Filching Figures

Tapping the Fed's computer

On most Friday afternoons at 4:15, the Federal Reserve releases the money-supply figures from the previous week. In the past, that has set off a flurry of activity in financial centers around the world. Short-term interest rates often rise or fall on the basis of what the Fed reports, causing swings in the prices of bonds and often stocks. Anyone who could find out in advance what the figures would be might reap huge profits by buying or selling.

Such was the scheme of Theode C. Langevin, 34, a six-year employee of the Federal Reserve Board who moved to E.F. Hutton in mid-November. During his last 18 months at the Fed, Langevin, a $37,300-a-year economist, was given daily access to the central bank's computer by telephone. When Langevin left his Washington job, his access code was canceled, but he had arranged to learn the code number of an unwitting colleague. On his very first day at his approximately $60,000-a-year job at Hutton, Langevin punched the number into a push-button telephone and was immediately connected to the Fed's computer.

Only a day later, Langevin's ruse was discovered. His illegal tap had been recorded on a log maintained by the computer and printed out daily. A supervisor scanned the list and discovered that the Fed worker whose number Langevin had lifted was on vacation. As soon as that worker was cleared, the Fed set a trap. It created fictitious money-supply data and then rigged the computer telephone line with a tracing device. When Langevin made his next call, he was caught. Says a Fed official: "He walked into the henhouse to steal some chickens, and the gate closed behind him."

Officials at E.F. Hutton had been in formed of the investigation by the FBI before Langevin's last call and fired him shortly thereafter. They said they did not get any information from him or benefit in any way. Langevin blamed his action on a "personal situation" that he refused to identify. He told TIME: "I made a bad mistake. It may ruin my career. It was the first time I ever did anything like this." He faces a fine of up to $1,000 and a jail term as long as five years.

The Fed's computer has been compromised once before. In 1975 an employee gave Consumer Reports a printout of bank interest charges, which the magazine subsequently printed. Ironically, Langevin stood little chance of profiting from his purloined data. Since last October, the Fed has been giving much less weight to the money supply in formulating policy. When Langevin was performing his electronic theft, the information was worth less than at any time in the past three years. This file is automatically generated by a robot program, so viewer discretion is required.