Department of Homeland Security Daily Open Source Infrastructure Report

Wednesday, August 27, 2008

Complete DHS Daily Report for August 27, 2008

Daily Report


 According to the Associated Press, industry data released Monday shows that incidents of mortgage fraud jumped 42 percent nationwide. The report is based on data about loans that were originated in the first quarter of this year. (See item 16)

See details below in Banking and Finance Sector.

 The New York Times reports that eight states and Puerto Rico will no longer get money for an advanced HIV tracking system because funds are limited and those states did not meet competitive requirements. (See item 29)

29. August 24, New York Times – (National) HIV/AIDS testing jurisdictions reduced; 8 states lose funding. It was only two weeks ago that a revised HIV/AIDS tracking system indicated the annual HIV rate in the United States was about 40 percent higher than annual estimates had been giving for years. Now, the New York Times has reported that eight states and Puerto Rico will no longer get money for an advanced HIV tracking system because funds are limited and those states did not meet competitive requirements. The country had been divided into 34 HIV tracking jurisdictions, the Times reported, but now there will be 25. Those jurisdictions no longer getting financing are Georgia, Illinois, Maryland, Missouri, Ohio, Oklahoma, Pennsylvania, Tennessee, and Puerto Rico, the newspaper said. Source:


Banking and Finance Sector

14. August 26, Bloomberg – (National) Merrill, Wachovia hit with record refinancing bill. Banks, securities firms and lenders have a record $871 billion of bonds maturing through 2009, according to JPMorgan Chase & Co., just as yields are at their most punitive compared with Treasuries. The increase in yields may cost them as much as $23 billion more in annual interest versus a year ago based on Merrill Lynch index data. Higher refinancing expenses will restrict the ability of banks to borrow in the capital markets and lend, further cutting off credit to consumers and businesses and curbing what is already the slowest growing economy since 2001. Standard & Poor’s said last week that it had a “negative” outlook on almost half of the 50 highest-rated financial institutions in the U.S. as of June 30, the highest proportion in 15 years. The Federal Reserve’s quarterly lending survey released August 11 said that more banks tightened credit for consumers and business borrowers. Interest-rate derivatives imply that banks are even becoming hesitant to lend to each other amid the flood of maturing debt. They are charging each other a premium of 78 basis points over what traders predict the Fed’s daily effective federal funds rate will average over the next three months. That is up from 24 basis points in January, and may widen to 85 basis points, or 0.85 percentage point, by mid-December, approaching the record levels set last year, prices in the forwards market show. Source:

15. August 25, Empire State News – (New York) Foreign currency broker sentenced in scheme to rig trades. A foreign currency broker originally from Staten Island has been sentenced to four years supervised release before a Federal District Court in Manhattan Federal Court. The sentence follows his guilty plea to a conspiracy to commit wire fraud, bank fraud, money laundering and federal tax evasion. The suspect was arrested in November 2003 in connection with Operation Wooden Nickel, a large scale undercover investigation of criminal activity in the foreign currency or “forex” markets. As part of the sentence, he was ordered to pay $400,001 in restitution to UBS and $24,000 to Societe Generale and to forfeit $5.2 million dollars to the government. During the late 1990’s, the culprit worked at Tullett and Tokyo Forex, Inc., a firm that offered brokerage services in the interbank spot foreign currency market. In his scheme, he used his contacts with bank traders in large institutions and provided rigged foreign currency trades to co-conspirators in return for cash kickbacks. Source:

16. August 25, Associated Press – (National) Florida tops 1Q mortgage fraud list. Reported incidents of mortgage fraud jumped 42 percent nationwide, with Florida reporting the highest number of cases, according to industry data released Monday. Properties in Florida accounted for nearly a quarter of all mortgage fraud incidents, the Mortgage Asset Research Institute (MARI) said. California ranked second, followed by a three-way tie for third among Illinois, Maryland and Michigan. The report is based on data submitted by MARI subscribers about loans that were originated in the first quarter of this year and have since been classified as fraudulent. The most common mortgage fraud cases included misrepresenting income, employment history, and debt and assets. Maryland, for example, had an unusually high percentage (69 percent) of its cases involved tax return and financial statement misrepresentation. Mortgage fraud has represented about $1 billion in losses over the past decade, the Mortgage Bankers Association said. Source:

17. August 25, Reuters – (International) Abu Dhabi bank sues in U.S. over risky investments. Abu Dhabi Commercial Bank of the United Arab Emirates bank sued Morgan Stanley, the Bank of New York Mellon Corp and ratings agencies Moody’s and S&P on Monday, accusing them of fraud in operating a fund that collapsed in the U.S. credit crisis. The lawsuit filed in U.S. district court in Manhattan said a complex deal known as the Cheyne Structured Investment Vehicle (SIV) was marketed by the defendants as highly rated and reliable, but they had hidden the risks. “Defendants knew the assets purchased and held by the SIV were risky and of poor quality. They further

knew the models used to generate the high rates were flawed,” the lawsuit said. SIVs, which once held some $350 billion in assets, have played a major role in the U.S. credit crisis, after proving unable to refinance their short-term debts. A series of SIVs are now selling off bank debt and assets such as asset-backed securities to try to pay back investors, a move that many see as further pressuring credit markets. A deal was announced last month to restructure Cheyne, which at receivership was a $7 billion fund. Many investors who elected to stay in the restructured fund now have assets worth less than one-half of their former value, and the Abu Dhabi Commercial Bank’s investment is worth zero now, the complaint said. SIVs used short-term funding, such as asset-backed commercial paper, to buy longer-term assets such as bank debt and asset-backed securities. The bank brought the action on behalf of all investors who bought investment grade Mezzanine Capital Notes issued by Cheyne Finance PLC and its wholly owned subsidiary Cheyne Finance Capital Notes from October 2004 to October 2007. Source:

Information Technology

35. August 26, ComputerWeekly – (International) Brazilian charged for leasing out PC botnet to attackers. Brazilian authorities have charged a man for allegedly selling access to a 100,000-PC botnet of zombie computers. These zombie PCs were used to send spam, launch distributed denial-of-service attacks, or commit identity theft. The man now faces up to five years in prison and a fine of more than $250,000. Source:

36. August 26, Philippines Inquirer – (International) IBM warns ‘zero-day’ hacker exploits growing. Hackers are exploiting users’ inability to comply promptly against announced vulnerabilities, according to an IBM security report. Ironically, IBM said security advisories seem to worsen the problem. According to IBM’s X-Force midyear report, more than 90 percent of browser-related exploits detected during the first six months of this year have occurred within 24 hours after these vulnerabilities were disclosed. More significantly, IBM noted hackers are adopting new techniques and strategies in order to better exploit “zero-day” vulnerabilities, or simply before users are even aware they need to install patches or updates. Also, “exploit codes” being made public further compromise IT systems. The practice of disclosing exploit code along with a security advisory has been the accepted practice for many security researchers, the report said. In the first six months of 2008, nearly 80 percent of Web browser exploits are targeted browser plug-ins, the report also said Source:

37. August 25, Computerworld – (National) Novell’s iPrint open to attack, say researchers. Attackers can exploit bugs in Novell Inc.’s iPrint application to obtain corporate information or hijack computers, security experts said. Novell has issued a patch that plugs multiple holes in the ActiveX control that Novell ships as part of its iPrint product, but according to Copenhagen-based bug tracker Secunia APS, one of the flaws remains unfixed. Secunia, which reported the bugs to Novell, counted at least eight vulnerabilities in the ActiveX control included with the Windows Vista version of the iPrint client, as well as several other flaws in another Windows Vista iPrint component. Source:

38. August 25, Computerworld – (National) Microsoft adds privacy tools to IE8. On Monday, Microsoft Corp. spelled out new privacy tools in Internet Explorer 8 (IE8). The most intriguing tool was dubbed “InPrivate Browsing” by Microsoft. When enabled, IE8

will not save browsing and searching history, cookies, form data, and passwords; it also will automatically clear the browser cache at the end of the session. Other new tools will include “InPrivate Blocking” and “InPrivate Subscription,” which notifies users of third-party content that can track browsing history and subscribe to lists of sites to block, respectively. Microsoft will also tweak its existing “Delete Browsing History” by adding an option to preserve bookmarked sites’ cookies even when all others are erased. Source:

Communications Sector

39. August 26, VNUNet – (Michigan) Phone companies latest iPhone slowdown culprit. A recent survey by Wired magazine has pointed to mobile carriers as the reason for the iPhone 3G slowdown. The magazine asked some 2,600 iPhone 3G users around the world to contribute 3G performance numbers from their localities. The results, claims Wired, suggest that the sluggish 3G speeds have more to do with the local 3G networks than any shortcomings in the hardware. 3G performance has by far been the biggest complaint from users ever since the iPhone 3G was launched in early July. The model was the first to run with a 3G connection, eschewing the EDGE network hardware employed by the previous model. So far, nobody has been able to pinpoint the exact reason for the slowdown. One analyst firm has suggested that the problems were due to bad hardware from Infineon. Other pundits suggested a firmware issue which they say Apple attempted to fix with the last update. Source: