Monday, March 26, 2012

Complete DHS Daily Report for March 26, 2012

Daily Report

Top Stories

• Government auditors said federal officials know little about and currently do not regulate tens of thousands of miles of pipelines that carry natural gas into residential and commercial areas. – Associated Press

3. March 23, Associated Press – (National) Audit: Gas lines tied to fracking lack oversight. Government auditors said federal officials know little about thousands of miles of pipelines that carry natural gas released through the drilling method known as fracking, and need to step up oversight to make sure they are running safely, the Associated Press reported March 23. Amid the gas-drilling boom, private companies have put in hundreds of small gathering pipelines to collect new fuel supplies released through the high-pressure drilling technique. Nationwide, about 240,000 miles of gathering pipelines ferry the gas and oil to processing facilities and larger pipelines in the major energy-producing states. Many of these pipelines course through densely populated areas, including neighborhoods in Fort Worth, Texas. The Government Accountability Office said in its report issued March 22, that most of those miles are not regulated by the U.S. Pipeline and Hazardous Materials Safety Administration, which means they are not regularly inspected for leaks or corrosion. In some states, officials do not know where the lines are. Nationwide, there are about 200,000 miles of gas-gathering lines and up to 40,000 miles of hazardous liquid gathering lines in rural and urban areas alike, ranging in diameter from about 2 to 12 inches. But only about 24,000 of those miles are regulated, according to the report. Source:

• California officials said if the out-of-service San Onofre nuclear power plant remains offline through the summer, the San Diego and Los Angeles areas could experience energy shortages. – Los Angeles Times

8. March 22, Los Angeles Times – (California) Energy officials prepare for summer without San Onofre plant. California energy officials are working to stave off the potential for summer power shortages if the San Onofre Nuclear Generating Station near San Diego remains out of service, the Los Angeles Times reported March 22. San Onofre has been shut down since January 31, when a tube in one of the plant’s newly installed steam generators in the Unit 3 reactor sprang a leak. The reactor was taken offline and Southern California Edison, the plant’s operator, began pressure-testing 129 tubes that showed excessive wear, while the U.S. Nuclear Regulatory Commission dispatched a team to investigate the issue. Meanwhile, in Unit 2, the plant’s other working reactor, which had been shut down for routine maintenance since early January, they found excessive wear and tear on 192 more tubes. An Edison spokeswoman said the company is planning for the possibility the plant could be offline through the summer. In a March 22 report, staffers said that in a major heat wave or transmission line outage during the peak season, South Orange County and the San Diego and Los Angeles areas could face energy shortages without the 2,200 megawatts of power generated by San Onofre. Source:,0,2483335.story

• Police arrested a man who made hundreds of thousands of dollars stealing parts from railroad tracks. They said the thefts had the potential to damage tracks and put trains carrying hazardous materials at risk. – Miami Herald

17. March 22, Miami Herald – (Florida) Derailed: Miami man charged with dealing in stolen train-track parts. In Miami, a man was charged with dealing in stolen railroad parts. Authorities said his illegal business — selling the parts to nearby recycling firms — could have damaged the tracks and put trains at risk. The man was arrested on a search warrant March 21 at his home. He is being held on $38,000 bond, according to jail records. The suspect recruited people to steal precious metals that held down the tracks before dealing the parts to buyers, a Miami police spokeswoman said. He also sold sewer covers. He was charged with five counts of dealing stolen property and one count of business without a license, jail records show. Additional charges are pending.”He made hundreds of thousands of dollars,” said a spokeswoman for the Florida East Coast Railway system. The Miami police spokeswoman said safety could have been compromised. “Just imagine, a lot of these trains transport explosive chemicals,” she said. “Now imagine a derailment.” Source:

• Police arrested 12 people and shut 2 health clinics in the Cape Coral, Florida area for their part in a scheme that used exaggerated or nonexistent medical treatments to defraud car insurance firms of $22.5 million a year. – Fort Myers News-Press

24. March 22, Fort Myers News-Press – (Florida) Cape Coral police: 12 people arrested in multi-million dollar insurance fraud investigation. A string of suspicious crashes in Cape Coral, Florida, mushroomed into a 13-month investigation that took down two clinics and resulted in 12 arrests, the Fort Myers News-Press reported March 22. The dozen suspects are charged with defrauding car insurance companies of $22.5 million a year. At a news conference March 22, investigators explained how the suspects, including the president of Cape-based Xtreme Care Rehabilitation Center, allegedly staged accidents and billed insurance companies for exaggerated or nonexistent medical treatments to pad their bank accounts. It is believed to be the first time in the state such an investigation resulted in the arrest of a doctor. In addition to Xtreme Care, the C&A Family Rehab Center, also in the Cape, was raided March 21. In all, 31 clinics were alleged to be involved. According to federal indictments of the 12 defendants in what was called Operation Whiplash, clinics allegedly even had fake victims sign blank forms indicating they had been treated when, in fact, they had not visited the clinic. To drum up business, the clinics allegedly employed recruiters to find participants willing to get involved in the staged crashes and clinic visits, often reaching across the state to places such as Miami. Authorities say they were caught in the act by undercover agents who got involved in the process, from staging the crashes to faking injuries and signing off on false claims. The investigation –- the largest of its kind in southwest Florida –- involved officers and agents from Hialeah Police Department, Miami Police Department, the U.S. Secret Service, the Internal Revenue Service, and Florida’s Department of Financial Services, as well representatives from several car insurance companies, including State Farm, Met Life, Sentry, Travelers, Allstate, Nationwide, and Farmers. Source:|newswell|text||p


Banking and Finance Sector

10. March 23, Associated Press – (California; National) 4 convicted in major bank fraud, identity thefts. Four members of an Armenian organized crime ring were convicted in one of the largest bank fraud and identity theft schemes in California history, the U.S. attorney’s office announced March 22. All four were Armenian Power members or associates who targeted dozens of victims in California, Nevada, Arizona, and Texas, according to the assistant attorney general. Over the course of the 6-year conspiracy, more than $10 million was stolen. The four were found guilty of conspiring to commit bank fraud, attempted bank fraud, and various counts of aggravated identity theft March 16. They are due for sentencing August 6. One of the defendants is a member of the Armenian Power organized crime group and was a ringleader of the massive fraud scheme, while the rest were associates, prosecutors said. Using cell phones smuggled into Avenal State Prison, the incarcerated ringleader and a co-defendant coordinated a scheme to obtain Social Security numbers and birth dates and use the data to steal money from high-value account holders. The scheme transferred money, had unauthorized checks printed, and used forged signatures to write checks. In all, 20 defendants were charged in the plot that involved orders made from within prisons and the assistance of bank insiders who were enlisted by the criminal organization. To date, all but one of the defendants involved in the scheme have been convicted. The remaining defendant is awaiting trial. Those convicted face maximum sentences of 30 years in federal prison for each count of bank fraud, 30 years for each count of conspiracy to commit bank fraud, and additional mandatory 2-year sentences for each count of aggravated identity theft. Source:

11. March 23, Pittsburgh Post-Gazette – (Pennsylvania) Belle Vernon man pleads guilty to arranging fraudulent loans. A Belle Vernon, Pennsylvania man pleaded guilty to mail fraud and wire fraud March 22, agreeing to serve 5 years in prison for a series of scams involving mortgages and annuities. Prosecutors said the man ran businesses that helped people to arrange mortgages, settled property transfers, did construction work, and sold annuities. He was indicted for arranging $5.2 million in fraudulent loans, in some cases steering proceeds to his construction company for work that was never done, in other cases inflating the creditworthiness of borrowers or the value of buildings. He also sold annuities with hidden surrender charges that would be triggered if the buyer tried to roll over the financial instrument. Source:

12. March 22, KBZK 7 Bozeman – (National; International) $10M warrant issued for Bozeman man in int’l Ponzi scheme. A $10 million arrest warrant was issued for a Bozeman, Montana man wanted for his part in an alleged Ponzi scheme that reportedly defrauded millions of dollars from investors in 20 states and five countries, KBZK 7 Bozeman reported March 22. The suspect faces 20 felony charges that include operating a pyramid scheme, theft by embezzlement, failure to register as a securities salesperson, failure to register a security, and fraudulent practices. Court papers detail many counts of embezzlement. “[He] misled the investors by making untrue statements or omitting material facts when he failed to tell them that he was not investing their money and instead was using it for his Ponzi scheme and/or his own personal use,” papers filed in Gallatin County District Court state. One person told officials the man “used his affinity with various ministers, pastors, evangelists and other church-related people ... to solicit investors,” court documents state. “A review of the bank records obtained pursuant to the Investigative Subpoena shows that the Defendant and [his wife] received at least $5,388,343 in investment funds from over 140 investors located in Montana, Alabama, Arkansas, California, Colorado, Florida, Georgia, Illinois, Louisiana, Maryland, Michigan, Mississippi, Missouri, New York, North Carolina, Tennessee, Texas, Virginia, Washington, Wisconsin, Canada, Germany, South Korea and Russia,” court papers state. The Montana Commissioner of Securities and Insurance (CSI) determined in an investigation that the man misappropriated about $5.4 million and used about $4.4 million of that for his and his wife’s own personal use, and the other $1 million or so for his Ponzi scheme. Source:

13. March 22, Anderson Independent Mail – (National) Bank account frozen for man accused of Ponzi scheme. South Carolina officials said March 22 they have placed a hold on a man’s bank account. The freeze came as new affidavits showed investigators felt an urgent need to lock the account because a temporary bank-initiated hold was about to expire. A state investigator noted the man and his silver business, Atlantic Bullion & Coin, ceased operations around March 12, when a securities complaint alleging fraud was made public. The complaint alleges the man and his business defrauded customers from 25 states out of millions of dollars while little, if any, silver was bought for clients. The state attorney general’s office has said the business was structured like a Ponzi scheme and took in about $71 million for investments since 2009. Source:

Information Technology

30. March 23, Associated Press – (Oregon) Fire official: Chemical explosion at Portland silicon factory injures 2. A spokesman for the Portland Fire Department in Oregon said an explosion involving a chemical reactor at a silicon factory injured two people. He said two men were doing maintenance March 22 near the chemical reactor at Wacker Siltronics. The reactor combines chemicals for manufacturing. He said reports indicate the explosion occurred when oxygen interacted with a substance called trichlorosilane. He said that is a chemical compound of silicon, hydrogen, and chlorine. Two men reported respiratory problems after the explosion and were taken to a hospital. Two plant technicians and two Portland Fire HAZMAT technicians assessed the chemical reactor’s condition. The explosion drew more than 40 Portland Fire personnel. The spokesman said the explosion was confined to one part of the plant, which makes semiconductor wafers. Source:

31. March 23, Help Net Security – (International) Flash-based rogue AV targets users. In a recently discovered spam e-mail campaign promoting fake AV, the links in the messages take users to one of more than 300 compromised domains. Once users lands on the page, a JavaScript message warning about a “critical process activity” prepares them for a fake scan which immediately starts “running.” “The page uses Flash making it look more convincing with realistic icons, progress bars, and dialog boxes,” according to the researchers. “Unsurprisingly, the fake antivirus detects plenty of viruses. Decompressing the Flash file and analyzing it shows a huge list of files contained within it. The Flash movie then simply picks some of these at random and claims they are infected (with equally random virus names).” Users are then offered the option of removing all the found malware. If they choose not to, they are bombarded with warnings about an imminent system crash and urged to change their decision. If they choose to remove the malware, they are offered a “Windows Risk Minimizer” for downloading and, once run, the fake solution appears legitimate. It also runs a scan and finds the system is overrun with malware. If users still fail to proceed to buy a subscription for the solution and close the window, the fake AV will vex them with pop-up warnings and balloon messages indicating a program was blocked from stealing data, identity theft is in process, or threats of prosecution. It then claims the problems can be solved by buying a lifetime subscription and support for the fake AV for $99. Source:

32. March 22, H Security – (International) LibreOffice 3.4.6 fixes ‘potential security problem’. The Document Foundation released version 3.4.6 of its open source LibreOffice productivity suite. The maintenance update addresses a “potential security problem” and includes fixes for a number of bugs, such as problems that could lead the application to crash. Details of what the security problem in question is were not given. Source:

For more stories, see items 34, 35, and 36 below in the Communications Sector.

Communications Sector

33. March 23, WKU Public Radio – (Kentucky) Transmitter repairs are underway in Somerset. Radio station W277AA (103.3 FM), which is the translator for WDCL 89.7 FM in Somerset Kentucky remained off the air while major repairs continue. The station indicated that the signal should be restored by March 24. The week of March 12, the WDCL transmitter suffered a major equipment failure. Following temporary repairs, the signal was restored, but some key pieces of equipment must be replaced. That process is underway. The work will affect WDCL and W277AA. Source:

34. March 23, Quincy Herald-Whig – (Illinois) Severed cable disrupts Comcast TV, Internet connections. A severed fiber optic cable in McDonough County disrupted Comcast cable service and phone service in parts of Western Illinois March 22. Illinois State Police in Macomb confirmed cable television and computer service were disrupted in parts of Adams, McDonough, and Fulton counties. Phone service was temporarily lost in the Bushnell area as well. Source:

35. March 23, Lubbock Avalanche-Journal – (Texas) Fiber optic cut leaves Lamesa with service glitches. WindStream phone and Internet service was cut off in Lamesa, Texas, March 22 due to what a Verizon Wireless representative described as a “fiber optic outage.” The outage left the town without any service for about 4 hours. According to another Verizon Wireless representative, the outage affected all phone companies excluding AT&T. The representative said the connections were back up, but glitches were still present. There was no word as to when glitch-free service would resume. Source:

36. March 22, IDG News Service – (International) ISPs commit to new cybersecurity measures. March 22, a group of U.S. Internet service providers (ISPs) committed to taking new steps to combat three major cybersecurity threats based on recommendations from a U.S. Federal Communications Commission (FCC) advisory committee. The ISPs, including AT&T, Comcast, Time Warner Cable, and Verizon Communications, committed to implement measures to fight botnets, domain name fraud, and Internet route hijacking. The FCC’s Communications, Security, Reliability, and Interoperability Council (CSRIC) also adopted the recommendations for voluntary action by ISPs March 22. Eight wired and wireless ISPs, representing about 80 percent of the broadband subscribers in the United States, are members of CSRIC and signed on to the recommendations. Source:

For another story, see item 31 above in the Information Technology Sector.