Two Senior Law Enforcement Professionals Join Deloitte & Touche's Forensic/Investigative Unit for Northern California and Hawaii.

SAN FRANCISCO--(BUSINESS WIRE)--March 11, 1999--

A Major Boost to Firm's West Coast "Fraud Squad"

Leland Altschuler, Former Federal Prosecutor, Supervised U.S. Attorney's Office in San Jose; George Vinson, Special Agent with FBI,

Expert in White Collar Crime and Computer Hacking

Deloitte & Touche's Dispute Consulting Services Group reports that Leland B. Altschuler and George V. Vinson, two prominent Northern California-based law enforcement professionals, have joined the practice as practice group leaders in the Forensic and Corporate Investigative Services group.

Mr. Altschuler, 46, is a former federal prosecutor who spent the past six years as head of the U.S. Attorney's office in San Jose. Mr. Altschuler directed all federal criminal investigations in Silicon Valley and the South Bay -- "ground zero" for computer crime cases in the U.S. The San Jose office historically accounts for more cutting edge cases in high tech, including software piracy and trade secrets, than any other federal prosecutor's office in the country. Mr. Altschuler's role in some 1,000 prosecutions led to a pair of Department of Justice Directors Awards.

Mr. Vinson, 54, comes off a 23-year career with the FBI, including a stint as assistant special agent in charge of the Bureau's San Francisco office, as well as five years managing the Modesto, Fresno and Bakersfield offices. In addition to experience in white collar crime, corruption and terrorism, Mr. Vinson has conducted scores of investigations involving computer crime. He created the first FBI computer intrusion "hacking" team for assignments in the Western U.S. and Pacific Rim. This specialized group investigated large-scale network intrusions, including those potentially affecting major government and business infrastructure.

In 1996, Mr. Vinson's team penetrated a massive illegal bulletin board used for trading and selling copyrighted software programs * including programs sold by Microsoft, Adobe and Sony. Known as Cyberstrike, the investigation led to 10 indictments and set a new standard for undercover computer operations used by federal agencies. In 1997, the hacking group broke a large credit card theft operating on the Internet involving 86,000 in stolen card verifications, with more than $1 billion in exposure to the issuing banks and card companies.

"George Vinson and Lee Altschuler bring an incredible one-two punch to our Northern California practice -- their experience cuts across all aspects of law enforcement, from investigations to indictments to crisis management," said Joe Anastasi, who leads Deloitte & Touche's dispute consulting practice for Northern California and the Pacific Rim. Noting that as much as 90% of fraud and embezzlement cases may go unreported in Silicon Valley, Mr. Anastasi explained that companies have an acute need to assess internal controls and take a more assertive approach to financial crime.

"Many high tech managers are the first to admit they are not doing enough to protect themselves from high tech crimes," Mr. Anastasi said. "Coupled with the forensic accounting and specialized industry expertise we have as a firm, the addition of Vinson and Altschuler represents a tremendous double asset for our clients, especially in matters involving recovery of protected intellectual property, but also hard goods cases and financial fraud."

Mr. Vinson is based in Deloitte & Touche's San Francisco office and anchors the investigative team for Northern California. Mr. Altschuler works out of San Jose and leads investigative assignments for Silicon Valley. "We expect Lee and George to work in tandem-- it's likely that given their prominence in the region we will hire more forensic and investigative staff as our book of business continues to grow," said Mr. Anastasi.

Forensic Practice Booming, Along with Computer Crime

As corporate and financial fraud is expected to reach $200 billion in the next year, forensic and investigative services is one of the fastest growing specialties within Deloitte's dispute consulting practice, not only in high-tech country, but nationally.

Forensic accountants, specialists in tracing and recovering assets for clients hit by fraud and other financial loss, are in high demand of late. Computer technology and global schemes have made business fraud more complex, easier to perpetrate and hide, and harder to investigate internationally. The FBI has advised Congress that criminal cases involving computer intrusions more than doubled in 1998. A study last year by the Computer Security Institute showed that 64% of 520 companies polled reported information system security breaches -- an increase of 16% over 1997. Financial losses from 241 organizations that put a dollar figure on them totaled $136 million. This represents a 36% increase in reported losses over 1997. Incidents of serious invasions from external operating system intrusions have also made newspaper headlines. Mr. Altschuler and Mr. Vinson noted the case of two Cloverdale, CA teenagers who were responsible for a wave of Department of Defense computer break-ins several years ago -- a penetration broken by Mr. Vinson's Computer Intrusion Task Force. In a notorious 1997 incident, a hacker in Massachusetts penetrated regional telephone systems to impair communications at an airport and disconnect the control tower. However, a Computer Security Institute survey noted that disgruntled employees, many with legitimate access, pose the highest threat to a corporation's computer operating system.

White Collar Cybercrime 

So why do the majority of insider computer crimes go unreported? Apart from a lack of centralized data, many companies fear negative publicity associated with cyber crime. There is also concern that competitors will use the news to their advantage. "Of course, even with that mindset, most victims of electronic crime see the necessity of recovering assets and also preventing future intrusions," Mr. Vinson explained.

A recent survey found that over half of the world's largest companies had been victims of fraud in recent fiscal years. Of those, 25% reported losing at least $1 million during the past five years. Almost all fraud involved the misuse of computers in some form and was committed with the assistance of employees. An estimated 80% of computer-related crime is an inside job or has inside help. "Breaches in cyber security represents the greatest kind of white collar crime today," said Mr. Altschuler, who has prosecuted scores of such cases.

With the reluctance of companies to report insider crime to law enforcement agencies, corporations have increasingly turned to fraud and forensic experts at firms such as Deloitte & Touche for their combination of investigative skills with financial and accounting expertise, as well as specific industry expertise. Once evidence of fraud is discovered, investigators and forensic accountants -- including computer forensic specialists -- can be brought in to provide documentary evidence of criminality. Without this evidence, federal prosecutors often refuse to accept fraud cases involving losses. With it, however, the likelihood of asset recovery and prosecution increases exponentially.

Altschuler and Vinson Backgrounds

Both Mr. Altschuler and Mr. Vinson have confronted the rise in financial and cyber crime during their law enforcement careers. Mr. Altschuler successfully prosecuted a $310 million check kite case and was instrumental in prosecuting one of the first high-technology transfer cases in 1989. The latter involved theft of a secret object code for supercomputers with military applications. The insider in this case attempted to sell the code to Russian operatives. In a 1996 prosecution, Mr. Altschuler later won a case against an individual who had stolen the manufacturing specifications for Intel's 486 Pentium chip.

During his tenure in the San Jose U.S. Attorney's office, Mr. Altschuler aggressively pursued both high technology and white collar cases, including: industrial espionage involving the manufacturing specifications for a leading semi-conductor manufacturer, faked test results for U.S. Army combat radios used in Operation Desert Storm, software piracy and trademark violations, criminal misuse of the Internet, cellular telephone fraud, and matters involving parallel prosecution issues.

Mr. Vinson's most recent FBI posting was as Assistant Special Agent in Charge of the National Foreign Intelligence program and Counter Terrorism program in San Francisco. He managed 150 Agents charged with foreign counter intelligence. Mr. Vinson created the West Coast Computer Intrusion Team in 1995 expressly to provide the FBI with an enhanced capability for investigating computer intrusions, including international hacking. He was responsible for the FBI's assessment of threats to the National Information Infrastructure, which consists of the most sensitive computer operating systems involving the U.S. government, as well as major telecommunications and financial wire transfer systems. In the 1980s, he directed the FBI's investigations of four of the country's largest savings & loan failures. Mr. Vinson is a graduate of the California State University in Sacramento, and a California graduate of the FBI Academy. He is also a certified fraud examiner.

Mr. Altschuler earned his J.D. at the University of California in Davis, California. He has twice received the Director's Award for Superior Performance issued by the Executive Office for U.S. Attorneys, Department of Justice (1988 and 1994), representing the national award for top federal prosecutors.

Joining A Thriving Forensic Group

Mr. Altschuler and Mr. Vinson come to Deloitte & Touche in the midst of a wave of prominent new hires added to the forensic and investigative services group. Last month, Frank Piantidosi, a former partner at PriceWaterhouseCoopers who led PWC's role in the Voelcker Commission investigation of Swiss Banks, joined Deloitte & Touche as the National Director of the Forensic & Investigative Services Unit, based in New York. Also in February, the firm added Marvin Levy, a leading Washington, D.C.-based auditor. Mr. Levy, who has worked for the FBI, the Office of Inspector General and the IRS, is regarded as one of the pioneers of modern forensic accounting.

The group has also added major professionals in Philadelphia, Chicago, New York, Minneapolis, and Los Angeles, with backgrounds in both law enforcement and forensic accounting.

In another move, the group has formed a Global Fraud Task Force to assist clients in international fraud matters. Chairing that group is Peter McLaughlin, national partner in charge of fraud and investigative services. Mr. McLaughlin, a former Royal Canadian Mountie, works out of the Dallas office.

"Our clients encounter business problems in foreign countries which require forensic specialists to investigate situations using global forensic practitioners who understand the local culture and laws," Mr. McLaughlin said. The investigative arm of the fraud and forensic practice has a strong international presence in over 20 countries.