Security

Albert Gonzalez

(Credit: Wired.com)

A Miami hacker who had already pleaded guilty to computer fraud and identity theft for breaches at retailers T.J. Maxx, OfficeMax, and many other merchants, pleaded guilty on Tuesday to similar charges related to breaches at Heartland Payment Systems, 7-11, Hannaford Brothers supermarkets, and two other companies.

Albert Gonzalez, 28, reiterated terms of a plea agreement in U.S. District Court in Boston. A week earlier, co-conspirator Stephen Watt of New York, appeared in that same court and was ordered to serve two years in prison and pay $171.5 million in restitution for developing a sniffing program used to grab payment card data in the breach at the TJX companies between 2003 and 2008.

In that case, Gonzalez agreed in September to forfeit more than $2.7 million in restitution, as well as a condo, jewelry, and a car as part of his plea agreement. In addition to the TJX Companies (owner of T.J. Maxx), Gonzalez's ring is accused of breaches at BJ's Wholesale Club, OfficeMax, Boston Market, Barnes & Noble, Sports Authority and others.

Separately, he also has pleaded guilty to one count of conspiracy to commit wire fraud related to hacks into the network of the Dave & Buster's restaurant chain.

Gonzalez was the ringleader in what authorities have said constituted the largest identity fraud scam in U.S. history.

He and two Russian men were indicted in the Heartland case in August, accused of stealing data related to more than 130 million credit and debit cards. Retailer Target told Reuters that it was one of the victims of Gonzalez. "We believe that, at most, only a tiny fraction of guest credit and debit card data used at our stores may have been involved," Target spokeswoman Amy Reilly said.

Gonzalez, a former federal government informant, faces several sentences of up to 20 or 25 years in prison. Sentencing is set for March.

His attorneys, in seeking the minimum sentence, have suggested that Gonzalez may have Asperger's Disorder. He admitted in court that he had abused alcohol and drugs for years, according to Reuters.

Microsoft has denied claims of a new vulnerability in Internet Information Services (IIS) 6, putting the blame instead on poorly configured Web servers.

In a blog post Tuesday, Redmond said it had completed an investigation into claims that a flaw in how the IIS interprets file extensions in uniform resource locators (URLs) can enable an attacker to bypass content filtering software to upload and execute code on an IIS server. The company found "no vulnerability" in IIS.

Security researcher Soroush Dalili highlighted the issue on Christmas Day in a paper released via his Web site (PDF), describing the impact as "highly critical for Web applications."

Read more of "Microsoft debunks IIS vulnerability claims" at ZDNet Asia.

Social-networking sites like Facebook and Twitter can expect more attention from cybercriminals in 2010, according to a new report (PDF) released Tuesday by McAfee Labs. Also at risk are users of Adobe Systems products including Acrobat Reader and Flash. And move over Microsoft; the security firm predicts that Google's Chrome OS will "create another opportunity for malware writers to prey on users."

The company also anticipates smarter and more dangerous Trojans that "follow the money," as well as a "significant trend toward a more distributed and resilient botnet infrastructure that relies much more on peer-to-peer technologies."

In a recorded interview (scroll down for audio) David Marcus, McAfee Labs' director of security research and communications, said that he expects "an explosion of Facebook and other services targeted by cybercriminals." In addition to malware like Koobface that spreads among Facebook users' friends list, Marcus expects an increase in rogue Facebook applications.

"When you click yes to 'do you want to allow this application to access your Facebook account,' you're giving that application access to all the data in your Facebook account," he said. Facebook vets the third-party applications that it distributes, but rouge developers are finding other ways to get people to install unauthorized apps.

"A lot of the spammers and scammers will send fake Facebook application requests to users' inboxes," he said. Marcus recommends that you only install apps from within Facebook by clicking "browse more applications" in the Facebook application installer."

Twitter vulnerabilities
According to McAfee, Twitter is vulnerable mostly because of URL-shortening services like bit.ly and tinyurl.com. There's nothing wrong with Twitter or these services, but when you click on a shortened URL you have no idea where you're going until after you get there. I would like to see a URL-shortening service that vets each URL for security and rejects those that are potentially dangerous. Twitter, according to the McAfee report is "also serving as a control vehicle for botnets."

Criminals are now being more surgical in their attacks, singling out individuals and corporations as targets. The report points to the 10-month investigation of "GhostNet," which McAfee Labs describes as a "network of at least 1,295 compromised computers in 103 countries" that "primarily belonged to government, aid groups, and activists." The malicious code was delivered by e-mail with subject headings related to the Dali Lama and Tibet, according to the report.

The report also sites "a very targeted wave of attacks against the management of major companies," as well as attacks carried out against "journalists from various media organizations, including Agence France Press, Dow Jose and Reuters based in China."

Adobe products and Google Chrome vulnerable
Adobe products, especially its Acrobat Reader and Flash, are likely to replace Microsoft Office as the No. 1 software target, according to McAfee. It's nothing they've (Adobe) done wrong," Marcus said. "The bad guys go where the masses go" and because of the increasingly widespread use of Adobe products, "that tends to be what the bad buys will start looking to exploit. It really is nothing more sophisticated than that."

Criminals are infecting PDF files and leveraging exploits in the opening of PDF documents, according to Marcus.

"Instead of viewing a PDF you're actually taken to a website that downloads some type of malware to your machine." Adobe plans to patch a critical hole in Reader and Acrobat on January 12.

There is also concern about Google's Chrome operating system, which is expected to be officially released in 2010. Chrome, which will run Web-based applications, is likely to be vulnerable to attacks in HTML 5--the newest version of the hyper-text markup language that, says the report, "holds all the promises that today's Web community seeks--primarily blurring and removing the lines between a Web application and a desktop application."

McAfee also warned of banking Trojans with "new tactics that went well beyond the rather simple keylogging-with-screenshots" that were used earlier. Trojans now use rootkit techniques to hide on a victim's system to disable antivirus software.

"Often the victim's computer becomes part of a botnet and receives malware configuration updates," the report said.

For more on the threats on Facebook and Twitter read "Using Facebook and Twitter safely" on CNET.

Cause for optimism
The report did end with some optimism, calling 2009 a good year for law enforcement. In November 2009, the U.S. Department of Justice indicted nine individuals "from Russia, Moldova, and Estonia who were allegedly responsible for $9 million in customer payroll data compromises at RBS WorldPay."

The year also "saw the conviction of the infamous "Godfather of Spam," Alan Ralsky of Michigan, and his criminal syndicate, which was responsible for generating a significant portion of the world's unsolicited e-mail," McAfee said.

"You started to see that not a lot of resiliency was built into some of those botnets, they were taken down, and poof they disappeared for very long periods of time," Marcus said. He said he thinks "the bad guys will learn from that and build in some redundancy," but he remains optimistic. "The good guys and regular users are getting tired of getting exploited and we're finally starting to see more offensive and aggressive take downs of botnets...we're starting to see people wanting to take back the Internet."

Listen to Larry's interview with David Marcus.

Listen now: Download today's podcast

Karsten Nohl talks about his project at the Hacking at Random conference in August.

(Credit: Hacking at Random)

A German computer engineer said Monday that he had cracked the secret code used to encrypt most of the world's mobile phone calls.

In an attempt to expose holes in the security of global wireless systems, 28-year-old Karsten Nohl cracked the 21-year-old GSM algorithm, which is used to encrypt 80 percent of the world's mobile calls, reports The New York Times.

Nohl revealed his success at the Chaos Communication Congress in Berlin, Germany. He said that 24 people worked independently to reproduce the code book, or binary code log, for the algorithm, which contains the equivalent of about two terabytes of data.

He announced his intentions to crack the GSM algorithm at a conference in August.

Read more of "Code that encrypts world's GSM mobile phone calls is cracked" at ZDNet's Between the Lines.

John Hering, co-founder and chief executive of Lookout

(Credit: James Martin/CNET )

SAN FRANCISCO--In July, John Hering and Kevin Mahaffey demonstrated an SMS attack targeting a variety of smartphones at a security show. This week they are launching a company, with backing from some heavyweight investors, that will offer a fix for that problem, as well as protect smartphones from many other security issues.

Lookout has received $5.5 million in Series A funding from Khosla Ventures, Trilogy Partnership, and angel investors including Phil Paul, founder of Paul Capital Partners; Chris Sacca, former head of special initiatives at Google; and Joseph Ansanelli, former chief executive of Vontu.

Lookout is a cross-platform, Internet-connected application that offers advanced security and backup services, as well as the ability to locate devices that go missing or get stolen, and over-the-air management capabilities. The service is currently in private beta in more than 170 countries across 400 mobile networks, Hering, Lookout's chief executive, said in an interview.

It will be offered publicly on a subscription basis in early 2010 and an enterprise version will come later in 2010 or early 2011, he said. Pricing will be announced later.

Hering, Mahaffey, and the third co-founder, James Burgess, all met while attending the University of Southern California, and have honed their skills in the mobile space over the past five years, initially calling the company Flexilis.

They conducted research, helped handset makers with diagnostic tools, and discovered vulnerabilities in mobile devices and software--including uncovering a serious hole in the iPhone's implementation of Bluetooth in 2007 and hitting a world record by hacking a mobile phone from more than a mile away via Bluetooth in 2004.

With the funding and name change comes a move to San Francisco from Orange County in Southern California. The twentysomething executives were busy interviewing prospective employees in their sparse, new offices in the South of Market area in San Francisco. They have taken over part of the offices formerly occupied by Twitter.

"Hopefully, the Twitter luck will rub off on us," Hering said, as he gave a tour of the digs.

Lookout works on all the major smartphone platforms.

(Credit: James Martin/CNET )

The Lookout software is downloaded to the device and gets updates and backs up data in real-time via Lookout servers in the cloud. Antivirus and firewall software protects against electronic threats such as hackers, malware, and spyware. A dashboard allows for easy management of multiple devices.

Security veterans like Symantec and McAfee, as well as a host of smaller companies, are quickly moving into the mobile security space. But Hering isn't worried.

"Other companies offer a more PC-based approach," he said. "We're protecting the device and data, and we're multi-platform."

Lookout silently blocks malware in the background, but particularly serious threats prompt a notification to the user. The software also will protect against bad or unauthorized apps that might be downloaded, and attacks attempted via Wi-Fi or Bluetooth.

The missing device locator function will most definitely attract attention. If the device is lost, the owner can use the Web app to make it "scream," and a truly obnoxiously loud siren will sound that will annoy everyone within earshot. If the device is set to silent or mute mode, the scream feature overrides that.

For people who think their device may have been stolen and want to track it down, there is a nifty way to trace it via an online map. Device owners can pull up the Find My Device Web app to see the approximate location of the device on a map, and either lock the device so no one can use it or access the data, or wipe the data entirely. If the device is recovered, the data is easily restored. A combination of Global Positioning System, cell tower, and Wi-Fi technology is used to track the devices.

For backup and recovery purposes, the data and settings on the device can be set to what they were at any point of time in the past, and data can be transferred to other devices.

As phones become increasingly powerful computers and storage devices that accompany users everywhere, they become even more attractive targets for attackers and thieves.

"Smartphones are the next computing platform," Hering said. "Ultimately, I think this will be the primary platform. It's in my pocket, and goes everywhere with me. There are not many computing devices that have that power and personal connection."

Chief Technology Officer Kevin Mahaffey and Chief Executive John Hering, co-founders of mobile security firm Lookout, which now occupies the former offices of Twitter in San Francisco.

(Credit: James Martin/CNET )

A not-so-merry holiday gift for Amazon.com: hackers say they've successfully cracked copyright protections on the company's Kindle e-reader, making it possible to export e-books to other devices.

One hack reportedly resulted from a Kindle DRM challenge issued on Israeli forum Hacking.org. On that site, an Israeli hacker known as Labba claims to have created a tool that lets e-books stored on the Kindle be transferred as PDF files.

A U.S. hacker has written a program to crack copyright protections on the Kindle for PC application.

(Credit: Amazon)

A U.S. hacker who goes by the name "i♥cabbages," meanwhile, created a program called Unswindle that promises to convert books stored in the Kindle for PC application into a different file format.

The free Kindle for PC app lets book buyers read their books right from their PCs without having to buy a Kindle reader. Unswindle has to be used in conjunction with MobiDeDRM, a program by another hacker named "darkreverser."

Posters on i♥cabbages' blog give Unswindle mixed reviews, ranging from "works like a charm" and "worked flawlessly" to descriptions of various errors.

You and just about everyone else, it seems, are spending more and more time on Facebook and Twitter, updating statuses and checking friends' tweets. That's all well and good, of course, but the amount of personal information that all of you share in real time, and the level of trust implicit with the social networking sites, do pose particular security and privacy problems.

A recent study from Sophos found that Facebook users reveal a lot of personal information to new friends, including ones they really don't even know or have never met. Using fake profiles, Sophos sent out friend requests to 100 random Facebook users, and more than 40 percent blindly accepted, giving the company access to birth dates, e-mail addresses, phone number and addresses--private information strangers shouldn't have.

The openness of Twitter--anyone can follow anyone else, and posts are indexed in search engines--makes it a nirvana for spammers. Kaspersky says there are nearly 500,000 new unique URLs that appear in Twitter posts daily, and of those, anywhere between 100 and 1,000 are malware attacks.

Here's a look at some of the specific threats users of the sites face and what they can do about it.

FACEBOOK

A rogue app that appeared early in the year sent notifications to Facebook users reporting they were violating terms of service and offering a link that lead to an application called "facebook -- closing down!" which then spammed all the friends of affected users.

(Credit: Trend Micro)

Problems: Malware, account hijacking, phishing, and social engineering

The biggest malware risk is Koobface, (an anagram of Facebook), which is a worm that targets social networking sites and affects Windows-based computers. Once a computer is infected, it hijacks the Facebook account and sends messages to other friends of the victim, enticing them to click on a link. The link redirects to a Web site where they are prompted to download software ostensibly to watch a video. However, there is no video; only malware that infects the system, blocks access to security sites, and can be used to steal sensitive information from the computer, such as credit card numbers. Infected machines can then be used to spread the worm to others on Facebook, send spam and distribute fake antivirus alerts, said Rik Ferguson, a security researcher at Trend Micro. Koobface now can automatically create new profiles using infected machines, he said.

Facebook accounts can be hijacked in several ways. A brute-force attack can be used to guess passwords. Users can fall for phishing attacks by clicking on links in messages or e-mails purportedly coming from friends that redirect to a fake Facebook log-in page. Or malware such as Koobface can steal passwords.

Social engineering is a huge problem for social networks because the trust that users have for messages and posts from friends can be easily exploited by scammers. Hijacked accounts are used to send everything from spam touting weight loss plans to links that install malware and steal passwords to fake emergency messages saying a friend is stranded in another country and needs someone to send money. Scammers are also sending e-mails that look like they come from Facebook and include an attachment that contains a Trojan.

Solutions: Use antivirus and anti-malware software and keep it up-to-date. Install security updates for operating system and other software. Use software like AVG Linkscanner or McAfee Site Adviser to protect against phishing and malware attacks. Become a fan of the Facebook Security page, which has posts related to all sorts of security issues, tips, resources and other information. If you think you've been infected with Koobface or other malware you should reset your password and notify friends who may have been affected.

Use an up-to-date browser that features an antiphishing black list, such as Firefox 3.0.10 or Internet Explorer 8. Be aware of where you enter your password. Check to see that you are logging in from a legitimate Facebook page with the Facebook.com domain. Be wary of unusual stories or offers that are too good to be true. Verify information with sources directly. Be cautious of any message, post or link that looks suspicious, requires an additional log-in or asks you to download or upgrade software. If a link seems odd or lacks context, don't click on it. Don't click on links or open attachments in suspicious e-mails. You can add a security question from the "Account Settings" page if you would like an additional layer of protection.

Problem: Rogue applications

Facebook doesn't vet every app that appears on the site, which means there is a risk that some apps will have bugs in them or will violate Facebook's privacy policies. Facebook has proven diligent in removing rogue and problem apps quickly when it is notified, but unlike iPhone apps, pretty much anyone can write a Facebook app. "Because the code is not always of professional standard or hosted or audited by Facebook, we've seen innocent apps compromised externally and used to deliver malware, such as fake antivirus," Ferguson said. One rogue app that appeared early in the year sent notifications to Facebook users reporting them in violation of terms of service and offering a link that lead to an application called "facebook -- closing down!" which then spammed all the friends of affected users, according to Trend Micro.

Solution: See solutions above, and be cautious about adding applications. Research the developers and perform Web searches to see if anyone has complained about the app. And ask yourself, what value does the app provide? Do I really need to play zombie?

Problem: Privacy leaks due to user error

Because people control who they are friends with on Facebook it is easy for users to have a false sense of security about the privacy of their data and activities on the site. Social engineering attacks, lax security practices by users like using weak passwords and design or implementation problems with the site itself can undermine the privacy protections users rely on. Users who fall for phishing scams and get their accounts hijacked have everything in their account exposed to strangers who can then use the different types of data for identity fraud or to target the victim's friends with social engineering attacks.

Solution: See solutions above. Also, use unique logins and passwords for each Web site you access. Use strong passwords, change them often and don't share them with anyone.

These instructions explain how to keep most people from viewing your friends list on Facebook.

(Credit: CNET)

Problem: Privacy leaks due to design or implementation issues

Privacy advocates contend that Facebook's lenient apps approval process, privacy policies and confusing privacy settings put users at risk. Two weeks ago, Facebook asked users to configure their privacy settings. The options were confusing and many people were inclined to just keep the default settings, which are set to make the data visible to the Web rather than opting to use the old settings established by the user. Screenshots and descriptions are detailed on this photo gallery.

Many people have complained that it is difficult to figure out how to change the privacy settings, that they are not intuitive and that there doesn't seem to be one central place for that. And using Facebook Connect with outside apps, like the iPhone app Foursquare, can expose more information than a user expects to share. The new privacy changes at Facebook have prompted the Electronic Privacy Information Center to ask the Federal Trade Commission to investigate.

Facebook encourages people to share their full names, date of birth, home town and other information, all pieces of information that are commonly used in identity fraud. Scammers on underground sites even refer to Facebook as a "free date-of-birth look up service," according to Ferguson. People don't realize that their profile information can be accessed by total strangers who happen to be in the same groups or networks unless they specifically change the settings. People who don't trust random apps--which in general have access to profile information even if it isn't necessary to the function of the app--don't realize that the apps their friends are using also have access to their data. "Friends apps can access most of your profile, interests and groups. There is no way to prevent them from accessing your name, profile, photo, town and gender," said Joseph Bonneau, a PhD candidate in security at the University of Cambridge. In response to user feedback, Facebook made a change that allows users to hide their friend lists from everyone but their friends, a Facebook spokesman said.

Solution: CNET has a tutorial on how to hide your Facebook friends list by clicking on the pencil in the friends box on your profile. Detailed instructions and tips on dealing with Facebook privacy settings are available on the DotRights.org site and on the All Facebook blog. Facebook also has a blog post about the privacy changes.

Problem: Privacy leaks related to marketing

The relationship between the apps and advertisers can also cause problems. Adding an app allows the app to show ads inside the Facebook domain, and that can leak a user's profile information to the advertiser, said Peter Eckersley, a staff technologist at the Electronic Frontier Foundation. Meanwhile, cookies and other browsing tracking technology combined with data from social networks can be used by marketers to identify users for targeted advertising and other purposes, Eckersley said, providing details in a blog post on different ways data can be leaked from social networks to third-party tracking firms. Once marketers know a specific person's user name, they can use that identifier in the URL to get to a user's public profile page, according to Eckersley. "They can create a social graph of your date of birth, city, employment, relationship status, all uniquely codified in a way that can be automatically sucked into a database," he said.

Solution: Pick a good cookie policy for the browser, such as manually approving all cookies or only keeping cookies until the browser is closed. Disable Flash cookies. Use Firefox extensions such as RequestPolicy and NoScript to control when third-party sites can include content or run code in the browser page. Use the Targeted Advertising Cookie Opt-Out plugin or AdBlock Plus to block ads. To hide your IP address and other browser characteristics, use Tor via Torbutton.

Problem: Information used to suppress dissent and target political activists

As with e-mail, blog postings and other public expressions of dissent, Facebook and Twitter have been used by governments to target protesters. The Wall Street Journal reported earlier this month that family members of Iranian Americans had been arrested or questioned because of anti-Iranian government posts on Facebook by members outside the country. In other instances, Iranians living abroad were forced to log into their Facebook accounts or reveal passwords to government officials as they arrived at the Tehran airport and some even had their passports confiscated because of their political posts. In the U.S., the EFF says, officials have taken actions against U.S. citizens based on information discovered on their social networks; the group has sued the CIA and other agencies for allegedly refusing to release information about how they are using such sites in surveillance and investigations.

"Basically, every time you post something to Facebook you should assume that the whole world will know what you've posted, your family, employer, the government, people you don't trust," Eckersley said.

Solution: Think carefully about what information you want to share about yourself and consider only posting information you would want to let the general public see.

TWITTER

This screen shot shows a Koobface attack message on a Twitter page.

(Credit: Trend Micro)

Twitter has many of the same malware, phishing, hijacking and social engineering issues that Facebook has, and the solutions for those problems would be the same. Because users don't provide much personal information to Twitter, and can even create accounts using all fake information, and because anyone can follow anyone else, there aren't the same issues with privacy, either. But that makes life easy for spammers.

Security does seem to be a worrisome thing with Twitter. The site has had several serious problems from employee accounts getting compromised. In January, someone hacked into the Twitter internal network -- possibly by guessing the password -- and gained access to the Twitter accounts of President Obama, CNN anchor Rick Sanchez, and 31 other high-profile Twitterers. In May, someone broke into Twitter's network and gained access to 10 accounts, which appeared to include Britney Spears and Ashton Kutcher. In that breach, a hacker was able to gain access to a Twitter employee's Yahoo account through the password recovery system and from there get information from other sites, including access to the employee's Twitter account. And last week, the legitimate account of a Twitter employee was used to hijack the site and redirect visitors to an external page displaying a banner for the "Iranian Cyber Army."

Meanwhile, Twitter was crippled (and Facebook and other sites also affected) by a rare politically motivated denial-of-service attack targeting one user in August. However, that incident reflects more on Twitter's ability to keep the site up in the face of an attack and accessibility than it does about security risks to users.

Twitter users are susceptible to getting their accounts hijacked, and the site has been targeted by clickjacking pranks. In these social engineering attacks, users were encouraged to click on links that distributed the original tweet to all of the Twitter user's followers.

Users with large numbers of followers have an added responsibility to be careful, particularly when setting accounts to automatically post items from news feeds. A malicious post on an unmoderated news feed that venture capitalist Guy Kawasaki was re-tweeting distributed a Trojan to more than 139,000 followers in June.

Kaspersky offers a Krab Krawler tool that analyzes tweets as they get posted on Twitter and blocks any malware associated with them. Trend Micro has technology that monitors Twitter posts for malicious URLs, as well as looks for attack patterns in the posts, such as use of popular terms to indirectly lead people to malicious links. And Finjan offers a free browser plug-in dubbed SecureTweets that warns users when they encounter a malicious URL in Twitter, as well as Blogger, Gmail, Google and a host of other popular sites. To keep up with security issues on Twitter follow Twitter's Spam Watch account.

Social networks are also susceptible to other serious security problems that can hit any type of Web site. For instance, last week passwords of 32 million stored in plain text on the RockYou site were exposed by a SQL injection attack, according to security firm Imperva. Because the passwords are used on other affiliate sites to the social networking application maker, the breach jeopardized other accounts, like Gmail, Hotmail, and Yahoo.

Citigroup denies it, but its Citibank unit was reportedly robbed of tens of millions of dollars, the victim of a cyberattack by members of a Russian criminal gang, says Tuesday's Wall Steet Journal (subscription required).

The attack was discovered this past summer, says the Journal, but investigators for the FBI and National Security Agency believe it could have happened months or a year prior. The two agencies have reportedly shared information with the Department of Homeland Security and Citigroup to defend against the attack. The investigation is supposedly ongoing, with no word on whether or not any of the stolen money has been found.

Investigators initially became suspicious after spotting traffic coming from IP addresses once used by the Russian Business Network, a Russian gang of cybercriminals who went off the radar back in 2007, notes the Journal. But reports have surfaced that members of the gang have since regrouped to launch a wave of new attacks.

One of the tools allegedly used by the hackers to break into Citibank was Black Energy, says the Journal, a $40 piece of software that launches Distributed Denial of Service (DDoS) attacks to prevent access to a specific Web site. Designed by a Russian hacker, Black Energy is commonly sold on certain Russian language forums. But Black Energy is now being sold as part of a $700 kit called the YES Exploit System. The kit includes other crimeware that steals bank account credentials, making it an especially dangerous threat to firms like Citibank.

But Citigroup denies that such an attack ever took place. In a prepared statement e-mailed to CNET, Citigroup said: "Allegations of a breach of Citi systems and associated losses are false. Denial-of-service attacks are directed against companies around the world. While there have been attempts to interfere with the availability of our systems, none of these have resulted in any breaches, compromise of customer information, or losses to Citi."

A company spokesperson further denied any involvement from the FBI. "We had no breach of the system and there were no losses, no customer losses, no bank losses," said Joe Petro, managing director of Citigroup's Security and Investigative services. "Any allegation that the FBI is working a case at Citigroup involving tens of millions of losses is just not true."

Phone calls to the FBI and NSA were not returned.

New cybersecurity chief Howard Schmidt

(Credit: The White House)

The White House's new cybersecurity chief faces a tough agenda, but will be able to draw on the lessons of a 40-year career, including stints at Microsoft and eBay.

Former security adviser Howard Schmidt is returning to the White House as President Obama's new cybersecurity coordinator, the White House announced Tuesday.

In his new role, Schmidt will report to the National Security Council. Schmidt will also "have regular access to the president," said an official who spoke to The New York Times.

Earlier this year, President Obama initiated a review of the government's cybersecurity policies in an effort to streamline operations. Turf wars among various agencies and a perceived weakness in the Department of Homeland Security had raised red flags, prompting the president to declare that the country was not adequately prepared on the cybersecurity front.

Following that review, the White House identified a need for a new cybersecurity chief, then plunged into a tricky, months-long process that now brings Schmidt back to public service.

President Barack Obama greets his new White House cybersecurity chief Howard A. Schmidt in the Cross Hall of the White House.

(Credit: Official White House Photo by Lawrence Jackson)

In a recorded speech introducing himself, Schmidt said he sees information technology as offering great opportunities but also great dangers to national security, public safety, economic competitiveness, and personal privacy. As dependence on technology increases, he said, the need to protect our security and privacy also increases.

As such, Schmidt said that the president has directed him to focus on several key areas:

• developing a new and comprehensive strategy to secure U.S. networks to ensure an organized response to future cyber incidents;
• beefing up both public and private partnerships in the U.S. and abroad;
• promoting research and development of next-generation technologies;
• and leading a national campaign to promote cybersecurity, awareness, and education.

Acknowledging that Washington can't solve cybersecurity problems on its own, Schmidt said his agenda is to bring together the government, the private sector, and other stakeholders as part of a new and comprehensive cyberstrategy to strengthen online defenses.

Following Schmidt's appointment, a variety of security analysts offered their thoughts.

In a Tuesday blog post, Randy Abrams of security vendor ESET said that Schmidt is very smart and personable, possessing a depth of knowledge and experience that makes him one of the best possible candidates for the job. But Abrams cautioned people not to expect miracles or fast changes as Schmidt will face huge obstacles trying to coordinate security across different government agencies, most of which have people who think their way is the only way to do things.

Phillip Dunkelberger, president and CEO of security vendor PGP, where Schmidt serves on the board of directors, said: "Howard's familiarity with public sector, private sector, large vendors and small innovative companies should be a great asset to this unique position; one that will just expand as our nation's dependency on cyber communications continues to grow." He also stressed that Schmidt will need to jump in quickly and form a solid working relationship with the Department of Defense and with the federal government's chief information officer, Vivek Kundra, and chief technology officer, Aneesh Chopra.

Schmidt brings to his new post a lengthy resume of government service, with a particular niche in computer crimes and forensics. Early in his career, he worked for the FBI's National Drug Intelligence Center, where he ran the Computer Exploitation Team. He also was a special agent and program director for the Air Force, where he set up one of the government's first dedicated computer forensic labs.

His new post will be Schmidt's second stint at the White House. In December 2001, just after the 9/11 attacks, he was appointed vice chairman for President Bush's Critical Infrastructure Protection Board and deputy to former White House cybersecurity czar Richard Clarke. Schmidt left his post in February 2003 to return to the private sector. During his tenure with the Bush administration, he helped create a new cybersecurity plan, which at the time was criticized as being too watered down, a charge that Schmidt disputed.

In the private sector, Schmidt served as chief security officer for Microsoft from 1997 to 2001 before joining the White House. After leaving his government post, he joined eBay in 2003 as vice president for security.

More recently, Schmidt was the president and CEO of the Information Security Forum, an international nonprofit organization that focuses on risks and research in the cyberworld.

Updated December 23, 4:00 a.m. PST with comments from security analysts.