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Global Crackdown on Computer Hackers; MERS in U.S.; AT&T to Buy DirecTV; Chinese Hackers

Aired May 19, 2014 - 14:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

BROOKE BALDWIN, CNN ANCHOR: Wolf Blitzer, thank you.

Great to be with all of you as we start our week together. I'm Brooke Baldwin. You're watching CNN.

Got a computer? Pay attention. Because we have to begin today with this international crackdown on this mass invasion of privacy involving half a million computers worldwide. And so these victims were allegedly terrorized without ever leaving their homes. The FBI says more than 90 people have been arrested -- see all these countries, all the green - in 19 countries for allegedly using a program called "Blackshades" which apparently can turn your web cam into a spy cam. And it gets worse from there. CNN obtained this exclusive look of the FBI's cyber command room as the takedown of those offenders happened.

(BEGIN VIDEO CLIP)

PREET BHARARA, U.S. ATTORNEY: Once installed on a victim's computer, the "Blackshades" rat (ph) allowed computers to remotely and secretly gain access to everything on a victim's computer, including private photographs and documents and even passwords to online accounts. It could even record every key stroke entered on a victim's keyboard to speedily steal credit card and other sensitive information.

(END VIDEO CLIP)

BALDWIN: The FBI today announced it had arrest two men who created "Blackshades," one of whom has already pled guilty. Among the victims, Miss Teen USA who said she turned, quote, "hysterical" last year after getting an e-mail with pictures of herself nude taking surreptitiously with her own web cam. The sender threatened to do it more if she didn't do exactly what he wanted.

(BEGIN VIDEO CLIP)

CASSIDY WOLF, VICTIM OF COMPUTER HACKING: I dropped my phone and I was screaming. I was on the phone with my mom and we were both crying. I really - I couldn't explain the emotion that I was going through. It was terrifying. Absolutely terrifying.

(END VIDEO CLIP)

BALDWIN: With me now security consultant and ethical hacker Ryan Burnheimer. Ryan, welcome.

RYAN BURNHEIMER, ETHICAL HACKER: Thank you very much for having me.

BALDWIN: Let me just be real. I had a guest on a couple years ago, you know, and hearing of these stories, how people can do this to, you know, cameras and laptops, I have duct tape over my laptop camera because I am frightened of someone creeping in with this "creepware." Why is it so insidious?

BURNHEIMER: Well, you're right, it is -- it's terrifying in its own right.

BALDWIN: Yes.

BURNHEIMER: But, you know, "Blackshade" is something that - you know, it's a piece of malware that is -- that's out there now. It can track your key strokes. It can turn on your microphone. It can turn on your web cam, which is terrible as well, as you said, in this teen - the case with the Miss Teen USA.

Another aspect of this is that it creates something called random ware - "ransomware," which can -- is not only being used by -- it's encrypt files that is being held on -- within your computer. It's holding - it's holding these files encrypted and they're holding people -- these files ransom, not only individuals, but companies are being held ransom.

BALDWIN: Well, that's -- that's apparently what happening to this young woman. You know, this bad guy said to her, hey, I have all these nude pictures of you and if you don't send me more, this will go - you know, I'm going to publish this all around the world. And so she was terrified and she went along with it for a little while. Before we move along to the significance of this, you know, these arrests, do you have advice for people? I mean other than using duct tape, how do we stop this from happening?

BURNHEIMER: Well, it is - hey, duct tape is one - is one way to go about it. But the other way is just to be aware of what's going on. And if you are encountered with one of these, do not pay the - do not pay the ransom because you've got to think these are unethical people that are being -- asking for your money. So what are they going to be doing with your credit cards? What are they going to do with this information? The best advice that I give is just contact authorities. The nice thing is the FBI is actively going after these people as we discussed earlier.

BALDWIN: Thank goodness.

BURNHEIMER: So they are actively going after these people and just make sure that you're not going out and giving them your credit card or any information like that.

BALDWIN: Yes. Don't do it.

Ryan, what about - you know, in terms of law enforcement around the world working across boundaries, I mean how are they going to be dealing with this crackdown in terms of everyone sort of working together?

BURNHEIMER: Well, that's actually good news is that we're seeing -- right now we're seeing something that hasn't been done as much in the past. You have over 400 cases where they're actually going out and looking for the people that are creating and selling this malware to people that should haven't their hands on it. You said - you said earlier that there's - I think there's almost 97 people that have been caught distributing this to people that that shouldn't have their hands on it and it's something that hasn't been -- we haven't seen this in the past other than, you know, for groups like Anonymous that have been - you know, that we've had multiple -- had a team effort to go after.

BALDWIN: It's creepy. I'm glad the FBI is on it and is successful. Ryan Burnheimer, thank you so much for your perspective.

And you just heard from Miss Teen USA, Cassidy Wolf. She will talk exclusively to Anderson Cooper tonight, of course, in the wake of the news. Watch her on "AC 360," 8:00 p.m. Eastern, only here on CNN.

Now to this. Today, Washington took the unprecedented step of charging five Chinese military officers with cyber spying against vital U.S. industries. You have the Justice Department saying now that five officials work for a super-secret spy cell known as Unit 61398 believed to be housed in this 12-story building in Shanghai and some are saying we are talking about trillions of dollars of theft -- just think about that for a second -- against U.S. Steel and Alcoa, among others. This is huge. This is a huge story and we'll have much more on that just a bit later.

CNN. CNN has just learned a Florida patient infected with the MERS virus has been released from the hospital. The patient has recovered. Now testing negative for MERS. But this comes just days after some frightening developments in the spread of this virus because for the very first time -- the acronym, it's Middle East Respiratory Syndrome - MERS has spread from one person to another within the United States. Right here on U.S. soil. This latest case in Illinois, this is the third confirmed case in the U.S., but the first infection that began here, the other two cases were contracted overseas.

CNN senior medical correspondent Elizabeth Cohen is here with me.

So this got my attention, certainly. It's one thing when we're talking about folks coming directly from, you know, the Middle East.

ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: Right.

BALDWIN: It's another when it's happening here.

COHEN: Right. And what's - what's disturbing about this is not just that it spread, which in many ways was expected, is how, how it spread.

BALDWIN: Tell us. COHEN: So let's hear about this.

BALDWIN: OK.

(BEGIN VIDEO CLIP)

COHEN (voice-over): The first two cases in the United States were people who got infected in Saudi Arabia and then got on a plane and came here. Those cases were reported in Indiana and Florida. Now health officials say an Illinois man, who had a business meeting with the Indiana patient, has also tested positive for MERS.

LAMAR HASBROUCK, ILLINOIS DEPT. OF PUBLIC HEALTH: This potential person that was - that is maybe the third case that was transmitted, had just basically business transactions with the individual. So no unique travel history of their own and then no travel history since.

COHEN: The CDC says during a meeting on April 25th, the two men were sitting within six feet of each other talking. The only physical contact they had was shaking hands. The next day they had another meeting, this one shorter. This was a week before the Indiana patient was confirmed to have MERS.

A CDC doctor says the Illinois man was never really sick, but now the CDC wants to test people he came in contact with, because even without symptoms, it's possible he could have spread the deadly MERS virus.

(END VIDEOTAPE)

COHEN: Now, considering that the Illinois man never got sick, it could be that MERS maybe spreads more easily than we had thought. But, on the other hand, it also may turn out that it's not quite as deadly. Remember last week we were talking about that 30 percent morality rate?

BALDWIN: Right.

COHEN: It may be that that's a little high. It may not really be that high.

BALDWIN: But, Elizabeth, we're talking about this?

COHEN: I know, and sitting about this distance apart.

BALDWIN: I mean I thought last week when we kept talked about these cases -

COHEN: I know.

BALDWIN: That it was difficult to get. That changes the game.

COHEN: It does, because last week the doctors -- experts were talking about households. You know, people who lived in the same household or doctors and patients who, of course, have very close and prolonged contact. This is two business meetings. That really changes the game in a lot of people's minds. Now, the CDC doesn't want to go there.

BALDWIN: OK.

COHEN: They want to keep (INAUDIBLE) acquiring more data and more information because remember this is a new virus so there's a lot that they don't know about it.

BALDWIN: We are talking to someone from the CDC and we'll press them on that.

Elizabeth -

COHEN: You should.

BALDWIN: We will. Thank you.

Next, it is a merger between two huge media companies that would change how and where you watch your favorite TV shows. And even if you're not a customer of AT&T or DirecTV, it could still impact your monthly TV bill.

Plus, a decision this afternoon could rewrite (ph) racing history. Have you heard about this? The horse called California Chrome won the first two legs of the triple crown wearing -- who knew -- a nasal strip. But there were questions about whether that would be allowed at the Belmont Stakes and now we know if Chrome will be allowed to run with that.

(COMMERCIAL BREAK)

BALDWIN: Welcome back. I'm Brooke Baldwin.

You know, between broadcast, cable, Internet, handheld wireless, we're swimming in content these days. But those who control the flow of what we are getting, you know, it's becoming fewer and fewer, thus increasingly powerful. Now, AT&T has agreed to buy DirecTV. That deal disclosed on Sunday. So, where there were four providers, that number will shrink since, remember, Comcast is planning to buy Time Warner Cable, $45 billion for that deal, and AT&T is offering $49 billion for DirecTV. Staggering sums and huge implications for we, the consumer. With me now from New York, here he is, CNN technology analyst Brett Larson.

BRETT LARSON, CNN TECHNOLOGY ANALYST: Hey, Brooke.

BALDWIN: Hello.

LARSON: Yes, merger mania.

BALDWIN: Merger mania like Monopoly is here.

LARSON: Yes. Yes.

BALDWIN: So you have AT&T plus DirecTV -

LARSON: Right.

BALDWIN: Equals, you know, this communications giant and what they call the holy trinity of phone, broadband and video.

LARSON: Yes.

BALDWIN: If the deal goes through, what does that mean for us?

LARSON: Well, it could mean a lot of things for us. We'll start, I guess, with the good part so that we can all feel happy about this merger.

BALDWIN: OK. Give me the warm and fuzzies first.

LARSON: We're going to add - yes, the warm and fuzzies that will add - will add the TV on to the AT&T.

BALDWIN: OK.

LARSON: What it - what it could do and what I hope to see it do is that bundled service that you talked about, that holy trinity. You know, the service that I have at home, I get faster broadband because I also have HBO and Showtime and other services on my television that brings the whole price down and then gives me faster broadband service. And, at the end of the day, I save a lot of money. I also save money on my cell phone.

Now, a lot of these bundles aren't available in rural areas or when you really get outside of the -- even the urban areas, a lot of the suburban areas where you are best served by DirecTV, you're not getting to benefit from those bundles. So there's where I think we're going to see some warm and fuzzy goodness.

I also hope, and I hope the feds kind of push this on them, I hope it pushes that merger to bring more of that wireless high speed internet by way of DirecTV and maybe some new technology mixing cellular with satellite to bring more high speed Internet to underserved parts of the country because that's still an issue today.

BALDWIN: Yes. They need a -

LARSON: Where it's -

BALDWIN: It's tough to get. Go ahead.

LARSON: Yes. No, I was going to say, where it's going to be bad is that once - you know, we're losing competition again and that means that prices could potentially go up. And that's where it's kind of a lose/lose. When you go from having four options to two options to, you know, two options that may or may not be in cohesion with each other, that's where it's a problem.

BALDWIN: Lessens competition, ergo price goes up.

LARSON: Right.

BALDWIN: What about folks who are not customers?

LARSON: Now, this is where I'm kind of excited at the technology and where it could take it. Let's face it, more and more people are tuning away from the television for their content, as they traditionally have, and they're going --

BALDWIN: And getting on the Internet.

LARSON: Yes, they're going on the Internet, they're going on their phones, they're going on their tablets. We have this (INAUDIBLE) cord- cutters. We also have a whole generation of people who never bothered to sign up for traditional cable service that brings you television, but are instead signing up for that broadband.

BALDWIN: What? People aren't getting cable?

LARSON: People aren't getting cable. They're signing up for that broadband service because, listen, CNN has apps and a website where you can go, CNN-x, you can watch all of our content. You've got Hulu Plus. You've got Netflix. You've got all these other avenues of content and it -- the merger for that reason makes sense because AT&T has to control the pipe at some point and if they have DirecTV in their back pocket, that means they might be able to bring you some content by way of your wireless phone or your wireless device.

BALDWIN: It's incredible to me to think about, for example, like CNN mobile and people are going here first to then come here.

LARSON: Right. Right, exactly.

BALDWIN: (INAUDIBLE).

LARSON: We get them here and then we bring them here to watch us.

BALDWIN: Crazy. Changes.

LARSON: Yes.

BALDWIN: Thank you so much for joining me. We appreciate it.

LARSON: Thanks, Brooke.

BALDWIN: Coming up next, the federal government taking steps to protect businesses here in the U.S. by doing something it has never actually done before. What government leaders did today to catch people allegedly stealing industry secrets.

Plus, will he or won't he? Questions abound about whether this horse, California Chrome, would be allowed to run in the Belmont Stakes and go for the sports' coveted triple crown. Today we have our answer. That's next.

(COMMERCIAL BREAK)

BALDWIN: Superstar horse California Chrome needs one more victory to become the first triple crown winner since Affirmed did it. and that was in - that was far back in 1978. It looks like he will get to wear these nasal strips when he makes his run for the record books. And this is a huge deal because the horse -- can you see this, here we've highlighted with a graphic, nice -- wears a strip across his nose when he races, just like, you know, athletes wear these nasal strips in other sports. So after Saturday's Preakness victory, there were sudden concerns that New York, home to the Belmont Stakes, doesn't allow nasal strips on horses for racing. But today we have the news, New York officials gave these nasal strips the a-OK. And just this morning, California Chrome's co-owner told CNN he has had a special feeling actually about this particular horse from even before the beginning.

(BEGIN VIDEO CLIP)

STEVE COBURN, CO-OWNER, CALIFORNIA CHROME: I saw him when he was a day old. I saw him in a dream three weeks prior to that. He was exactly like my dream. And I told my wife, I said, this horse is going to do big things. I don't know what yet, but he's going to do big things. And he's proven us right so far. We believe in our horse. We believe in our trainer. And he is proving to America right now that he is America's horse.

(END VIDEO CLIP)

BALDWIN: I love his love for his horse. Brian McFayden is here with Bleacher Report.

So, quickly, as we were talking in the commercial break, my biggest takeaway, other than it's awesome this horse gets to wear these nasal strips, I had no idea horses where nasal strips, did you?

BRIAN MCFAYDEN, BLEACHER REPORT: Well, of course. They have problems like when they're sleeping and they're next to their loved one and they're -

BALDWIN: They're snoring.

MCFAYDEN: And the mama horse is like, "hey, papa horse, you need to stop."

But, no, it helps them. What it does is like when they're racing, especially at the Belmont Stakes, it's a mile and a half long. It's the longest race out of the three legs.

BALDWIN: OK.

MCFAYDEN: And when you're running, it's grueling. And these horses need to be able to breathe properly. And what the strips do is it opens up the passages in the nostrils.

BALDWIN: Lessens the possibility of bleeding into the lungs.

MCFAYDEN: Yes.

BALDWIN: So it's a good thing for this horse. So what will this mean here in terms of it hasn't -- you haven't had this triple crown winner since 1978. This would be potentially a huge deal.

MCFAYDEN: It would be ginormous. First of all --

BALDWIN: Ginormous?

MCFAYDEN: Do you like that word?

BALDWIN: I like that. (INAUDIBLE).

MCFAYDEN: Yes, California Chrome single-handedly put horse racing back on the forefront of the sporting world.

BALDWIN: So exciting.

MCFAYDEN: I mean we're - I'm sitting here. This is probably like my 20th hit today of talking about California Chrome.

BALDWIN: How do you feel being (INAUDIBLE).

MCFAYDEN: I'm best friends now with California Chrome. We are now Twitter followers. Well, I follow him. He isn't following me back. I'm kind of hoping for that follow-up.

BALDWIN: So when does this race happen?

MCFAYDEN: On June 7th.

BALDWIN: OK, so it's coming up.

MCFAYDEN: It's coming. He's got a couple weeks to rest up, but he's ready.

BALDWIN: The back story with this horse is that the horse's mother, the mare, was bought for what?

MCFAYDEN: $8,000!

BALDWIN: $8,000.

MCFAYDEN: Which is nothing in the horsing - in the horsing --

BALDWIN: How much in the horsing world?

MCFAYDEN: In the horsey world. You can tell I'm a horse connoisseur here. No, $8,000. But usually they're a lot more - a lot more money than that. But, get this. You know, before - before California Chrome won the Kentucky Derby, the owners, Coburn and Martin, they were offered $6 million for the horse and 51 percent - a 51 percent in the horse and they said, no.

BALDWIN: They said no.

MCFAYDEN: They said -- actually they said "hell no." BALDWIN: Wow.

MCFAYDEN: And you think about how much money this horse is going to actually make for this - for this ownership, unbelievable. And these guys are regular joes. They have - they have regular jobs. Coburn, he works - he works at a plant that specializes in magnetic strips for credit cards.

BALDWIN: Incredible.

MCFAYDEN: Yes, unbelievable.

BALDWIN: Little would he know and I love how he said to Chris, you know, I had this dream, as we played a minute ago, I had this dream that we would have this horse and it would do big things. And clearly it is. So June -

MCFAYDEN: June 7th.

BALDWIN: June 7th we'll be watching. Brian McFayden, thank you.

MCFAYDEN: You're welcome. Thanks for having me on.

BALDWIN: Nasal strips and all.

Coming up next, we have been telling you about this growing scandal involving wait times at V.A. hospitals all around the country. It is a story CNN broke. It even lead to a hearing on Capitol Hill. The White House has responded. Now a report that the president was told about the wait time five years ago. We'll talk about that coming up next.

Plus, Michael Jackson like you have never seen him before. We'll show you his hologram performance and explain why it's sparking so much controversy. Cool or creepy? What do you think?

MCFAYDEN: Cool.

BALDWIN: Send me a tweet @brookebcnn. We'll be right back.

(COMMERCIAL BREAK)

BALDWIN: Washington charged to that industrial cyber spying by China is costing American jobs and forcing laid off American workers to lose their homes. As a result, the Department of Justice brought charges against five officials of this super-secret Chinese spy cell known as Unit 61398 and believed to be housed in this 12 story building in Shanghai. The U.S. says these five officials lead (ph) the vast effort to steal cutting edge commercial research and critical pricing data from six American victims, including some of what you're looking at, Westinghouse, Alcoa, U.S. Steel, some of the examples. Some are saying we are talking about trillions of dollars in theft.

(BEGIN VIDEO CLIP)

JOHN CARLIN, ASST. ATTORNEY GENERAL FOR NATIONAL SECURITY: While the men and women of our American businesses spent their business days innovating, creating, and developing strategies to compete in the global marketplace, these members of unit 61398 were spending their business days in Shanghai stealing the fruits of our labor.

DAVID HICKTON, U.S. ATTORNEY FOR WESTERN DISTRICT OF PENNSYLVANIA: When these cyber intrusions occurs, production slows, plants close, workers get laid off and lose their homes.

(END VIDEO CLIP)

BALDWIN: Let's go to Washington to CNN's Pamela Brown.

And, Pamela, the DOJ is saying, OK, China, our people are inventing these cutting edge industrial products, then your people are stealing the research, copying the product, selling it cheaper than we, the west can, because your research costs were pretty much close to zero, you stole the information. Tell me, what are we talking about here specifically.

PAMELA BROWN, CNN CORRESPONDENT: Sure. Sure. So, Brooke, U.S. officials are saying that these five military officials from China's People's Liberation Army targeted six U.S. companies in the steel trade, nuclear power and manufacturing industries and basically hacked into their computer systems from thousands of miles away and raided highly sensitive information from them, such as cutting edge research, as you pointed out, pricing and strategy information. Essentially the companies' crown jewels.

So, officials allege that the hackers sent e-mails to these companies that launched malicious software which crippled their networks and allowed them to raid thousands of files.