Wednesday, August 29, 2012

Complete DHS Daily Report for August 29, 2012

Daily Report

Top Stories

• The U.S. government said 78 percent of oil production in the Gulf of Mexico was stopped as companies prepared for Hurricane Isaac. – Associated Press

1. August 28, Associated Press – (National) U.S: 78 pct. of Gulf oil production shut by storm. The U.S. government stated 78 percent of the oil production in the Gulf of Mexico has been halted in preparation for Tropical Storm Isaac, the Associated Press reported August 27. The Bureau of Safety and Environmental Enforcement reported about 1 million barrels per day of oil production has stopped as companies have evacuated 346 offshore oil and gas production platforms. That is 17 percent of daily U.S. oil production and 6 percent of consumption. The agency said 2 billion cubic feet of natural gas production is also affected. That is about 3 percent of daily U.S. production and consumption. Production was expected to quickly resume after the storm passes. Source:

• Authorities arrested seven people allegedly involved in an extensive bank scam that stole as much as $100 million from several large banks throughout the country, police reported. – KCAL 9 Los Angeles See item 14 below in the Banking and Finance Sector

• Hackers are taking advantage of a zero-day vulnerability in Java 7 that can be exploited through any browser on any system, security experts said. – Computerworld See item 37 below in the Information Technology Sector

• Restoration efforts for thousands of Verizon customers at homes, businesses, and government agencies in the Lawrence, Massachusetts area continued after a fire under the Central Bridge August 27 damaged Verizon cables. – Verizon See item 38 below in the Communications Sector

• Engineers closed the floodgates around the city of New Orleans, hoping to keep water from the Gulf of Mexico out as Hurricane Isaac headed toward the city and its newly reinforced 350-mile flood protection system. – USA Today; Associated Press

47. August 28, USA Today; Associated Press – (Louisiana; Southeast) Isaac barrels in as Category 1 hurricane. Isaac strengthened into a Category 1 hurricane with 75-mph winds as it made its way toward Louisiana, USA Today reported August 28. Forecasters at the U.S. National Hurricane Center upgraded the storm August 28 saying Isaac gained strength as it moved over the warm, open waters of the Gulf of Mexico. Engineers closed the floodgates around the city of New Orleans, hoping to keep water from the Gulf from surging into the area as Isaac moved closer to shore, threatening to cause major flooding. All eyes are on the newly reinforced hurricane protection system which includes 350 miles of levees, floodwalls, and floodgates ringing the greater New Orleans area. Isaac will be the first true test of the $14 billion system, which was bolstered by the U.S. Army Corps of Engineers (USACE) following Katrina in 2005. By August 28, USACE closed 124 of the 127 gates in the city, said the president of the Southeast Louisiana Flood Protection Authority East, a quasi-State agency created after Katrina to monitor Corps projects. Engineers closed the remaining gates at a massive surge barrier east of the city and another large gate near Lake Pontchartrain, sealing the 200 miles of perimeter around the metro area, he said. Isaac was expected to push a storm surge of 6 to 12 feet and dump up to 18 inches of rain in some places. Officials expect the system to hold up fine. States of emergency were in effect in Louisiana, Mississippi, Alabama, and Florida. Source:


Banking and Finance Sector

13. August 27, Credit Union Times – (National) Credit unions, banks bilked in $16 million Jiffy Lube scam. Credit unions and other lenders were among those allegedly defrauded out of $16 million in a case involving the sale of and leaseback of several businesses in four States, Credit Union Times reported August 27. The U.S. Attorney’s Office for the Middle District of Pennsylvania announced the indictment of a real estate broker/investment consultant. The attorney said that between 2006 and 2008, the man and a co-conspirator allegedly used a group of companies to buy Jiffy Lube stores, automotive service businesses, convenience store/gas stations, and other commercial properties and then sell them to investors in Pennsylvania and California. Financing and commercial loans were allegedly obtained from Indiana First Savings Bank, Bank of the West, California Credit Union, Travis Credit Union, and Great Lakes Credit Union for investors to purchase properties and then used other companies controlled by the co-conspirators to lease and operate the properties. The indicted man allegedly provided investors and lenders with false and fraudulent financial data on the investment properties, which induced loans and investments totaling approximately $16 million. He would then allegedly divert funds from the sale of the properties to cover lease payments and expenses and to buy new properties and also allegedly received approximately $1.9 million in commissions and consulting fees from the sale of properties, authorities said. The co-conspirator was previously charged and pleaded guilty in April 2011. Source:

14. August 27, KCAL 9 Los Angeles – (California; National) Secret Service, OC police nab 7 suspects in massive bank scam. Authorities arrested seven people allegedly involved in an extensive bank scam that stole as much as $100 million from several large banks throughout the country, police reported. More arrests would be made as the investigation continues, a Huntington Beach, California police sergeant said August 27. The case started when a woman drained $24,000 from another person’s account at a Chase bank in Huntington Beach. She was caught and pleaded guilty in July to using a counterfeit credit card. More suspects have been accused of the same ―account takeovers‖ and police suspect they had help from bank employees. A task force, which also included Los Angeles County sheriff’s deputies as well as Los Angeles, Irvine, and Huntington Beach police, served five search warrants the week of August 20. ―There are 50 to 55 we have identified or are going to identify, of which seven were arrested last week,‖ the police sergeant said. The thieves struck 300 to 500 bank branches, taking out $5,000 to $7,000 each time, according to the sergeant, who said the losses could be higher than what police have estimated thus far. He noted that Bank of America has lost about $12 million. Investigators planned to meet with Citibank officials August 28. Source:

15. August 27, USA Today – (National) Cybercrooks fool financial advisers to steal from clients. Cybercriminals are using falsified email messages in attempts to con financial advisers into wiring cash out of their clients’ online investment accounts, USA Today reported August 26. If the adviser falls for it, a wire transfer gets legitimately executed, and cash flows into a bank account controlled by the thieves — leaving the victim in a dispute with the financial adviser over getting made whole. Anecdotal evidence of this ruse — directed at financial planners, estate lawyers, and other advisers who rely on email and online banking to work with clients — has just begun to surface, according to tech security and online banking experts. IDentity Theft 911, a theft-recovery service, is working on a case where a faked email led to a $35,000 transfer. In another caper, a veteran financial planner was fooled by a Gmail message appearing to arrive from an insurance company executive. The email carried instructions to wire $15,850 into an account at PNC Bank, worded in a casual style similar to past emails the adviser had received from the executive. Luckily, the planner phoned his client to clarify which account to pull the money from and discovered the fraud. Cybercriminals have discovered investors now routinely rely on email to authorize personal advisers to execute financial transactions. ―Instead of managing layers of malicious software, all the bad guys need is e-mail and phone skills‖, a vice president at Authentify said. Source:

16. August 27, Topeka Capital-Journal – (Kansas; Missouri) Man admits scheme was based on bank, wire fraud. A man has pleaded guilty to swindling banks and investors out of more than $5 million, a U.S. attorney said August 27. The Overland Park, Kansas man pleaded guilty to one count of bank fraud, one count of aggravated identity theft, one count of money laundering, and one count of wire fraud. In his plea, he said he devised a scheme in which he defrauded Kansas City, Missouri area financial institutions including Valley View Bank, Bank of the West, and Marshall & Ilsley Bank by providing them with false financial data to obtain lines of credit and loans. He obtained loans by providing false documentation, and arranged for a person to call a loan officer at Valley View Bank to claim he had more than $2.7 million invested with the caller. One of the loans was obtained for his company, Software4Biz Consulting using fake documents. He also co-founded a company called BlueValley Capital Management LLP. Partners in the venture invested $50,000. When soliciting investors, he made false statements overstating the annual return of the partners’ investments. When one of the co-founders requested an audit, he provided a report with false data. He also falsely claimed to have the ability to purchase pre-initial public offering stock in Facebook. Source:

17. August 27, U.S. Federal Bureau of Investigation – (Maryland) Man pleads guilty to $163,000 credit card fraud scandal in Maryland. A man pleaded guilty in Greenbelt, Maryland, August 27 to fraud in connection with access devices that cost merchants more than $163,376. According to his guilty plea, from February 20, 2008 to April 2, 2010, he obtained credit cards in his own name and added fictitious names as secondary users on the accounts. He then used the credit cards to order items from merchants on payment plans. He provided multiple different addresses to which the items should be shipped, including addresses for himself, his friends and relatives, and vacant addresses. Merchants charged his credit cards in installments over a period of time. He then reported to the credit card companies that his cards had been lost or stolen. The companies closed those credit card accounts and issued new credit card account numbers. When the merchants tried to charge the man’s credit cards for the subsequent installment payments, they were unable to do so because those accounts had been closed. The man maintained at least three eBay accounts, which he used to sell the items that he had fraudulently obtained from the merchants. Source:

18. August 27, – (National) Couple accused of $10-plus million Ponzi scheme against Detroit police and fire pension spent frivolously. A Florida couple is accused of initiating a Ponzi scheme that stripped the Detroit Police and Fire Retirement and other creditors of $39.5 million dollars, reported August 27. After receiving a $9.9 million loan in 2008 from the pension system for the purposes of investing in distressed properties for resale, a husband and wife who at the time operated South Carolina-based Paramount Land Holdings never made payments in accordance with the agreement, the federal complaint against them reads. Prior to the pension board filing a complaint in April, the couple fled to the Caribbean, during that period spending large sums on expensive works of art. The pair approached the former president of Paramount Limited with the land-purchase-business proposal, which he presented to the pension board. Although the board chose not to invest in the business, it granted a $10 million loan with an 18 percent interest rate. While investigating the potential second loan, the board identified ―numerous substantial breaches‖ related to the initial $10 million and filed for default. The couple allegedly spent $5 million of the loan they received on more than 2,500 properties in 30 States. Based on the costs of litigation, unpaid interest, and other fees, the pension fund claims the couple owes more than $15.3 million to the pension fund. Combined with other creditors, they owe at least $39.5 million, the Detroit News reported. Source:

Information Technology Sector

36. August 27, The H – (International) Five 0days: HP in the security dock. In compliance with its policies, the Zero Day Initiative (ZDI) has released five security holes that HP has had more than 6 months to fix. All of the zero-day holes affect products in HP’s enterprise and networking divisions: HP LeftHand Virtual SAN, HP Operations Agent for NonStop, HP Intelligent Management Center, HP iNode Management Center, and HP Diagnostics Server. In all five products, remote attackers can exploit programming flaws to inject and execute arbitrary code via specially crafted requests — sometimes even at system user level, the highest threat level. In all five cases, the ZDI informed the company of the problems at the end of 2011. Source:

37. August 27, Computerworld – (International) Macs at risk from ‘super dangerous’ Java zero-day. Hackers are exploiting a zero-day vulnerability in Java 7, security experts said August 27. The unpatched bug can be exploited through any browser running on any operating system, from Windows and Linux to OS X, that has Java installed, said the engineering manager for Metasploit, an open-source penetration testing framework. The CTO of Errata Security confirmed the Metasploit exploit — which was published less than 24 hours after the bug was found — is effective against Java 7 installed on OS X Mountain Lion. He said he was able to trigger the vulnerability with the Metasploit code in Firefox 14 and Safari 6 on OS X 10.8. Although the exploits now circulating in the wild have been aimed only at Windows users, it is possible Macs could also be targeted. ―What is more worrisome is the potential for this to be used by other malware developers in the near future,‖ said antivirus vendor Intego. ―Java applets have been part of the installation process for almost every malware attack on OS X this year.‖ The engineering manager for Metasploit called the bug ―super dangerous,‖ noting that it was ―totally a drive by,‖ meaning that attackers could compromise computers simply by duping users into browsing to a Web site that hosts the attack code. Security experts have recommended that users disable Java until Oracle delivers a patch. Source:

For more stories, see items 15, 16 above in the Banking and Finance Sector and 38 and 39 below in the Communications Sector

Communications Sector

38. August 28, Verizon – (Massachusetts) Verizon restores service for thousands after Lawrence, Mass., fire; restoration efforts. Service was restored for thousands of Verizon customers, and restoration efforts continued for thousands more in the Lawrence, Massachusetts area after a fire under the Central Bridge August 27 damaged Verizon cables. Verizon crews worked to splice new cables and restore service for customers who live and work primarily in the Lawrence and North Andover areas. Verizon trailers were set up at the scene, and crews will work in round-the-clock shifts until all services are restored. Some Verizon customers in Andover, Lawrence, Littleton, Methuen, North Andover, North Reading, and Tewksbury lost some Verizon services as a result of the fire. Also, voice and data services for some business and government customers may be affected. Customers in other communities may have been impacted as well. Verizon was working with its customers, local officials, and other carriers to identify and prioritize service restoration for critical services, including health care facilities, public safety, elderly housing complexes, and individual customers. Source:

39. August 28, Falls Church Patch – (Virginia) Verizon restores service to some Merrifield customers. A third of the affected Verizon landline and Internet customers in the Merrifield are of Fairfax, Virginia, had their services restored August 27, days after a construction company severed three underground communication cables. A Verizon spokesman said crews were working around the clock to restore service to the more than 1,000 affected customers. Crews were working in the intersection of Gallows Road and Lee Highway. Fairfax County officials urged people to avoid the intersection if they can while crews continue to work. August 23, a construction company working in the intersection damaged three Verizon communications cables and the underground ducts they were in. The spokesman said the restoration could take days to finish. Source: