Wednesday, April 18, 2012

Complete DHS Daily Report for April 18, 2012

Daily Report

Top Stories

The potential shortage of a key component used to make fuel and brake lines could force automakers around the world to close car and truck plants as they run short of parts. – Associated Press

9. April 17, Associated Press – (National; International) Chemical plant shutdown could cut auto production. The potential shortage of a key component used to make fuel lines and brake lines could force automakers in the United States and around the world to close car and truck plants as they run short of parts, the Associated Press reported April 17. Auto industry executives scheduled an unprecedented meeting April 17 in Detroit to talk about the problem. Officials from as many as 10 automakers and dozens of parts supply companies were set to attend. A March 31 explosion at Evonik Industries in Germany killed two workers and damaged a factory that makes CDT. That chemical is a key component in a nylon resin called PA12, which is used to make a specialized plastic. The plastic is used in auto fuel lines and brake lines. PA12 has been in short supply for about 2 years, as demand from the solar industry increased. The Evonik incident will worsen the shortage, which could hit every major automaker. Source:

Prosecutors said three former General Electric Co. bankers used a bid-rigging scheme involving municipal bonds to steal hundreds of millions of dollars from cities and the Internal Revenue Service. – Bloomberg See item 13 below in the Banking and Finance Sector

Two men pleaded guilty and agreed to testify against a third man about a 2009 conspiracy to strap on suicide-bomb vests and detonate them inside New York City subways. – Associated Press

15. April 17, Associated Press – (New York) Would-be bomber recounts evolution of NYC plot. Two men pleaded guilty and agreed to testify against a third men in a bid for leniency for a conspiracy to conduct what authorities have called one of the most frightening near-miss terror plots since the September 11th attacks — a 2009 scheme to strap on suicide-bomb vests and detonate them inside subways in the Manhattan men “were prepared to kill themselves and everyone else around them — men, women and children,” an assistant U.S. attorney said in opening statements, the Associated Press reported April 17. “These men came so close — within days of carrying out this attack.” A witness took the stand April 17 to testify about how, after relocating to the Denver area, he cooked up explosives and set out by car for New York City in September 2009 to carry out the attack. One of the accused recalled returning to New York City and using his cab to drive around the city in early 2009 and casing potential targets for a terrorist attack, including Grand Central Terminal, Times Square, and the New York Stock Exchange. The conspirators also considered striking Penn Station or city movie theaters before settling on attacking the subways during Ramadan, he said. Source:

A mulch fire burned for the third straight day in Knoxville, Tennessee, billowing smoke that closed businesses, evacuated homes, and killed many fish in a creek. – Knoxville News Sentinel

46. April 17, Knoxville News Sentinel – (Tennessee) Day 3 of the mulch fire: Hard to guess when blaze will be put out. Dozens of firefighters in Knoxville, Tennessee, continued to aim streams of water on a stubborn mulch fire April 17, that was entering its third day of burning, sending plumes of unhealthy smoke across the area. Deep-buried fire smoldered from Shamrock Organic Products, spreading blue and white smoke across Knoxville. The Knox County Health Department declared a “code red” alert, meaning the air swirling around the 9-acre site near Middlebrook Pike was unfit for anyone to breathe. Some businesses in the area, including a women’s health center, said they adjusted or canceled office hours because smoke from the fire affected customers. Knox County Schools kept students inside at nearby schools. The Red Cross set up a shelter for neighbors of the fire smoked out of their homes. A Knoxville Fire Department spokesman said water continued to seep into Third Creek where state wildlife officials reported a fish kill April 16. Tainted water from the scene entered the creek and robbed it of oxygen, causing the fish kill. While southwesterly winds pushed some smoke away from downtown later April 17, the fire likely will burn for days, officials said. Source:


Banking and Finance Sector

11. April 17, Courthouse News Service – (California; National) Feds accuse 10 of $10 million conspiracy. Federal prosecutors unsealed an 18-count indictment accusing 10 people across the country of taking more than $10 million in a mortgage loan conspiracy, money laundering, and other crimes, Courthouse News Service reported April 17. Three of the defendants ran the scam through two companies: Advanced Partnership Properties and BYW Construction, both of El Cajon, California, the U.S. attorney’s office said. They are accused of processing fraudulent loan applications for the other seven defendants to buy “multiple properties” in southern California and elsewhere. “According to the indictment, the defendants and their co-conspirators would then divert tens of thousands of dollars per transaction from the loan proceeds to BYW’s bank accounts using false claims for unsecured loans, liens, and notes on construction work that was never performed,” the U.S. attorney’s office said. “After funneling the payments to BYW’s bank accounts, the defendants caused the funds to be withdrawn or transferred to their own bank accounts for their own benefit and to further the scheme.” Charges include conspiracy to commit mail fraud and wire fraud, mail fraud and wire fraud, aiding and abetting mail fraud and wire fraud, conspiracy to launder money, and laundering money. Source:

12. April 16, U.S. Securities and Exchange Commission – (Illinois; National) SEC charges optionsXpress and five individuals involved in abusive naked short selling scheme. The U.S. Securities and Exchange Commission (SEC) April 16 charged an online brokerage and clearing agency specializing in options and futures, as well as four officials at the firm and a customer involved in an abusive naked short selling scheme. The SEC alleged Chicago-based optionsXpress failed to satisfy its close-out obligations under Regulation SHO by repeatedly engaging in a series of sham “reset” transactions designed to give the illusion the firm had purchased securities of like kind and quantity. The firm and a customer engaged in these sham transactions in many securities, resulting in continuous failures to deliver. The former chief financial officer at optionsXpress was named in the SEC’s administrative proceeding along with optionsXpress and the customer. Three other optionsXpress officials were named in a separate proceeding and have settled the charges against them. According to the SEC’s order, the misconduct occurred from at least October 2008 to March 2010. The SEC alleges the sham transactions impacted the market for the issuers. For example, from January 1, 2010 to January 31, 2010, optionsXpress customers accounted for an average of 47.9 percent of the daily trading volume in one security. In 2009 alone, the optionsXpress customer accounts engaging in the activity purchased about $5.7 billion worth of securities and sold short about $4 billion of options. In 2009, the customer named in the administrative proceeding himself purchased at least $2.9 billion of securities and sold short at least $1.7 billion of options through his account at optionsXpress. Source:

13. April 16, Bloomberg – (National) Former GE bankers defrauded cities in bid scam, U.S. says. Three former General Electric Co. (GE) bankers defrauded cities and the U.S. Internal Revenue Service in a bid-rigging scheme involving municipal bonds, a prosecutor told jurors at the start of a fraud trial in a New York federal court April 16. The three face charges of conspiracy to commit fraud by manipulating auctions for municipal bonds. The government claims that from August 1999 to November 2006 the men gave kickbacks to brokers hired by local governments to solicit bids, to win auctions, and to increase their profits. A U.S. Department of Justice lawyer said the defendants were improperly given information about other bidders, putting them in a position “like playing poker and knowing everyone’s cards.” The charges grew out of a 5-year investigation by federal antitrust prosecutors into the $3.7 trillion municipal bond market. In December 2011, GE agreed to pay $70.4 million to resolve its part of the investigation. CDR Financial Products Inc. and its founder pleaded guilty, less than a week before they were to be tried on bid-rigging charges. Several former CDR employees are scheduled to testify in the trial. The case is focused on guaranteed investment contracts, which cities buy with money raised from selling bonds. A former CDR employee who pleaded guilty and is cooperating with the government has testified about helping GE win bids, at the direction of CDR’s founder and its former chief financial officer, in exchange for later fees on swap transactions. Source:

14. April 16, Associated Press – (California; International) 7 indicted in toy firm’s alleged drug money scheme. Five people were arrested April 16 in a money laundering scheme that allegedly funneled millions of dollars in Colombian and Mexican drug money through an American toy company, federal officials said. Immigration and Customs Enforcement said the two owners of Industry, California-based Woody Toys and three company employees were arrested on charges of evading federal reporting requirements for financial transactions. Two toy dealers from Mexico were arrested earlier on similar charges. One of those men and the two toy dealers are also charged with conspiring to launder money in a scheme that officials said channeled at least $6 million to the California toy company between 2005 and 2011. The Mexican toy dealers bought U.S. dollars made off drug sales from currency brokers in a “black market peso exchange,” officials said. That exchange enabled drug traffickers to get rid of drug dollars and gave the toy dealers a more favorable exchange rate so they could then purchase toys in the United States, authorities said. The dealers would then send the money to Woody Toys via courier or bank deposits. Authorities said Woody Toys failed to file required paperwork when the company received deposits of more than $10,000, and also intentionally structured bank deposits in smaller increments to avoid having to do so. The investigation started in November 2010 following a money laundering probe at Los Angeles-area toy wholesaler Angel Toy. Source:

Information Technology

41. April 17, Help Net Security – (International) Apple enhances Apple ID account security. iOS device owners whose Apple ID account may have triggered a flag with Apple’s security team were asked to set up three new security questions and a backup e-mail address when they tried to download apps from the App Store. The request left some wondering whether they were subjected to a phishing attempt, as Apple did not announce or explain the move beforehand. However, the request was legitimate, as Apple confirmed for Ars Technica, and was part of the company’s attempt to increase security. The measure was seen as a smart move by Apple, as the Apple ID account is tied to Apple’s retail Web site and its media services. Many users have credit cards associated with their account. Source:

42. April 17, Help Net Security – (International) Bogus ‘Account limit exceeded’ emails targeting Yahoo users. Fake Yahoo e-mail notifications are being sent to inboxes, urging users to verify their account because it “exceeded its limit,” Hoax-Slayer warned. The message is accompanied by a veiled threat of account suspension within 24 hours aimed at making users panic, which raises the likelihood of them following the offered link. For users who follow the link, it leads to a fake Yahoo log-in page. Users who input their personal information send it to the phishers who created the page. This information is then used by the criminals to hijack the users’ accounts. The accounts can be used for a variety of malicious schemes, including sending spam, bombarding the users’ contacts with links leading to malware or making fake pleas for money. Source:

43. April 16, H Security – (International) Critical vulnerability in IrfanView plugin. The official plug-in package for the popular image viewer IrfanView is currently shipped with a vulnerable version of the FlashPix plugin. The code contains a critical vulnerability that could be exploited by an attacker to infect a system with malicious code; the hole is caused by a heap buffer overflow. An attacker only needs to get a user to open a specially crafted FlashPix format image with IrfanView to get their code to run. This is a relatively exotic file format that might not be opened deliberately, but opening the file could also occur unknowingly, for example, when looking at a folder full of images and browsing their thumbnails with IrfanView. The FlashPix hole is patched in version 4.34 of the plug-in pack but it must be reinstalled manually. The gap was discovered by a security researcher who reported it to Secunia. He has since released a proof of concept, which means IrfanViw users who installed the plug-in package should update as soon as possible. Source:

44. April 16, IDG News Service – (International) Web site vulnerabilities fall, but hackers become more skilled. The number of coding mistakes on Web sites continues to fall, but companies are slow to fix issues that could be exploited by hackers working with improved attack tools, according to a security expert. The average number of serious vulnerabilities introduced to Web sites by developers in 2011 was 148, down from 230 in 2010, and 480 in 2009, said the chief technology officer (CTO) for WhiteHat Security, which specializes in testing Web sites for security issues. He spoke on the sidelines of the Open Web Application Security Project conference in Sydney, Australia, April 16. The vulnerabilities are contained in custom Web site code and are not issues that can be fixed by applying patches from, for example, Microsoft or Oracle, the CTO said. According to WhiteHat Security statistics, it takes organizations an average of 100 days to fix about half of their vulnerabilities. The risk is that vulnerabilities that have not been speedily remedied could be found by a hacker, resulting in a high-profile data breach. Source:

For another story see item 45 below in the Communications Sector

Communications Sector

45. April 16, Odessa American – (Texas) Phone service out Monday in Pecos. Landline phone service returned to the Pecos, Texas area about 8 hours after someone accidentally cut a fiber line near Wickett April 16, an AT&T spokeswoman said. AT&T Southwest construction crews arrived with necessary equipment and worked to restore service. After the cut, all landline service in the area appeared to be out; even government offices and the regional Texas Department of Public Safety office in Pecos were not receiving calls. The Pecos mayor said Internet service was also affected for some, but others retained or regained access later. Source:

For more stories, see items 41 and 42 above in the Information Technology Sector