by: Ed Pilkington in New York
When Jeff Moss, popularly known as the Dark Tangent, started holding underground hacker conferences in Las Vegas he knew he had a problem. All previous gatherings had been strictly invitation-only to ensure privacy. Moss wanted his convention to be open to all hackers, and that would inevitably draw the unwelcome attendance of undercover FBI agents. “I knew law enforcement would show up whether I wanted it or not, so I decided to put them on notice.”
Moss initiated a game at his events called Spot the Fed. If a delegate detected someone they thought was a cop they could stand up and denounce them. If correct, they would win a T-shirt printed with the logo: “I spotted the Fed.”
The game became an instant sensation. “People were really excited about it,” Moss says. That was in the 1990s. Since then Moss’s annual conference, Defcon, has turned into one of the largest hacker meetings in the world and those early examples of outed Feds trying to pass undetected among the Defcon crowd have also grown into an entire industry, a specialism of modern policing, with highly trained and computer literate FBI and secret service agents running an army of informants who now pervade the hacker community.
A window into how the Feds do business has been opened in a book by Kevin Poulsen of Wired. He had a former life as a database cracker under the handle Dark Dante and was sentenced to 51 months in jail, partly on the testimony of a couple of his co-hackers who, as he puts it, had the heat put on them and “dropped a dime”.
In Kingpin, Poulsen tells the stories of several audacious FBI and US secret service operations using undercover agents and hacker informants. [The secret service, established in 1865 to target currency counterfeiters, now protects VIPs and investigate crime].
Poulsen profiles the FBI agent Keith Mularski who targeted networks of criminal hackers, or carders as they are known, who specialise in credit card and identity theft. Mularski went undercover, using the hacker handle Master Splyntr, which he borrowed from the TV cartoon Teenage Mutant Ninja Turtles.
The FBI agent took over the management of the DarkMarket crime forum frequented by more than 2,000 carders where they would buy and sell personal data for use in credit card fraud. For three years, unbeknown to the hackers who were congregating there, DarkMarket was turned into a sophisticated FBI sting operation.
Working with an undercover officer from the Serious Organised Crime Agency in London, Mularski’s ploy led to 56 arrests across four countries, and brought down some of the biggest names in the world of ID-theft. The catch included DarkMarket’s founder, a Sri Lankan-born Briton called Renukanth Subramaniam, aka JiLsi, who was sentenced to five years in prison in the UK last year.
Kingpin also recounts the stories of criminal hackers who were strongarmed by the FBI into becoming informants. David Thomas, a fraudster using the handle El Mariachi, was forced to co-operate after he was caught arranging an illegal $30,000 scam. FBI agents created an intelligence-gathering mission around him. The bureau set him up with a computer, a flat from which to operate, expenses and regular payments of $1,000 a month, in return for which he provided the agency with information on the hackers who passed through his crime forum, the Grifters.
Then there was Operation Anglerphish, an information gathering mission based around another prominent carder, Brett Johnson, aka Gollumfun. He turned informant in 2005 after he was accused of using forged Bank of America cheques. The secret service arranged for him to be released on bail, then set him up with a computer in their South Carolina field office from which he entered into dialogue with scores of illegal hackers on the forum Carders Market. Poulsen records that every message that crossed Johnson’s computer was recorded and displayed on a plasma screen on the secret service’s office wall.
The informant to end all informants was Albert Gonzalez, Cumbajohnny as he was known in cyberspace, who was involved in hacking for many years and attended the Las Vegas Defcon in 2001. He was jailed after he was caught stealing from a cash machine in New York, which gave the secret service the leverage they needed to force him to work for them.
They had Gonzalez sprung from jail, and under the codename Operation Firewall helped him establish a closed network or VPN (virtual private network) for carders in which cyber criminals could trade stolen credit card details. It acted like a giant honey trap. A team of 15 agents monitored and recorded the activities of scores of top carders as they communicated with each other through the network.
For his pains, Gonzalez was paid a secret service salary of $75,000 a year.
Operations Anglerphish and Firewall were among the most audacious but disastrous attempts by the FBI to infiltrate and disrupt hackers. In the case of Anglerphish, Johnson managed to outwit the secret service and steal some $130,000 in illegal tax refunds while working as their informant.
Gonzalez’s triple crossing was even more jaw-dropping. He managed to pull off what is believed to be the biggest fraud in cyber history while working on behalf of the secret service. He cracked into credit and debit card databases and stole millions of identities, while simultaneously pulling his federal salary. He was sentenced in March last year to two concurrent 20-year prison terms.
But Poulsen believes the FBI and secret service have had victories, smashing several hacker forums and destroying the sense of invulnerability their members had previously enjoyed.
“The carders’ sense of invulnerability is shattered, their commerce is tariffed by paranoia and mistrust, the veil of secrecy that once protected hackers and corporations alike has mostly evaporated,” he writes.
The FBI will not comment on its methods, nor on how successful it has been in crawling under the skin of the hacker community. Its spokeswoman said agents follow guidelines on the use of informants set by the attorney general, and each case is different.
Kevin Mitnick, dubbed the world’s most wanted hacker when he spent three years on the run from the FBI for cracking into banks and telecoms companies, has studied all the big hacker criminal cases over the past 20 years. In almost all cases, he says, hackers have been turned into informants out of the desire to save their own skins faced with long prison sentences.
“I’d say that 99.9% of informants are doing it because they want to reduce their own criminal sentences. In nearly every case, hackers get scared because they fear the government will throw the book at them.”
Mitnick knows what he is talking about. In a forthcoming memoir, Ghost in the Wires, he tells how his long-term hacking partner, Lewis de Payne, co-operated with the authorities . “We were close hacking partners for 20 years, so it was disappointing, though not exactly surprising. He had lots of bravado – he wasn’t scared, he wouldn’t cave – but the moment the Feds came after him, he collapsed.”
Mitnick refused to play ball with the FBI by informing, and for that stubbornness was rewarded with a five-year prison sentence from which he emerged in 2000. “I refused to co-operate as it was against my moral fibre to reduce my sentence and hand it to somebody else. So I sat in prison much longer than I otherwise would.”
In most cases, the tool used by the FBI and secret service to turn naturally anti-authoritarian hackers into agents of the state is quite simple: fear. A hacker is picked up and charged with various crimes. Just as they are starting to contemplate spending the rest of their youth behind bars, they are given a glimmer of hope. Co-operate with us, the Feds say, by “proffering” information against others, and we will grant you limited immunity so that nothing you say can be used against you. If the information proves useful, we will lop years off your sentence.
It is the same time-worn technique applied to drug dealers or mobsters or any other community that stands outside the law – get the little guy to turn on the big guy. But it has been especially effective when applied to hackers who lack the collective resistance to police pressure afforded by a mafia family or organised drug gang. “Hackers like to talk tough behind the keyboard, but as soon as the handcuffs are slapped on them and they face federal indictment, everything changes,” says Mitnick.
The system for turning hackers into informants is morally corrupt, in Mitnick’s view, because it involves a material inducement. “The snitch is getting paid in terms of less time in jail in exchange for their testimony. I have a problem with that, it’s no different to paying someone $10,000 for their testimony, it’s still payment even if it is in reduced sentence not money.”
Jennifer Granick, an expert on cyber law who has represented several prominent hackers in cases involving informants, says such plea bargaining can distort the legal process. “The reduction in sentence is typically in proportion to how useful the information is that’s given. That’s a perverse incentive to lie, as the bigger the story you give the more it will be in your benefit.”
As for Spot the Fed, the game is still being played at Defcon conventions in Las Vegas. Moss says it’s not quite the soaraway hit it used to be. On the one hand, federal agents have become much more adept at blending in with the crowd. In the old days they would wear the wrong shoes or use the wrong vocabulary, and could be detected a mile away. Today, they’ve got the hacker look down to an art.
On the other hand, Moss says, FBI agents are often all too happy to be publicly identified. “These days it’s got to the point where undercover agents will out themselves, just to get the T-shirt that says ‘I am the Fed’.”