Asset Protection BLOG - Mark Nestmann

Keys, Keys, Keys...Who Can Break Yours?

When Julius Caesar sent messages to his generals, he feared they might fall into the wrong hands.  To avoid having his war plans compromised, he coded his messages using a simple system that shifted each letter three positions to the right.  For instance, he replaced every M with P, every B with E, etc. 

Today, codes have become much more sophisticated, but the objectives are the same as in Caesar's time.  You want to send a message to someone that only that person can read.  Or, shifting back to our own time, you want to make messages (or other files) on your PC unreadable to anyone except for yourself.

A mathematical process called encryption makes this possible.  Encryption scrambles your messages or files using mathematical formulas that make the text unreadable to anyone except for someone possessing the key to "decrypt" it. 

Encryption programs are now available that even the super-computers used by national intelligence agencies cannot decipher messages created with them, at least not without an exhaustive effort.  They're easy to use, and cheap--sometimes even free.  I recommend them highly.

In keys, longer is better.  While the way a key is generated influences its strength, in general, the more "bits" a key has, the stronger it is. 

For instance, I use an encryption program called "Pretty Good Privacy" (PGP).  One of the types of keys PGP uses is called an "RSA key."  A 4096-bit RSA key is stronger than a 1024-bit RSA key.

And not just a little stronger.  Key strength increases exponentially with key length. 

Unfortunately, the early versions of PGP support a maximum key length of 1024 bits.  Recent research indicates that in near future, 1024-bit RSA keys will get "cracked" by increasingly powerful computers.  However, 4096-bit RSA keys remain very safe—for now.

If you're using 1024-bit keys to secure your e-mail or computer files, you should upgrade to a longer key.  The newest version of PGP, PGP Desktop, supports the stronger 4096-bit keys.  So does the free version of PGP you can download at http://www.pgpi.com. 

But act soon.  When asked whether 1024-bit RSA keys are dead, one cryptographic researcher involved the race to crack them said, "The answer to that question is an unqualified yes."

Act accordingly.

Copyright © 2007 by Mark Nestmann

Freeze Out Identity Thieves

Are you serious about protecting yourself from identity theft—the world's fastest growing crime? 

If you are, starting tomorrow, you'll have the ultimate tool to do it. It's called a "credit freeze."  Effective Oct. 31, 2007, all three major credit bureaus will offer credit freezes to any individual who requests one.

A credit freeze, in effect, places an electronic padlock on your credit report.  No one can review your credit report until you remove the padlock. 

If an identity thief tries to apply for credit in your name, he'll be in for a rude surprise. That's because if a company can't review your credit report, it's very unlikely to issue you (or an impostor) credit.  A credit freeze eliminates identity theft at its source—the ability of a criminal to obtain credit fraudulently.

Let's say that an identity thief steals enough information to apply for credit in your name.  That might include your name, address, birthday, and Social Security number—all easily retrievable over the Internet.

Next, the thief uses this information to obtain a driver's license or other official identity document containing your name, but the thief's photo. Then, he visits a car dealership or other seller of "big-ticket" items.  Finally, he test drives a luxury car and tells the salesman to "charge it"—to you.

With a credit freeze, the thief's application for credit in your name will be turned down cold! But without a credit freeze, he just might drive off the lot in a brand-new car, leaving you to pay the bill.

To freeze your credit file, send a letter via certified mail to the following addresses:

• Experian Security Freeze, P.O. Box 9554, Allen, TX 75013
• Equifax Security Freeze, P.O. Box 105788, Atlanta, GA 30348
• Trans Union Consumer Protection Center, P.O Box 6790, Fullerton CA 92634

The letter must contain your full name, middle initial, and generation (Jr., Sr., etc.), your date of birth, your current address, and any previous addresses for the past two years.  You'll also need to include a copy of a government-issued photo ID card; a utility bill or bank statement with your name on it; and your Social Security Number. Finally, include a US$10 check or money order per credit bureau.

Each credit bureau will send you a letter confirming the credit freeze.  You'll also receive a PIN code that you can use to "unfreeze" your account if you want to buy a new car, apply for a mortgage, etc.  "Unfreezing" costs another US$10 per credit bureau.

Is there a downside?  Yes, but it's a small one.  If you lose your PIN, unfreezing your account may take as long as 10 days.  (With the PIN, the unfreezing is supposed to occur in a matter of hours or even minutes).  But, a 10-day delay isn't necessarily a bad thing if you're prone to making impulse buying decisions.

For hundreds more suggestions on how to protect your privacy and wealth, click here.

Copyright © 2007 by Mark Nestmann

Avoid the "Anti-Terrorism Clearance Certificate" Scam

In the last few months, I've received several e-mails from Sovereign Society members requesting assistance in obtaining an "anti-terrorist clearance certificate."  They supposedly need the certificate to claim a monetary award, generally for US$100,000 or more, purportedly from an offshore source.

One writer, who I'll call Debbie, received a text message informing her that she had won US$500,000 in a contest she didn't know she had entered.  The message instructed her to send a fax to a phone number in Latvia to claim her prize.

After she sent the fax, she received a message similar to the following:

"Dear Debbie,

This letter is to confirm that we have in our possession a CERTIFIED BANK DRAFT for US$500,000 to be sent to you upon receipt of the United Nations Office on Drugs & Crimes (UNODC) anti-terrorist clearance certificate.

Please contact me as soon as possible to obtain this certificate so that we may release these funds to you.

Yours truly,

Lord Michael Ellis, Barrister"

At this point, Debbie became suspicious.  But, since US$500,000 is, well, US$500,000, she decided to investigate further.

She sent an email message to "Lord Michael Ellis" requesting the instructions.  The next day, she received a message instructing her to send US$18,750 to cover the cost of the certificate.  The message stated that such a certificate had to accompany all international money transfers.

That's when Debbie contacted me.  And I told her what I'm about to tell you: you don't need an anti-terrorism clearance certificate to send money internationally.  indeed, no such certificate exists.  Those who tell you otherwise are perpetrating a variation of a very old fraud—the advance fee scam.

In an advance fee scam, a criminal offers you a large sum of money.  The catch is that you get it only after you pay a smaller amount to have the funds released.  Justification for the advance fee varies, but they're all fictions invented by criminals.  Once you pay the money, the criminal—and your money—disappear.

The bottom line: if someone tells you that you need to purchase an anti-terrorist clearance certificate to receive funds from abroad, it's a fraud.  Save your hard-earned money to invest in a legitimate opportunity—not an advance fee scam.

Copyright © 2007 by Mark Nestmann

Telecom Package Deals Sacrifice Privacy

You've surely received mailers or other reminders from telephone and cable companies offering "all-in-one" packages of telephone, television, and Internet services, with the package offered at a significant discount to the services priced individually.

But if read the privacy policies from the companies offering these packages, you'll may find that the providers may have the right to track what you watch on television and whom you call, in addition to monitoring which Web sites you visit, and what you buy online.  Some companies even reserve the right to read your e-mail.  This information belongs to the company, and may be used for any purpose provided for in the service contract, including selling your telecom profile to marketing companies or turning over the records to private investigators or the government. 

For instance, Time Warner Cable, which offers a combined telephone, television, and video service, says it may track "Internet addresses you contact and the duration of your visits to such addresses."  Time Warner says it "does not use or disclose any personally identifiable information that may be derived from these logs for marketing, advertising or similar purposes."  But, its "Affiliated Internet Service Providers" may monitor "information you publish on the ISP Service," which I interpret as giving the company permission to read your e-mail.  Further, it may retain "personally identifiable information" about your account for up to 15 years after you end your business relationship with the company.

Satellite television provider DirecTV says that it "may share customer information, including programming purchases, with selected media, entertainment, and other similar service providers."  However, you may "block the collection of Anonymous Viewing Information from your DIRECTV Receiver."

AT&T Yahoo! and Video Services goes farthest of all: it stipulates that, with respect to its Internet and video services, "while your Account Information may be personal to you, these records constitute business records that are owned by AT&T."  In other words, if you use AT&T's Internet or video services, the company owns, without reservation, your private data.

When you sign up for telecom services, you're stuck with whatever data collection and distribution policies the companies you choose have in effect.  However, some companies, like DirecTV, give you the option of blocking some types of information sharing.  I highly recommend doing so.

A better, albeit more expensive and time-consuming option, is to choose different companies to provide each telecom service you need.  For instance, you could use one company for local telephone service, but not use their cellular or long-distance services.  Purchase these separately, and if you value your privacy, choose pre-paid cellular and pre-paid long-distance services that you can purchase anonymously. 

Otherwise, your loss of privacy may be a package deal as well.

Copyright © 2007 by Mark Nestmann

Yes, You are a Criminal

If you live or do business in the United States, you're almost certainly a criminal, even if you don't know it.

In New Jersey, you can be arrested for driving by your own home.  In Florida, a man was sentenced to six years in prison for carrying cash.  In Pennsylvania, a woman faces prison for yelling obscenities at her clogged toilet. And under federal law, you can be imprisoned for withdrawing lawfully-earned currency from your own bank account. 

The common thread of these stories is criminalization: the conversion of conduct that was once merely socially stigmatized or subject to fines or other civil sanctions into a criminal offense.

Are you abusive, or does your spouse or partner say that you are?  Domestic violence laws in New Jersey and numerous other states mandate the arrest of a male based on recommendations from a social worker.  The social worker may recommend a man's detention for spousal abuse based on a woman's testimony alone.  Driving by your own home can be grounds for a criminal complaint. 

Who hasn't ever carried cash in their wallet?  In Florida, it's a criminal offense to do so: a court sentenced a man to six years in jail for the crime of possessing a cocaine-contaminated dollar bill.  An appellate court ordered the man released only after local newspapers revealed that the overwhelming majority of currency circulating in the state was tainted with narcotics residues.

Do you become frustrated because your appliances at home don't operate properly?  In Pennsylvania, a woman who allegedly shouted profanities at her overflowing toilet within earshot of a neighbor faces up to 90 days in jail. 

Have you ever withdrawn cash from a US bank account?  Better be careful, because if you withdraw more than US$10,000 in a series of "related" transactions, you may be guilty of a federal crime called structuring, and face a prison sentence of five years, a US$250,000 fine, and confiscation of the entire bank account under civil forfeiture laws.

Are you a terrorist?  You may not think that you are, but under the USA PATRIOT Act and other federal laws, practically all forms of domestic protest could be considered "terrorism."  Once the government classifies you as a terrorist, it can seize and ultimately forfeit everything you own, whether or not those assets are connected to terrorism.  Then, under the Military Commissions Act, it can detain you indefinitely, without ever charging you with a crime.

These examples merely scratch the surface of the overwhelming trend of criminalization.  The trend won't be reversed until we convince lawmakers that criminal sanctions aren't necessarily the best way to deal with moral, social, or political problems and disputes. 

In the meantime, the only way to protect yourself is to ask, before engaging in even the most seemingly innocent activity or transaction: "is there any way I might get arrested for this?"  The answer may not always be obvious, but a little research online or at a law library may at least shed light on the potential for criminal liability. 

Copyright © 2007 by Mark Nestmann

Since the NSA's Listening in Anyway, You Might as Well Get Free Phone Service

Here's a new wrinkle in telephone service: in exchange for permitting your conversations to be monitored by voice recognition software, you can call anyone, anywhere in the world, for no charge.

That's the offer that a start-up company called Pudding Media is offering its customers.  Here's how it might work, according to a company press release:

" It's Saturday night. You plan to go to a movie with Ashley. But which movie should you see...? Time to call her and decide. You surf to ThePudding.com and call Ashley for free. As soon as you start talking about movies, a list of local movies, complete with reviews and show times appear on the screen. Now, what about dinner? Just talking about where to get dinner, and offers for local restaurants are displayed. Now you and Ashley have everything you need for dinner and a movie! Oh and just a few clicks and you've reserved the tickets and a table. Sweet!"

I must admit that I have misgivings about allowing someone to monitor my telephone conversations.  However, I have no objection to services like Pudding Media, because the monitoring is truly voluntary, and you actually get something in return.

Now, if the National Security Agency would just be as helpful when they secretly monitor your calls as authorized by the grossly misnamed "Protect America Act."  But I suspect that the recommendations from ThePudding.com might be more helpful. 

To learn more about how you can protect your privacy on and off the phone, click here.

Copyright © 2007 by Mark Nestmann

How to Buy a Second Passport…and Why You Might Want to

In yesterday's blog, I described a program for "economic citizenship" from Lithuania, that, according to the Lithuanian embassy, has no legal basis.  For that reason, I recommend avoiding it. 

However, two countries—the Commonwealth of Dominica and the Federation of St. Kitts and Nevis—have "citizenship by investment" programs fully authorized in law. 

Dominica, sometimes called the "nature island of the Caribbean," is located approximately 300 miles southeast of Puerto Rico.  Not to be confused with the Dominican Republic, it's an amazing island with mountains rising nearly 5,000 feet out of the ocean, a boiling lake, and the last original settlement of native Americans in the Caribbean.  A former British colony, Dominica has been independent since 1978.

Dominica's gorgeous scenery, clean water, pure air, and a largely unspoiled environment have made it a popular eco-tourism destination.  But the country’s rugged coastline, lack of sand beaches, and the absence of a large international airport have hindered its growth.  Dominica also is periodically affected by hurricanes, although it's at the southern tip of the Caribbean hurricane belt.  Last summer, it suffered a severe blow from Hurricane Dean, although damage was limited to its agricultural sector and didn't seriously affect business or tourism. 

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With a price starting at only US$75,000 for a single applicant (US$100,000 for a family), the cost of Dominican economic citizenship and passport is relatively low.  Legal and due diligence fees add approximately US$25,000 to these costs.  To qualify, you need to pass a background check, have a genuine interest in Dominica, and speak English fluently. 

With a Dominican passport, you can travel visa-free to about 50 countries and enter another 40 or so by obtaining a visa upon entry or with minimal formalities.  The passport provides a substantially expanded ability to live or work in any of Caribbean Community (CARICOM) countries, which in addition to Dominica are Antigua & Barbuda, The Bahamas, Barbados, Belize, Grenada, Guyana, Haiti, Jamaica, Montserrat, Saint Kitts & Nevis, Saint Lucia, Saint Vincent & the Grenadines, Suriname, and Trinidad & Tobago. 

Like Dominica, St. Kitts & Nevis are beautiful islands.  The mountains aren't quite as tall, but the scenery remains breathtaking.  Former colonies of Great Britain, these two sister islands form a federation that has been independent since 1983. A bit further north than Dominica, St. Kitts & Nevis is also subject to hurricanes.  In 1998, Hurricane Georges caused more than US$400 million in damages.

St. Kitts & Nevis is somewhat more prosperous and developed than Dominica, and the price of the economic citizenship program is higher.  There are two options: you can purchase qualifying real estate with a value of US$350,000 or more (plus a one-time 10% payment of property tax), or make a contribution of US$200,000.  Application, registration, due diligence, and legal fees add a minimum of US$15,000 to these figures; substantially more if you opt for the qualifying real estate option.

The St. Kitts & Nevis passport provides slightly improved travel options in comparison to Dominica.  Since St. Kitts & Nevis is also a CARICOM member, the benefits of improved access to CARICOM countries apply to both passports.

But perhaps I'm getting ahead of myself.  Why get a second passport at all?

There are many reasons.  A second passport can expand your travel possibilities.  It can also protect your identity, should you ever need to keep your nationality a secret for safety reasons.  It can give you the right to reside in other countries, and give you a way to cross international borders if your primary passport is lost or stolen. 

For U.S. citizens, a second passport has another benefit—it's a necessary prerequisite if you want to legally disconnect, once and for all, from the U.S. tax system.  The only way to eliminate all U.S. tax liability is to cease being a U.S. citizen.  But before you do so, you must obtain citizenship and passport from another country.

The Nestmann Group, Ltd. can provide assistance to qualified individuals seeking second citizenship and alternative residence.  Please contact us for more information at assetpro@nestmann.com. 

Copyright © 2007 by Mark Nestmann

Lithuanian Economic Citizenship--NOT

A passport from a European Union country is one of the most desirable travel documents you can possess.  Most EU members have extensive network of countries to which passport-holders can travel without a visa.  Equally important, a person holding a passport from one EU country can generally travel to, reside in, and work in another EU country, with few formalities necessary.

Unfortunately, few shortcuts are available to obtain a passport from a EU country.  Almost without exception, you must apply for residence in your selected EU country, and live there for an extended period--generally 5-10 years--before you're eligible to apply for passport and citizenship.

It certain cases, you may qualify for citizenship in a EU country by virtue of your ancestry, marital status, or residence in a dependency of that country.  For instance, if you can prove that you have at least one Irish-born grandparent, you can apply for Irish citizenship and passport.  There may also be a shortened period of residence to qualify for citizenship if you're married to a citizen of a EU country.  Finally, if you're a resident of a dependency of a EU country, it may be possible to make expedited application for citizenship in the parent country.

Since it's difficult to obtain citizenship from a EU country, it's not surprising that some shady promoters offer fraudulent shortcuts through this process.  Last May, I exposed one program that that was selling passports from unnamed EU countries for prices as low as US$9,900. 

Now, I've discovered a Web site offering economic citizenship from the EU country of Lithuania.  The Web site claims that:

"The Republic of Lithuania has a specific Citizenship- by-Investment Programme, its legislation provides for the possibility of granting citizenship be [sic] means of naturalisation to people who have achieved particularly good results for the country in their work in science, economics, arts, culture, and sport in the Republic of Lithuania, or who have invested a large sum of money in the Republic of Lithuania which benefited the economy and created jobs in the country. There is no set amount of money that needs to be invested, so success depends upon the economic result and the number of jobs created. The normal requirements, including the renunciation of the applicant's existing citizenship, are not applied."

According to this Web site, prices for Lithuanian citizenship and passport start from EUR 25,000.

This would be a great deal, but the company behind the Web site didn't answer my inquiries about the legal basis of this program.  So, I inquired about it to the Lithuanian embassy in Washington, D.C.  I received the following response from the embassy:

"There is no such law permitting an individual to purchase Lithuanian citizenship and passport for such items are not goods to be sold or bought.  We believe the service that company provides does not have legal basis.. On rare occasions, persons who by some act contributed to the well-being of Lithuania and its citizens can get Lithuanian citizenship by a special presidential decree."

How often does this occur?  Apparently, no such honorary passports have been issued since 2004.  Not exactly a reliable way to obtain a Lithuanian passport!

A company that sells you a passport from a country where there's no legal provision for such sale is likely offering stolen, counterfeited, or illegally issued documents.  In all cases, such illegally-obtained passports are subject to cancellation and confiscation.  Worse, anyone using them may face fines and even imprisonment for possession of illegal travel documents. Avoid such passports at all costs!

Fortunately, there are economic citizenship programs that do have a basis in law, and provide a legitimate means to obtain a second passport.  I'll be discussing these programs at the upcoming Sovereign Society Offshore Advantage Academy in the Bahamas Nov. 7-11, 2007.  For more information, click here. 

Tomorrow, I'll give you a "sneak peak" at my presentation...until then.

Copyright © 2007 by Mark Nestmann

Your Bluetooth Device May be a Bug

Bluetooth is a short-range communications standard intended to replace the cables that would otherwise connect portable communications devices; e.g., cell phones, laptops, etc.

Just about everyone seems to have a Bluetooth device, too.  The first few times I saw persons walking down the street, apparently talking to themselves, I thought I might be dealing with an outbreak of mental illness.  Then, I noticed the small blue device hooked to their ear.  This is a Bluetooth device—one of the hundreds on the market.

Because Bluetooth has been so successful, hackers have naturally tried to circumvent its security protocols.  There have been some spectacular security failures, the best known of which is a so-called "Bluesnarfing" attack that allows a hacker to remotely download the contacts list, diary, and stored pictures in Bluetooth-enabled cell phones.  While cell phone companies say they've closed this security flaw, older Bluetooth phones (certainly those manufactured before 2004) may remain vulnerable.

Now, researchers have discovered another vulnerability.  When your Bluetooth device is activated, an eavesdropper may be able to listen to your conversations—but only when you're NOT using the phone.  A modified radio scanner is all that's needed to listen in on conversations.  Someone can simply drive down the street with such a scanner, and when it detects a conversation broadcast by a Bluetooth device, listen to whatever's being said.  Essentially, the Bluetooth device acts as a microphone and transmitter, picking up whatever you say and broadcasting to anyone who with the equipment to monitor it. 

What's not yet clear is how far away the scanner can be from the Bluetooth device to monitor conversations on it.  It's at least 30 feet and I've seen one study that claims that broadcasts from more powerful Bluetooth devices can be monitored from 300 feet away, perhaps further.  But again, the attack works only when you're not using your phone.   

To protect yourself, don't use a Bluetooth device any more powerful than you really need.  Small over-the-ear wireless devices have very low power and are difficult to monitor.  But beware of larger units that connect to your vehicle's cigarette lighter or are dashboard-mounted.

If you're in the market for a Bluetooth device, look for one that requires you to press a button or otherwise manually synchronize the device before it's used.  Also, look for one that requires a PIN code and that allows you to change the PIN.

Finally, if you're not sure whether your Bluetooth device can be monitored, turn it off when you're not using it.

Copyright © 2007 by Mark Nestmann

U.S. on Verge of Enacting an "Exit Tax"

Since 1996, there have been at least a dozen efforts by congressional tax-and-spenders to impose an "exit tax" on wealthy Americans who exercise their constitutional right to disconnect from the U.S. tax system through a process called expatriation. I wrote about one of the most recent proposals here. However, President Bush vetoed the legislation containing this provision for other reasons.

In most countries, all that's necessary to expatriate is to become non-resident. But in the United States, you need to also give up U.S. citizenship, because the U.S. Tax Code imposes tax on U.S. citizens living abroad, even if they've never set foot in the United States. Since the United States taxes its citizens and not just its permanent residents, the only way for a U.S. citizen to eliminate U.S. tax liability is to acquire legal residence and citizenship in another country and subsequently give up U.S. citizenship.

Expatriation is politically unpopular. The vision of a pale ex-U.S. citizen-billionaire basking on a beach in a tax haven is too much for many less affluent citizens to bear. As a result, anti-expatriation rules penalizing U.S. citizens who are deemed to have given up their citizenship for tax avoidance reasons have been in effect for decades. First imposed in the 1960s, the rules were tightened in 1996 and again in 2004.

Now, Congress is again on the verge of passing an outrageous law that would impose the first-ever exit tax on former U.S. citizens or long-term residents (persons who have resided in the United States for eight years or more of the previous 15 years). On October 10, the House of Representatives passed the Tax Collection Responsibility Act of 2007 (H.R. 3056). If passed by the Senate, and signed by President Bush, this act will require persons who give up U.S. citizenship or long-term residence to pay a tax on all unrealized gains of their worldwide estate that exceed US$600,000. The gains will be assessed based on the fair market value of the assets and the tax due within 90 days of expatriation.

This bill also imposes a draconian 30% withholding tax on unrealized gains in an expatriate's IRA or other pension plan. And don't think about gifting assets to family members or friends still living in the United States: a separate 30% tax applies to such gifts or bequests.

The conference report on this legislation smugly states that U.S. citizens give up U.S. citizenship, but that the Tax Code shouldn't provide an incentive to do so. Rather, that decision should be, in the report's words, "tax neutral."

Give me a break. Taxing expatriates on a phantom gain that could quite possibly be taxed again by whatever country to which they relocate is hardly "tax neutral." Especially when the only alternative to this "alternative tax regime" is to make an to post a bond and pay an interest charge for the privilege of not paying tax on gains you never realized.

I'll be tracking the progress of this deplorable proposal as it makes its way through the Senate. There's a chance that President Bush would veto the bill, should it pass the Senate, but there's no assurance he would do so, since bashing wealthy expatriates is so popular.

I've also prepared a special report on expatriation and the implications an exit tax will have on Americans considering expatriation. To learn more about this report, click on http://www.nestmann.com/catalog/product_info.php?cPath=21&products_id=43.

Copyright © 2007 by Mark Nestmann

Don't Let Someone Steal Your Offshore Account

If you read the "fine print" when you open an offshore bank account, you'll likely find a clause similar to this one:

“The bank is entitled, but is not obliged to rely upon and act in accordance with any notice, demand or other communication … by any verbal, telephone, telegraphic, telex, or electronic message if believed by the bank to be genuine and to be presented or delivered by or on behalf of the customer, without incurring liability should it be false or there be any ambiguity therein…The bank shall not be liable for consequences of forgery unless such forgery should through observance of due diligence have been readily detected."

This clause, or one similar to it, immunizes the bank against a lawsuit if they mistakenly disburse funds you've not authorized. 

How might this occur?  One possibility would be if your bank statement is misdirected.  Several years ago, for instance, I received a statement from my offshore bank.  Only, it wasn't my statement—it was someone else's, with a much larger balance than my own.  It's possible that with the name of the bank customer and his account number, I could have ordered a disbursement from that account to another account that I controlled. 

Most offshore banks have sophisticated systems in place to prevent this from occurring, and I don't know of any cases where a depositor in an offshore bank has been defrauded this way.  But it's certainly possible—otherwise, offshore banks wouldn't include this type of disclaimer in their client agreement.

There are several precautions to consider to guard against this potential loss:

• Establish a code word that must be provided to the bank before disbursing funds;
• Have your bank hold bank statements, rather than mailing them to you;
• Open a numbered account whereby you're identified only by a number and code word, rather than by your own name.  (You must disclose your identity to set up the account, however).
• Instruct the bank not disburse funds unless you personally appear at the bank to authorize the disbursement;
• Instruct the bank not to disburse funds unless you send them written instructions with a signature guarantee from a notary. 

Whether your offshore bank is willing to accept any of these conditions will naturally depend on its particular policy.  The larger an account you have, the more willing the bank is likely to be to cooperate with you.

Forewarned is forearmed.

Copyright © 2007 by Mark Nestmann

Court Strikes Down Key Provision of USA PATRIOT Act

Could you be the subject of a FBI inquiry because you checked out a biography of Osama bin Laden at your local library?  Or if you requested a copy of Mao Tse Tung's Little Red Book (an infamous paean to the alleged glories of Communism) through an inter-library loan?

That's exactly the type of inquiries undertaken by the FBI under authority of the "national security letters" (NSL) provision of the USA PATRIOT Act.  This law, enacted by a panicked Congress only a few weeks after the attacks of Sept. 11, 2001, has numerous arguably unconstitutional components. 

Among the most objectionable of these are the NSL provisions, which permit the FBI to demand virtually any record from a U.S. business or organization, without obtaining a warrant based on probable cause of wrongdoing. 

The burden of proof on the FBI to issue a NSL is very low.  It must certify only that the records are "sought for" or "relevant to" an investigation "to protect against international terrorism or clandestine intelligence activities."  This has led to an explosive growth in NSLs, with the number issued increasing from 8,500 in 2000 to more than 47,000 in 2005.

FBI officials may forever prohibit the recipient of a NSL from disclosing its existence "to any person" other than the recipient's lawyer, with five years imprisonment as the prescribed punishment.  The most requested records include library records, telephone logs, e-mail logs, financial and bank records and credit reports.  The FBI may retain the records indefinitely, even when they prove irrelevant to an investigation.  They may also be shared broadly, facilitating the creation of electronic dossiers on tends of thousands of Americans.

Last March, the Department of Justice Office of the Inspector General issued a report in it found "serious misuse" of NSLs on the part of the FBI.  Thousands of NSLs have been issued that didn't even meet the minimal burden of proof the USA PATRIOT Act requires.  (Presumably, these include the library inquiries I just mentioned.)

However, on Sept. 6, a U.S. District Court ruled that the section of the Patriot Act that authorizes NSLs violates the free speech provisions of the U.S. Constitution and unreasonably curbs the authority of the judiciary.  The court barred the FBI from issuing NSLs, but delayed the effective date of the prohibition until Dec. 6, 2007 to give the Bush administration a chance to appeal.

That's definitely a step in the right direction.  In the meantime, Congress has stepped in with a bill that would reform NSL authority to preserve judicial oversight, so that NSL recipients can appeal them before a court.

History shows that democratic societies don't cope well with sudden crises.  The greater the crisis, the swifter and more unthinking the solution politicians concoct.  Thankfully, six years after the events of Sept. 11, 2001, the United States may be returning to a more balanced approach to the "War on Terrorism."

Copyright © 2007 by Mark Nestmann

Would You Pay 25 Cents to Protect Your Privacy?

Information has value, so it's not surprising that a trade in personal information exists.  Technology has made organizing personal information much easier and more thorough.  But it also facilitates invasions of our privacy we wouldn't have dreamed of only a few years ago.

If you live in the United States, just about everything you might want to keep private is for sale: your telephone records; the location and value of your home; your medical records; your financial records; and, much, much more. 

You might wring your hands and despair at this loss of privacy.  But, most Americans won't spend even 25 cents to protect your data from disclosure.  A recent study from researchers at Carnegie-Mellon University and the University of California found that most persons aren't willing to spend anything—even 25 cents—to prevent companies from selling sensitive information about them.  They weren't willing to pay to protect data as sensitive as the number of individuals with whom they'd had sex.

There are a number of reasons Americans aren't willing to trade their depreciating greenbacks for greater privacy.  I'm not a social scientist, but I think the most important one is that they don't understand how information about them is sold, data mined, and otherwise used for purposes ranging from deciding if they're good prospects to purchase aluminum siding to identifying them as potential terrorists. 

On the other hand, when privacy invasion is more visible—telemarketing calls come to mind—Americans will spend a little time (if not money) to avoid it.  Perhaps that's why nearly 150 million Americans have put their names on the Federal Trade Commission's "'Do Not Call" list.  There's no charge to have your name placed on this list. 

In addition, younger Americans have a much higher tolerance for privacy invasion than older Americans.  Recently, I warned the college-age daughter of a friend about how U.S. intelligence agencies were data mining information on social networking Web sites such as MySpace to identify the next generation of terrorists or other malcontents.  She was surprised, but when I saw her two weeks later, she told me she didn't plan to take down her MySpace page.  "That's how I meet all my friends," she told me.  I don't have anything to hide, so why should I worry?" 

The truth is, though, that all of us have things to hide.  The "nothing to hide" argument is specious on its face: would you give a stranger the combination to your safety deposit box?  Would you knowingly give your credit card number to someone an identity thief?  Those who say they have "nothing to hide" also fail to appreciate the fact that data mining may reveal—perhaps falsely—an association with a group labeled as threatening.  Indeed, that's the precise reason why the Homeland Security Administration's terrorist watchlist contains hundreds of thousands of names, when in reality, only a tiny handful of these individuals have seriously considered, much less tried to carry out, a terrorist attack.

However, so long as data mining occurs behind the scenes, and the "average American" doesn't seem affected by it, the nothing to hide argument will continue to have legs.  And that's a shame, because all of us have something to hide, even if we don't know it.

What do YOU have to hide? Click here to learn how the witness protection program and other high-security initiatives protect the people whose privacy must be preserved—perhaps as a matter of life and death.

Copyright © 2007 by Mark Nestmann

What not to Carry Across a U.S. Border

A few months ago, I warned about the possibly disastrous consequences of carrying a laptop computer across a U.S. border. Basically, U.S. courts have said that Customs can confiscate your laptop, make an "image" of the hard disk and all the data on it, and use that data against you in a criminal proceeding—all without probable cause that you've done anything wrong.

But, the data on your laptop isn't the only information that might be used against you at the airport. Especially, don't let Customs see your address book. If you do, it might get copied, and later used against you.

That's what happened to Texas oilman Oscar Wyatt, Jr. in the Houston airport in August 2002. After being copied by Customs, the address book eventually found its way to the U.S. Justice Department. And it played a prominent role in the recently concluded trial of Wyatt in New York.

The 83-year-old Wyatt, you'll recall from a previous posting, was accused of complying with a demand from former Iraqi dictator Saddam Hussein to pay surcharges on oil exported from Iraq in connection with the United Nations "Oil for Food" program.

Wyatt pleaded guilty on October 1 to one count of conspiracy to commit wire fraud. He agreed to a sentence of 18-24 months imprisonment.

The address book was problematic for Wyatt, because it contains the home telephone numbers for top officials in former Iraqi dictator Saddam Hussein's regime, all of whom were off limits to U.S. companies in 2002. Just as troubling for Wyatt's defense, it contains numerous telephone numbers of officials in the Iranian government. There's also a listing for Marc Rich, who sold oil from Iraq and Iran in violation of U.S. embargoes.

While the existence of these entries doesn't prove that Wyatt did business with Iraq in violation of U.S. law, it provides circumstantial evidence that, in fact, he did. And that's why it was so potentially damaging. 

What could Wyatt have done differently? Given the explosive nature of the entries in the address book, it would have been well worth his time to have the information in it digitized and placed on an encrypted USB stick. (PGP (www.pgp.com) is one program that is capable of encrypting entire volumes of a hard disk or USB stick.) If that USB stick were confiscated by Customs, the information on it couldn't be retrieved without knowledge of the passphrase.

Oscar Wyatt will spend the next 18-24 months in prison. That won't be easy for an 83-year-old man in poor health. And a big reason why he'll be there is an address book that he could have easily protected.

Copyright © 2007 by Mark Nestmann

Here's One Way to Stay Out of Guantanomo

Hasan Elahi is an art professor at Rutgers University.  Along with more than 700,000 people, he's on the U.S. government's terrorist watch list.  The Bangladeshi-born U.S. citizen has been repeatedly searched, questioned, investigated, and even given a lie detector test by the FBI. 

Once you're on the terrorist watch list, of course, it's hard to get off—very hard.  Indeed, even dying won't get you removed from it—several of the Sept. 11, 2001 suicide bombers were still on the watchlist as of late 2006.

Elahi's life began to unravel in 2002, when FBI agents began investigating him on suspicion of stockpiling explosives in a Florida storage unit. While Elahi was able to convince the FBI that he didn't possess explosives, and wasn't planning to blow anything up, every time he traveled, he faced delays, questioning, and suspicion.  He began thinking that if the feds really thought he was a terrorist, they might eventually ship him off to the notorious detention center in Guantanomo Bay, Cuba.

Elahi's solution? Document his life, 24 hours a day, on the Internet.  He takes hundreds of photos a day of himself in class, in coffee shops, at home, in art galleries, etc.  Each one of them is instantly uploaded to his Web site at http://elahi.rutgers.edu.   

This way, Elahi reasons, the government can't get it wrong.  There's no doubt whatsoever where he is or what he's doing, any time, day or night.  There's also a market phenomenon at work: no FBI agent is going to get a promotion for uncovering a terrorist plot by watching an art professor eating a Big Mac.  "It's economics," he says. "I flood the market."

It's working.  Elahi hasn't been detained at the airport since he began documenting his whereabouts online.  But just to be sure, he always calls the FBI a few days in advance every time he plans to take a trip via commercial airline.   

The lack of privacy in Elahi's personal life, he believes, is a small price to pay in exchange for being able to travel freely.  And, as he says, "it sure beats Guantanamo."

Copyright © 2007 by Mark Nestmann