Once again, Adam Penenberg flushes out more stories
from journalists looking for a quick story, that don't 
care about honesty and integrity.

Phantom mobsters
By Adam L. Penenberg

Nothing makes for better copy in a big-city newspaper than a techno-mobster story. In a
June 17 story that appeared on page 3 of the New York Post, Beth Piskora, a business
reporter with the Rupert Murdoch-owned tabloid, writes that at a conference on organized
crime sponsored by Kroll Associates, the big-time New York-based business intelligence
firm, she learned of a high-tech scam being perpetrated by an unnamed organized crime

According to Piskora, the mob had set up a phony consulting company to help companies
solve their Y2K-related problems. She claims the consultancy had even published a web
site and offered a toll-free number, as well as other features, in an attempt to appear

"Then," she writes, "they started to fix things, all right." 

Piskora claims the mob-hired programmers rewrote financial software to redirect payments
to mob-controlled accounts. She also says that this is "just one example of the way the
mob is using technology and Wall Street" and that the FBI was investigating. 

Various people present at this conference, however, including Steven Cohen, a former mob
prosecutor who was on the conference panel, and several FBI agents say Piskora's account
is news to them. They've never heard of such a scam and say they would know if there was
one going on. In addition, no one at the FBI that Forbes Digital Tool contacted had heard
of any such investigation. 

"The first time any of us had heard of that story was when it appeared in the New York
Post," says Cohen, who is now a partner with the Manhattan law firm Kronish, Lieb Weiner
& Hellman. "It bothers me that this type of story was reported without checking it out

    "It bothers me that this type
    of story was reported without
       checking it out first."

FBI special agent Jim Margolin, a spokesman for the Bureau's New York office, says, "I am
not aware of any organized crime tech-scam like this and I checked with people in a
position here who should know." 

This colorful mob anecdote was also picked up as news by Information Week News Editor at
Large John Soat, who, in his June 22 column "I.T.  Confidential," mentioned the scam
without crediting the New York Post. 

Soat initially directed the Tool to James Bucknam, a managing director of Kroll
Associates. But Bucknam says, "I can tell you unequivocally that I am not the source of
information on any Y2K-related scams for either Beth Piskora or John Soat." 

When confronted with this statement, Soat admitted his information came secondhand. "I
got a tip from one of my reporters and it came from the New York Post." 

According to Cohen, Seth Farber, a former federal prosecutor and a partner at Dewey
Ballantine, as well as several FBI agents and other conference attendees, it is true that
Lewis D. Schiliro, assistant director in charge of the FBI's New York office and also a
conference panelist, did field a question from an audience member about any connection
between the mob and the Y2K problem, but he responded by saying that he was not aware of

"When a man in the audience asked the question, 'Has the mob done anything to exploit the
Y2K problem,' we thought it was a funny line,"  recounts Cohen. "Lewis Schiliro told him
that to the best of his knowledge, no, the mob has not gotten involved in Year 2000 work.
And based on my experience with Schiliro, he is briefed on everything the Feds have going
on in this area." 

Queries directed at Schiliro by the Tool were handled by agency spokesman Margolin. 

Piskora says she doesn't recall anyone from the audience asking about any relationship
between the mob and the Y2K problem, but admitted that didn't mean the question wasn't
raised. She claims she picked up the anecdote right after the conference.  "A group of us
were talking and one guy told me he was with the FBI,"  Piskora says. "I asked whether
the mob was involved with Y2K and he said, ‘yes.'" 

When asked if she could recall the agent's name, she said she could not, that she would
have to check her notes. After talking it over with Post Business and Financial Editor,
Xana Antunes, Piskora said she saw no reason to share a "confidential source" with Forbes
Digital Tool. 

But did Piskora check her source's identification? She says she didn't ask for a badge or
identification but that she was sure that he worked for the bureau. Why? Because he said
he did, and the conference was filled with FBI agents and Kroll Associates detectives. 

What about the web site and toll free numbers? Did she actually see them? 

No. Piskora says she was the one who raised the issue of the web site, toll free phone
and other tools of business legitmacy in the form of a question and her mystery source
said "‘Yes,' then clammed up." 

Antunes says the Post "stands fully"  by the story. "No one from the FBI ever called me
for a retraction, so we're not going to do anything about this. [The fact that no one can
confirm the story] is not my problem." 

Agent Margolin says the FBI rarely asks for retractions, and only in instances that
seriously affect bureau business--for instance, if an agent is misquoted in a manner that
could jeopardize public trust or affect ongoing investigations. He says it never occurred
to him to contact the Post to complain about the inaccuracies. 

What is not at issue is the fact that such a scam could indeed occur. Anup Ghosh, in his
book E-Commerce Security: Weak Links, Best Defenses, relates the story of the German
hacker group, Chaos Computer Club.  The group demonstrated on German TV how an ActiveX
control could be used to transfer money from a person's bank account to one belonging to
Chaos without the account holder's knowledge. 

The group had hidden the ActiveX control on a web page and attracted traffic with the
slogan: "Becoming a millionaire in five minutes." The hackers designed their ActiveX
control to work with Quicken and to transfer the money at some point in the future so
that the victim wouldn't find out about it until after he received his banking statement.
(See "Downloader beware). 

And what of Piskora's mystery man?  Maybe he does exist, but the Feds adamantly deny he's
one of theirs. As Cohen remarked, "Why would an FBI agent at a conference contradict what
his boss just said?" 

Cohen says the worst thing about the Post's reporting an apocryphal story is that it
could lead to copycats.  "When you publicize any criminal scam, odds are that some clever
criminal is going to pick up on it and make it a reality."