traffic and broader law enforcement. But he added that public resistance could be one obstacle to its adoption. "We all break the law regarding speeding," Mr. Kerridge said. "The system may leave a bad taste in motorists' mouths at the beginning. But when their insurance starts going down and stolen vehicles start getting recovered, the benefits will overcome that." -- ----------------- R. A. Hettinga <mailto: rah(a)ibuc.com> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire'

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Re: Can Skype be wiretapped by the authorities? (fwd from em@em.no-ip.com)
by Eugen Leitl 14 May '04

14 May '04

----- Forwarded message from Enzo Michelangeli <em(a)em.no-ip.com> -----

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