- Email: [email protected]
Computer theft
-6-
The case was heard before the San Francisco Federal District Court. After considerable legal discussions Dataforce admitted unauthorised copying, agreed to surrender illegal copies (of software programmes) that it had made and consented to pay damages and legal fees. The Court also granted an injunction prohibiting Dataforce from further copying.
Space invading pirates
While the judgement is significant the case itself does not appear to be exceptional. Pirates have been buying up one or two legitimate copies of in-demand programmes and then using these to illegally produce copies. To-date the main problem has been with Industry experts video games and personal computer programmes. estimate that well over half such programmes in circulation are pirated copies with some companies, probably including Micropro, suffering to a greater extent than this. Business programmes carry a greater degree of immunity due to two factors: the smaller size of the market at present; and the added expense of replicating the manuals that usually come with such These factors will be increasingly outweighed, programmes. however, as demand increases and pirates cash in on the higher price such programmes carry.
Locks
Apart from the legal defence which, despite this latest case, is still widely deemed to be inadequate, many software producers have developed security devices built into programmes or hardware. Such 'locks' have undoubtedly discouraged some amateur priates but They also provide no real obstacle to the determined professional. create compatability problems for genuine dealers (demonstrating programmes on a wide variety of hardware) and have failed to gain much approval among hardware manufacturers.
not
sufficient
The current state of play then in the manufacturers versus pirates fight? Manufacturers coming up fast but pirates still sitting on a comfortable points lead.
COMPUTER
THEFT In March 1981 the Nixdorf Computer Company, Burlington USA became aware of the possibility of losses through its refurbishing and Senior management at Nixdorf began to receive scrap department. anonymous telephone calls reporting equipment being stolen through its facility at North Reading. The company retained First Security Services of Boston to investigate the allegations. In May 1981 First Security Services decided to open a 'dummy' construction consulting company which was seemingly dependant on a Nixdorf computer. The dummy construction company contacted various suppliers of computer hardware seeking to buy accessories.
Owned by Nixdorf employee
One of the companies approached was Basement Electronics Inc which also trades as Computer Corral. Enquiries had revealed that this company was part owned by an employee of Nixdorf, Mrs Shirley Greenberg. Mrs Greenberg worked in Nixdorf's scrap and refurbishing department. The other shareholders were Mrs Greenberg's husband and brother-in-law, Arthur and Alan Greenberg. An investigator visited Computer Corral and explained that he needed to upgrade his computer from a 32 megabyte memory to a 64 megabyte memory. The supplier claimed that he did not have the
CAOlll
Volume 4 Number 5
@Elsevier
International
Bulletins
-7replacement part in stock and made an arrangement with the investigator to deliver it to the dummy construction consulting company.
Serial altered
number
A few days later the replacement memory board arrived. The trained investigator receiving it immediately noticed that the serial number of the part had been altered. He paid for the item by cheque but no invoice was offered or asked for. A further order was placed for a computer terminal. The terminal was delivered by an employee of Computer Corral and the investigator took the opportunity to question him about the source of his firm's stock. The delivery man said his boss, Alan Greenberg, had a friend who "throws new equipment into scrap he buys". Again no invoice was offered: apart from the cheque used to pay Computer Corral the purchase was unrecorded. Finally a mini computer and disc drive was ordered. These were delivered by Alan Greenberg himself. Neither item bore a serial number. First Security Services then interviewed the Computer Corral delivery man who said that in the two months he had worked for the company he had seen the owners, Alan and Arthur Greenberg, removing serial numbers from Nixdorf equipment. The evidence obtained by the investigators acting on behalf of the Nixdorf Computer Company was made available to the Attorney General's office by the company's corporate security manager, David Lewis.
Enriching scrap deals
In August 1981 Mr Lewis, together with State Police, interviewed the manager of the company's scrap and refurbishing department. The manager, Mr Zenisek, admitted that he had ensured that bids for scrap and unwanted material placed by the Greenbergs were Furthermore he had sweetened the parcel by adding successful. unused parts and equipment to the lots sold to Computer Corral. Mr Zenisek said he had been paid $17 000 by Alan Greenberg for his State police raided the premises of Computer Corral co-operation. and seized computer equipment valued at $5 million, including $1 million worth of new parts. Nixdorf were able to say that they had not supplied the company yet all the equipment seized was apparently theirs.
Al2 invoZvement denied
Arthur and Shirley Greenberg made statements categorically denying that they were in any way parties to a conspiracy to steal from Nixdorf. Shirley Greenberg said she had joined the Nixdorf company as an electrical assembler in 1978. She claimed that she had always been employed in the scrap and refurbishing department under Mr Zenisek. As such, she said, she had no opportunity to sell or handle new items. She maintained that she was only a nominal officer and stockholder of Basement Electronics Inc and Computer Corral. Arthur Greenberg said he began his firm in November 1979 and began trading in used computer parts in June 1980. He admitted buying and selling used scrap parts from a number of companies including Nixdorf but denied having knowingly traded in new parts. He also denied being involved in any criminal activity involving initial bidding for material purchased from Nixdorf.
;;KBm
Volume 4 Number 5
OElsevier
International
Bulletins.
-8-
In August 1981 the matter was taken to the US Superior Court. Judge Joseph Mitchell immediately ordered that the assets of the Greenbergs, George Zenisek, Basement Electronics Inc, Computer Corral and associated companies Salvage Commodities Limited and Compex Inc should be frozen.
No erimina2 a2 :eged
charges
No criminal charges have so far been filed against any of the parties concerned. The Nixdorf Computer Company has, however, estimated its losses at $7 million and has commenced civil proceedings to recover this sum. That Nixdorf could lose stock of the value of $7 million yet only become aware of the problem as a result of anonymous telephone calls says little for their accounting and despatch controls. In an organisation concerned with the manufacture of portable high value items it is important that accounting systems are designed to quickly identify losses and pin down responsibility for them. If Nixdorf had had such a system coupled with adequate gate controls it is probable that the unauthorised removal of new items parcels of scrap material would not have arisen. The following flow chart is of a system designed to prevent unauthorised removed of goods and to ensure that all outward movements are recorded on controlled basic documents.
I ORDER
1 CUS’IOMER
OFFICE ORDER f
ClNERM
Volume 4 Number 5
‘c: Elsevier
International
Kulletins
-
9 -
Ideally goods should only be prepared for despatch when an order is received from the order office and matched with an invoice from accounts.
MORE ON CONSULTANTS
Following the article 'Checking out the consultants' that appeared in the November 1981 issue of the Bulletin we were asked by several readers for more information, particularly for small business as contemplating installing a micro/mini system. We asked a staff reporter to investigate. The first time buyer of a micro or minicomputer system, often overwhelmed by the profusion and variety of suppliers, may decide to employ a consultant to help him select a system for his business needs. However, if the current growth in such consultancies continues the buyer may soon need to employ a consultant to help select the right consultant: Consultants involved in the business of selecting and advising clients on computer systems can be split into four groups:
Tread warily
1.
those that give free advice to the client and take a commission from the supplier;
2.
those that take a fee from the client and a commission from the supplier:
3.
those that charge the client for providing advice but have disclosed links with one or more suppliers;
4.
those that charge the client for impartial advice and provide exactly that.
The value of advice from these various sources can vary quite significantly and our advice to would-be clients is to tread very warily and look at all possible options. Typically, consultancy companies of the first group claim to offer impartial guidance, based on a feasibility study. One such UK company utilises area consultants who liaise with a Head Office "in order to match client's requirements against the many hundred of possible suppliers who are in their own computerised information system". The Head Office then "acting only in the interest of the client, produces a shortlist of two selected suppliers. If the client agrees, full specifications are forwarded to these two suppliers and demonstrations arranged". The client then obtains the preferred system direct from the supplier. However, this company (in common with many others) will not supply details of which manufacturers or suppliers are included in their information system. When asked whether the products of some of the better-known manufacturers were included the response was that "when the system matched a client's requirements the supplier concerned would be approached to see whether they would be interested in the order". It was not made clear what the situation would be if for some reason - such as a reluctance to pay the appropriate commission to the consultant - the supplier did not accept the order. Would the client be advised of the true situation?
Volume 4 Number 5
C Elsevier International
Bulletins
The case was heard before the San Francisco Federal District Court. After considerable legal discussions Dataforce admitted unauthorised copying, agreed to surrender illegal copies (of software programmes) that it had made and consented to pay damages and legal fees. The Court also granted an injunction prohibiting Dataforce from further copying.
Space invading pirates
While the judgement is significant the case itself does not appear to be exceptional. Pirates have been buying up one or two legitimate copies of in-demand programmes and then using these to illegally produce copies. To-date the main problem has been with Industry experts video games and personal computer programmes. estimate that well over half such programmes in circulation are pirated copies with some companies, probably including Micropro, suffering to a greater extent than this. Business programmes carry a greater degree of immunity due to two factors: the smaller size of the market at present; and the added expense of replicating the manuals that usually come with such These factors will be increasingly outweighed, programmes. however, as demand increases and pirates cash in on the higher price such programmes carry.
Locks
Apart from the legal defence which, despite this latest case, is still widely deemed to be inadequate, many software producers have developed security devices built into programmes or hardware. Such 'locks' have undoubtedly discouraged some amateur priates but They also provide no real obstacle to the determined professional. create compatability problems for genuine dealers (demonstrating programmes on a wide variety of hardware) and have failed to gain much approval among hardware manufacturers.
not
sufficient
The current state of play then in the manufacturers versus pirates fight? Manufacturers coming up fast but pirates still sitting on a comfortable points lead.
COMPUTER
THEFT In March 1981 the Nixdorf Computer Company, Burlington USA became aware of the possibility of losses through its refurbishing and Senior management at Nixdorf began to receive scrap department. anonymous telephone calls reporting equipment being stolen through its facility at North Reading. The company retained First Security Services of Boston to investigate the allegations. In May 1981 First Security Services decided to open a 'dummy' construction consulting company which was seemingly dependant on a Nixdorf computer. The dummy construction company contacted various suppliers of computer hardware seeking to buy accessories.
Owned by Nixdorf employee
One of the companies approached was Basement Electronics Inc which also trades as Computer Corral. Enquiries had revealed that this company was part owned by an employee of Nixdorf, Mrs Shirley Greenberg. Mrs Greenberg worked in Nixdorf's scrap and refurbishing department. The other shareholders were Mrs Greenberg's husband and brother-in-law, Arthur and Alan Greenberg. An investigator visited Computer Corral and explained that he needed to upgrade his computer from a 32 megabyte memory to a 64 megabyte memory. The supplier claimed that he did not have the
CAOlll
Volume 4 Number 5
@Elsevier
International
Bulletins
-7replacement part in stock and made an arrangement with the investigator to deliver it to the dummy construction consulting company.
Serial altered
number
A few days later the replacement memory board arrived. The trained investigator receiving it immediately noticed that the serial number of the part had been altered. He paid for the item by cheque but no invoice was offered or asked for. A further order was placed for a computer terminal. The terminal was delivered by an employee of Computer Corral and the investigator took the opportunity to question him about the source of his firm's stock. The delivery man said his boss, Alan Greenberg, had a friend who "throws new equipment into scrap he buys". Again no invoice was offered: apart from the cheque used to pay Computer Corral the purchase was unrecorded. Finally a mini computer and disc drive was ordered. These were delivered by Alan Greenberg himself. Neither item bore a serial number. First Security Services then interviewed the Computer Corral delivery man who said that in the two months he had worked for the company he had seen the owners, Alan and Arthur Greenberg, removing serial numbers from Nixdorf equipment. The evidence obtained by the investigators acting on behalf of the Nixdorf Computer Company was made available to the Attorney General's office by the company's corporate security manager, David Lewis.
Enriching scrap deals
In August 1981 Mr Lewis, together with State Police, interviewed the manager of the company's scrap and refurbishing department. The manager, Mr Zenisek, admitted that he had ensured that bids for scrap and unwanted material placed by the Greenbergs were Furthermore he had sweetened the parcel by adding successful. unused parts and equipment to the lots sold to Computer Corral. Mr Zenisek said he had been paid $17 000 by Alan Greenberg for his State police raided the premises of Computer Corral co-operation. and seized computer equipment valued at $5 million, including $1 million worth of new parts. Nixdorf were able to say that they had not supplied the company yet all the equipment seized was apparently theirs.
Al2 invoZvement denied
Arthur and Shirley Greenberg made statements categorically denying that they were in any way parties to a conspiracy to steal from Nixdorf. Shirley Greenberg said she had joined the Nixdorf company as an electrical assembler in 1978. She claimed that she had always been employed in the scrap and refurbishing department under Mr Zenisek. As such, she said, she had no opportunity to sell or handle new items. She maintained that she was only a nominal officer and stockholder of Basement Electronics Inc and Computer Corral. Arthur Greenberg said he began his firm in November 1979 and began trading in used computer parts in June 1980. He admitted buying and selling used scrap parts from a number of companies including Nixdorf but denied having knowingly traded in new parts. He also denied being involved in any criminal activity involving initial bidding for material purchased from Nixdorf.
;;KBm
Volume 4 Number 5
OElsevier
International
Bulletins.
-8-
In August 1981 the matter was taken to the US Superior Court. Judge Joseph Mitchell immediately ordered that the assets of the Greenbergs, George Zenisek, Basement Electronics Inc, Computer Corral and associated companies Salvage Commodities Limited and Compex Inc should be frozen.
No erimina2 a2 :eged
charges
No criminal charges have so far been filed against any of the parties concerned. The Nixdorf Computer Company has, however, estimated its losses at $7 million and has commenced civil proceedings to recover this sum. That Nixdorf could lose stock of the value of $7 million yet only become aware of the problem as a result of anonymous telephone calls says little for their accounting and despatch controls. In an organisation concerned with the manufacture of portable high value items it is important that accounting systems are designed to quickly identify losses and pin down responsibility for them. If Nixdorf had had such a system coupled with adequate gate controls it is probable that the unauthorised removal of new items parcels of scrap material would not have arisen. The following flow chart is of a system designed to prevent unauthorised removed of goods and to ensure that all outward movements are recorded on controlled basic documents.
I ORDER
1 CUS’IOMER
OFFICE ORDER f
ClNERM
Volume 4 Number 5
‘c: Elsevier
International
Kulletins
-
9 -
Ideally goods should only be prepared for despatch when an order is received from the order office and matched with an invoice from accounts.
MORE ON CONSULTANTS
Following the article 'Checking out the consultants' that appeared in the November 1981 issue of the Bulletin we were asked by several readers for more information, particularly for small business as contemplating installing a micro/mini system. We asked a staff reporter to investigate. The first time buyer of a micro or minicomputer system, often overwhelmed by the profusion and variety of suppliers, may decide to employ a consultant to help him select a system for his business needs. However, if the current growth in such consultancies continues the buyer may soon need to employ a consultant to help select the right consultant: Consultants involved in the business of selecting and advising clients on computer systems can be split into four groups:
Tread warily
1.
those that give free advice to the client and take a commission from the supplier;
2.
those that take a fee from the client and a commission from the supplier:
3.
those that charge the client for providing advice but have disclosed links with one or more suppliers;
4.
those that charge the client for impartial advice and provide exactly that.
The value of advice from these various sources can vary quite significantly and our advice to would-be clients is to tread very warily and look at all possible options. Typically, consultancy companies of the first group claim to offer impartial guidance, based on a feasibility study. One such UK company utilises area consultants who liaise with a Head Office "in order to match client's requirements against the many hundred of possible suppliers who are in their own computerised information system". The Head Office then "acting only in the interest of the client, produces a shortlist of two selected suppliers. If the client agrees, full specifications are forwarded to these two suppliers and demonstrations arranged". The client then obtains the preferred system direct from the supplier. However, this company (in common with many others) will not supply details of which manufacturers or suppliers are included in their information system. When asked whether the products of some of the better-known manufacturers were included the response was that "when the system matched a client's requirements the supplier concerned would be approached to see whether they would be interested in the order". It was not made clear what the situation would be if for some reason - such as a reluctance to pay the appropriate commission to the consultant - the supplier did not accept the order. Would the client be advised of the true situation?
Volume 4 Number 5
C Elsevier International
Bulletins