The Fugitive Game: Online With Kevin Mitnick (14 page)

"Title 18, Section 3142, The Wiretap Act. There's a clause that says
any telephone service producer who believes his services are being
fraudulently used may wiretap the suspect without a warrant."

Kevin Mitnick is right. I look up the statute and it's just as he says.
Pac Bell or any other phone company in the nation can legally wire-
tap citizens without any government approval.

■ pa

"Are you sure it was a full implementation of DES?" Mitnick probes.

Mitnick is asking about rumors that the FBI enlisted a Cray Super-
computer to crack Kevin Poulsen's Defense Encryption Standard-
encrypted computer files. Poulsen says it happened. He double-
encrypted his files, and the government cracked the encryption, a feat
next to impossible. If true, it's the first evidence that the government's
code-cracking powers are greater than it's publicly acknowledged.

"Yeah. Supposedly the files were encrypted two to three times," I say.

"Wow!" Mitnick exclaims, his voice jumping a few octaves.
"They spent some money on Poulsen!"

Mitnick muses about which of the FBI top guns might currently
have him in their sights.

"I'd be interested if Jim Settle was involved," Mitnick wonders
out loud. "Or Hal Hendershot."

Harold Hendershot is the FBI's Supervisory Special Agent, Eco-
nomic Crimes, Financial Crimes Section. He coordinates major com-
puter crime investigations. Settle, too, has been a major FBI
computer crime investigator, but he's just retired.

Then Mitnick surprises me. He starts chattering about a letter to
Attorney General Janet Reno that De Payne's attorney, Richard Sher-
man, has written, a letter that I am told will blame the FBI and Assistant
U.S. Attorney David Schindler for Eric's transgressions. It's a letter
sure to enrage the very FBI agents who are trying to capture Mitnick.

Dillinger would never have dreamed of this. Nor would Capone.

Mitnick chuckles. "I'd love to see Schindler's face when the judge
asks him about Eric."

I don't get it. De Payne hires a lawyer to enrage the FBI and shove
Kevin Mitnick higher up the FBI's Most Wanted list. And Mitnick
thinks it's funny?

De Payne hasn't said anything for over half an hour. Maybe he's
snuggling in bed with Mitnick's ex.

It's risky, but I've been waiting all night to ask this question.

"What do you think about De Payne doing all this?"

"Lew has a tendency to always get attorneys involved. That's just
the way he is," Mitnick explains, sounding ambivalent. "Lew is the
one person since 1981 they have not been able to get."

Somewhere on the planet,
Kevin Mitnick is laughing.

My fax beeps, and I walk over to see the threatening letter to Janet
Reno that Mitnick warned was in the works.

I have to smile. They're actually doing it, accusing the federal gov-
ernment of committing crimes. It's revenge. It's the ultimate hack.
It's yet another De Payne-Mitnick full-court prank. Charges of ille-
gal activity by FBI agents. Allegations that a U.S. attorney deceived a
federal judge about his knowledge of Eric's continuing crimes. The
fugitive hacker and his prankster friend are fighting back, attacking
their enemies for their handling of hacker double agent Justin Pe-
tersen, aka Eric Heinz.

Law Offices of Richard G. Sherman
May
19, 1994

The Honorable Janet Reno

Attorney General of the United States

Department of Justice

10th & Constitution Ave. N.W. Room 4400

Washington D.C. 2.0530

RE: Illegal Activities by Certain Special Agents of the Federal Bu-
reau of Investigation.

Dear Madam Attorney General:

It has come to my attention that Federal Bureau of Investigation
Special Agents Stanley E. Ornellas, Kenneth G. McGuire III, and
Joseph C. Ways .. . have engaged, individually and jointly, in a
course of conduct which is illegal and contrary to Bureau policy in
their handling of an informant working under their direction and
control... .

... On or about October 31, 1991, the Texas prosecution against
Petersen was transferred to the Central District of California pur-
suant to Rule 2.0 of the F.R. Crim.P. and sealed as Petersen was
then cooperating with the government and it was alleged that his
life might be in danger. . .. Indeed, there was substantial danger,
however, it was to the general public and not Petersen.

. . . Justin T. Petersen obtained, illegally, several.. . Driver Licences
under various fictitious names. ... He then filed a false claim with
and started receiving disability benefits from the Hollywood Social
Security office under the name of Eric Heinz Jr., who was then de-
ceased, claiming that he was disabled due to having a missing hand.

. .. DMV [Department of Motor Vehicles] investigators ran Eric's
various aliases through their computers. This triggered automatic
notification to the FBI that someone had requested information
through the computer regarding their informant Justin Petersen. As
a result, the FBI called the DMV investigators to ascertain if they
had a legitimate reason to run their informant. The FBI was made
aware of Eric's state crimes. SSA [Social Security Administration]
investigators attempted to ascertain from the FBI the whereabouts
of Eric, so that they could question and arrest him. The FBI agents
"handling" Petersen refused to provide any information to the re-
questing law enforcement officers. . . .

I laugh at the sheer audacity of the letter, and the potentially damag-
ing facts that De Payne and Sherman choose to leave out. Mitnick's
relentless and possibly illegal ploys to unmask Petersen's undercover

identity. His hounding of Social Security officers to investigate and
terminate Petersen's bogus social security benefits.

But as I continue reading, I see that De Payne's attorney is not
content with blasting the FBI and the U.S. Attorney's Office for pro-
tecting Eric so that he could continue his life of crime. Sherman goes
on to claim that more than just botching its undercover operation,
the U.S. government permitted Eric to wiretap illegally.

Placing such a system ... in the hands of law enforcement, would
be an invitation to catastrophe ... the SAS computer . . . represents
one of the greatest dangers to the civil liberties of U.S. citizens. .. .
It is a computer system which allows someone ... to literally take
over any phone in the United States.

Allowing the FBI to share such information with a common infor-
mant like Eric, who can then pass it on to others, makes the former
catastrophe pale by comparison. ... It is hard to believe that such
an adventure would be approved by any responsible Justice Depart-
ment Official.

To obtain his release from detention in Texas and allow Petersen to
remain at liberty given his background, criminal record, and crimi-
nal activity, confounds me. He is one of the most dangerous techno-
criminals in the United States. No information, telephone conversa-
tion, or data transmission is safe so long as he is at liberty and free
to teach others his craft... . Why did all of this occur? . . . What
was so unique about this informant that the FBI would ignore his
background, and criminal activity, while acting as their informant,
cause them to conceal him from state law enforcement officers, and
deceive a Federal District Judge?...

Yours Truly,

Richard G. Sherman

cc: Hon. Louis Freeh
Hon. Nora Manella
SAC Charlie Parsons
Clerk, Hon. Stephen V. Wilson

The lengthy letter with numerous exhibits doesn't suggest the gov-
ernment's motive, but the implication is clear. Only one prize could
be sufficient to warrant Petersen's alleged dangers to the public and
national security.

The chance to capture Kevin Mitnick.

■ ■ ■

My wife cups her hand over the portable phone.

"It's John Markoff of the
New York Times."

The call was bound to come sooner or later. Though I've been
researching my book about Poulsen for months, only in the last few
weeks have I been interviewing Kevin Mitnick. Reporters don't take
kindly to others nosing around their subjects, and Markoff,
Cyber-
punk
coauthor and recognized cyberspace journalist, routinely
scoops the competition on high-tech stories.

But still, I'm surprised Markoff is phoning me at home on a Satur-
day. He's only called me once in the last six years or so, and I barely
know him. We first met in the summer of 1987 when, as an editor at
a San Francisco computer magazine, I contracted him to write a
story. At the time, he was a respected high-tech reporter for the
San
Francisco Examiner.
He, too, had gotten his start with technology
magazines.

We had met for lunch in a bistro across from the old offices of
Rolling Stone
magazine. Tall, with a curly mop of dark hair and
thick glasses, Markoff struck me as confident yet modest. He lacked
the usual hard-boiled cynicism of most newspaper reporters. The
story was about a new Sun Microsystems computer, and I wanted to
hire Markoff for his contacts. Over lunch, he discussed the new,
secret UNIX computer Sun was planning to introduce. I was im-
pressed. Markoff had the contacts of an insider, and the technical
expertise of an engineer. But what most impressed me was his de-
meanor. He had an ease about him, an earnestness that was appeal-
ing. It was easy to see why people would confide in him.

The next week Markoff turned in a good, technical piece. Our
paths didn't cross again for nearly three years, until early 1990 in
Syracuse, New York, when we both attended the trial of the Internet
worm hacker, Robert Tappan Morris. I was writing a feature article

on the case; Markoff was covering the trial for the
New York Times. His then wife, Katie Hafner, was there to cover the event for the
book they told me they were writing together,
Cyberpunk.
Markoff
had broken the story on the front page of the
Times,
when Robert
Morris Sr., a personal friend of his and one of the National Security
Agency's most talented code breakers, helped tip off Markoff that it
was his son who had unleashed the Internet worm.

We spoke briefly during the trial, and the evening of Morris's con-
viction we shared a cab back to the Sheraton. Markoff's wife called
me during the summer of 1991, asking if she could use some of the
material in my Morris article in
Cyberpunk.
Hafner phoned again in
early 1992, asking for advice on promoting the recently completed
book. I offered my suggestions, and in the book's preface the couple
thanked me for my assistance.

■ ■ ■

It's a Saturday afternoon, June 1994.

John Markoff launches into conversation with no mention of the
four and a half years that have elapsed since we last spoke. He's all
business. Markoff has heard that Mitnick social engineered a copy
of the source code for a cellular phone made by Qualcomm, a com-
pany in San Diego. He's hot on his trail. Source code is the most
fundamental level of software — the actual instructions that make
computers perform specific tasks. When you buy a regular program
like Microsoft Word, you don't get source code, you get a program
that has been built — compiled — for commercial use.

If indeed Mitnick's got the source code to the program that drives
Qualcomm's phone, he could command the phone to do things not
intended for the general public's use.

"He [Mitnick] talked to six people in the company," Markoff
claims. "It was his style. The stuff ended up on CompuServe."

If true that would mean Qualcomm's proprietary cellular soft-
ware ended up publicly available on the Internet.

"What's the software good for?" I ask.

"You can clone a phone with it."

In other words, the source code, or base software, would enable a
hacker to hijack the serial number and other identifying information

of other people's cellular phones, thereby sticking them with the
bills.

"Why do you think Mitnick's doing it?"

Markoff doesn't seem to know, and admits he's "never found a
profit motive" behind Mitnick's hacking.

Markoff has a copy of the Janet Reno letter claiming FBI miscon-
duct and tells me he's heard Agent Steal pursued Mitnick and "he
[Eric] was dirty." He plans to fly down to visit De Payne's attorney
in Los Angeles soon, but he isn't impressed by the government's
wayward undercover operative.

Markoff thinks Kevin Mitnick is by far the superior hacker.

■ ■ ■

"Have you talked to Kevin?" Markoff continues.
"I'm talking to lots of hackers," I venture.
"How do you think I might get in touch with Kevin?"
"Well, you know he's still close with De Payne."
"I've thought about trying to catch Kevin," the
New York Times reporter jokes before saying goodbye. "But I guess that wouldn't be
politically correct." (Markoff later denied saying this, even in jest.)