Tag Archive for Pretexting

Feds Nab Printer Toner Firms for Fraud

Feds Nab Printer Toner Firms for FraudFollowers for the Bach Seat know that printer ink is one of the most expensive materials on earth. Well, the U.S. Department of Justice just prosecuted one of the worst examples of the sky-high price of printer toner. The DOJ announced that Gilbert N. Michaels of West Los Angeles was sentenced to 48 months in federal prison. He was convicted of orchestrating a decades-long, multimillion-dollar telemarketing scheme that defrauded more than 50,000 victims by selling printer toner cartridges.

ecades-long, multimillion-dollar telemarketing schemeAccording to the DOJ, his firms, IDC Servco and Mytel International, with the assistance of boiler room call center operators, fraudulently sold over a six-year span more than $126 million worth of printer toner cartridges throughout the United States. Michaels’ companies handled the billing and shipping of the toner. He charged the boiler rooms at or above retail prices for the toner they were selling to victims. Michaels provided price catalogs to the boiler rooms to use in making sales. The catalogs listed the price of the toner at up to five to 10 times the retail price. Many of the victims already were receiving toner at no additional charge under their existing contracts for copiers and printers.

Fake printer toner prices increases

To pull off the scam, the telemarketers would pretend to be representatives of toner-supply companies many of the businesses already had contracts with. The telemarketers would then tell the victims that the price of printer toner had increased. The fake sales reps told the victims they could buy the toners at the previous, lower price, prosecutors said.

boiler room call center operatorsBelieving they were dealing with their regular suppliers, the victims would sign order confirmation forms. IDC would then ship toner to victims along with highly inflated invoices. When the victim businesses realized they had been scammed, they called IDC to complain. The victims were typically told that IDC could not cancel the order or refund money because the victims had signed order confirmation forms. IDC also failed to disclose its relationships to the telemarketing companies that brokered the fraudulent deals.

IDC would threaten legal action or turn them over to collection agencies, prosecutors said. If IDC did agree to take the toner back, it would demand significant “restocking fees,” prosecutors said.

Not the first fraud conviction

Not the first fraud convictionMichaels’s operation dates back to the 1970s. This is not his first run-in with the DOJ. Michaels and his companies were under scrutiny in 1988. At that time, the companies were reprimanded for making false statements. They were forced to use an independent sales company to sell printer toner. 

As part of the sentencing, Michaels was ordered to pay a $200,000 fine. His net worth is said to be $6.7 million. Ciaran McEvoy, the spokesperson for the US Attorney’s Office in Los Angeles, said, “Mr. Michaels led a conspiracy whose deceptive practices were particularly damaging to the small business community.” 

Other defendants

Six other defendants were also found guilty along with Michaels:

  • James R. Milheiser of CA who owned and/or controlled Material Distribution Center, PDM Marketing, Bird Coop Industries, Inc., and Copier Products Center. He was convicted of conspiracy and mail fraud.
  • Francis S. Scimeca of CA owned Supply Central Distribution, Inc. and Priority Office Supply, was convicted of conspiracy and mail fraud.
  • Leah D. Johnson of CO who owned Capital Supply Center and LJT Distribution, Inc.
  • Jonathan M. Brightman, of CA and owner of Copy Com Distribution, Inc.; Independent Cartridge Supplier; and Corporate Products.
  • Sharon Scandaliato Virag owned XL Supply, Inc.
  • Tammi L. Williams, office manager at Elite Office Supply, and worked at Specialty Business Center, Rancho Office Supply, and Select Imaging Supplies.

Stay safe out there!

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Ralph Bach has been in IT long enough to know better and has blogged from his Bach Seat about IT, careers, and anything else that catches his attention since 2005. You can follow him on LinkedInFacebook, and Twitter. Email the Bach Seat here.

Social Engineering Terms

Social Engineering Terms Social engineering means manipulating a person to get access without authorization. Practically speaking, it’s a blanket term for non-technical hacking. FierceITSecurity gives the classic example: Hacker calls target and pretends to be “from the IT department,” getting the target to divulge a password or other sensitive corporate information.

non-technical means.Derek C. Slater at FierceITSecurity discusses a short-list of social engineering terms with Chris Hadnagy, author of the book “Unmasking the Social Engineer: The Human Element of Security.” The author explained that some of the terms below aren’t social engineering per se, but they are related to the same goal: Gaining unauthorized access to information, systems, and facilities through deception and other non-technical means.

In his Social Engineering course, Mr. Hadnagy tells participants that one goal is that every target “will be glad to see them” because the social engineering methods covered seem friendly, not antagonistic. “It’s amazing how much information people will give you if you’re just nice to them,” he says. “Con men don’t look malicious–they’re the guys with the biggest smiles.

Social Engineering terms

Confidence manConfidence trick: The ‘con’ in “con man” refers to gaining the confidence of the target before attempting to exploit him. Examples: The movie Grifters with John Cusack, and every Ponzi scheme from Charles Ponzi himself on through to Bernie Madoff and whoever’s doing it now. And somebody’s doing it now warns the article.

Amygdala hijacking: Your amygdala is the part of your brain that manages decision-making and emotional responses. “Amygdala hijacking” in the social engineering context means putting the target emotionally off-balance by causing stress, or contacting the person during an unusually stressful time, according to Hadnagy. That means the target is less rational and more vulnerable to exploitation.

Amygdala hijackingExample: Friday at 4:30 pm, or the day before holiday vacation starts, many employees–not you or me, obviously–are anxious to get out of the office. That’s a perfect time for a pretexting call (see below) or a hacker-simulated crisis, putting the target further off-balance and making them more likely to do whatever is expedient–giving information over the phone or via email to make the “crisis” go away.

Elicitation: means getting information without asking for it directly.

Influencing:  Mr. Hadnagy says influencing means provoking a desired response from the target “while getting them to think it’s their idea.”

Manipulation: involves getting the target to perform the desired action, regardless of whose idea they think it is. Unlike influence, manipulation could involve a direct or implied threat, for example.

Pretexting: Mr. Hadnagy’s definition, is equal to method acting. The social engineer doesn’t just say “I’m Bob”–he becomes Bob.

Example: Contracted to test one company’s defenses, Hadnagy gained access to various facilities by posing as Paul the Pest Inspector. “I had the uniform with the name patch, I had Paul’s business cards, and for a day before the event, my team was calling me ‘Paul’,” he says.

Phishing: is the use of email as a conduit for social engineering attacks.

PhishingExample: Know those emails that start “I’m Prince Phillip and I need help transferring my royal fortune to an American bank”–the venerable so-called 419 or Nigerian scam? People still fall for those. It’s a phishing attack and an example of a confidence scam.

Spear-phishing: Spear-phishing is a more targeted form of phishing. Instead of blasting that “I’m a Prince” email to everyone with an email address, a spear-phishing attack is personalized to reach a small group or individual.

Example: A hacker identifies a target, Fred, and finds personal details, professional connections, and current project information via Fred’s LinkedIn profile. He then sends the target an email that is correctly addressed to Fred, appears to come from a real colleague, and references specific project details. Fred is much more likely to click on malicious links or open attachments in this email than he is likely to respond to Prince Phillip spam.

These next four terms don’t involve deception. However, they’re all important non-technical information attacks and can work in concert with social engineering efforts.

Harvesting – is using publicly available sources–particularly on social media, these days–to gather information about a target for later use in social engineering.

Dumpster diving – means what it sounds like: rooting through the trash to find discarded papers or items with valuable information. This is less glamorous than social engineering, but it’s also a useful form of harvesting and doesn’t need human interaction. (rb- I have covered the dangers of dumpster diving on Bach Seat since 2010.)

Shoulder surfing – means reading sensitive information on-screen and over the shoulder of a legitimate user.

Tailgating – is the ancient practice of going through a physical access point on the heels of someone who has an access card, key, or entry code. Catching the door before it shuts behind them, as it were.

rb-

Whether it is your home or corporate email account, social engineering is dangerous. Being educated about the risks of social engineering is critical. The next time someone reaches out via email or the phone, take a second and ask a few questions before you give away your digital identity unless of course they also have a candy bar

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Ralph Bach has been in IT long enough to know better and has blogged from his Bach Seat about IT, careers, and anything else that catches his attention since 2005. You can follow him on LinkedInFacebook, and Twitter. Email the Bach Seat here.