Chinese Cyber Warfare Capabilities a Force to be Reckoned With

Yesterday, the US-China Economic and Security Review Commission (USCC), a congressional advisory panel, released a joint analysis with Northrop Grumman reporting that the Chinese government is building up their hacking and cyber warfare abilities. The report is based on case studies of prior cyber attacks, People's Liberation Army releases, scholarly contributions from experts, and journals from the Chinese National Defense University and the Academy of Military Sciences.

According to the report, China is a decade into a massive military modernization campaign to drastically increase its ability to engage in cyber warfare, also known as its ability to hack. The goal of this campaign is to have a fully integrated infrastructure with the ability to coordinate military operations on land, in air, at sea, in space, and across the electromagnetic spectrum. The basic premise of a system like this would be to cripple an enemy's communications ability, rendering their military command powerless, while protecting one's own communication systems. Another objective of such a system would be to gather intelligence from the enemy's military communications. The suggestion is that China has already begun to target government and military networks to explore possible weaknesses in the event that they may need to exploit them.

Chinese foreign ministry spokesman Qin Gang the same day dismissed the "rumors" of foreign countries as "fabrications."

The USCC's report is available here.

Trying to be a Spy: Nasa Scientist Arrested

Stewart Nozette (pictured left, from nasa.gov), a former NASA, DARPA (Defense Advanced Research Projects Agency), and U.S. Naval Research scientist, was arrested Monday for allegedly trying to sell national secrets to FBI agents posing as Israeli government agents for $11,000. This is not the first time Nozette has been under investigation. He was investigated in 2006 for allegedly submitting false expense forms to NASA.

Nozette was arrested on Monday, and indicted Wednesday afternoon. He is scheduled for a detention hearing on October 29, 2009. He is likely being charged under 18 U.S.C. § 793 (d).

Nozette had been involved in 1994 in developing special satellite based radar that was used to detect water on the moon. Officials claim that he held top secret security clearances as recently as 2006, likely related to his work with the Navy or DARPA. Nozette also had engaged in consulting work for an Israeli government contractor. His work for the Israeli government may be used as evidence to support the attempted espionage charge.

The USDOJ's press release may be found here.

UPDATE: Net Neutrality Proposed, Notice and Comment

The FCC has posted its anticipated proposal for Net Neutrality rules, and seeks comment on the proposal. According to the FCC press release:

"Under the draft proposed rules, subject to reasonable network management, a provider of
broadband Internet access service:

1. would not be allowed to prevent any of its users from sending or receiving the lawful content of the user’s choice over the Internet;
2. would not be allowed to prevent any of its users from running the lawful applications or using the lawful services of the user’s choice;
3. would not be allowed to prevent any of its users from connecting to and using on its network the user’s choice of lawful devices that do not harm the network;
4. would not be allowed to deprive any of its users of the user’s entitlement to competition among network providers, application providers, service providers, and content providers;
5. would be required to treat lawful content, applications, and services in a nondiscriminatory manner; and
6. would be required to disclose such information concerning network management and other practices as is reasonably required for users and content, application, and service providers to enjoy the protections specified in this rulemaking."

Number 4 looks like it may be directed at the recent Apple, AT&T, Google issue surrounding Apple's rejecting the Google Voice App (learn more here and here in my previous entries on the subject).

The FCC's documents relating to the most recent proposal can be found here:
NPRM: Word | Acrobat
News Release: Word | Acrobat
Genachowski Statement: Word | Acrobat
Copps Statement: Word | Acrobat
McDowell Statement: Word | Acrobat
Clyburn Statement: Word | Acrobat
Baker Statement: Word | Acrobat
Staff Presentation: Acrobat

Rumblings of a Neutral Net

The word on the street is that the FCC is about to release notice of proposed rules to enforce net neutrality. Keep your eyes peeled!

http://www.fcc.gov/

Part II: Billionaire, Founder of Galleon Group, Charged With Insider Trading

Raj Rajaratnam, the billionaire founder of the Galleon Group that I wrote about in my last post has also been charged by the SEC in Federal court. The SEC claims Rajaratnam's scheme was massive (as illustrated in the diagram above), and generated more than $25 million. Other companies allegedly involved are IBM, Intel, and Mckinsey & Company.

What makes this development interesting, at least to a law student like me, is that the SEC is suing in civil court, unlike what Federal Prosecutors have done in the Federal criminal court. The SEC has no power to bring criminal charges. Their only means of enforcement is through civil suit, as Congress has given them standing to sue for enforcement of their regulations. Federal prosecutors can charge the same violations criminally, but only if the actions of the perpetrator were willful (which means that the person knew they were doing something, and that it was wrong) under 15 U.S.C. 78ff(a). The SEC, filing in civil court, need only prove the violation, not the willfulness of the perpetrator.

The SEC's press release may be found here, a pdf of the chart above may be found here, the SEC civil complaint may be found here, and the comments of the SEC director in charge, Robert Khuzami, may be found here.

Billionaire, Founder of Galleon Group, Charged With Insider Trading

Listed by Forbes as number 559 of the worlds richest people, Raj Rajaratnam was worth $1.3 billion. Sadly, some of those funds may have been ill-begotten. Yesterday the US Attorneys of the Southern District of New York charged Rajaratnam with securities fraud pursuant to the insider trading portions statutes 15 U.S.C. §§ 78j(b), 78ff; 17 C.F.R. §§ 240.10b-5, and 240.10b5-2. AllegedlyRajaratnam obtained inside information from another hedge fund operator, and traded upon it, making several million dollars. He was also charged with conspiracy. The maximum possible penalty for the sum of all 13 charges against Rajaratnam is 200 years and $46 million, or twice the gross gain or loss on each charge. A stiff price to pay for tricky dealing on Wall Street.


The US Attorney's press release may be found here, the charging document here, and the remarks of Preet Bharara, the United State's Attorney for the Southern District of New York, can be found here.

FBI Task Force Officer Arrested and Charged with Mail Fraud

Michael Palermo, 50, a 16 year veteran of the New York and New Jersey Port Authority Police Department (PAPD) and an 11 year FBI task force officer investigating violent crimes was arrested on charges of mail fraud. According to the FBI, Palermo had received a number of personal services from a cooperating witness that he worked with as part of his task force career. Allegedly, Palermo received from the cooperating witness favorable prices on high end automobiles, free automobile work, and favorable prices on landscaping services. These transactions are strictly prohibited by the FBI, DOJ, and PAPD.

According to the criminal complaint, in a civil suit initiated by Palermo against the builder of his house, Palermo produced a false $10,000 check as evidence of damages incurred as a result of building defects. The services that the check were supposed to be paying for were allegedly performed free of charge by the same cooperating witness.

On Tuesday Palermo had his first appearance before judge Mark Falk, a United States Magistrate Judge in Newark, NJ. Palermo faces a possible sentence of 20 years in prison plus fines. The responsible officers in the case are Weysan Dun, FBI special agent in charge of the Newark Field Office, Michael Fedorko, superintendent of the PAPD, and James Tomlinson, special agent in charge of the Department of Justice Office of the Inspector General. Find the full story here.