California leads states in identity fraud and computer hackings, report says
| Los Angeles
The same high-profile assets that make California an engine for America鈥檚 creativity and economy 鈥� think Silicon Valley and Hollywood 鈥� have made it a magnet for international criminal enterprises. If that sounds like a cover story for 鈥淒uh Magazine,鈥� the first comprehensive report about it was released here Thursday, and it backs up the assertions with data and investigative evidence 鈥� and recommends what to do next.
鈥淐alifornia is a global leader on a number of fronts and, unfortunately, transnational criminal activity is one of them,鈥� says a report by California Attorney General Kamala Harris, calling the state the top target in the United States for fraudulent and lawless organizations originating everywhere from China to Africa to Eastern Europe.
Specifically, California leads all US states in the number of victims of Internet crimes, the number of computer systems hacked or attacked by malware, the amount of financial losses suffered by all of the above, and the number of victims of identity fraud, according to the 181-page report, entitled 鈥淕angs Beyond Borders.鈥�
The report describes operations as running 鈥渢he gamut from traditional crimes 鈥� such as narcotics, weapons or human trafficking 鈥� to complex money laundering schemes and specialized cybercrimes.鈥�
The amount of illicit money moving through California鈥檚 economy 鈥� approximately the world鈥檚 eighth largest 鈥� 鈥渢hreatens the security of the state鈥檚 financial institutions, local businesses, and communities, with an estimated $30 to $40 billion in illicit funds laundered through California commerce every year,鈥� it says.
From 2009 to 2012, the number of intentional breaches of computer networks and databases in the US jumped by 280 percent, and California 鈥� whose gross domestic product is currently $2 trillion 鈥� leads the nation, it says.
"It is no surprise that California is in the sights of transnational criminal organizations which commit large-scale crimes involving the theft of Intellectual Property,鈥� says Prof. James Cooper, director of the International Legal Studies Program at California Western School of Law in San Diego. 鈥淢uch of the state's economy is based on IP rights and the revenue streams that innovation brings,鈥� he writes in an e-mail.
Some cybercrime experts say the report only states the obvious.
鈥淚t鈥檚 not really news that this is going on. The question is, what are they going to do about it?鈥� says Peter Toren, author of 鈥淚ntellectual Property and Computer Crimes鈥� and a former federal investigator of cybercrimes. The state, he says, should concentrate on educating in-state corporations how to avoid cybercrimes rather than trying to go after organizations in foreign lands. 鈥淭he federal government should be doing that,鈥� he says.
The report calls for the Legislature to change state law so that prosecutors can freeze the assets of transnational criminal organizations and associated gangs before seeking an indictment.
Some question that recommendation.
鈥淪eeking pre-indictment seizure of assets 鈥� I get it, but it could be subject to abuse and I don鈥檛 like it. And indictments are prepared under seal so contemporaneous seizure would accomplish the same,鈥� says Ian Wallach, an intellectual property attorney.
The report also says the state should mimic federal law by increasing punishment for people convicted of supervising, managing, or financing transnational criminal organizations.
Attorney General Harris 鈥渋s apparently seeking harsher prison sentences for supervising or managing transactional offenders than those currently in place,鈥� Mr. Wallach says. 鈥淚 don鈥檛 think prolonged incarceration ever works as a deterrent, and it is terribly expensive. Our prisons are already unconstitutionally overcrowded 鈥� largely as a result of unnecessarily long sentences.鈥�
But Professor Cooper sees drawbacks to how punishment is currently meted out. "The reason that transnational criminal organizations engage in these illicit industries [involving intellectual property] is that the profit margins are so high and the fines (or ... prison time) are so low,鈥� he writes. 鈥淲hy transport cocaine or meth when you can just copy a Hollywood DVD and make big bucks selling it on street corners around California's cities?"
Some question Harris鈥檚 motivations in releasing the report.
鈥淚 think she is coming out with this simply as a way to draw attention to excite the public about the issue to get more funds to battle the problem,鈥� says Rob D鈥橭vidio, assistant professor at Drexel University in Philadelphia, where he teaches for the criminal justice program.
If so, that鈥檚 not a bad idea, others say.
鈥淢ore power to her,鈥� says Rachel Ehrenfeld, director of the New York-based American Center for Democracy. 鈥淭his is an issue that sorely needs our attention. Many people are asleep about this.鈥�
