Monday, Dec. 25, 1972

Key-Punch Crooks

In the hierarchy of criminals, forgers and safecrackers have long enjoyed elite status because of their special skills. Now they may be topped by the computer criminal. According to Stanford Research Institute Computer Specialist Donn B. Parker, who recently completed a study of 100 crimes involving computers, the potential for illicit gain from the machines is so vast that dishonest employees and even ambitious outsiders will increasingly be tempted to put their knowledge to unlawful use. A handful of keypunch crooks have already thought of some ingenious ways to defraud the Brain, with varying results. Some examples:

P: Palo Alto Programmer Hugh Jeffrey Ward learned, from customers of a computer firm in Oakland, code numbers that enabled him to give orders to the firm's computer. Ward claims that, on instructions from his superiors, he told the Oakland computer to print out a program for plotting complex aerospace data in graph form. His company presumably planned to market the program, which was valued at $12,000 or more, to the Oakland firm's own customers. He was caught through a telephone company tracer and received a suspended sentence.

P: Minneapolis Programmer Milo Arthur Bennett, whose firm handled computer work for the National City Bank of Minneapolis, programmed the computer in 1966 to ignore an overdraft in his own account at the bank. He was caught and prosecuted in four months--but only because the computer broke down and the bank's accounts were checked manually.

P: An employee of the New Jersey National Bank electronically siphoned $128,000 out of 33 of the bank's accounts and into the balances of two outside accomplices. The trio were caught because the bank switched to new computers that did not give the "inside man" time to erase the withdrawal data from the defrauded customers' bank statements, as had been planned.

P: Jerry Schneider, a 21-year-old U.C.L.A engineering graduate, studied Pacific Telephone and Telegraph's computer by posing first as a journalist and later as a customer. He learned enough to place commercial orders for telephone equipment simply by punching the right beep tones on his own touch telephone. He then picked up the equipment and sold it through a dummy firm. Incredibly, the telephone company let his unpaid bills accumulate for three years. The Los Angeles district attorney charged that Schneider stole $1,000,000 worth of goods in that manner, and the engineer drew a 40-day jail sentence. Now on probation, he is setting up a firm to advise businesses on how to protect themselves against the kind of computer theft he used to practice.

P: A Washington, D.C., man takes the prize for elegant--and successful --simplicity; he pocketed all the deposit slips at the writing desks of the Riggs National Bank and replaced them with his own electronically coded forms. For three days, every customer who came in without a personal slip and used one of the "blank" forms was actually depositing money into the culprit's account. The thief reappeared, withdrew $100,000 and walked away; he has not yet been found.

To cut down the rising incidence of automated ripoffs, companies that own computers are installing more and more gadgetry to improve security. The Defense Department is working on guidelines designed to prevent unauthorized use of multi-access computers used by military contractors. "Computer audits," in which certain uses of the computer are carefully monitored, and computer ID cards are also growing in popularity. Such measures make computer crime more difficult, but then smart crooks usually have a way of escalating their skills right along with the law. For one thing, says Parker, they can enroll in one of the computer courses now offered as vocational rehabilitation in many U.S. prisons.

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