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Counterterrorism Funds & Unlikely Targets; Ashcroft Press Conference -- Operation Web Snare

Aired August 26, 2004 - 13:29   ET

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

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


MILES O'BRIEN, CNN ANCHOR: The spam ready to hit the fan? The Justice Department sticking a big federal fork in some of the Internet's biggest junk e-mail offenders as it winds up Operation Slam Spam. Got to love that stuff.
Coming up in just a few minutes, Attorney General John Ashcroft expected to announce arrests and indictments. We'll bring it to you live. Hopefully a few reporters will show up.

Iraq's most powerful Shiite cleric makes a dramatic return to his home in war-torn Najaf. U.S. and Iraqi forces stand down, while Grand Ayatollah Ali al-Sistani begins a peace mission in a bid to end nearly three weeks of bloodshed.

And a much different kind of showdown on the soccer field in Athens, Get your Olympic kicks right here, as the U.S. women's team goes for the gold. Can the fab five get -- and their friends, of course -- get past Brazil? Grab a cold one and stick around. Not necessarily an adult beverage, that's OK -- just anything cold. We'll take you to Athens live in just a few moments.

KYRA PHILLIPS, CNN ANCHOR: Now to the Scott Peterson trial, as it takes an interesting turn. Back on the stand right now, an investigator who testified that police initially believed more people were involved in Laci Peterson's disappearance.

Let's go to CNN's Ted Rowlands standing by live in Redwood City -- Ted?

TED ROWLANDS, CNN CORRESPONDENT: Well, Kyra, Steven Jacobson is back on the stand. There was a 45-minute delay or so this morning, but he is now being crossexamined by Mark Geragos.

A lot of courtroom observers think that he has been the most effective prosecution witness thus far. He is the person that was in charge of recording Scott Peterson's phone calls during the investigation. He has hundreds of phone calls that he recorded during the wiretaps of Peterson's phone.

And yesterday, he played a number of those calls -- of Peterson lying, not only to Amber Frey, as was dictated, of course, with Frey's recorded call, but to his mother and his father, his stepmother, and his friends and family about where he was, what he was doing, at certain times of the day.

He lied about where he was one day while they were in the Berkeley Marina. He claimed he was down in Bakersfield to his own mother and father. He also talked at one point about selling his house, the house that he and Laci had lived with -- lived in, in Modesto. He tried to do this less than a month after she was reported missing.

(BEGIN AUDIO CLIP)

SCOTT PETERSON: Kinda keep it quiet, all right?

BRIAN ARGAIN: Oh, I will. I'm not gonna say a word to anybody -- don't worry about that.

PETERSON: Can I sell it furnished?

(END AUDIO CLIP)

ROWLANDS: Now, on crossexamination, Mark Geragos has tried to attack Jacobson on many different fronts. Today, he brought out the fact that while he was recording some phone calls, he was missing other ones. And that specifically, Peterson did try to make a call to the Longview, Washington, Police Department, which Jacobson sort of insinuated that he never did and was lying about it in some of the recorded phone calls.

Well, Geragos pulled out a phone bill today, and said isn't it true that he did try to call and you just didn't pick up the recording? Jacobson conceded that. Geragos is still crossexamining Jacobson. In fact, he's asked that he come back on Monday because of a discovery issue which was discovered today. And so, Jacobson will be on today and then again back on Monday -- Kyra?

PHILLIPS: All right, Ted Rowlands, live from Redwood City, thanks so much.

Well, upping the ante in the search for a double killer. A $10,000 reward is being offered in the killing of two California camp counselors. Police are looking for new leads after clearing a Wisconsin man they questioned earlier this week. Yesterday, investigators went back to the beach where the victims were found shot to death, sifting through the sand by hand for any evidence they could find.

O'BRIEN: All right. Can you stand to hear the words swift boat yet again? Well, here we go.

Arizona Senator John McCain has already expressed his disgust about those anti-Kerry ads. Told "The New York Times" he plans to personally express his displeasure about them to President Bush.

Now, today, the White House announced Mr. Bush wants to work with Senator McCain in pursuing legal action against what it calls shadowy 527 groups that sponsor such ads on both sides of the political fence. White House spokesman Scott McClellan says McCain told the president that he thought it was a good idea they work together.

Is the swift boat controversy making waves with voters? A new "Los Angeles Times" poll shows that the president has edged ahead of his Democratic challenger. That's the first time that's happened in the "L.A. Times" poll. Forty-nine percent of those surveyed choose George Bush; 46 percent choosing John Kerry in an "L.A. Times" poll.

Just prior to the Democratic National Convention in July, Kerry was two points up in his rival. The numbers fall within the poll's margin of error, however.

Rested and refreshed after a week at the ranch, President Bush hit the dusty campaign trail again today. He kicked off his seven- day, eight-stay trek to the convention this morning in Las Cruces, New Mexico. It is Mr. Bush's fourth trip this year to the critical battleground state -- which he lost in 2000, you may recall, by only 366 votes.

Meanwhile, John Kerry traveled to Minnesota for a town hall meeting on healthcare at Anoka Technical College. And although his campaign agenda may be packed, the Democratic candidate says he'd free things up for more face time -- or more likely, in-your-face time -- with the president. He challenged Mr. Bush to weekly, face-to-face debates, you betcha. So far, there are only three presidential debates on the calendar, however: September 30th, October 8th, October 13th.

PHILLIPS: Since the 9/11 attacks nearly three years ago, the U.S. has worked to prepare first responders around the country for the possibility of another strike. Well, some larger cities are crying foul over how the money for equipment and training is being distributed. The charge? Rural areas are better funded.

CNN's Drew Griffin traveled to Wyoming, the state with the smallest population in the U.S. -- filed this report.

(BEGIN VIDEOTAPE)

DREW GRIFFIN, CNN CORRESPONDENT (voice-over): It may seem unlikely -- a remote chance in this remote town that sits on the plain. But Douglas, Wyoming's 15 sworn police officers are ready.

UNIDENTIFIED MALE: There's four suits, two different types.

The air cartridge pops out.

GRIFFIN: They are ready for a chemical, biological, or even dirty bomb attack.

CHIEF LORI EMMERT, DOUGLAS, WYOMING POLICE: We're very fortunate to be at the level we are.

GRIFFIN: Douglas Police Chief Lori Emmert says, don't laugh, her city of 5,500 sits on a major interstate.

Last week, Douglas hosted the state fair. And if anything happens here, 50 miles east of Caspar...

UNIDENTIFIED FEMALE: Have a nice day. EMMERT: Thank you.

GRIFFIN: ... it's up to the chief and her officers to respond.

(on camera): Why does Douglas, Wyoming, need to protect itself from terrorists?

EMMERT: My feeling is that every emergency responder -- fire, police, or medical -- should have the equipment they need to respond to an incident. And I don't know -- I don't know that state or boundaries negates that.

GRIFFIN (voice-over): Douglas is one of many small towns across America benefiting from the fight against terrorism. The Homeland Security Act sends money across the nation to help first responders prepare for the next attack.

Douglas purchased this mobile command post, new air tanks for its firefighter, radios, and every single police officer in Wyoming received chemical and biological defense suits, thanks to federal dollars.

(on camera): Is this something you could afford without Homeland Security?

EMMERT: No. No, we could not afford it.

GRIFFIN (voice-over): Kelly Ruiz is with Wyoming's Office of Homeland Security.

(on camera): Does the State of Wyoming really think there will be a terrorist-related strike in this state?

KELLY RUIZ, WYOMING HOMELAND SECURITY: All we know is you cannot second-guess a terrorist. Wyoming's strong in agricultural and energy, so you just can't second-guess them and say where they're going to strike or where they're not going to strike.

GRIFFIN: Yet, even during the height of the busy state fair, it's hard to imagine any terrorist would strike Douglas, Wyoming. Yet this town and the State of Wyoming are spending more federal dollars per person defending themselves against terrorism than even New York.

(voice-over): In fact, according to the Department of Homeland Security, while California and New York will spend about $11 per person on homeland defense, Wyoming's per capita spending will be four times that amount: $45.22 for every man, woman, and child in the state.

How did it happen? In the aftermath of 9/11, Congress was pressed to react, swiftly passing legislation to help the country defend itself. And nothing could be quicker than plugging in an existing federal funding formula.

REP. CHRISTOPHER COX (R), CALIFORNIA: We used the same funding formulas for paving roads. GRIFFIN: That's right, road paving -- based in part on population, but also on such details as the number of postal roads in a state. Congressman Christopher Cox heads the House Select Committee on Homeland Security. He's pushing a bill that would change the formula.

COX: Terrorism funding isn't like paving roads. Terrorism funding -- counterterrorism funding has to be focused on actual threats, actual vulnerabilities.

GRIFFIN: Cox says the current system pays little attention to actual risks. All states get money, no matter the need. And this has led to a counterterrorism spending spree that, in some cases, has little to do with countering terrorism.

In Lake County, Tennessee, counterterrorism money purchased a $30,000 defibrillator for a high school. The mayor said it would be good to have on hand for the district basketball tournament. Mason County, Washington, bought a $63,000 decontamination unit the county sheriff's department says it cannot currently use. West Bloomfield, Michigan, is waiting on a $213,000 check, Homeland Security money, for fire prevention. And in Grand Isle, Vermont, the sheriff's department bought a new four-wheel drive pickup truck for winter patrols. It also pulls the new command center.

COX: Moneys should be spent, according to the 9/11 Commission, according to risk, according to threat. And that's what the pending legislation in Congress will do.

UNIDENTIFIED MALE: In the north arena, contestant number 208.

GRIFFIN: The bill is getting wide support in Congress. But that support is likely to wither in the Senate, where small states like Wyoming may not have an equal risk of terrorism, but they do have an equal vote.

Drew Griffin, CNN, Douglas, Wyoming.

(END VIDEOTAPE)

O'BRIEN: Still ahead on LIVE FROM, a quest for gold. We're live from Athens as the U.S. women's soccer team takes on Brazil for the gold medal.

PHILLIPS: Go, girls!

O'BRIEN: We'll have full details. Keep your shirt on.

ANNOUNCER: You're watching LIVE FROM on CNN, the most trusted name in news.

(COMMERCIAL BREAK)

O'BRIEN: Are you sick and tired of spam? How about phishing? That's that's actually even more troubling. As a matter of fact, so is the attorney general, apparently. He's just about to make announcement on that very subject. Cracking down on that -- of course, it's such a widespread problem that it might be very difficult for any one announcement to do much good.

Let's listen to the attorney general, and then we'll go to our expert on this, Daniel Sieberg, in a moment.

(BEGIN LIVE NEWS EVENT)

JOHN ASHCROFT, ATTORNEY GENERAL: Good afternoon. I'm delighted to have at the Justice Department today a number of individuals who are important to the matters we'll be discussing.

Jana Monroe is the assistant director for the FBI cyber division. I want to thank you for being here again, for helping us again. Lee Heath, the chief postal inspector of the U.S. Postal Service -- again, for your cooperation and assistance in an important set of matters.

We welcome back to the Justice Department Deborah Majoras, the chairman of the Federal Trade Commission. And note that she never had to be on crutches when she was here at the Justice Department.

So -- it's also a special pleasure to have with us today the director of operations at the Nigerian Economic and Financial Crime Commission, Ibrahim Lamorde. And we thank him for his work and for the cooperation and the collaboration that we have -- that makes a possibility the activities in which we engage.

Every day, more than a half a billion people around the world log on to the Internet to buy, to sell, to exchange goods or exchange ideas, to communicate, and to take advantage of the promising opportunities and innovative solutions offered by using the Net.

While billions of dollars course across the Internet each day, a small group of predators have chosen to -- a small group of predators has chose to make cyberspace a place for crime and fraud. America's justice community is dedicated to stopping economic crimes before they spread through the online community. And as part of this effort today, I am announcing Operation Web Snare.

Operation Web Snare is the largest and most successful collaborative law enforcement operation ever conducted to prosecute online fraud, to stop identity theft, and to prevent other computer- related crimes.

Since its initiation on June 1 of this year, Operation Web Snare has been extraordinarily productive. It has yielded more than 160 investigations in which more than 150,000 victims lost more than $215 million. As a result of this operation, there were more than: 350 subjects of the investigation; 103 arrests to date; 53 convictions; 117 criminal complaints, indictments, and informations; and the execution of more than 140 seizure and search warrants.

The success of Operation Web Snare is due largely to the concerted efforts of numerous law enforcement partners. Web Snare received aid and cooperation from: 36 United States attorneys offices; the criminal division of the Department of Justice; 37 of the 56 FBI field divisions; 13 of the 18 postal inspections service field divisions; the Federal Trade Commission; the United States Secret Service; and the Bureau of Immigration and Customs Enforcement.

The cases brought in this operation span many of the most significant forms of computer-related crime: major online fraud schemes -- some defrauding tens of thousands of victims; online identity theft, such as phishing -- you know, that's the P-H-I-S-H-I- N-G phishing.

That's the soliciting of Internet users for their personal and financial data, using e-mails and Web sites falsely representing that they are from legitimate banks and company. And then, when you solicit the financial data from individuals or identity data, you use that data -- the criminal does -- in order to defraud that person or others.

Computer hacking and, of course, intellectual property crime -- such as selling counterfeit software.

Operation Web Snare also shows that America's justice community is seeking to anticipate, to outthink and to adapt to new trends in Internet crime.

Today, I am sending a memorandum to all United States attorneys offices and other component heads at the Department of Justice. I am asking them in that memorandum to familiarize themselves with the Identity Theft Penalty Enhancement Act signed into law by President Bush recent on July the 15th. The act proscribes stiff prison terms for those who use identity theft to commit other crimes.

I've directed the department to make full use of the Act's provisions in any appropriate investigation or prosecution involving identity theft. This would include frauds, organized crime, drug trafficking, and terrorism-related matters, as well.

Last year alone, nearly 10 million Americans had their identity stolen. Identity theft costs the nation's businesses nearly $50 billion a year in fraudulent transactions and often involves coordinated criminal conduct. And when that cost is undertaken and sustained by America's businesses, those become part of a cost of doing business that all of us pay when we buy products or services.

Now, as a result of Operation Web Snare, a federal grand jury, for example, in Kansas City returned an indictment charging five individuals with conspiracy to commit identity theft, access to vice fraud, and unlawful access to a protected computer.

According to the indictment, Ganit Ashola (ph) stole several pages from an employee roster with the social security numbers of her co-workers. Ashola (ph) gave the information to her boyfriend, Sogi Olowokandi (ph). That information then was taken to Chicago, where it was used by several members of the alleged conspiracy to apply for credit cards.

In Operation Web Snare, we also saw firsthand the increased use of the Internet to damage rival businesses and communicate threats for commercial advantage.

For example, in Los Angeles the CEO of a communications company and five other individuals were charged yesterday for allegedly using denial of service attacks against their online competitors in order to reap commercial advantage.

According to the charges filed yesterday the CEO and the business partner allegedly hired and used computer hackers in Arizona, Louisiana, Ohio, and the United Kingdom, to attack the Web sites of multiple competitors.

The hackers' tactics allegedly included targeting the victims' Web sites and an Internet service provider. These attacks reportedly cost the competitors more than $2 million in lost revenue and associated costs.

O'BRIEN: We have been listening to the attorney general of the United States, John Ashcroft, as he lays out what appears to be a fairly far-reaching, broad effort to go after people who are causing problems on the Web.

And really a whole host of problems mentioned there, denial of service, phishing, spamming, identity theft. Lots to go through, Daniel Sieberg is our expert here on technology matters. He's going to help us wade through these waters.

Let's start with one of the perhaps most troubling things out there right now, which is phishing, P-H-I-S-H-I-N-G, which is a very -- well, I almost got phished the other day. I was telling I got what appeared to be a notice from American Express. It said: "Click on this button for an important message." Thought it was real. Not so, right?

DANIEL SIEBERG, CNN TECHNOLOGY CORRESPONDENT: That is the whole trick behind phishing, it that it is intended to look real and it really is a little bit like fishing, as in the F-I-S-H-I-N-G, they cast a net, they send out millions of e-mail at a time, possibly, just like a spammer. It's sort of an offshoot of spam.

When you get this message in your inbox, it looks legitimate, it even has graphics, logo of companies. You recognize eBay, Paypal, AOL, part of our parent company, Time Warner. All of these companies have been used by phishers who are trying to lure people in.

Once you get these e-mails, there are often links in them that look like they take you to a site, and they say, we need to update your credit card information or they warn you that your account could be closed if you don't do this right away.

So they use some scare tactics with people. Then when you give over your credit card information or your personal information, they steal it, possibly identity theft involved or worse.

O'BRIEN: All right. And I know you have some tips here, but I think it's safe to say that if anybody is sending you a message like that, American Express, and you have an account with them, they know your numbers. You do not need to give somebody who you have a business relationship with your personal numbers. They have them.

SIEBERG: Absolutely.

O'BRIEN: All right. Let's go through the tips real quick.

SIEBERG: Yes, we definitely have some tips for people here. First of all, one thing we want to really hit home with people. This is entirely preventable. You just cannot let your guard down, even with these arrests that are mentioned today.

First of all, be suspicious of any e-mail that asks you to update your account. Again, as Miles pointed out, they will probably call you if they really need that information. They're not going to send you an e-mail that's asking for all of this personal data.

Don't respond to e-mail requests for this personal information. Sometimes they even ask for your ATM number or your passwords. Don't click on links in an e-mail to get to any Web page, OK? Any Web page.

If you have to go to that Web site, type it in, don't go through the e-mail. Avoid filling out forms and e-mail messages that ask again for this personal information which could be Social Security information or anything.

O'BRIEN: And it's worth pointing out that it looks like a legitimate address there, americanexpress.com, but it really isn't.

SIEBERG: Exactly, it redirects you to another site, even though it looks real. Make sure you're using a secure Web site, that means that you want https up in the address line or see a little lock. Now those can also be spoofed. So again you've got to be careful.

Regularly log into your online accounts, make sure that they're up to date. Regularly check your bank accounts and your debit card statements. And if you have questions or you want to send any of these scams on, the FTC obviously very involved, ftc.gov. But phishing, a growing scam.

O'BRIEN: All right. Daniel Sieberg, thank you very much, appreciate those tips, back with more in just a moment.

(COMMERCIAL BREAK)

PHILLIPS: All right, coming up, we're going to go live to Athens of course, for the latest on the U.S. soccer team's quest for Gold. We're talk about the women, of course.

O'BRIEN: Michael Holmes will be there, keeping his shirt on. LIVE FROM's hour of power begins after this.

(COMMERCIAL BREAK)

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Aired August 26, 2004 - 13:29   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
MILES O'BRIEN, CNN ANCHOR: The spam ready to hit the fan? The Justice Department sticking a big federal fork in some of the Internet's biggest junk e-mail offenders as it winds up Operation Slam Spam. Got to love that stuff.
Coming up in just a few minutes, Attorney General John Ashcroft expected to announce arrests and indictments. We'll bring it to you live. Hopefully a few reporters will show up.

Iraq's most powerful Shiite cleric makes a dramatic return to his home in war-torn Najaf. U.S. and Iraqi forces stand down, while Grand Ayatollah Ali al-Sistani begins a peace mission in a bid to end nearly three weeks of bloodshed.

And a much different kind of showdown on the soccer field in Athens, Get your Olympic kicks right here, as the U.S. women's team goes for the gold. Can the fab five get -- and their friends, of course -- get past Brazil? Grab a cold one and stick around. Not necessarily an adult beverage, that's OK -- just anything cold. We'll take you to Athens live in just a few moments.

KYRA PHILLIPS, CNN ANCHOR: Now to the Scott Peterson trial, as it takes an interesting turn. Back on the stand right now, an investigator who testified that police initially believed more people were involved in Laci Peterson's disappearance.

Let's go to CNN's Ted Rowlands standing by live in Redwood City -- Ted?

TED ROWLANDS, CNN CORRESPONDENT: Well, Kyra, Steven Jacobson is back on the stand. There was a 45-minute delay or so this morning, but he is now being crossexamined by Mark Geragos.

A lot of courtroom observers think that he has been the most effective prosecution witness thus far. He is the person that was in charge of recording Scott Peterson's phone calls during the investigation. He has hundreds of phone calls that he recorded during the wiretaps of Peterson's phone.

And yesterday, he played a number of those calls -- of Peterson lying, not only to Amber Frey, as was dictated, of course, with Frey's recorded call, but to his mother and his father, his stepmother, and his friends and family about where he was, what he was doing, at certain times of the day.

He lied about where he was one day while they were in the Berkeley Marina. He claimed he was down in Bakersfield to his own mother and father. He also talked at one point about selling his house, the house that he and Laci had lived with -- lived in, in Modesto. He tried to do this less than a month after she was reported missing.

(BEGIN AUDIO CLIP)

SCOTT PETERSON: Kinda keep it quiet, all right?

BRIAN ARGAIN: Oh, I will. I'm not gonna say a word to anybody -- don't worry about that.

PETERSON: Can I sell it furnished?

(END AUDIO CLIP)

ROWLANDS: Now, on crossexamination, Mark Geragos has tried to attack Jacobson on many different fronts. Today, he brought out the fact that while he was recording some phone calls, he was missing other ones. And that specifically, Peterson did try to make a call to the Longview, Washington, Police Department, which Jacobson sort of insinuated that he never did and was lying about it in some of the recorded phone calls.

Well, Geragos pulled out a phone bill today, and said isn't it true that he did try to call and you just didn't pick up the recording? Jacobson conceded that. Geragos is still crossexamining Jacobson. In fact, he's asked that he come back on Monday because of a discovery issue which was discovered today. And so, Jacobson will be on today and then again back on Monday -- Kyra?

PHILLIPS: All right, Ted Rowlands, live from Redwood City, thanks so much.

Well, upping the ante in the search for a double killer. A $10,000 reward is being offered in the killing of two California camp counselors. Police are looking for new leads after clearing a Wisconsin man they questioned earlier this week. Yesterday, investigators went back to the beach where the victims were found shot to death, sifting through the sand by hand for any evidence they could find.

O'BRIEN: All right. Can you stand to hear the words swift boat yet again? Well, here we go.

Arizona Senator John McCain has already expressed his disgust about those anti-Kerry ads. Told "The New York Times" he plans to personally express his displeasure about them to President Bush.

Now, today, the White House announced Mr. Bush wants to work with Senator McCain in pursuing legal action against what it calls shadowy 527 groups that sponsor such ads on both sides of the political fence. White House spokesman Scott McClellan says McCain told the president that he thought it was a good idea they work together.

Is the swift boat controversy making waves with voters? A new "Los Angeles Times" poll shows that the president has edged ahead of his Democratic challenger. That's the first time that's happened in the "L.A. Times" poll. Forty-nine percent of those surveyed choose George Bush; 46 percent choosing John Kerry in an "L.A. Times" poll.

Just prior to the Democratic National Convention in July, Kerry was two points up in his rival. The numbers fall within the poll's margin of error, however.

Rested and refreshed after a week at the ranch, President Bush hit the dusty campaign trail again today. He kicked off his seven- day, eight-stay trek to the convention this morning in Las Cruces, New Mexico. It is Mr. Bush's fourth trip this year to the critical battleground state -- which he lost in 2000, you may recall, by only 366 votes.

Meanwhile, John Kerry traveled to Minnesota for a town hall meeting on healthcare at Anoka Technical College. And although his campaign agenda may be packed, the Democratic candidate says he'd free things up for more face time -- or more likely, in-your-face time -- with the president. He challenged Mr. Bush to weekly, face-to-face debates, you betcha. So far, there are only three presidential debates on the calendar, however: September 30th, October 8th, October 13th.

PHILLIPS: Since the 9/11 attacks nearly three years ago, the U.S. has worked to prepare first responders around the country for the possibility of another strike. Well, some larger cities are crying foul over how the money for equipment and training is being distributed. The charge? Rural areas are better funded.

CNN's Drew Griffin traveled to Wyoming, the state with the smallest population in the U.S. -- filed this report.

(BEGIN VIDEOTAPE)

DREW GRIFFIN, CNN CORRESPONDENT (voice-over): It may seem unlikely -- a remote chance in this remote town that sits on the plain. But Douglas, Wyoming's 15 sworn police officers are ready.

UNIDENTIFIED MALE: There's four suits, two different types.

The air cartridge pops out.

GRIFFIN: They are ready for a chemical, biological, or even dirty bomb attack.

CHIEF LORI EMMERT, DOUGLAS, WYOMING POLICE: We're very fortunate to be at the level we are.

GRIFFIN: Douglas Police Chief Lori Emmert says, don't laugh, her city of 5,500 sits on a major interstate.

Last week, Douglas hosted the state fair. And if anything happens here, 50 miles east of Caspar...

UNIDENTIFIED FEMALE: Have a nice day. EMMERT: Thank you.

GRIFFIN: ... it's up to the chief and her officers to respond.

(on camera): Why does Douglas, Wyoming, need to protect itself from terrorists?

EMMERT: My feeling is that every emergency responder -- fire, police, or medical -- should have the equipment they need to respond to an incident. And I don't know -- I don't know that state or boundaries negates that.

GRIFFIN (voice-over): Douglas is one of many small towns across America benefiting from the fight against terrorism. The Homeland Security Act sends money across the nation to help first responders prepare for the next attack.

Douglas purchased this mobile command post, new air tanks for its firefighter, radios, and every single police officer in Wyoming received chemical and biological defense suits, thanks to federal dollars.

(on camera): Is this something you could afford without Homeland Security?

EMMERT: No. No, we could not afford it.

GRIFFIN (voice-over): Kelly Ruiz is with Wyoming's Office of Homeland Security.

(on camera): Does the State of Wyoming really think there will be a terrorist-related strike in this state?

KELLY RUIZ, WYOMING HOMELAND SECURITY: All we know is you cannot second-guess a terrorist. Wyoming's strong in agricultural and energy, so you just can't second-guess them and say where they're going to strike or where they're not going to strike.

GRIFFIN: Yet, even during the height of the busy state fair, it's hard to imagine any terrorist would strike Douglas, Wyoming. Yet this town and the State of Wyoming are spending more federal dollars per person defending themselves against terrorism than even New York.

(voice-over): In fact, according to the Department of Homeland Security, while California and New York will spend about $11 per person on homeland defense, Wyoming's per capita spending will be four times that amount: $45.22 for every man, woman, and child in the state.

How did it happen? In the aftermath of 9/11, Congress was pressed to react, swiftly passing legislation to help the country defend itself. And nothing could be quicker than plugging in an existing federal funding formula.

REP. CHRISTOPHER COX (R), CALIFORNIA: We used the same funding formulas for paving roads. GRIFFIN: That's right, road paving -- based in part on population, but also on such details as the number of postal roads in a state. Congressman Christopher Cox heads the House Select Committee on Homeland Security. He's pushing a bill that would change the formula.

COX: Terrorism funding isn't like paving roads. Terrorism funding -- counterterrorism funding has to be focused on actual threats, actual vulnerabilities.

GRIFFIN: Cox says the current system pays little attention to actual risks. All states get money, no matter the need. And this has led to a counterterrorism spending spree that, in some cases, has little to do with countering terrorism.

In Lake County, Tennessee, counterterrorism money purchased a $30,000 defibrillator for a high school. The mayor said it would be good to have on hand for the district basketball tournament. Mason County, Washington, bought a $63,000 decontamination unit the county sheriff's department says it cannot currently use. West Bloomfield, Michigan, is waiting on a $213,000 check, Homeland Security money, for fire prevention. And in Grand Isle, Vermont, the sheriff's department bought a new four-wheel drive pickup truck for winter patrols. It also pulls the new command center.

COX: Moneys should be spent, according to the 9/11 Commission, according to risk, according to threat. And that's what the pending legislation in Congress will do.

UNIDENTIFIED MALE: In the north arena, contestant number 208.

GRIFFIN: The bill is getting wide support in Congress. But that support is likely to wither in the Senate, where small states like Wyoming may not have an equal risk of terrorism, but they do have an equal vote.

Drew Griffin, CNN, Douglas, Wyoming.

(END VIDEOTAPE)

O'BRIEN: Still ahead on LIVE FROM, a quest for gold. We're live from Athens as the U.S. women's soccer team takes on Brazil for the gold medal.

PHILLIPS: Go, girls!

O'BRIEN: We'll have full details. Keep your shirt on.

ANNOUNCER: You're watching LIVE FROM on CNN, the most trusted name in news.

(COMMERCIAL BREAK)

O'BRIEN: Are you sick and tired of spam? How about phishing? That's that's actually even more troubling. As a matter of fact, so is the attorney general, apparently. He's just about to make announcement on that very subject. Cracking down on that -- of course, it's such a widespread problem that it might be very difficult for any one announcement to do much good.

Let's listen to the attorney general, and then we'll go to our expert on this, Daniel Sieberg, in a moment.

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JOHN ASHCROFT, ATTORNEY GENERAL: Good afternoon. I'm delighted to have at the Justice Department today a number of individuals who are important to the matters we'll be discussing.

Jana Monroe is the assistant director for the FBI cyber division. I want to thank you for being here again, for helping us again. Lee Heath, the chief postal inspector of the U.S. Postal Service -- again, for your cooperation and assistance in an important set of matters.

We welcome back to the Justice Department Deborah Majoras, the chairman of the Federal Trade Commission. And note that she never had to be on crutches when she was here at the Justice Department.

So -- it's also a special pleasure to have with us today the director of operations at the Nigerian Economic and Financial Crime Commission, Ibrahim Lamorde. And we thank him for his work and for the cooperation and the collaboration that we have -- that makes a possibility the activities in which we engage.

Every day, more than a half a billion people around the world log on to the Internet to buy, to sell, to exchange goods or exchange ideas, to communicate, and to take advantage of the promising opportunities and innovative solutions offered by using the Net.

While billions of dollars course across the Internet each day, a small group of predators have chosen to -- a small group of predators has chose to make cyberspace a place for crime and fraud. America's justice community is dedicated to stopping economic crimes before they spread through the online community. And as part of this effort today, I am announcing Operation Web Snare.

Operation Web Snare is the largest and most successful collaborative law enforcement operation ever conducted to prosecute online fraud, to stop identity theft, and to prevent other computer- related crimes.

Since its initiation on June 1 of this year, Operation Web Snare has been extraordinarily productive. It has yielded more than 160 investigations in which more than 150,000 victims lost more than $215 million. As a result of this operation, there were more than: 350 subjects of the investigation; 103 arrests to date; 53 convictions; 117 criminal complaints, indictments, and informations; and the execution of more than 140 seizure and search warrants.

The success of Operation Web Snare is due largely to the concerted efforts of numerous law enforcement partners. Web Snare received aid and cooperation from: 36 United States attorneys offices; the criminal division of the Department of Justice; 37 of the 56 FBI field divisions; 13 of the 18 postal inspections service field divisions; the Federal Trade Commission; the United States Secret Service; and the Bureau of Immigration and Customs Enforcement.

The cases brought in this operation span many of the most significant forms of computer-related crime: major online fraud schemes -- some defrauding tens of thousands of victims; online identity theft, such as phishing -- you know, that's the P-H-I-S-H-I- N-G phishing.

That's the soliciting of Internet users for their personal and financial data, using e-mails and Web sites falsely representing that they are from legitimate banks and company. And then, when you solicit the financial data from individuals or identity data, you use that data -- the criminal does -- in order to defraud that person or others.

Computer hacking and, of course, intellectual property crime -- such as selling counterfeit software.

Operation Web Snare also shows that America's justice community is seeking to anticipate, to outthink and to adapt to new trends in Internet crime.

Today, I am sending a memorandum to all United States attorneys offices and other component heads at the Department of Justice. I am asking them in that memorandum to familiarize themselves with the Identity Theft Penalty Enhancement Act signed into law by President Bush recent on July the 15th. The act proscribes stiff prison terms for those who use identity theft to commit other crimes.

I've directed the department to make full use of the Act's provisions in any appropriate investigation or prosecution involving identity theft. This would include frauds, organized crime, drug trafficking, and terrorism-related matters, as well.

Last year alone, nearly 10 million Americans had their identity stolen. Identity theft costs the nation's businesses nearly $50 billion a year in fraudulent transactions and often involves coordinated criminal conduct. And when that cost is undertaken and sustained by America's businesses, those become part of a cost of doing business that all of us pay when we buy products or services.

Now, as a result of Operation Web Snare, a federal grand jury, for example, in Kansas City returned an indictment charging five individuals with conspiracy to commit identity theft, access to vice fraud, and unlawful access to a protected computer.

According to the indictment, Ganit Ashola (ph) stole several pages from an employee roster with the social security numbers of her co-workers. Ashola (ph) gave the information to her boyfriend, Sogi Olowokandi (ph). That information then was taken to Chicago, where it was used by several members of the alleged conspiracy to apply for credit cards.

In Operation Web Snare, we also saw firsthand the increased use of the Internet to damage rival businesses and communicate threats for commercial advantage.

For example, in Los Angeles the CEO of a communications company and five other individuals were charged yesterday for allegedly using denial of service attacks against their online competitors in order to reap commercial advantage.

According to the charges filed yesterday the CEO and the business partner allegedly hired and used computer hackers in Arizona, Louisiana, Ohio, and the United Kingdom, to attack the Web sites of multiple competitors.

The hackers' tactics allegedly included targeting the victims' Web sites and an Internet service provider. These attacks reportedly cost the competitors more than $2 million in lost revenue and associated costs.

O'BRIEN: We have been listening to the attorney general of the United States, John Ashcroft, as he lays out what appears to be a fairly far-reaching, broad effort to go after people who are causing problems on the Web.

And really a whole host of problems mentioned there, denial of service, phishing, spamming, identity theft. Lots to go through, Daniel Sieberg is our expert here on technology matters. He's going to help us wade through these waters.

Let's start with one of the perhaps most troubling things out there right now, which is phishing, P-H-I-S-H-I-N-G, which is a very -- well, I almost got phished the other day. I was telling I got what appeared to be a notice from American Express. It said: "Click on this button for an important message." Thought it was real. Not so, right?

DANIEL SIEBERG, CNN TECHNOLOGY CORRESPONDENT: That is the whole trick behind phishing, it that it is intended to look real and it really is a little bit like fishing, as in the F-I-S-H-I-N-G, they cast a net, they send out millions of e-mail at a time, possibly, just like a spammer. It's sort of an offshoot of spam.

When you get this message in your inbox, it looks legitimate, it even has graphics, logo of companies. You recognize eBay, Paypal, AOL, part of our parent company, Time Warner. All of these companies have been used by phishers who are trying to lure people in.

Once you get these e-mails, there are often links in them that look like they take you to a site, and they say, we need to update your credit card information or they warn you that your account could be closed if you don't do this right away.

So they use some scare tactics with people. Then when you give over your credit card information or your personal information, they steal it, possibly identity theft involved or worse.

O'BRIEN: All right. And I know you have some tips here, but I think it's safe to say that if anybody is sending you a message like that, American Express, and you have an account with them, they know your numbers. You do not need to give somebody who you have a business relationship with your personal numbers. They have them.

SIEBERG: Absolutely.

O'BRIEN: All right. Let's go through the tips real quick.

SIEBERG: Yes, we definitely have some tips for people here. First of all, one thing we want to really hit home with people. This is entirely preventable. You just cannot let your guard down, even with these arrests that are mentioned today.

First of all, be suspicious of any e-mail that asks you to update your account. Again, as Miles pointed out, they will probably call you if they really need that information. They're not going to send you an e-mail that's asking for all of this personal data.

Don't respond to e-mail requests for this personal information. Sometimes they even ask for your ATM number or your passwords. Don't click on links in an e-mail to get to any Web page, OK? Any Web page.

If you have to go to that Web site, type it in, don't go through the e-mail. Avoid filling out forms and e-mail messages that ask again for this personal information which could be Social Security information or anything.

O'BRIEN: And it's worth pointing out that it looks like a legitimate address there, americanexpress.com, but it really isn't.

SIEBERG: Exactly, it redirects you to another site, even though it looks real. Make sure you're using a secure Web site, that means that you want https up in the address line or see a little lock. Now those can also be spoofed. So again you've got to be careful.

Regularly log into your online accounts, make sure that they're up to date. Regularly check your bank accounts and your debit card statements. And if you have questions or you want to send any of these scams on, the FTC obviously very involved, ftc.gov. But phishing, a growing scam.

O'BRIEN: All right. Daniel Sieberg, thank you very much, appreciate those tips, back with more in just a moment.

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PHILLIPS: All right, coming up, we're going to go live to Athens of course, for the latest on the U.S. soccer team's quest for Gold. We're talk about the women, of course.

O'BRIEN: Michael Holmes will be there, keeping his shirt on. LIVE FROM's hour of power begins after this.

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