Fed Website Hacked - Banker's Info Accessed

Story first appeared on USA Today -

More than 4,000 bank executives had their personal information published on the Internet by hackers who accessed the data on an internal Federal Reserve website, according to a Reuters report.

The Federal Reserve says no critical functions were affected by the breach, which the activist group Anonymous is taking credit for. `

"Exposure was fixed shortly after discovery and is no longer an issue. This incident did not affect critical operations of the Federal Reserve system," a spokeswoman for the U.S. central bank told Reuters. All of the bankers affected by the breach had been contacted, Reuters said.

The information posted by Anonymous included mailing addresses, business and personal phone numbers and e-mail addresses.

Anonymous is a ragtag group of activist hackers who've launched scores of attacks on government and business sites.

The Fed did not identify the hacked website. But Reuters said bankers were told that the site was a contact database for use during natural disasters.

Wednesday afternoon, Fed spokeswoman Lisa Oliva said the hackers had exploited a "temporary vulnerability." She says the exposure has been fixed, the executives have been informed of the breach and it is no longer an issue.

Anonymous has been involved in an increasing number of hack attacks on business and government websites in retaliation for the seizure of Megaupload, a popular Internet service that allowed users to transfer large files of movies and music. The FBI has charged several people connected with Megaupload with copyright infringement and running an international criminal enterprise.

Former Airline Executives Indicted in Conspiracy to Fix Fuel Surcharges

FBI PR

Conspiracy Alleged to Have Taken Place Following Hurricanes Katrina and Rita

 

 

 

A Miami grand jury returned an indictment today against four former airline executives of competing air cargo carriers for participating in a conspiracy to fix surcharges on air cargo shipments from the United States to South and Central America following Hurricanes Katrina and Rita, the Department of Justice announced today.

The one-count indictment, returned today in U.S. District Court in Miami, charges Guillermo “Willy” Cabeza, George Gonzalez, Rodrigo Hernan Hidalgo, and Luis Juan Soto with conspiring to suppress and eliminate auto transport competition by agreeing to impose an increase to their fuel surcharges on air cargo shipped from the United States to locations in South and Central America. Each former airline executive is charged with participating in the conspiracy beginning in or around late September 2005 until at least November 2005.

According to the indictment, Cabeza, Gonzalez, Hidalgo, and Soto, along with co-conspirators, carried out the conspiracy by engaging in discussions, including at a meeting in an office in the area of Miami’s Kendall-Tamiami Executive Airport, and agreeing to impose an increase to the fuel surcharge applied on flights from the United States to South and Central America. As part of the conspiracy, Cabeza, Gonzalez, Hidalgo, Soto and their co-conspirators engaged in communications to implement and monitor the agreement and accepted payments at collusive and noncompetitive rates.

Cabeza is the former president of a Miami-based air cargo carrier, Gonzalez is the former chief commercial officer of a Peruvian air cargo carrier, Hidalgo is the former vice president of sales and marketing of a Miami-based air cargo carrier, and Soto is the former president of a Miami-based air cargo carrier.

Air cargo carriers transport a variety of cargo shipments, such as heavy equipment and car transport, perishable commodities, and consumer goods, on scheduled international flights.

Cabeza, Gonzalez, Hidalgo, and Soto are charged with price fixing in violation of the Sherman Act, which carries a maximum penalty for each individual of 10 years in prison and a $1 million fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

A total of 18 airlines and 14 executives, including the four individuals charged today, have been charged in the Justice Department’s ongoing investigation into price fixing in the air transportation industry. To date, more than $1.6 billion in criminal fines have been imposed and four executives have been sentenced to serve prison time. Charges are pending against 10 executives, including the four individuals charged today.

Today’s charge is the result of a joint investigation into the air transportation industry being conducted by the Antitrust Division’s National Criminal Enforcement Section and the Chicago Field Office, the FBI’s field offices in Miami and Washington, the Department of Transportation’s Office of Inspector General and the U.S. Postal Service’s Office of Inspector General. Anyone with information concerning price fixing or other anticompetitive conduct in the air transportation or vehicle transport industry is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694.

FBI Raids Offices of Three Toyota Parts Suppliers

The Wall Street Journal

Three Japanese automotive parts suppliers, tightly tied to Toyota Motor Corp., were raided Tuesday by the Detroit office of the FBI over allegations of price-fixing.

Warrants were carried out on the Michigan offices of Yazaki North America in Canton, Denso International America Inc., in Southfield, and Tokai Rika, also known as Tram, in Plymouth, an FBI spokeswoman confirmed Wednesday.

"The antitrust division is investigating the possibility of anticompetitive cartel conduct of automotive electronic components suppliers," said Department of Justice spokeswoman Gina Talamona. "We are coordinating with the European Commission and other foreign competition authorities."

The department is looking at possible anticompetitive behavior of these companies, not at the parts themselves, a person familiar with the investigation said. Toyota has ownership stakes in Denso and Tokai Rika. There is also no connection between the investigation and Toyota's recall problems.

U.S.-based auto parts makers have for years cited frustration in attempting to win new contracts from Toyota when bidding against one of Toyota's "captive suppliers."

Denso confirmed it was inspected by the FBI and said the investigation was based on allegations of violations of antitrust laws.

"We are fully cooperating with the investigation," said a Denso spokeswoman, who added that the investigation wasn't linked to Toyota's recent recalls.

The two other companies couldn't immediately be reached for comment.

Toyota spokeswoman Cindy Knight said the company is still trying to determine why the FBI is investigating Denso, Yazaki and Tokai Rika.

"Toyota is aware that certain suppliers have been contacted by government officials, but we have limited information about the scope of the investigation," Ms. Knight said. "Toyota has not been contacted by authorities."

The raid comes as Toyota and federal automobile-safety regulators are appearing in Congress Wednesday to testify about problems of unintended acceleration in some Toyota vehicles.

Yazaki supplies several electronic components, while Denso makes a variety of parts including accelerator pedals that Toyota has used in its vehicles. Those pedals weren't involved in the recent recalls of Toyota vehicles based on complaints of unintended acceleration.

Tokai Rika makes a variety of safety products including seat belts, door mirrors, power windows and steering switches.

Big Shots Go Down at Gun Show

Business Week

FBI arrests in a bribery scandal may leave the firearm industry wounded

 

The setting was Las Vegas, but no one was expecting fireworks at this year's Shot Show, the annual gun industry trade convention. Sure, sales of firearms and ammunition rose in the wake of Barack Obama's victory, as Second Amendment buffs—fearing a Democratic Administration would push new restrictions on weapon ownership—rushed to stock up. Yet what the industry calls the "Obama stimulus" had already started to tail off by the time gun marketers converged on Las Vegas.

Then the feds crashed the party. The FBI used the convention to round up 21 industry executives who allegedly fell for an undercover sting in which they agreed to pay illegal kickbacks to the defense minister of an African nation. In exchange, the small arms marketers thought they were securing the opportunity to sell millions of dollars in weapons and body armor. Unfortunately for them, they were transacting business with FBI operatives posing as middlemen, according to indictments unsealed by a federal judge in Washington. A 22nd suspect was picked up in Miami. "This is one case where what happens in Vegas didn't stay in Vegas," said Assistant Attorney General Lanny Breuer at a news conference.

One of the men arrested in Las Vegas was Amaro Goncalves, a vice-president of sales for Smith & Wesson (SWHC), the largest U.S. manufacturer of handguns. A federal grand jury alleged that Goncalves agreed to pay a 20% kickback to clinch the sale of 1,825 pistols for use by the presidential guard of the African government (the name of the nation is not revealed in the court filings). Goncalves and the others stand accused of violating the Foreign Corrupt Practices Act, which prohibits bribery in seeking overseas business.

Goncalves' employer has not been charged, and neither has any other company. Smith & Wesson said in a written statement that it has "no information beyond what has been reported" and is "prepared to cooperate fully with law enforcement."
 

"Obama Stimulus" Fizzles

The arrests created a stir among attendees at the Shot Show. The FBI gave the organizers no warning and caught everyone by surprise, says Mark Thomas, spokesman for the National Shooting Sports Foundation, the show's sponsor. But Thomas denies the raid cast a pall over this year's proceedings. "It's business as usual," he says.

The gun industry still faces the fizzling of the Obama sales rally. While Smith & Wesson and competitors such as Sturm Ruger (RGR) and Glock reported strong financial results in 2009, many executives expect a cooling off in 2010, especially in sales of semiautomatic rifles, which had surged last year.

Reliable statistics are hard to come by in an industry where many players are private companies, but one set of data confirms that a shift is already under way. The federal government reported that mandatory criminal background checks, which gun retailers must carry out in advance of a sale, dropped 7.6% in December, to 1.41 million, from the previous year. "Things are getting back to normal, meaning they are slowing down," says Cameron Hopkins, a gun marketing consultant based in suburban Las Vegas who attended the Shot Show. "The good times never last forever."

FBI Seeks to Loosen Restrictions On National-Security Probes

The Justice Department unveiled a set of proposed guidelines designed to loosen restrictions on how Federal Bureau of Investigation agents conduct preliminary national-security investigations.

FBI and Justice Department officials say changes to the so-called Attorney General's Guidelines, set to take effect Oct. 1, are aimed at removing limitations that hampered national-security investigations, or that made it difficult for FBI agents to comply with legal rules.

The guidelines allow FBI agents to open "threat assessments," which are lower-level investigations that are based only on having a "purpose," and not necessarily any factual reason to do so. In these investigations, agents would be able to conduct "pretext interviews," without identifying themselves as FBI agents. The rules also loosen restrictions on agents being able to use physical surveillance, solicit new informants or assign informants to seek information without high-level approval.

Civil-rights groups and congressional critics have raised concerns about the proposed rules, charging that they open the way to potential civil-liberties violations. They also raised the prospect that the FBI could repeat abuses similar to those found in a Justice Department internal investigation into administrative subpoenas known as national-security letters. In 2006 and 2007, investigators reported widespread abuses of the national-security letters, which the FBI can issue without a judge's approval, to obtain private records, such as credit-report information and telephone records. Since then, the FBI has established new measures to ensure agents comply with legal requirements for such letters.

On Friday, senior FBI and Justice Department officials conducted briefings for civil-rights groups and journalists about the proposed guidelines, setting strict rules for those attending. The officials provided numbered copies of the roughly 50-page draft guidelines and allowed those in the briefing to read the document for 30 minutes before they were allowed to ask questions. Officials said the documents were still considered "drafts," and journalists were prohibited from quoting specific portions of the guidelines or from naming the officials who conducted the briefing.

An FBI official who conducted the briefing said the bureau wanted one new set of guidelines to replace three previous sets that separately detailed the tactics allowed in criminal probes, national-security investigations and foreign-intelligence operations.

The official said the current rules made it difficult for agents conducting a terrorism probe to use certain tactics in a preliminary investigation, such as conducting interviews without identifying themselves as FBI agents. If the agent were conducting a criminal investigation, the restriction wouldn't apply, the official said.

"Why, as a matter of policy, do we want to make it more difficult for agents trying to resolve national-security threats than we do to resolve the garden-variety criminal threat? We didn't see that these distinctions made sense," the official said.

The FBI has briefed members of Congress on the guidelines in recent weeks, though concerns held by lawmakers have not been resolved.

In a letter last month to Attorney General Michael Mukasey, the top Democratic and Republican members of the Senate Judiciary Committee insisted that the guidelines be delayed from enactment until lawmakers could question FBI Director Robert Mueller at a hearing next week.

"Efforts to harmonize the rules governing criminal and national-security matters also raise potential civil-liberties concerns, given the broader latitude currently given to investigators to consider race and ethnicity in national-security matters," the senators wrote in their letter.

Caroline Fredrickson, director of the American Civil Liberties Union's Washington legislative office, who attended the Friday briefing, said removing the distinction between criminal and national-security investigations "allows for racial-profiling without question." Previously, the use of racial-profiling was restricted to certain national-security investigations, such as those involving an imminent threat.

Brian Roehrkasse, a Justice Department spokesman, said it was "not responsible" to argue that race can never be taken into account during an investigation. He said the FBI, as it conducts more intelligence work, is sensitive to the question of race and religion.

The new guidelines would replace ones put in place in 2002 with little public discussion. An FBI official said the new rules are crucial to helping the bureau become "an intelligence-driven agency that is not waiting for things to fall on our doorstep, but actually looking proactively for threats within the country."

By: Evan Perez
Wall Street Journal; September 13, 2008