High-Tech Hoods

Criminals have discovered what every other type of businessperson has learned: Automation pays off

BRANDON KESSLER HAD BEEN RUNNING HIS BUSINESS from a trailer park in Bellflower, Calif., with only his two teenage sons to help him man the constantly ringing phone and write down orders. But then Kessler went high-tech. He added phone lines and hooked one of them to a Pentium-based PC, allowing his customers to place orders directly into the computer. That not only eliminated the need for a full-time order-taker but also provided Kessler with a searchable database of all his customers and their orders, reducing errors and arming him with marketing data.

The accounting software he set up on a separate PC enabled him to slash accounts receivable, steady his cash flow, and react more quickly to profit dips. Three years later, in 1995, Kessler was clearing half a million a year and had moved the six PCs with which he was now running his business into the spacious, finished garage of his new home, which boasted a swimming pool and deck, a kitchen crammed with brand-new top-of-the-line appliances, and a cat that ate nothing but jumbo shrimp.

It was a classic success-through-automation story--marred only by the fact that the business was entirely illegal. Kessler (not his real name) was selling electronic devices that enabled his customers to "steal" premium cable television shows. Last year, police arrested the prospering entrepreneur and pulled the plug on his humming bank of PCs. "The operation was ingenious," says Detective Richard Hiles, of the Los Angeles County Sheriff's Department (L.A.S.D.), with equal parts disgust and admiration.

Kessler represents one of the fastest-growing breeds of entrepreneur: the wired criminal. For years, organized crime rings, including the U.S. Mafia and Columbian drug cartels, have taken advantage of new communications and information technology. But lately, smaller crime operations--street criminals--have begun to take advantage of increasingly inexpensive high-tech tools. Enlisting everything from spreadsheets to E-mail to personal digital assistants, these small-time hoods are streamlining their businesses and communicating more effectively, and privately, with suppliers and customers.

The rush of local chop-shop operators and drug dealers turning "techie" has left police departments scurrying to reengineer their forces. In the past few years, hundreds of local police departments have formed computer crime squads to handle the rising number of cases involving computer evidence and other forms of technology, once considered rare incidents. "The use of technology for crime is a fast-moving train, and we're running alongside, trying to keep up," says Sergeant Larry Balich, of the L.A.S.D.'s computer crime unit.

Consider Jim Davis (not his real name), one of hundreds of thousands of small-business owners who have made the Internet an everyday part of their routine. Davis happens to be in the cocaine business; he deals the drug in a Southwestern town. Davis communicates with his suppliers mostly from home through his America Online account. (Mobility being a big plus in his line of work, he also leases a hand-held device that allows him to connect to the Internet from other phones, as a backup.) Davis sets up his buys in on-line chat rooms during sessions that look to the ordinary observer like two people setting up a blind date. An ever-changing list of on-line aliases helps preserve his anonymity.

On this particular day, in one of the chat rooms frequented by suppliers and dealers, Davis logs on as Snoopy and types "Hello." A foot soldier for the Honduran supplier is waiting and replies, "Hello, Snoopy, tell me about yourself." The two then switch to E-mail, using "instant messages" that zip through cyberspace and quickly disappear. The exchange reads something like this:

Davis: I'm six feet tall with blond hair, long eyelashes, and a spider tattoo. ("Spider" is a prearranged password.)

Supplier: You sound interesting. Let's meet.

Davis: Okay, how about 6 p.m. at the corner of. . . .

Of course, the two never actually meet face-to-face. Davis goes to the location, which might be a locker in a bus station. He drops off cash, and picks up, say, a harmless-looking gym bag--full of cocaine. Because the buy was set up entirely on-line, no phone records will ever surface linking Davis to the supplier. They've even avoided the cost of a long-distance phone call.

Small-time drug traders have found other ways of reducing their risks through technology. Former DEA agent Bob O'Leary, who set up his own private investigation firm, Integrity Assessments Inc. in Annapolis, Md., after 25 years in federal law enforcement, remembers being stationed in Miami some years back and listening to an intercepted radio conversation between a drug smuggler pilot in the air and a distributor on the ground with whom he was trying to rendezvous. "I can't find you, I can't find you. We're out of fuel. I'm going to try to land . . ." radioed the increasingly frantic pilot. He did land--like a mortar shell, exploding on impact. "We could always count on a certain percentage of smugglers killing themselves," says O'Leary.

These days, agents are lucky even to spot smugglers. Frantic radio calls and flashlight-waving have been replaced by inexpensive and stupifyingly precise global positioning systems (GPSs). If they're willing to invest a couple of thousand dollars in this former military technology, even the worst smugglers and the most clueless ground crew can manage a successful drop. "The GPS is revolutionizing air smuggling," groans O'Leary. Adding insult to injury, some smugglers use satellite communications systems to send messages to the ground rather than rely on far more easily interceptable single sideband radio.

Even when they're caught, wired criminals are often harder to prosecute because virtual evidence is easily disposed of. Cops pine for the days when the most that bookmaking operations could do to protect themselves was to write down all their bets on "flash" paper, which instantly ignites when touched by a flame or spark; bookies had to hope they could light a match faster than the cops could break down the door. Today, even tiny bookie operations are often set up around spreadsheets equipped with a "hot button" that deletes all files with the flick of a finger.

The Texas State Police consider themselves lucky to have recently closed down one bookie operation based in a tiny house in the middle of a forest near the town of Beaumont--they managed to get to the computer before the "bad guy" did when they raided the house. They discovered that the bookie had been using E-mail to oversee remote bookmaking operations in three other cities. Sergeant Investigator of Special Crimes Brady Harris complains that the ability to control illegal operations at a distance via computer has created a tactical and jurisdictional nightmare. "When you can operate a bookie joint in Dallas from a computer in a small town," he says, "it makes you hard to find." Even when the police do find the culprit, they can't always figure out who should prosecute him. In the past six months, Harris adds, he's had to go from not knowing how to turn a computer on to making it a part of his everyday life.

Two thousand miles away, in Nassau County, N.Y., Detective Bill Bambrick echoes Harris's complaint. Bambrick works for the Nassau County Police Department's computer crime section. He's seen marijuana dealers who use Excel spreadsheets, gambling operations running Lotus 1-2-3, and even one loan-sharking operation that had developed proprietary software to track debtors. But the hardest part of his job, he says, is proving that the one who gets arrested is the one who has been running the computer. It's not enough to dig up incriminating E-mail. "To get a conviction in court," he says, "you have to place a person at the keyboard." A whole case could be destroyed if, say, the defense can prove that an entire family used a seized computer. After all, who knows who actually participated in the illegal activity?