Hacking Era Is Declining, But Silicon Crime Isn't

AMERICA'S most notorious computer hacker goes on trial today.

His exploits inspired a movie, launched a two-year manhunt, and ended with a high-tech dragnet worthy of a science-fiction thriller. Yet, the trial of hacker Kevin Mitnick in Raleigh, N.C., signals the end of an era, rather than the beginning of one. Hackers like Mr. Mitnick, motivated by fun or social conscience, are giving way to professional electronic criminals who can rob a bank without ever entering the building or launder drug money using laptop computers.

''The hackers and 'phreakers' [telephone hackers], they're almost the legends of the Old West,'' says Alfred Olsen, chief of the Warwick Township Police Department in Lititz, Pa., and part of a group of computer-savvy policemen known as the High Tech Crime Network.

''Unfortunately, they've been replaced by entrepreneurs,'' he says.

The criminal entrepreneurs who go on-line today are driven by dollars, not conscience, police say. Their numbers are rising. And they'll rise even more as companies move to conduct business over the Internet -- the global network of computers. ''You're going to see an increase in business-system break-ins,'' predicts Bill Baker, an Internet-connected lieutenant with the Jefferson County, Ky., police department.

On-line gambling, financial scams, even sex-crimes are being made easier with computer networks. In March, Justin Peterson pleaded guilty in federal court of conspiring to transfer $150,000 out of a California finance company.

Chief Olsen, meanwhile, is investigating an individual he says used the Internet to run an international child-sex ring. The ring brought foreign children into the United States and set them up with adult clients. The children have since disappeared. ''We're not finding any trace of them,'' Olsen says. The investigation, which has involved several foreign and domestic law-enforcement agents, has been going on for more than a year.

These activities stand in sharp contrast to Mitnick or the classic hackers of the 1970s and 80s. ''A lot of them believed that what they were doing was correct,'' Olsen says. ''They weren't looking to steal. They believed that phone service [for example] should be free.'' Despite 14 years of hacking, Mitnick does not appear to have profited financially from his computer wizardry.

AS a teenager, he allegedly broke into the computer system of the North American Air Defense Command -- a military command for the US nuclear-weapons arsenal. The story inspired the computer-hacker movie ''War Games.'' Mitnick denies the incident but has admitted dozens of other break-ins. He has been imprisoned twice for on-line snooping. In 1992, he disappeared as the FBI was investigating him for infiltrating telephone company computers. While on the run, police say he stole 20,000 credit-card numbers but never used them.

Mitnick might still be on the run today had he not broken into the home computer of physicist Tsutomu Shimomura and stolen files. Mr. Shimomura used his own Internet abilities to track Mitnick to North Carolina and, using a scanner to monitor Mitnick's cellular-telephone calls, pinpointed the fugitive's whereabouts for authorities.

Mitnick's capture is dramatic evidence that the technology that helps criminals can also be wielded effectively by police. But the criminals have a head start.

Take conspiracy. Criminals have always found ways to find other like-minded individuals who will commit crime. With the Internet, ''it's so much easier to do,'' says Carlton Fitzpatrick, branch chief with the Financial Fraud Institute in Georgia, part of the US Treasury Department. ''That most certainly is going on now with hate groups.''

The ease of Internet communication poses another problem. Where does an electronic crime take place? If someone in Washington, D.C., logs into an electronic gambling operation in the Caribbean, ''whose jurisdiction applies?'' asks Pamela Johnson, assistant director of the Treasury Department's Financial Crimes Enforcement Network (FinCEN). ''Am I gambling in Washington or am I gambling in the Caribbean?''

The next logical step in on-line crime, experts agree, is money laundering. Whenever a dealer sells drugs, he is usually stuck with a large amount of cash. This presents a problem. The bills can be traced. And the dealer may have to explain to authorities how he got his income when he has no apparent job. That's why dealers often move cash through a complex set of transactions to try to make it appear legitimate.

But, because paper money leaves a paper trail, crime experts believe that criminals will try to use electronic means that leave no such trail. Already, several legitimate companies, such as Amsterdam-based DigiCash, are setting up systems to enable consumers to buy and sell directly on the Internet. If these systems don't include safeguards, police say, they may make it impossible to track ill-gotten gains.

''The anonymity which makes it secure and the speed which makes it efficient are also things which have the potential to make it easy for the bad guys,'' Ms. Johnson says. FinCEN is part of a global network of more than 25 countries to develop joint methods of fighting financial crimes. So far, companies involved in creating electronic commerce are cooperating, Johnson says.

Such crime-fighting efforts, however, do raise new concerns about privacy.

Will governments try to track all electronic transactions or just large ones that are suspect? Will police use the new technology to conduct intrusive surveillance? Will databases of credit and other information on individuals be linked in such a way that companies will become a kind of corporate Big Brother?

These are issues that remain to be worked out. Criminals, however, are not waiting around for such legal niceties. ''Basically, the network is unpoliced,'' Mr. Fitzpatrick says. ''It's like a new interstate system with no highway patrol.''

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