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had been duped by Gill, he retreated into a state of denial and

depression. The PI community had trusted him. He entered his

friendship with Gill a bright-eyed, innocent young man looking for

adventure. He left the friendship betrayed and gun-shy.

Sad-eyed and feeling dark on the world, Craig Bowen turned off PI and

Zen forever.

Sitting at his computer sometime in the second half of 1989, Force

stared at his screen without seeing anything, his mind a million miles

away. The situation was bad, very bad, and lost in thought, he toyed

with his mouse absent-mindedly, thinking about how to deal with this

problem.

Force wanted to discount the secret warning, to rack it up as just

another in a long line of rumours which swept through the underground

periodically, but he knew he couldn't do that. The warning was rock

solid; it had come from Gavin.*

The way Force told it, his friend Gavin worked as a contractor to

Telecom by day and played at hacking at night. He was Force's little

secret, who he kept from the other members of The Realm. Gavin was

definitely not part of the hacker BBS scene. He was older, he didn't

even have a handle and he hacked alone, or with Force, because he saw

hacking in groups as risky.

As a Telecom contractor, Gavin had the kind of access to computers and

networks which most hackers could only dream about. He also had good

contacts inside Telecom--the kind who might answer a few tactfully

worded questions about telephone taps and line traces, or might know a

bit about police investigations requiring Telecom's help.

Force had met Gavin while buying some second-hand equipment through

the Trading Post. They hit it off, became friends and soon began

hacking together. Under the cover of darkness, they would creep into

Gavin's office after everyone else had gone home and hack all night.

At dawn, they tidied up and quietly left the building. Gavin went

home, showered and returned to work as if nothing had happened.

Gavin introduced Force to trashing. When they weren't spending the

night in front of his terminal, Gavin crawled through Telecom's

dumpsters looking for pearls of information on crumpled bits of office

paper. Account names, passwords, dial-up modems, NUAs--people wrote

all sorts of things down on scrap paper and then threw it out the next

day when they didn't need it any more.

According to Force, Gavin moved offices frequently, which made it

easier to muddy the trail. Even better, he worked from offices which

had dozens of employees making hundreds of calls each day. Gavin and

Force's illicit activities were buried under a mound of daily

legitimate transactions.

The two hackers trusted each other; in fact Gavin was the only person

to whom Force revealed the exact address of the CitiSaudi machine. Not

even Phoenix, rising star of The Realm and Force's favoured protégé,

was privy to all the secrets of Citibank uncovered during Force's

network explorations.

Force had shared some of this glittering prize with Phoenix, but not

all of it. Just a few of the Citibank cards--token trophies--and

general information about the Citibank network. Believing the

temptation to collect vast numbers of cards and use them would be too

great for the young Phoenix, Force tried to keep the exact location of

the Citibank machine a secret. He knew that Phoenix might eventually

find the Citibank system on his own, and there was little he could do

to stop him. But Force was determined that he wouldn't help Phoenix

get himself into trouble.

The Citibank network had been a rich source of systems--something

Force also kept to himself. The more he explored, the more he found in

the network. Soon after his first discovery of the CitiSaudi system,

he found a machine called CitiGreece which was just as willing to dump

card details as its Saudi-American counterpart. Out of fifteen or so

credit cards Force discovered on the system, only two appeared to be

valid. He figured the others were test cards and that this must be a

new site. Not long after the discovery of the CitiGreece machine, he

discovered similar embryonic sites in two other countries.

Force liked Phoenix and was impressed by the new hacker's enthusiasm

and desire to learn about computer networks.

Force introduced Phoenix to Minerva, just as Craig Bowen had done for

Force some years before. Phoenix learned quickly and came back for

more. He was hungry and, in Force's discerning opinion, very bright.

Indeed, Force saw a great deal of himself in the young hacker. They

were from a similarly comfortable, educated middle-class background.

They were also both a little outside the mainstream. Force's family

were migrants to Australia. Some of Phoenix's family lived in Israel,

and his family was very religious.

Phoenix attended one of the most Orthodox Jewish schools in Victoria,

a place which described itself as a `modern orthodox Zionist'

institution. Nearly half the subjects offered in year 9 were in Jewish

Studies, all the boys wore yarmulkes and the school expected students

to be fluent in Hebrew by the time they graduated.

In his first years at the school, Phoenix had acquired the nickname

`The Egg'. Over the following years he became a master at playing the

game--jumping through hoops to please teachers. He learned that doing

well in religious studies was a good way to ingratiate himself to

teachers, as well as his parents and, in their eyes at least, he

became the golden-haired boy.

Anyone scratching below the surface, however, would find the shine of

the golden-haired boy was merely gilt. Despite his success in school

and his matriculation, Phoenix was having trouble. He had been

profoundly affected by the bitter break-up and divorce of his parents

when he was about fourteen.

After the divorce, Phoenix was sent to boarding school in Israel for

about six months. On his return to Melbourne, he lived with his

younger sister and mother at his maternal grandmother's house. His

brother, the middle child, lived with his father.

School friends sometimes felt awkward visiting Phoenix at home. One of

his best friends found it difficult dealing with Phoenix's mother,

whose vivacity sometimes bordered on the neurotic and shrill. His

grandmother was a chronic worrier, who pestered Phoenix about using

the home phone line during thunderstorms for fear he would be

electrocuted. The situation with Phoenix's father wasn't much better.

A manager at Telecom, he seemed to waver between appearing

disinterested or emotionally cold and breaking into violent outbursts

of anger.

But it was Phoenix's younger brother who seemed to be the problem

child. He ran away from home at around seventeen and dealt in drugs

before eventually finding his feet. Yet, unlike Phoenix, his brother's

problems had been laid bare for all to see. Hitting rock bottom forced

him to take stock of his life and come to terms with his situation.

In contrast, Phoenix found less noticeable ways of expressing his

rebellion. Among them was his enthusiasm for tools of power--the

martial arts, weapons such as swords and staffs, and social

engineering. During his final years of secondary school, while still

living at his grandmother's home, Phoenix took up hacking. He hung

around various Melbourne BBSes, and then he developed an on-line

friendship with Force.

Force watched Phoenix's hacking skills develop with interest and after

a couple of months he invited him to join The Realm. It was the

shortest initiation of any Realm member, and the vote to include the

new hacker was unanimous. Phoenix proved to be a valuable member,

collecting information about new systems and networks for The Realm's

databases. At their peak of hacking activity, Force and Phoenix spoke

on the phone almost every day.

Phoenix's new-found acceptance contrasted with the position of

Electron, who visited The Realm regularly for a few months in 1988. As

Phoenix basked in the warmth of Force's approval, the

eighteen-year-old Electron felt the chill of his increasing scorn.

Force eventually turfed Electron and his friend, Powerspike, out of

his exclusive Melbourne club of hackers. Well, that was how Force told

it. He told the other members of The Realm that Electron had committed

two major sins. The first was that he had been wasting resources by

using accounts on OTC's Minerva system to connect to Altos, which

meant the accounts would be immediately tracked and killed.

Minerva admins such as Michael Rosenberg--sworn enemy of The

Realm--recognised the Altos NUA. Rosenberg was OTC's best defence

against hackers. He had spent so much time trying to weed them out of

Minerva that he knew their habits by heart: hack, then zoom over to

Altos for a chat with fellow hackers, then hack some more.

Most accounts on Minerva were held by corporations. How many

legitimate users from ANZ Bank would visit Altos? None. So when

Rosenberg saw an account connecting to Altos, he silently observed

what the hacker was doing--in case he bragged on the German chat

board--then changed the password and notified the client, in an effort

to lock the hacker out for good.

Electron's second sin, according to Force, was that he had been

withholding hacking information from the rest of the group. Force's

stated view--though it didn't seem to apply to him personally--was one

in, all in.

It was a very public expulsion. Powerspike and Electron told each

other they didn't really care. As they saw it, they might have visited

The Realm BBS now and then but they certainly weren't members of The

Realm. Electron joked with Powerspike, `Who would want to be a member

of a no-talent outfit like The Realm?' Still, it must have hurt.

Hackers in the period 1988-90 depended on each other for information.

They honed their skills in a community which shared intelligence and

they grew to rely on the pool of information.

Months later, Force grudgingly allowing Electron to rejoin The Realm,

but the relationship remained testy. When Electron finally logged in

again, he found a file in the BBS entitled `Scanner stolen from the

Electron'. Force had found a copy of Electron's VMS scanner on an

overseas computer while Electron was in exile and had felt no qualms

about pinching it for The Realm.

Except that it wasn't a scanner. It was a VMS Trojan. And there was a

big difference. It didn't scan for the addresses of computers on a

network. It snagged passwords when people connected from their VMS

computers to another machine over an X.25 network. Powerspike cracked

up laughing when Electron told him. `Well,' he told Powerspike, `Mr

Bigshot Force might know something about Prime computers, but he

doesn't know a hell of a lot about VMS.'

Despite Electron's general fall from grace, Phoenix talked to the

outcast because they shared the obsession. Electron was on a steep

learning curve and, like Phoenix, he was moving fast--much faster than

any of the other Melbourne hackers.

When Phoenix admitted talking to Electron regularly, Force tried to

pull him away, but without luck. Some of the disapproval was born of

Force's paternalistic attitude toward the Australian hacking scene. He

considered himself to be a sort of godfather in the hacking community.

But Force was also increasingly concerned at Phoenix's ever more

flagrant taunting of computer security bigwigs and system admins. In

one incident, Phoenix knew a couple of system admins and security

people were waiting on a system to trap him by tracing his network

connections. He responded by sneaking into the computer unnoticed and

quietly logging off each admin. Force laughed about it at the time,

but privately the story made him more than a little nervous.

Phoenix enjoyed pitting himself against the pinnacles of the computer

security industry. He wanted to prove he was better, and he frequently

upset people because often he was. Strangely, though, Force's protégé

also thought that if he told these experts about a few of the holes in

their systems, he would somehow gain their approval. Maybe they would

even give him inside information, like new penetration techniques,

and, importantly, look after him if things got rough. Force wondered

how Phoenix could hold two such conflicting thoughts in his mind at

the same time without questioning the logic of either.

It was against this backdrop that Gavin came to Force with his urgent

warning in late 1989. Gavin had learned that the Australian Federal

Police were getting complaints about hackers operating out of

Melbourne. The Melbourne hacking community had become very noisy and

was leaving footprints all over the place as its members traversed the

world's data networks.

There were other active hacking communities outside Australia--in the

north of England, in Texas, in New York. But the Melbourne hackers

weren't just noisy--they were noisy inside American computers. It

wasn't just a case of American hackers breaking into American systems.

This was about foreign nationals penetrating American computers. And

there was something else which made the Australian hackers a target.

The US Secret Service knew an Australian named Phoenix had been inside

Citibank, one of the biggest financial institutions in the US.

Gavin didn't have many details to give Force. All he knew was that an

American law enforcement agency--probably the Secret Service--had been

putting enormous pressure on the Australian government to bust these

people.

source of pressure coming from the other side of the Pacific. The FBI

had also approached the Australian Federal Police about the mysterious

but noisy Australian hackers who kept breaking into American systems,5

and the AFP had acted on the information.

In late 1989, Detective Superintendent Ken Hunt of the AFP headed an

investigation into the Melbourne hackers. It was believed to be the

first major investigation of computer crime since the introduction of

Australia's first federal anti-hacking laws. Like most law enforcement

agencies around the world, the AFP were new players in the field of

computer crime. Few officers had expertise in computers, let alone

computer crime, so this case would prove to be an important proving

ground.6

When Gavin broke the news, Force acted immediately. He called Phoenix

on the phone, insisting on meeting him in person as soon as possible.

As their friendship had progressed, they had moved from talking

on-line to telephone conversations and finally to spending time

together in person. Force sat Phoenix down alone and gave him a stern

warning. He didn't tell him how he got his information, but he made it

clear the source was reliable.

The word was that the police felt they had to bust someone. It had

come to the point where an American law enforcement officer had

reportedly told his Australian counterpart, `If you don't do something

about it soon, we'll do something about it ourselves'. The American

hadn't bothered to elaborate on just how they might do something about

it, but it didn't matter.

Phoenix looked suddenly pale. He had certainly been very noisy, and

was breaking into systems virtually all the time now. Many of those

systems were in the US.

He certainly didn't want to end up like the West German hacker

Hagbard, whose petrol-doused, charred remains had been discovered in a

German forest in June 1989.

An associate of Pengo's, Hagbard had been involved in a ring of German

hackers who sold the information they found in American computers to a

KGB agent in East Germany from 1986 to 1988.

In March 1989, German police raided the homes and offices of the

German hacking group and began arresting people. Like Pengo, Hagbard

had secretly turned himself into the German authorities months before

and given full details of the hacking ring's activities in the hope of

gaining immunity from prosecution.

American law enforcement agencies and prosecutors had not been

enthusiastic about showing the hackers any leniency. Several US

agencies, including the CIA and the FBI, had been chasing the German

espionage ring and they wanted stiff sentences, preferably served in

an American prison.

German court proceedings were under way when Hagbard's body was found.

Did he commit suicide or was he murdered? No-one knew for sure, but

the news shook the computer underground around the world. Hackers

discussed the issue in considerable depth. On the one hand, Hagbard

had a long history of mental instability and drug use, having spent

time in psychiatric hospitals and detoxification centres off and on

since the beginning of 1987. On the other hand, if you were going to

kill yourself, would you really want to die in the agony of a petrol

fire? Or would you just take a few too many pills or a quick bullet?

Whether it was murder or suicide, the death of Hagbard loomed large

before Phoenix. Who were the American law enforcement agencies after

in Australia? Did they want him?

No. Force reassured him, they were after Electron. The problem for

Phoenix was that he kept talking to Electron on the phone--in voice

conversations. If Phoenix continued associating with Electron, he too

would be scooped up in the AFP's net.

The message to Phoenix was crystal clear.

`Listen, you miserable scum-sucking pig.'

`Huh?' Phoenix answered, only half paying attention.

`Piece of shit machine. I did all this editing and the damn thing

didn't save the changes,' Electron growled at the Commodore Amiga,

with its 512 k of memory, sitting on the desk in his bedroom.

It was January 1990 and both Phoenix and Electron were at home on

holidays before the start of university.

`Yeah. Wish I could get this thing working. Fucking hell. Work you!'

Phoenix yelled. Electron could hear him typing at the other end of the

phone while he talked. He had been struggling to get AUX, the Apple

version of Unix, running on his Macintosh SE30 for days.

It was difficult to have an uninterrupted conversation with Phoenix.

If it wasn't his machine crashing, it was his grandmother asking him

questions from the doorway of his room.

`You wanna go through the list? How big is your file?' Phoenix asked,

now more focused on the conversation.

`Huh? Which file?'

`The dictionary file. The words to feed into the password cracker,'

Phoenix replied.

Electron pulled up his list of dictionary words and looked

at it. I'm going to have to cut this list down a bit, he thought. The

dictionary was part of the password cracking program.

The larger the dictionary, the longer it took the computer to crack a

list of passwords. If he could weed out obscure words--words that

people were unlikely to pick as passwords--then he could make his

cracker run faster.

An efficient password cracker was a valuable tool. Electron would feed

his home computer a password file from a target computer, say from

Melbourne University, then go to bed. About twelve hours later, he

would check on his machine's progress.

If he was lucky, he would find six or more accounts--user names and

their passwords--waiting for him in a file. The process was completely

automated. Electron could then log into Melbourne University using the

cracked accounts, all of which could be used as jumping-off points for

hacking into other systems for the price of a local telephone call.

Cracking Unix passwords wasn't inordinately difficult,

provided the different components of the program, such as the

dictionary, had been set up properly. However, it was time-consuming.

The principle was simple. Passwords, kept in password files with their

corresponding user names, were encrypted. It was as impossible to

reverse the encryption process as it was to unscramble an omelette.

Instead, you needed to recreate the encryption process and compare the

results.

of its password file. Second, take a list of commonly used passwords,

such as users' names from the password file or words from a

dictionary, and encrypt those into a second list. Third, put the two

lists side by side and compare them. When you have a match, you have

found the password.

However, there was one important complication: salts. A salt changed

the way a password was encrypted, subtly modifying the way the DES

encryption algorithm worked. For example, the word `Underground'

encrypts two different ways with two different salts: `kyvbExMcdAOVM'

or `lhFaTmw4Ddrjw'. The first two characters represent the salt, the

others represent the password. The computer chooses a salt randomly

when it encrypts a user's password. Only one is used, and there are

4096 different salts. All Unix computers use salts in their password

encryption process.

Salts were intended to make password cracking far more difficult, so a

hacker couldn't just encrypt a dictionary once and then compare it to

every list of encrypted passwords he came across in his hacking

intrusions. The 4096 salts mean that a hacker would have to use 4096

different dictionaries--each encrypted with a different salt--to

discover any dictionary word passwords.

On any one system penetrated by Electron, there might be only 25

users, and therefore only 25 passwords, most likely using 25 different

salts. Since the salt characters were stored immediately before the

encrypted password, he could easily see which salt was being used for

a particular password. He would therefore only have to encrypt a

dictionary 25 different times.

Still, even encrypting a large dictionary 25 times using different

salts took up too much hard-drive space for a basic home computer. And

that was just the dictionary. The most sophisticated cracking programs

also produced `intelligent guesses' of passwords. For example, the

program might take the user's name and try it in both upper- and