Wednesday, August 31, 2005

'Loverspy' Spyware Creator Indicted, On the Run

The creator of Loverspy, software to surreptitiously observe individuals' online activities, has been indicted for allegedly violating U.S. federal computer privacy laws.


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If convicted, Carlos Enrique Perez-Melara, could face a maximum sentence of 175 years in prison and fines of up to $8.75 million. His current whereabouts are unknown.

Four individuals who purchased Loverspy to illegally spy on others were also indicted.

"This federal indictment--one of the first in the country to target a manufacturer of "spyware" computer software--is particularly important because of the damage done to people's privacy by these insidious programs," John Richter, acting assistant attorney general of the U.S.
Department of Justice's Criminal Division, said in a statement. "Law enforcement must continue to take action against the manufacturers of these programs to protect unsuspecting victims and seek punishment for those responsible for wreaking havoc online."

Perez-Melara, 25, was indicted last month on 35 counts of manufacturing, sending, and advertising a surreptitious interception device (the Loverspy program), unlawfully intercepting electronic communications, disclosing unlawfully intercepted electronic communications, and obtaining unauthorized access to protected computers for financial gain. Each count carries a maximum penalty of five years in prison and a maximum fine of $250,000.

His indictment was returned on July 21 by a federal grand jury sitting in the U.S. District Court for the Southern District of California in San Diego, but the indictment was unsealed only Friday.
Secret Monitoring

Perez-Melara advertised and sold Loverspy and EmailPI software over the Internet for $89 a copy to people looking to secretly monitor an individual's e-mail, passwords, chat sessions, and instant messages, as well as the Web sites they visit. Purchasers of the program could log into a Loverspy Members Area on the Loverspy and EmailPI Web sites and choose an e-card and greeting that would be sent to the victim. Loverspy would arrive hidden inside the e-card and would launch when the victim opened the card. After being installed, Loverspy would send regular reports collating the victim's online activities either directly to the purchaser of the spy software via e-mail or to Perez-Melara, who would then forward the reports to the purchaser. The spyware also enabled the purchaser to remotely control the victim's computer to the extent of altering and deleting files, and surreptitiously turning on any Web camera hooked up to the victim's computer.


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From around July 1, 2003, until October 10, 2003, approximately 1000 individuals in the United States and abroad bought Loverspy and sent e-cards containing the application to around 2000 people, according to the authorities. Around half of those 2000 are known to have had their computers compromised and their communications intercepted, the indictment stated. The antivirus software of the day didn't identify Loverspy as dangerous, so it didn't block the program's installation, the indictment noted. Perez-Melara's operations were shut down after the
FBI executed a federal search warrant for his San Diego apartment on October 10, 2003.

The victims named in the indictment are located in California, Hawaii, Missouri, New Hampshire, North Carolina, Pennsylvania, and Texas.
Others Indicted

The four other individuals indicted with Perez-Melara by the federal grand jury in San Diego are John Gannitto of Laguna Beach, California; Kevin Powell of Long Beach, California; Laura Selway of Irvine, California; and Cheryl Ann Young of Ashland, Pennsylvania. They are each charged with two counts--unauthorized access to protected computers (via Loverspy) in furtherance of other criminal offenses and illegally intercepting the electronic communications of their victims. Each of the two counts carries a maximum penalty of five years in prison and a maximum fine of $250,000.
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Other purchasers of Loverspy have been prosecuted by federal authorities in Charlotte, North Carolina, Dallas, and Honolulu. Prosecutions are going ahead in Kansas City, Missouri, and Houston. All known Loverspy victims have been notified by e-mail that they were targeted by the program, according to the authorities.

ITunes Music Phone Set to Launch

SAN FRANCISCO - A long-delayed cell phone from Apple Computer Inc. and Motorola Inc. that can play iTunes music downloads is finally set to debut through Cingular Wireless, a research analyst said.

The new phone will be equipped with software that would allow it to play songs purchased at Apple's iTunes Web site, according to Roger Entner, an analyst for research firm Ovum who said he learned of the plans from an industry executive.

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Representatives from Apple, Cingular and Motorola declined to comment, but the three companies are expected to roll out the device at an event here next week. Apple announced Monday that it would host a news conference Sept. 7.

It was unclear whether the new phone will allow users to download music directly over a cellular Internet connection or if they would have to download songs to a computer and then transfer them to the handset.

Just about every major cell phone maker has been working to launch a music phone that could compete with the iPod, Apple's popular digital music player.

Motorola originally planned to unveil the iTunes phone at a trade show back in February but the debut was scrubbed at the last minute with no explanation. Some observers speculated that the event was blocked by Apple's famously secretive management. Others postulated that one or more wireless operators objected to the possibility that such a device would undercut their efforts to sell music to cell users.

Analysts have predicted that music-playing phones could threaten iPod's grip on the market for digital music players.

Although battery life is a major impediment, tech companies have long vied to create an all-in-one product that would encompass all the utility of cell phones, handheld computers, music players, cameras and videogame machines.

The move into cell phones is seen by industry experts as a way for Cupertino, Calif.-based Apple to hedge its bets.

"It's a win for all three companies," Entner said. "Apple gets into the wireless space, Motorola associates itself with a wow brand and Cingular aligns itself with an iconic music-device company."

Crews Pass Dead to Reach Storm Survivors

NEW ORLEANS - Rescuers along the hurricane-ravaged Gulf Coast pushed aside the dead to reach the living Tuesday in a race against time and rising waters, while New Orleans sank deeper into crisis and Louisiana's governor ordered storm refugees out of this drowning city.

Two levees broke and sent water coursing into the streets of the Big Easy a full day after New Orleans appeared to have escaped widespread destruction from Hurricane Katrina. An estimated 80 percent of the below-sea-level city was under water, up to 20 feet deep in places, with miles and miles of homes swamped.

"The situation is untenable," Gov. Kathleen Blanco said. "It's just heartbreaking."

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One Mississippi county alone said its death toll was at least 100, and officials are "very, very worried that this is going to go a lot higher," said Joe Spraggins, civil defense director for Harrison County, home to Biloxi and Gulfport.

Thirty of the victims in the county were from a beachfront apartment building that collapsed under a 25-foot wall of water as Katrina slammed the Gulf Coast with 145-mph winds. And Louisiana officials said many were feared dead there, too, making Katrina one of the most punishing storms to hit the United States in decades.

After touring the destruction by air, Mississippi Gov. Haley Barbour said it looked like Hiroshima after the atomic bomb was dropped.

New Orleans Mayor Ray Nagin said hundreds, if not thousands, of people may still be stuck on roofs and in attics, and so rescue boats were bypassing the dead.

"We're not even dealing with dead bodies," Nagin said. "They're just pushing them on the side."

The flooding in New Orleans grew worse by the minute, prompting the evacuation of hotels and hospitals and an audacious plan to drop huge sandbags from helicopters to close up one of the breached levees. At the same time, looting broke out in some neighborhoods, the sweltering city of 480,000 had no drinkable water, and the electricity could be out for weeks.

With water rising perilously inside the Superdome, Blanco said the tens of thousands of refugees now huddled there and other shelters in New Orleans would have to be evacuated.

She asked residents to spend Wednesday in prayer.

"That would be the best thing to calm our spirits and thank our Lord that we are survivors," she said. "Slowly, gradually, we will recover; we will survive; we will rebuild."

A helicopter view of the devastation over the New Orleans area revealed people standing on black rooftops baking in the sunshine while waiting for rescue boats. A row of desperately needed ambulances were lined up on the interstate, water blocking their path. Roller coasters jutted out from the water at a Six Flags amusement park. Hundreds of inmates were seen standing on a highway because the prison had been flooded.

Sen. Mary Landrieu (news, bio, voting record) quietly traced the sign of the cross across her head and chest as she looked out at St. Bernard Parish, where only roofs peaked out from the water.

"The whole parish is gone," Landrieu said.




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All day long, rescuers in boats and helicopters pulled out shellshocked and bedraggled flood refugees from rooftops and attics. The Coast Guard said it has rescued 1,200 people by boat and air, some placed shivering and wet into helicopter baskets. They were brought by the truckload into shelters, some in wheelchairs and some carrying babies, with stories of survival and of those who didn't make it.

"Oh my God, it was hell," said Kioka Williams, who had to hack through the ceiling of the beauty shop where she worked as floodwaters rose in New Orleans' low-lying Ninth Ward. "We were screaming, hollering, flashing lights. It was complete chaos."

Frank Mills was in a boarding house in the same neighborhood when water started swirling up toward the ceiling and he fled to the roof. Two elderly residents never made it out, and a third was washed away trying to climb onto the roof.

"He was kind of on the edge of the roof, catching his breath," Mills said. "Next thing I knew, he came floating past me."

Across Louisiana, Mississippi and Alabama, more than 1 million residents remained without electricity, some without clean drinking water. An untold number who heeded evacuation orders were displaced and 40,000 were in Red Cross shelters, with officials saying it could be weeks, if not months, before most will be able to return.

Emergency medical teams from across the country were sent into the region and
President Bush cut short his Texas vacation Tuesday to return to Washington to focus on the storm damage.

Federal Emergency Management Agency director Mike Brown warned that structural damage to homes, diseases from animal carcasses and chemicals in floodwaters made it unsafe for residents to come home anytime soon. And a mass return also was discouraged to keep from interfering with rescue and recovery efforts.

That was made tough enough by the vast expanse of floodwaters in coastal areas that took an eight-hour pounding from Katrina's howling winds and up to 15 inches of rainfall. From the air, neighborhood after neighborhood looked like nothing but islands of rooftops surrounded by swirling, tea-colored water.

In New Orleans, the flooding actually got worse Tuesday. Failed pumps and levees apparently spilled water from Lake Pontchartrain into streets. The rising water forced hotels to evacuate, led a hospital to boatlift patients to emergency shelters, and drove the staff of New Orleans' Times-Picayune newspaper out of its offices.

Officials planned to use helicopters to drop 3,000-pound sandbags into the breach, and expressed confidence the problem could be solved. But if the water rose a couple feet higher, it could wipe out water system for whole city, said New Orleans' homeland security chief Terry Ebbert.

In devastated Biloxi, Miss., areas that were not underwater were littered with tree trunks, downed power lines and chunks of broken concrete. Some buildings were flattened.

The string of floating barge casinos crucial to the coastal economy were a shambles. At least three of them were picked up by the storm surge and carried inland, their barnacle-covered hulls sitting up to 200 yards inland.

The deadliest spot yet appeared to be Biloxi's Quiet Water Beach apartments, where authorities said about 30 people were washed away. All that was left of the red-brick building was a concrete slab.

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"We grabbed a lady and pulled her out the window and then we swam with the current," 55-year-old Joy Schovest said through tears. "It was terrifying. You should have seen the cars floating around us. We had to push them away when we were trying to swim."

Said Biloxi Mayor A. J. Holloway: "This is our tsunami."

Looting became a problem in both Biloxi and in New Orleans, in some cases in full view of police and National Guardsmen. One police officer was shot in the head by a looter in New Orleans, but was expected to recover, Sgt. Paul Accardo, a police spokesman.

On New Orleans' Canal Street, which actually resembled a canal, dozens of looters ripped open the steel gates on clothing and jewelry stores, some packing plastic garbage cans with loot to float down the street. One man, who had about 10 pairs of jeans draped over his left arm, was asked if he was salvaging things from his store.

"No," the man shouted, "that's EVERYBODY'S store!"

Looters at a Wal-Mart brazenly loaded up shopping carts with items including micorwaves, coolers and knife sets. Others walked out of a sporting goods store on Canal Street with armfuls of shoes and football jerseys.

Outside the broken shells of Biloxi's casinos, people picked through slot machines to see if they still contained coins and ransacked other businesses. "People are just casually walking in and filling up garbage bags and walking off like they're Santa Claus," said Marty Desei, owner of a Super 8 motel.

Insurance experts estimated the storm will result in up to $25 billion in insured losses. That means Katrina could prove more costly than record-setting Hurricane Andrew in 1992, which caused an inflation-adjusted $21 billion in losses.

Oil prices jumped by more than $3 a barrel on Tuesday, climbing above $70 a barrel, amid uncertainty about the extent of the damage to the Gulf region's refineries and drilling platforms.

By midday Tuesday, Katrina was downgraded to a tropical depression, with winds around 35 mph. It was moving northeast through Tennessee at around 21 mph, with the potential to dump 8 inches of rain and spin off deadly tornadoes.

Katrina left 11 people dead in its soggy jog across South Florida last week, as a much weaker storm.

Tuesday, August 30, 2005

Microsoft in Internet TV partnership

The dream of bringing an abundance of digital TV programs and video to living rooms via the Internet nudged forward Monday as Microsoft and Scientific-Atlanta, a major TV set-top device maker, announced an agreement to work together.

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Microsoft would provide the software operating system and Scientific-Atlanta would make the set-top boxes that would let people access and control all their digital content -- video, photos, music -- from one place. The two companies' technologies would support the rollout of Internet-based TV by telecom giant SBC.

The alliance is an important step for SBC, which plans to deliver its version of IPTV, or Internet Protocol TV, to select markets by year's end or early 2006. SBC, the Baby Bell telecom giant, is devoting $4 billion to its IPTV rollout.

SBC is, in fact, acting a bit like a corporate matchmaker, said Maribel Lopez, IPTV analyst for Forrester Research.

``The telecom providers are playing a large hand in dictating who should partner together,'' she said. ``It makes sense they want all those players working together.''

The new digital technology will not replace TVs, observed Tim Bajarin, an analyst with market researcher Creative Strategies. Rather, IPTV boxes will sit atop or near the TVs and allow people to access digital video as well as control or move it around the house, between different TVs or PCs. For instance, if a person is watching a video in one room, he or she can continue viewing it from another room without missing a beat.

The technology could some day let people program their digital video recorders through their mobile phones or laptops, even if they are traveling around the world, said Ed Graczyk, marketing director for Microsoft TV.

``We refer to it as next-generation TV,'' he said.

IPTV will allow telecommunications companies, such as SBC and Verizon, to offer a ``triple play'' -- services for voice, video and data. Cable companies are interested in the technology, though they have not been as aggressive as their rivals in the telecommunications industry, analysts said.

Not only will IPTV allow providers to offer more material, but the technology also enables them to market niche content, such as a program on restoring antique automobiles or Vietnamese movies, Lopez said.

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The number of global IPTV subscribers is expected to grow from about 2 million in 2004 to more than 25 million in 2008 when subscriber revenue is expected to be about $7.2 billion, according to Multimedia Research Group.

Microsoft is hoping the new digital entertainment technology would provide another avenue for growth as it seeks to diversify beyond its mature Windows operating system.

Microsoft is working with SBC and Verizon on their IPTV products. In addition to Scientific-Atlanta, Microsoft also is working with Motorola, the other major TV set-top manufacturer.

Microsoft is just now putting the final touches on its first version of IPTV software.

But IPTV's development faces significant hurdles. Numerous companies must seamlessly link their technologies together. ``A lot of what we and our partners are doing is getting all of the pieces of the puzzle together in time to support these deployments,'' Graczyk said.

Another key component needed for mass adoption is broadband upgrades to allow for a faster delivery of video, he added.

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``We are still trying to figure out what the consumer wants, not only in services, but in hardware,'' Bajarin said. ``When you think about a product for the living room, it's been hard to see what people want it to do. We are still in the early stages.''