   The New York Times, September 12, 1995, pp. B1, B7.


   Bulletin Board Is Virtual; Hacker Arrests Are Real

   By Clifford J. Levy


   It was a classic sting operation, the kind of undercover
   gambit that has nabbed bad guys for decades: Federal agents
   disguised as big-time thieves set up shop and put the word
   out on the street that they were eager for business. Soon
   shifty characters were stopping by, officials said,
   peddling stolen goods that were worth millions of dollars.

   But as the agents revealed yesterday, the meeting place for
   this subterfuge was not some grimy storefront. It was a
   computer bulletin board that the United States Secret
   Service had rigged together to troll for people who are
   illegally trafficking in the codes that program cellular
   phones.

   The "computer service," which led to the arrests of at
   least six suspected hackers and the possibility of more, is
   the latest indication that law enforcement agencies are
   being forced to try novel strategies to keep up with the
   startling growth in computer-assisted crime. Cellular-phone
   fraud alone cost companies $482 million last year, the
   cellular-phone industry estimates.

   According to the criminal complaint in the case, a Secret
   Service agent used the Internet, the global computer
   network, to announce that the bulletin board catered to
   those involved in breaking into computers and in
   cellular-phone and credit-card fraud.

   "People all over the country responded," said Peter A.
   Cavicchia 2d, the special agent in charge of the Newark
   office of the Secret Service, which ran the investigation.
   "They felt they could do this with impunity."

   The Secret Service, which is the Federal agency charged
   with going after cellular phone and credit card fraud, has
   long been known to monitor commercial computer on-line
   services like Prodigy and America Online, as well as
   smaller, private computer bulletin boards, for illegal
   activities.

   But officials said this case represented the first time
   that the Secret Service had created an entirely new
   computer bulletin board, which is basically a system that
   links different computer users, allowing them to chat with
   and leave messages for each other. There have been a few
   instances of other law enforcement agencies creating
   bulletin boards for investigations.

   "If they are selling the stuff in cyberspace, law
   enforcement has to be willing to go there," said Donna
   Krappa, an assistant United States Attorney in Newark, who
   is on the team prosecuting the case. "And the way to do
   that is to have a fence in cyberspace."

   As Federal law enforcement officials detailed it, the
   investigation unfolded much like a traditionat sting that
   draws in people hawking stolen televisions, jewelry or
   cars. The agents made contact with the suspects, then
   worked to gain their confidence and allay their suspicions.

   The dlfference, of course, was that most of these
   discussions were conducted with computers talking over
   telephone lines.

   Last January, a Secret Service special agent, Stacey
   Bauerschmidt, using the computer nickname Carder One,
   established a computer bulletin board that she called Celco
   51.

   It is relatively easy to put together a private computer
   bulletin board, requiring only a computer, a modem, phone
   lines and communications software. Special Agent
   Bauerschmidt was assisted by an informer with experience as
   a computer hacker, officials said. The equipment and phone
   line for the scheme were located in a Bergen County, N.J.,
   apartment building.

   After buying hundreds of the stolen phone codes, the Secret
   Service conducted raids in several states late last week,
   arresting the six people and seizing more than 20 computer
   systems, as well as equipment for making cellular phones
   operate with stolen codes, said the United States Attorney
   in Newark, Faith S. Hochberg.

   Offlcials said that of those arrested, two of them, Richard
   Lacap of Katy, Tex., and Kevin Watkins of Houston, were
   partlcularly sophisticated because they actually broke into
   the computer systems of cellular phone companles to obtain
   the codes.

   It is more common for thieves to steal the codes by using
   scanners that intercept the signals that the phones send
   when making calls.

   "We consider this to be one of the most significant of the
   wireless fraud busts that have come down so far," said
   Michael T. Houghton, a spokesman for the Cellular
   Telecommunications Industry Association, a trade group.

   The others arrested were identified as Jeremy Cushing of
   Huntington Beach, Calif.; Al Bradford of Detroit, and Frank
   Natoli and Michael Clarkson, both of Brooklyn.



