Category Archives: Cartels

Gangsters with Blackberry’s & the Upsurge in “Intelligence Led” Busts

A sensational story about the criminal use of encryption appeared across social media this week like it was a scoop. It wasn’t. But that’s the way it was portrayed.

For the uninformed it played directly into the narrative that encryption is bad and overwhelmingly used by those withquestionable motives or downright evil intentions.

So What Happened?

The headlines varied but basically Vincent Ramos the boss of Phantom Secure, a company whose website declares that it supplies “THE WORLDS MOST TRUSTED COMMUNICATION SERVICE” was arrested in California.

The company supplies or supplied a modded and allegedly zero knowledge handset which is or was it claimed “Simple, effective and easy to use while highly secure, … recognized by government agencies and cyber experts as “Uncrackable” “.

All utter rubbish of course but if you are selling a high performance sports car to a guy who struggles with a gear change on a bicycle then who is to contradict you?

Imagine! Organised crime were using encrypted phones to communicate and those encrypted phones were being supplied by commercial outfits who knew.

Scoop? No.

“Buyer Beware” — What Did Phantom Secure Sell?

Phantom

The sales bumf declared that the “Classic Phantom Secure Encrypted BlackBerry Device”, apparently proven “year after year”, (by whom is unstated) was light weight and easy to use and provided end to end encrypted messaging, in theory. The package included:

  1. Modified and Locked Down Device
  2. Secure Encrypted Device to Device Encrypted Messaging
  3. Anonymous Communication
  4. International Roaming
  5. 6 months Subscription Included

The “Phantom Secure Android Edition” made the laughable statement that it provided unmatched secure enterprise mobility from BlackBerry and the “best at rest” security on an Android KNOX device, which communicated over the Phantom Secure service.

Summarising, the company promised “totally anonymous, device-to-device encrypted communications, brought to you by a globally trusted and recognized secure communications service.

The problem with that is that it was not brought to the companies customers by anything approaching a globally trusted and recognized secure communications service because it was hosted on Blackberry Enterprise Service servers.

Blackberry executive chairman and chief executive officer John Chen recently said “Today’s encryption has got to the point where it’s rather difficult, even for ourselves, to break it, to break our own encryption… it’s not an easily breakable thing. We will only attempt to do that if we have the right court order. The fact that we will honor the court order doesn’t imply we could actually get it done.

This Phantom Secure Android version included:

  1. Modified and Locked Down Device
  2. Secure Encrypted Device to Device Encrypted Messaging
  3. Anonymous Communication
  4. KNOX hardware and software integrated device security
  5. Prive Encrypted Chat
  6. Compatible messaging with BB7 Devices
  7. International Roaming
  8. 6 months Subscription Included

Worthless Disclaimers & Hollow Promises

Phantom Secure, and many like them, take care to make various disclaimers which they seem to think are a get out of jail freecard and state in their “Legal Compliance” section that:

We are a law-abiding company that is permitted to deliver encrypted communication services to our clients in order for them to protect their communications, without having the ability to decrypt their communications.”

The statement in no way ensures that these kind of suppliers cannot be indicted on charges. What it does do is give the impression to prospective customers that the company can in some way guarantee that even in the face of a warrant they do not possess the ability to compromise the historic or future communications of their customer base either intentionally or unintentionally.

But in the case of Blackberry that is just not true. It is public knowledge since 2016 that Operation Clemenza by the RCMP allowed Canadian investigators to access consumer-grade phones from Blackberry where the decryption key is in the company’s (RIM) possession.

BlackBerry, however, also offers the option to run their BlackBerry Enterprise Server (BES) which allows clients to run their own network of phones, and keep possession of their own decryption key. And this is what Phantom Secure were doing but as far back as January 2016 Dutch police said that they were able to read encrypted messages sent on the custom, security-focused BlackBerry devices.

Also in December 2015 in the article “The Encryption Debate: a Way Forward,” on the official Blackberry blog INSIDE Blackberry the company wrote that “privacy and security form the crux of everything we do. However,our privacy commitmentdoes not extend to criminals.”

But isn’t criminality established after due process has taken place? Warrants do not prove criminality even if there is probable cause? Are RIM Blackberry qualified to make the distinctions?

Regardless they sold their BES products based on the claim that they would never be called upon to make the distinction because they had designed a product that was totally secure.

There are products which can guarantee this and even in the face of warrants are unable to provide logs, metadata, or encryption keys. But BES cannot. There lies one of the many significant problems that Mr. Ramos faces.

The disclaimer continues …

“Our service does not require personal information and has no back doors. In providing such a service we do understand that there will be a very small number of people that may use our service to do activities we do not support. We do not condone the use of our service for any type of illegal activities and if known we will terminate the use of our service without notice.”

“Considering this, requests for the contents of communications may arise from government agencies, which would require a valid search warrant from an agency with proper jurisdiction over Phantom Secure.”

“However, our response to such requests will be the content and identity of our clients are not stored on our server and that the content is encrypted data, which is indecipherable.”

“Our company was founded as a means to provide businesses and people the opportunity to communicate in private in this modern technological age. Unfortunately there will be people that will use this technology for acts we do not condone but this should not be the reason why our universal human right to privacy should be taken away.

Mr. Ramos & Explaining the Unexplainable

The very unlucky or very silly Mr. Ramos, depending on which way you look at it, has now been charged with racketeering activity involving gambling, money laundering, and drug trafficking. I hope Mr. Ramos enjoyed the spoils while he could because he is in a very tight spot now, one way or the other.

US authorities have argued that Phantom Secure operated explicitly to enable organised crime groups to evade detection while planning major crimes. Phantom allegedly built an international client base of criminals by taking BlackBerry devices, stripping out the camera, microphone, GPS navigation and other features, and installing encryption software, making them difficult for law enforcement to crack. He was arrested in California, amid claims that his firms products’ were allegedly linked to Australian murders and drug trafficking.” [This extract is from “Phantom Secure boss arrested in US, amid products’ suspected links to Australian murders” By Dan Oakes, ABC Australia, Monday 12th March 2018]

Think about that statement “Making them difficult for law enforcement to crack.”. Hmmmm. If Mr. Ramos makes bail I predict that one of the first questions that he will be asked by some of his more colourful customers is how exactly does that statement sit with the claims the company made on their website. At best he over-promised and under-delivered. [For posterity I have preserved the Phantom Secure website before it inevitably goes dark.]

These dog and bones went for between USD1500–USD2000 a piece with 6 months shelf life and Phantom Secure had 20k subscribers. Do the figures! If you lost one then you had to buy a new one, no discounts.

Isn’t it amazing that a market segment of normally paranoid individuals are willing to buy an expensive technology that they do not understand from a supplier that they do not know and then proceed to drop all normal “opsec”, if you could call it that, and openly plan the spectaculars that led to these arrests.

The Recent Upsurge in Success for “Intelligence Led” Operations

In the fullness of time it will be very interesting to see how the evidence to construct this indictment was acquired, what paper trail was left by the company showing their modus operandi, the promises versus the actual reality of what the company claimed it could deliver, and whether these claims as and of themselves are seen by the Courts as a marketing tool solely intended to appeal specifically to a certain base, namely those with criminal intentions, and how that can be proven.

The story also raises interesting questions on a topic that I have been researching now for some time – parallel construction. Over the last three years there has been a staggering increase in seizures of drug shipments and the foiling of multiple gangland assassinations attributed to “intelligence led” operations.

Since the late noughties Blackberry handsets have been the comms weapon of choice for organised crime even though they have been widely discredited. There is a school of thought that outfits such as Phantom Secure have been tolerated and let exist by law enforcement because they were such a rich source of warrantless intel.

But now that even the most clueless crims are moving away from the platform it seems that it has been decided that it is time to bring in all the “CEO’s” of these secure comms companies. Their usefulness has been exhausted.

Some of the coverage in recent days has claimed that Ramos is co-operating. My guess is that LE wish to use his arrest to turn him into a “co-operating witness” and as such provide them with what looks like legal access to the Phantom Secureservers.

In that way all of that juicy warrantless surveillance can be seen to have been legitimately obtained intelligence and the clientbase, big fish and small, can be hoovered up en-masse or turned into assets.

As for the stuff that has gone before — well, it didn’t become an issue at the trials so no need to revisit that. It was credited to HUMINT in the shape of informants who could not be named in order to protect their identity.

The Inevitability of Licensing

I have no particular insight into the innocence or guilt of Mr. Ramos in this case. I do not know whether he overtly solicited criminal clients in the full knowledge of their business and their need for secure comms in order to evade detection in a criminal enterprise.

What I do know is that if you are legally recorded saying:

“Hey man, I sell these phones that are bullet proof and can’t be hacked or eavesdropped (“even though that is not the case”) and I know you value your security and privacy because your foe is law enforcement and your trade is illegal and I can sell you these phones for $$$$’s and you can ply your trade without fear of discovery

….. then you are nicked mate.

Mr. Ramos is damned if he does and damned if he doesn’t. He is finished every which way he turns.

The movie Layer Cake has a rich seam of relevant content to illustrate my point. In that movie Colm Meaney explains to Daniel Craig’s character XXXX his Cornelian dilemma as a result of being present during an incident:

“Listen, son. Let me explain something to you. Freddie’s in intensive care with a bit of a brain haemorrhage. You were there at the scene. That’s called joint venture. Now, if Freddie dies, you’re either in the dock with Morty… …or you’re in the witness box putting him away. Think about that.

The outcome of this matter is likely to produce significant and wider repercussions for the providers of secure communications solutions in general.

This case and those to follow are a preparatory step for compulsory licensing for purveyors of private encryption systems. They offer an antidote to the privacy objections about backdoors and present a far more pragmatic solution to giving law enforcement access to encrypted communications than systems that are “thoughtfully design” as was recently and ridiculously suggested by FBI Director, Christopher Wray.

The provision of private secure comms solutions will evolve to the same standard of licensing as is applied to firearms sales. Such companies will be required to be licensed before offering the service and when selling licenses I guess that pre-qualification checks on the purchaser will be required too. Purchasing a license will probably be enough to claim “probable cause” under FISA rules in the US. It takes little enough justification to eavesdrop as it stands.

Undermining the Argument for Un-Compromised Encryption

The arguments in support of generally available un-compromised encryption services are devalued by the incorrect parallels that the opponents of encryption make between them and the Phantom Secure case.

It plays directly into the narrative that the host of encryption luddites in law enforcement, government, and the intelligence community peddle daily as they seek to justify back-dooring or banning encryption products.

Those who oppose encryption use illogical extrapolations when making their arguments — “the bad guy used encryption … therefore the crime was committed because of encryption”. They use the special case to undermine the general case.

The Phantom Secure case will be used as another example of why encryption is bad. But the Phantom Secure case is not about privacy or encryption rights or freedom of speech.

If there is even the slightest question that the provider of hardware, software, and any other “wares” knowingly supplies them for assisting the commission of an offence or even suspects that they will be used in one then it is aiding and abetting and all the other bits and pieces that have been included on Mr. Ramos’s much publicised indictment.

References and Bibliography

  1. https://www.justice.gov/usao-sdca/pr/chief-executive-and-four-associates-indicted-conspiring-global-drug-traffickers
  2. https://motherboard.vice.com/amp/en_us/article/a34b7b/phantom-secure-sinaloa-drug-cartel-encrypted-blackberry?__twitter_impression=true
  3. https://motherboard.vice.com/en_us/article/bme5w3/customer-data-from-encrypted-phone-company-ciphr-has-been-dumped-online
  4. http://www.bbc.com/news/technology-43425333
  5. https://motherboard.vice.com/en_us/article/mbpyea/encrochat-secure-phone-hacking-video
  6. https://www.eff.org/nsa-spying/state-secrets-privilege
  7. https://www.peerlyst.com/posts/the-rogues-gallery-of-encryption-luddites-graham-penrose
  8. https://www.peerlyst.com/posts/peertalk-tm-privacy-vs-national-security-panel-questions-for-session-1-graham-penrose
  9. https://www.peerlyst.com/posts/all-blackberry-messages-can-be-decrypted-using-global-encryption-key-valery-marchuk
  10. https://www.peerlyst.com/posts/would-you-hire-a-locksmith-you-dont-trust
  11. https://www.peerlyst.com/posts/boss-of-a-company-that-supplied-encrypted-phones-arrested-andrew-commons
  12. https://www.hrw.org/report/2018/01/09/dark-side/secret-origins-evidence-us-criminal-cases
  13. https://www.peerlyst.com/posts/canadian-law-enforcement-obtained-blackberry-global-encryption-key-hega-geoffroy
  14. https://www.peerlyst.com/posts/android-blackberry-spyware-used-in-india-attacks-or-securityweek-com-hega-geoffroy
  15. https://nakedsecurity.sophos.com/2016/01/13/police-say-they-can-crack-blackberry-pgp-encrypted-email/
  16. https://www.theregister.co.uk/2016/01/13/blackbery_pgp_riddle/
  17. https://www.v3.co.uk/v3-uk/news/2441666/blackberry-pgp-handsets-cracked-by-dutch-cyber-cops
  18. https://www.makeuseof.com/tag/one-reason-get-blackberry-2016-security/
  19. https://nakedsecurity.sophos.com/2016/04/26/police-seize-network-behind-encrypted-blackberry-pgp-devices/
  20. https://www.itgovernance.co.uk/blog/phone-evidence-remotely-wiped-in-police-stations/
  21. http://www.zdnet.com/article/police-hack-pgp-server-with-3-6-million-messages-from-organized-crime-blackberrys/
  22. https://www.techdirt.com/articles/20160118/07441433368/blackberry-which-said-it-wouldnt-protect-criminals-assures-criminals-phones-are-still-secure.shtml
  23. https://www.smh.com.au/national/nsw/are-encrypted-phones-allowing-criminals-to-get-away-with-murder-20150523-gh82gv.html
  24. http://www.cbc.ca/news/technology/criminals-love-the-blackberry-s-wiretap-proof-ways-police-1.815031
  25. https://www.dailyrecord.co.uk/news/crime/cops-struggling-crack-encrypted-phones-6962815
  26. https://www.thedailybeast.com/meet-danny-the-guy-selling-encrypted-phones-to-organized-crime
  27. https://www.gizmodo.com.au/2018/03/the-fbi-busts-phantom-secure-ceo-for-allegedly-selling-encrypted-phones-to-gangs-drug-cartels/
  28. https://www.dailyrecord.co.uk/news/crime/cops-struggling-crack-encrypted-phones-6962815
  29. http://uk.businessinsider.com/methods-that-police-use-to-catch-deep-web-drug-dealers-2016-8?r=UK&IR=T
  30. https://www.theguardian.com/uk/2011/oct/30/metropolitan-police-mobile-phone-surveillance
  31. http://www.bbc.co.uk/news/uk-38183819
  32. https://www.techrepublic.com/article/fbi-nabs-ceo-of-encrypted-phone-company-for-sales-to-cartels-gangs/
  33. https://motherboard.vice.com/en_us/article/nz7e3z/decrypted-pgp-blackberry-messages-helped-convict-uk-gun-smugglers
  34. https://arstechnica.com/tech-policy/2018/03/fbi-again-calls-for-magical-solution-to-break-into-encrypted-phones/
  35. http://scholars.wlu.ca/etd/1758/
  36. https://www.digitaltrends.com/mobile/phantom-secure-ceo-arrested/?utm_source=dlvr.it&utm_medium=twitter

ENDS.

Using Positive Disruption To Beat The Touts, The Cartels & The Vested Interests

My Face Value is preparing for launch on 31st December 2017. To keep up to date with the latest news follow us on Facebook and Twitter

My Face Value is engaged in positive disruption. Positive disruption is a vital catalyst for change. We are committed to 100% compliance with all of the Rules / Terms & Conditions associated with the buying, selling and swapping of tickets including the complex subset of rules that relate to the transfer and exchange of unused season tickets (rules which vary widely between Leagues and even at the Club level – some of the challenges are clearly described in this page from the Liverpool F.C. website).

My Face Value will be compliant with all of the prevailing legislation with respect to ticket reselling in all of the locations in which we will operate initially. Presently those locations are the United Kingdom, the Republic of Ireland, France, Spain, Italy & Germany.

We will comply with all of the rules of all of the relevant governing bodies and / or associations who issue tickets which are processed in our community or the rules as stipulated by those who are responsible for the issuing of tickets on behalf of others.

Regardless of event type – Football, Cricket, Rugby, Concert, Festival – or geographic location there will be:

  • No compliance shortcuts;
  • No expedient “interpretations” of rules, regulations or terms & conditions;
  • No “let’s take a chance and see” attitude;
  • No headlong rush to “go live” & start generating revenues at the expense of compliance;

My Face Value are here for the long run to effect positive change. My Face Value has the patience, expertise & funding to see out the process to its conclusion. The positive disruption activities of My Face Value will and are upsetting the status quo.

My Face Value are challenging cartels & vested interests and barriers will and are being placed in our way.  The My Face Value Community Guidelines and Governance will be above reproach in order to prevent the vested interests / cartels / “competitors” from attempting to undermine our core mission – and they will try.

Our Core Mission?

Access to All Events – at Face Value – for True Fans

Our Commitment to Longevity 

My Face Value will not “go live” until all of the items on the critical path to ensure 100% compliance with all rules and regulations are complete and signed off by the relevant external interested parties.

With these prerequisites we estimate, at this time, that My Face Value will be in a position to “go live” for ticket BUY / SELL / SWAP functionality on:

Friday, 18th August 2017

This date is subject to change if needed and should an unforeseen delay occur in the compliance time line which is outside of the control of My Face Value.

Using Technology to Ensure Compliance & Eliminate Touting

The My Face Value Tech Team are currently completing the development of the My Face Value platform to support:

  • BUY/SELL/SWAP Features – Read about that in a future blog post;
  • Counterfeit Detection & Ticket Processing – Read about that in a future blog post;
  • Tout Detection – information on how we are preventing touting in the My Face Value community – Read about that in a future blog post;
  • Supporting the Grassroots – My Face Value are making our platform available for use by certain Clubs – free of charge – Read about that in a future blog post;
  • Completing the technology to support Affiliate Programs, Merchandising Sales, Travel & Accommodation Offers and Sportsbook Betting as incentives and rewards for My Face Value community members.

Getting The Support of The Clubs & Governing Bodies

My Face Value are also engaged in discussions with the Governing Bodies, Leagues and Clubs to clarify certain matters as they relate to ticket resales and ticket processing. My Face Value have developed technology and processes to implement rigorous enforcement and control of what we call “the ‘last’ official buyer will be the only person allowed to gain entry rule” at the turnstiles.

In partnership with the football clubs My Face Value proposes to combat the problem as follows:

  1. When a ticket is sold or swapped in the My Face Value community we will ultimately be seeking permission from the clubs to allocate a NEW ticket;
  2. The re-issued My Face Value ticket will be a mirror image of the original ticket with one significant difference – it will contain information unique to the My Face Value purchaser / swapper – namely an embedded photo, watermarking and a bar code;
  3. In the short term a visual inspection will verify that the person seeking to gain entry is the My Face Value purchaser / swapper;
  4. In the mid term this visual inspection will be augmented with a process where a scanner (which My Face Value will issue to the Clubs) will ensure with 100% certainty that the person seeking entry is the My Face Value purchaser / swapper and that the ticket is not a forgery;
  5. In the event that a “tout” or “forgery” is detected at the turnstiles by our scanners then all associated parties with that ticket will be immediately and automatically placed in the “Active Suspended (Pending Appeal)” Good Standing status on the My Face Value platform;
  6. This process is hugely summarised here to avoid writing a 50 page description but this is the essence of our approach.

My Face Value are not an Authorised Ticket Reseller for any league or club at this time. When we “go live” our only role will be to facilitate legal transactions. My Face Value will not sell tickets directly to community members but rather we will act as a facilitator for interactions between genuine fans who wish to BUY, SELL or SWAP tickets with other fans while complying with the My Face Value Community Guidelines.

We know there is a lot of information here and if after reading this post you need any further clarifications or have any questions or have any suggestions please email us at support@myfacevalue.co and we would be delighted to engage with you.

The My Face Value Team