Crimes Of The 'Net'

Ray Curci is an earnest, diligent guy. He spends days off with his wife, but works from home every weekend. One recent Saturday he settled himself in front of the computer in his den -- and noticed something odd. Dozens of people were logging on to a seldom-used computer that Curci, a systems administrator, runs at Florida State University. More puzzling was that most of the users were from abroad. And, once logged in, they seemed to just . . . disappear.

Hackers, Curci realized. Quickly, he tracked the intruders to their destination -- a so-called invisible directory, or data bank lacking any identifiable name or listing. He was astonished by what he found: a vast cache of proprietary software, including test versions of Windows 95 and OS/2, the new operating systems being developed by Microsoft Corp. and IBM. He has no idea who secreted it within the university's computers. But it was obviously a pirate's treasure trove. There were games and word-processing programs, even ""tools'' to help hackers break passwords and conceal their digital trespasses. Curci scrambled the purloined programs to make them unusable, even as a dozen hackers swarmed to download copies. But, he guesses, hundreds of cybersurfers beat him to the punch. Many more are still trying.

Such is the dark side of the Internet, the ubiquitous electronic web linking as many as 40 million computers worldwide. As anyone not wholly techno-illiterate knows by now, the Net is growing gangbusters. It's our new frontier, a digital Wild West. As befits such a rough-and-ready place, it's populated by lots of bad guys. Want the latest computer games from Broderbund or 3DO? Interested in previewing Microsoft's vaunted Windows 95, nine months before it hits a store near you? Tap into the Net, find the right bulletin board, and you can probably secure a free copy. Telephone credit cards, copyrighted music, even digital Playboy centerfolds are being electronically pilfered, too. Hackers call it ""sharing.'' Others consider it theft, pure and simple. ""It's like shoplifting,'' says Bruce Lehman, U.S. commissioner of patents and trademarks, no different from letting your fingers do the walking at your local CD store.

It's hard to gauge the scope of the phenomenon or its economic impact. But numbers tell part of the story. By some estimates, roughly $2 billion worth of software was stolen over the Internet last year, a growing portion of the total $7.4 billion the Software Publishers Association reckons was lost to piracy in 1993. Just last month the lead-er of an international piracy ring operating out of Majorca, Spain, pleaded guilty to a brand of fraud destined to become commonplace. According to U.S. investigators, the racketeers stole 140,000 telephone credit-card numbers, then sold them to computer bulletin boards in the United States and Europe. Hackers used the numbers to make a whopping $140 million worth of long-distance phone calls -- sometimes merely to pay for their time online, other times to tap into remote computers and download hijacked software. Who ate the loss? GTE Corp., AT&T, Bell Atlantic and MCI, among others.

It was not an isolated incident. Police have arrested half a dozen bulletin-board operators in recent months on charges of illegally distributing software over the Internet. ""This is only the tip of the iceberg,'' says Sandra Sellers of the Software Publishers Association. The association has identified 1,600 bulletin boards carrying bootleg software, she claims. Last week authorities in North Carolina indicted nine alleged members of a nationwide piracy ring, known digitally by code names like Phone Stud, Major Theft and Killerette. Like the hackers of the Majorca network, they have been charged with stealing as many as 100,000 telephone credit-card numbers -- as well as pirating an array of software. The cost to the phone companies has been estimated at $50 million.

The thievery isn't likely to stop with software and phone cards. Not so far in the future, the Internet will become a well-traveled avenue of commerce. Already retailers are using it to hawk everything from computer parts to flowers and teddy bears. Since anyone with a modem and a computer can go into business, the possibilities for abuse are almost endless. Playboy magazine, for instance, has sued half a dozen bulletin boards over the last two years for baring its Bunny pix. CompuServe, the major online information service, has been sued by 140 music publishers for allegedly permitting subscribers to download popular songs. Cybertheft as yet accounts for an indiscernible share of the $400 million lost annually to record piracy, but that's partly because of technical difficulties. Taping a popular single takes only a few moments; pirating a digital version can require anywhere from 30 minutes to several hours, depending on your equipment. But that will change as digital transmission technology improves. Before long, says David Leibowitz at the Recording Industry Association of America, ""you will be able to download an entire album in seconds.'' Then, watch out.

Businesses are moving to protect themselves. Perhaps because it's so obviously part of a trend, the Florida break-in provoked an unusually tough response. Microsoft posted a $10,000 bounty for informa-tion leading to the arrest and conviction of the perpetrators. DeScribe Inc., a computer-software company whose new word-processing program was found among the pirated software, offered a $20,000 reward. IBM is investigating, in cooperation with federal authorities. But tracking the cybercrooks won't be easy. The Internet is a chaotic place. Hackers go from computer to computer, vaulting borders and leaving few traces. Before entering a computer at Florida State University, they might pass through another computer in Finland, say, that strips any names or addresses from their communications. Even when uncovered, pirates can disavow wrongdoing. For instance, many of the Florida intruders hailed from Asia, where piracy is not always considered a crime.

Legality collides with practicality when battling cybertheft. As part of its plan for a ""national information infrastructure,'' the Clinton administration proposes tightening the federal Copyright Act to explicitly cover transmissions over the Inter-net. New laws would also make it clear that electronic property rights are as sacrosanct as any other. But to what effect? The rules of commerce and fair play that govern real-world business are alien to the anarchic ""Wild West'' culture of the Internet. There, the prevailing ethic is ""shareware.'' Knowledge is to be disseminated. Anything found in etherspace is widely considered to be ""mine'' as well as ""yours'' -- ""ours,'' in other words. Digital socialism rules the Net, not copyrightable capitalism. Few Interneters would disagree that stealing and reselling software or credit cards is wrong. But fewer still would feel guilty about copying the latest game version of Doom, or some such, rather than forking out $39.95. Unfortunately, that often admirable ethos makes it easier for gen-uine crooks to perpetrate -- and justify -- their crimes.

PHOTO: A software pirate? LaMacchia in his dorm at MIT


Hackers bust into computers at Florida State University and upload pirated versions of a dozen new programs, including Windows 95.

Max Louarn, 22, is arrested for masterminding a plot to sell 140,000 pilfered phone-card numbers in the United States and abroad via computer bulletin boards. He later pleads guilty.

Richard D. Kenadek, 43, is indicted for reportedly allowing pirated programs to be traded on his bulletin board, Davey Jones Locker.

David LaMacchia, 20 and a student at MIT, is indicted for conspiracy to commit wire fraud, after allegedly permitting the distribution of more than $1 million worth of copyrighted software over the Internet.

Playboy wins its suit against George Frena, who allowed copyrighted nude photos to be distributed on his computer billboard.

Frank Music Corp. files a class-action suit against CompuServe for allegedly permitting sub- scribers to post more than 500 copyrighted songs, including Frank's ""Unchained Melody.''