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The ring leader.

By Noland, Terrance
Publication: Business North Carolina
Date: Tuesday, April 1 1997

Playing the numbers, a Triad computer nerd turns employee theft into an international crime wave.

It's past 9 a.m., and Knight Shadow is late for the interview. It's not his fault. The federal prison camp at Seymour Johnson Air Force Base is on lockdown for a surprise head count. That happens once or twice a week, in addition to check-ins every two hours.

The delay adds to the anticipation. He's one of the menacing new breed of criminal known as cybercrooks, who prowl on-line, wielding computers as weapons and striking terror in the hearts of businessmen vulnerable to their techno-trickery.

Knight Shadow, a k a Ivy James Lay, is one of the most notorious. He was the center of an international crime ring peddling stolen calling-card numbers. Its reach spanned from Los Angeles to Germany, Spain and beyond. Lay was the supplier, his light fingers tapping into a computer to steal up to 100,000 card numbers from MCI's switching station near Greensboro, where he worked as a night-shift technician. He distributed them on-line through his middlemen, guys like "Killer" and "Legend." They found a ready market in European hackers and software pirates, who used them mostly to call bulletin boards to chat or download stolen programs.

MCI called it the largest fraud of its kind, and it went on for more than a year. The volume of calls was so great it forced AT&T to add overseas capacity so callers wouldn't get "all circuits busy" signals. Fraud complaints doubled at some phone companies, which had to beef up their staffs to handle them. MCI had five investigators on the case full-time for nine months.

The scheme came crashing down in September 1994 when Secret Service agents raided Lay's Haw River home. By then, early estimates said, more than $50 million in fraudulent long-distance calls had been racked up. One card alone had $99,000.

GTE lost so much money on this and a similar scheme, it did away with international calling on its cards for a while. MCI, AT&T and others installed new security systems to sniff out fraud quicker. One AT&T investigator claimed the inflated flow of international calls may have affected the balance of trade.

Lay is part of modern-crime mythology - elevated to that status partly by the public's fear of a technology it doesn't fully understand. He was No. 8 on the Pittsburgh Post-Gazette's Internet's Most Wanted list, alongside such techno-hooligans as Kevin Mitnick, the fugitive hacker nabbed in Raleigh in 1995.

In addition, make sure to read these articles:

  • PREVENTING COMPUTER FRAUD
  • HEADNOTE Enemies from without and within are constantly looking for ways to break into vulnerable computer systems. All it takes is one successful attack to ......
  • Preventing computer fraud: enemies from without...
  • COMPUTER FRAUD IS A BOOMING BUSINESS. Only a small percentage of computer criminals are ever apprehended, and even when they are caught, the courts tend ......
  • Cyber-crime still on the rise. (Update).
  • COMPUTER CRIME continues to hit organizations hard, yet most don't report information security breaches to law enforcement, a recent U.S. survey reports. Ninety percent of ......
  • PowerDialer -- high-tech gadget helps you break...
  • WATERTOWN, Mass.--(BUSINESS WIRE)--Feb. 19, 1997--Technology Arts announces the release of PowerDialer Rev 7.0, the world's fastest way to automatically redial busy numbers and finally get ......
  • Fighting hackers, fraud and wrong perceptions.
  • YOU'LL RECALL THE NEWS STORY IN February about a hacker who gained access to millions of Visa, MasterCard, American Express and Discover credit card account ......
  • The cloak-&-dagger communicator.
  • I will always remember my Secret Sam. It was the neatest toy I ever had. From the outside, it looked like a black plastic briefcase ......
  • Cybercops in the Classroom
  • A new breed of cop is hitting the cyberbeat and combating high-tech espionage, terrorism, scams, pedophiles, and fraud. Electronic sleuths are learning their skills in ......