Scary new malware uses a Gmail trick to steal your data

By Chris Smith                            

         

Scary new malware uses a Gmail trick to steal your data

A new piece of malware that can spy on a user’s computer has been discovered, Wired reports, with researchers also having found a clever way for the program to communicate with its creators: Google’s popular Gmail email service.

 

 

FROM EARLIER: You can force your way into Google’s Inbox even without an invite
Security startup Shape Security says it found a new strain of malware that’s able to read instructions from Gmail drafts and respond to the hacker’s commands without the user actually noticing anything happening on the computer.


“What we’re seeing here is command and control that’s using a fully allowed service, and that makes it superstealthy and very hard to identify,” Shape security researcher Wade Williamson said. “It’s stealthily passing messages back and forth without even having to press send. You never see the bullet fired.”

For everything to work, hackers first set up an anonymous Gmail account, and then infect a target computer with the malware. After gaining control of the computer, the hacker will remotely open an invisible instance of Internet Explorer in which the Gmail account is loaded.

Once that’s done, information can be passed back and forth using the drafts folder. The malware uses a Python script to retrieve commands and code entered into the draft field, and then it can respond in Gmail drafts and can include the data it wants to steal.

The malware is apparently a variant of an existing trojan called Icoscript first found by security firm G-Data in August. Icoscript has been infecting computers since 2012, using Yahoo Mail to hide its command and control, before switching to Gmail drafts recently.

It’s not clear how many machines have been infected by this malware strain, and there’s no way of easily detecting it, Shape says.

Google has not said anything about this particular attack, telling Wired that “our systems actively track malicious and programmatic usage of Gmail and we quickly remove abusive accounts we identify.”

More from BGR: You can preorder Google’s incredible Nexus 6 right now [updated]

This article was originally published on BGR.com

Verizon gives 120 million customers a cookie they can’t delete

Mark Stockley | October 28, 2014 3:19 pm | Filed under: Mobile, Privacy, Web Browsers | 2

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Verizon Wireless has been caught with their hand in the cookie jar, so to speak.

It emerged last week that the cellular provider has been adding a unique identifier to its cell phone customers’ web traffic – the identifier can be used to track a user’s actions in exactly the same way as a cookie can but, unlike a cookie, it can’t be deleted.

An HTTP header containing a device-specific ID is tacked onto outgoing web traffic as it passes through Verizon’s network, after it has left their users’ phones and before it hits the internet.

The identifier is part of Verizon’s Relevant Mobile Advertising program but, as annoying as targeted ads can be, that’s not the reason I’m writing about it.

The problem with the identifier is a side-effect – the fact that it is sent to every website you visit, always. Even if you opt out of Relevant Mobile Advertising that pesky HTTP header gets added to every request that leaves your phone.

The ID itself doesn’t contain any useful information but it can be used to determine that different requests for web pages, images and other files have come from the same device.

And that’s exactly what you need if you want to track somebody online.

And unlike the cookies, Flash Cookies, Web Storage or ETags that are normally used for tracking you can’t hide yourself by deleting it.

If you have taken steps to protect your privacy by using private browsing or by blocking or regularly deleting cookies then Verizon has unintentionally undone your good work and gifted every website you visit a hook to hang its tracking on.

The flaw was first noticed by a Jacob Hoffman-Andrews from the Electronic Frontier Foundation (EFF) who announced it with this Twitter equivalent of a ‘face-palm':

I don’t know how I missed this: Verizon is rewriting your HTTP requests to insert a permacookie? Terrible.

The tweet links to an article on the Advertising Age website that explains how Verizon’s advertising model works. Completely unintentionally, it nails the privacy problem too with this description:

It’s a cookie alternative for a marketing space vexed by the absence of cookies.

Yes it is.
Since then Hoffman-Andrews’s has suggested that Verizon isn’t alone in fiddling with their customers’ traffic.

Looks like AT&T has a similar header, and I’ve heard reports about Sprint. Visit scooterlabs.com/echo from cell data to check.

It wouldn’t be a surprise to learn that others are doing this – they certainly wouldn’t be the first. In January 2012 mobile carrier O₂ were caught adding uniquely identifiable HTTP headers to their customers’ outgoing web traffic.

Only in O₂‘s case it wasn’t just a long, meaningless strings that were being used as IDs – it was customers’ own phone numbers.

What Verizon has done is far from the worst thing that’s happened on the internet but it is, at best, a careless snub to any of their customers who take steps to manage their online privacy.
So, if you’re one of the 120 million customers who might be affected by this, what can you do to put your privacy choices back in your own hands?

Because the header is tacked on to HTTP requests that have already left your phone there are no apps or browser add-ons you can install on your phone that will remove it.

However it can’t be added in the first place if you connect to the internet using a Virtual Private Network or Wi-Fi, or if you use the cell network but only browse websites that are available over HTTPS.

 From job to job to job, a life lived -- and lost

                          

Associated Press

ADAM GELLER, AP National Writer

© AP Photo/Mel Evans ADVANCE FOR USE SUNDAY, OCT. 26, 2014, AND THEREAFTER- In this Sept. 5, 2014 photo, Glen Carter, a 33-year-old Army veteran, morns as the casket of his girlfriend Maria Fernandes is lowered into the ground during… 

    

ELIZABETH, N.J. — Fumes poured from the Kia SUV as soon as an emergency medical technician broke one of the rear windows. Inside, the body of a dark-haired young woman reclined in the driver's seat, keys dangling from the ignition.
 

But who was she? How was it that her life had ended here, in a convenience store parking lot?
 

Waiting for the vapors to clear so they could search her belongings, police noted the most obvious clue: She was wearing a familiar white-and-brown uniform. By that night, friends had identified her as Maria Fernandes, 32 and single, who worked minimum wage jobs at three nearby Dunkin' Donuts shops — often sleeping in her car between shifts.
 

Within days, Fernandes was being mourned online as a tragic heroine and a casualty of modern economics. By the time friends filed past the open casket, some had had enough.
 

"Society has a way of looking down at people who try to make ends meet," friend Rochelle Sylvestre eulogized. "Maria won that battle! She is still winning!"

___

Maria Fernandes worked most days from 2 to 9 p.m. at a Dunkin' kiosk inside Newark's main train station. Then she headed to a second shop in Linden, where she worked from 10 p.m. to 6 a.m. On weekends, she added an 8 a.m. to 1 p.m. shift at a third shop in Harrison, picking up additional hours when asked.

She often appeared exhausted, co-worker Alaaddin Abuawada said.
 

She slumped on cartons in the Harrison store's kitchen for 15-minute naps. When co-workers called her name for help, she jokingly answered, "No."
 

This was not the life Fernandes had expected.
 

More than a decade ago, she told friends she wanted to be an actress. She talked about going to school to be a beautician.
 

Fernandes had traveled far to pursue those dreams. She was born in Fall River, Massachusetts, to Portuguese immigrant parents. When she was 11 her father, a welder, retired and moved the family to his hometown on Portugal's Atlantic coast.
 

"She was kind of lost in this small town which was not hers," half-sister Olinda Moreira said.
 

In 1995, Fernandes spotted a Volkswagen with New Jersey license plates and introduced herself to owner Jose Ribau, visiting his hometown. That seeded friendships with Ribau's daughters.
 

Six years later, Fernandes appeared unexpectedly at the Ribaus' house in Newark, lugging a suitcase. She was 19.
 

"She always talked about coming to the U.S.," Cristina Ribau Orama recalled. "It was just a matter of time."

Eventually, Fernandes found a job at Calandra's bakery. In 2010, managers noticed when she talked about needing money to support a new boyfriend's children and took on a second job at a Dunkin' Donuts shop.
 

She had met the boyfriend, Richard Culhane, online. When he lost his construction job months later, Fernandes urged him to move to Newark, though they'd never met, and paid his first month's rent. Eventually they moved in together.
 

Culhane still sounds perplexed by her generosity. She bought a tent for a homeless man she saw near work. After they broke up last year she continued stopping by with videogames for the boys.
 

"Before she left, she was paying almost all of it," Culhane said of the couple's bills. "She was like, 'I'll take care of you,'" he said.
 

Culhane said Fernandes was fond of his boys, but was overwhelmed by the noise they caused. In 2011, the couple's landlord filed eviction papers when Fernandes fell behind, although she was able to work out a restitution plan.
 

After quitting the bakery, she picked up hours at a second Dunkin' Donuts, then a third. Co-workers said all paid at or just above the minimum wage — which New Jersey recently raised by $1 to $8.25 an hour.

"I told her over and over, 'Quit one. You're working too much," Culhane said. "But she said, 'No, I'm used to it now.'"

Some of Fernandes' expenses reflected choices. Friends recall many times she helped pay for their food or travel.
 

Fernandes was one of eight or nine women bound together by their love for Michael Jackson. After Jackson died, they ventured to California each June to visit his burial site.
 

"To me, when you say you're not alone, it literally means Michael is always there," Fernandes said, in a video filmed outside Jackson's mausoleum this past June.
 

Fernandes' paychecks made the trips possible. While it's not clear exactly how much she earned, she worked at least 87 hours each week; friends say even more. That equates to yearly income of $36,000, assuming two weeks off.
 

But work increasingly limited the time she had to spend it. This past June, she told the other women she wouldn't be able to make it to California, then surprised them by showing up at the cemetery before vanishing at day's end.
 

"She knew what she was working for — to get to California, to see Michael," friend Dar 'Shay White said.

This spring Fernandes' profile on a dating website caught the eye of Glen Carter, a 33-year-old Army veteran. Carter said he encouraged Fernandes to consider moving to Pennsylvania. But the idea was cemented when Fernandes took three days off early August and they met for the first time, taking Carter's daughter to Hersheypark.
 

White said she encouraged Fernandes to move, but Fernandes worried about leaving the doughnut shops short-handed.
 

Fifteen minutes before sunrise on Monday, Aug. 25, Fernandes finished her overnight shift. Halfway home, she pulled in to the parking lot of a Wawa convenience store.
 

"U can call if you like," she texted Carter, and they discussed the day ahead. Then Fernandes tilted back the seat to catch up on sleep.
 

She never woke up.
 

Inside the vehicle, police found the gas can Fernandes kept behind the back seat, tipped over and leaking. Her death was caused by inhaling gas vapors and was accidental, the Union County Medical Examiner would determine.
 

At the cemetery, mourners lay roses on her cream-colored casket.
 

Beside the grave, Fernandes' co-worker, Armando Gonzalez, glanced at his watch. There was just enough time, he said, to run home, change into his familiar white-and-brown uniform and report for a 3 p.m. shift.
 

"We've got to keep living, you know?"

Adam Geller can be reached at features@ap.org. Follow him on Twitter at https://twitter.com/AdGeller

 

© AP Photo/Glen Carter ADVANCE FOR USE SUNDAY, OCT. 26, 2014, AND THEREAFTER- In this August 2014 photo provided by Glen Carter, Maria Fernandes, left, poses for a photo with boyfriend Glen Carter, right, and his daughter, Hannah Wilson, bes…

Expelled Nazis got millions in Social Security

 

Associated Press

DAVID RISING, RANDY HERSCHAFT and RICHARD LARDNER2 hrs ago

© AP Photo/Darko Bandic In this July 28, 2014, photo, Jakob Denzinger looks from his apartment window in Osijek, eastern Croatia. Denzinger is among dozens of death camp guards and suspected Nazi war criminal… 

    

OSIJEK, Croatia (AP) — Former Auschwitz guard Jakob Denzinger lived the American dream.

His plastics company in the Rust Belt town of Akron, Ohio, thrived. By the late 1980s, he had acquired the trappings of success: a Cadillac DeVille and a Lincoln Town Car, a lakefront home, investments in oil and real estate.
 

Then the Nazi hunters showed up.
 

In 1989, as the U.S. government prepared to strip him of his citizenship, Denzinger packed a pair of suitcases and fled to Germany. Denzinger later settled in this pleasant town on the Drava River, where he lives comfortably, courtesy of U.S. taxpayers. He collects a Social Security payment of about $1,500 each month, nearly twice the take-home pay of an average Croatian worker.
 

Denzinger, 90, is among dozens of suspected Nazi war criminals and SS guards who collected millions of dollars in Social Security payments after being forced out of the United States, an Associated Press investigation found.
 

The payments flowed through a legal loophole that has given the U.S. Justice Department leverage to persuade Nazi suspects to leave. If they agreed to go, or simply fled before deportation, they could keep their Social Security, according to interviews and internal government records.
 

Like Denzinger, many lied about their Nazi pasts to get into the U.S. following World War II, and eventually became American citizens.
 

Among those who benefited:
 

—armed SS troops who guarded the Nazi network of camps where millions of Jews perished.

—an SS guard who took part in the brutal liquidation of the Warsaw ghetto in Nazi-occupied Poland that killed as many as 13,000 Jews.
 

—a Nazi collaborator who engineered the arrest and execution of thousands of Jews in Poland.

—a German rocket scientist accused of using slave labor to build the V-2 rocket that pummeled London. He later won NASA's highest honor for helping to put a man on the moon.
 

The AP's findings are the result of more than two years of interviews, research and analysis of records obtained through the Freedom of Information Act and other sources.
 

The Justice Department denied using Social Security payments as a tool for removing Nazi suspects. But records show the U.S. State Department and the Social Security Administration voiced grave concerns over the methods used by the Justice Department's Nazi-hunting unit, the Office of Special Investigations.
 

State officials derogatorily called the practice "Nazi dumping" and claimed the OSI was bargaining with suspects so they would leave voluntarily.
 

Since 1979, the AP analysis found, at least 38 of 66 suspects removed from the United States kept their Social Security benefits.
 

Legislation that would have closed the Social Security loophole failed 15 years ago, partly due to opposition from the OSI. Since then, according to the AP's analysis, at least 10 Nazi suspects kept their benefits after leaving. The Social Security Administration confirmed payments to seven who are deceased. One living suspect was confirmed through an AP interview. Two others met the conditions to keep their benefits.
 

Of the 66 suspects, at least four are alive, living in Europe on U.S. Social Security.

In newly uncovered Social Security Administration records, the AP found that by March 1999, 28 suspected Nazi criminals had collected $1.5 million in Social Security payments after their removal from the U.S.
 

Since then, the AP estimates the amount paid out has reached into the millions. That estimate is based on the number of suspects who qualified and the three decades that have passed since the first former Nazis, Arthur Rudolph and John Avdzej, signed agreements that required them to leave the country but ensured their benefits would continue.
 

Long-living beneficiaries can collect hundreds of thousands of dollars in payments.
 

A single male who earned an average wage of $44,800 a year and turned 65 in 1990, the year after Denzinger did, would receive nearly $15,000 annually in Social Security benefits, according to the Urban Institute, a nonprofit public policy group in Washington. That's $375,000 over 25 years. The amounts are adjusted for inflation.
 

The Social Security Administration refused the AP's request for the total number of Nazi suspects who received benefits and the dollar amounts of those payments.
 

Spokesman William "BJ" Jarrett said the agency does not track data specific to Nazi cases. A further barrier, Jarrett said, is that there is no exception in U.S. privacy law that "allows us to disclose information because the individual is a Nazi war criminal or an accused Nazi war criminal."
 

The agency also declined to make the acting commissioner, Carolyn Colvin, or another senior agency official available for an interview.
 

The Justice Department declined the AP's request for an official to speak on the record. Spokesman Peter Carr said in an emailed statement that Social Security payments never were used as an incentive or as a threat to persuade Nazi suspects to depart voluntarily.
 

"The matter of Social Security benefits eligibility was raised by defense counsel, not by the department, and the department neither used retirement benefits as an inducement to leave the country and renounce citizenship nor threatened that failure to depart and renounce would jeopardize continued receipt of benefits," Carr said.

© AP Photo/Darko Bandic This July 28, 2014, photo shows Jakob Denzinger's portrait on the tombstone of his empty grave in Cepin eastern Croatia. Denzinger is among dozens of death camp guards and suspected Nazi war criminals who collected… The department opposed the legislation in 1999, Carr acknowledged, because it would have undermined the OSI's mandate to remove Nazi criminals as expeditiously as possible to countries that would prosecute them.
 

Speed was a key factor.
 

Survivors of the Holocaust who made the United States their home after the war had been forced to share it with their former Nazi tormenters. That had to change, and fast, the OSI's proponents said. If suspects were to stand trial, they needed to be found and ousted while they were alive. The OSI and its backers didn't want death to cheat justice.
 

Yet only 10 suspects were ever prosecuted after being expelled, according to the department's own figures.
 

Efraim Zuroff, the head Nazi hunter at the Simon Wiesenthal Center in Jerusalem, said while he could understand having to make the tough choice "between no justice and a measure of justice" by allowing suspects to retain their benefits to get them out of the country, the OSI should have well known there was no political will to prosecute them after their removal.
 

"If these arrangements were made based on the supposition that these people would ultimately be prosecuted on criminal charges in their countries of origin, that was purely wishful thinking," Zuroff said Monday. "Ultimately the numbers prove very clearly that almost none of these people were ever charged, let alone punished."
 

He called for legislation that would close the loophole.
 

"If it can be done, it should be done," he said.
 

At his home in Osijek, Denzinger would not discuss his situation. "I don't want to say anything," he told the AP in German as he rested on his walker in the hallway of his apartment.
 

But Denzinger's son, who lives in the U.S., confirmed his father receives Social Security payments and said he deserved them. "This isn't coming out of other people's pockets," Thomas Denzinger said. "He paid into the system." Plus his father is paying 30 percent in taxes. "They should be taking out nothing," he said.
 

Another former Nazi camp guard, longtime Montana resident Martin Hartmann, lives in Berlin and also is collecting Social Security, according to a person with knowledge of Hartmann's finances who requested anonymity because the person did not want to be associated with Hartmann's Nazi history. Hartmann, 95, left the U.S. in 2007, just before a federal judge issued an order to revoke his citizenship.
 

The loophole also means new suspects, including former SS unit commander Michael Karkoc, whom the AP located last year in Minnesota, could retain benefits even if removed to another country.

German prosecutors opened an investigation after the AP uncovered documentation showing Karkoc, 95, ordered his unit to raze a Polish village during the war. Dozens of women and children were killed in the attack.
 

The American public did not become fully aware until the mid-1970s that thousands of Nazi persecutors had immigrated to the U.S. after World War II, with estimates ranging as high as 10,000. They were shocked to learn their former enemies could be living next door.
 

Congressional pressure led to the creation of the OSI in 1979 and it had a single purpose: track down and expel Nazis who played a role in the persecution of civilians.
 

But because their crimes were committed outside the U.S. and almost always against non-Americans, Nazi suspects could not be tried in U.S. courts.
 

The only other option available was to prove they lied to immigration authorities about what they did during the war, to strip them of their citizenships through a lengthy legal process, and then to attempt either deportation or extradition.
 

But almost no countries were willing to accept them through deportation, and few pressed charges that would have forced extradition.
 

So the Justice Department devised a strategy to overcome these difficulties, including encouraging them to leave voluntarily, which meant they would avoid the messy process of deportation but keep their retirement benefits.
 

The OSI regularly trumpeted its successes, and boasted in 2006 that its work had led to more Nazi expulsions from the U.S. in the previous 25 years than all other countries in the world combined.

"We really did want people to give up and go," said a senior Justice Department official, who defended the practice as a way of avoiding deportation proceedings that could last as long as 10 years.
 

"The goal is still to remove these people as quickly as possible, and the fact that as soon as we move to the deportation stage they run the risk of losing their benefit(s) is still an encouragement to leave," said the official, who spoke on condition of anonymity because he was not authorized to speak publicly about the department's thinking on the matter.
 

The OSI even went so far as to encourage several suspects to use U.S. passports for legal travel to allied countries, such as Germany or Austria. Once there, they would renounce their U.S. citizenships and still be able to collect Social Security benefits. This practice became known as "Nazi dumping" within diplomatic circles and stoked outrage at the State Department and in capitals in Europe.
 

The path for the OSI's approach opened when Congress passed legislation making "participation in Nazi persecution" grounds for deportation. But the Social Security Act was not changed to make such crimes also grounds for the termination of benefits.
 

An internal memo drafted in 1984 by State Department officials discussed how deals were made behind the scenes. To get suspects to renounce citizenship, the OSI would delay legal action and "refrain from seeking in any way to limit the subject's receipt of U.S. Social Security benefits," the memo said.
 

The criticism triggered a bitter back-and-forth between the two agencies, with each accusing the other of being un-American. Decades later, the acrimony lingers.
 

"It was not upfront, it was not transparent, it was not a legitimate process," said James Hergen, a former State Department legal adviser who once described the OSI's approach as a "cynical publicity ploy." ''This was not the way America should behave. We should not be dumping our refuse, for lack of a better word, on friendly states."
 

Neal Sher, who was OSI's director from 1983 to 1994, said the State Department put a higher priority on diplomatic niceties than holding former members of Adolf Hitler's war machine accountable.

"State always wraps itself in the flag. Unfortunately, it's not the American flag," said Sher, recalling a complaint voiced by a former colleague.
 

One of the first instances of "Nazi-dumping" involved Rudolph, a celebrated rocket scientist, and set off a diplomatic firestorm.
 

Rudolph was brought to the U.S. after the war because of his technical brilliance. NASA awarded him a Distinguished Service Medal for achievements that included his central role in the Apollo project that put a man on the moon. Decades later he was accused of "working thousands of slave laborers to death" in the Nazi factory that built the V-2 rocket, and he faced the loss of his citizenship and deportation.
 

Rudolph and Avdzej, another Nazi war crimes suspect, became the first to voluntarily leave the United States under the OSI's "renunciation program." When they arrived in Germany in 1984 and forfeited their U.S. citizenships, a furious West German government filed a formal protest.
 

Amid State Department objections, the OSI came up with a "new scheme," said an internal memo, obtained by the AP, to then-Secretary of State George Shultz. The difficulty in finding cooperative countries, according to the May 1987 memo written by senior State Department officials, "has led OSI to resort to bargains with Nazi persecutors which permit their voluntary departure from the U.S."

Another diplomatic uproar ensued when Austrian authorities learned about a deal with Martin Bartesch, a former SS guard at the Mauthausen concentration camp in Austria. Prisoners were forced to work at Mauthausen as slave laborers. At least 95,000 died from gunfire, gassings or starvation.
 

Unlike most guards against whom little incriminating evidence survived, captured Nazi records used by American prosecutors showed that Bartesch shot and killed a French Jew at the camp in 1943. Bartesch's family denied he had done anything wrong at Mauthausen.
 

In 1987, Bartesch landed, unannounced, at the airport in Vienna. Two days later, under the terms of the deal, his U.S. citizenship was revoked.
 

The Romanian-born Bartesch, who had immigrated to the U.S. in 1955, was suddenly stateless — and Austria's problem. The fallout forced U.S. Attorney General Edwin Meese to apologize to the Austrian interior minister and assure him Austria would not be blindsided again.
 

Bartesch received Social Security benefits in Austria until he died in 1989.
 

The State Department continued to protest the arrangement, but to no avail.
 

"Everybody knew there was no profit in opposing it. It was professional suicide," remembered Hergen. "Why would the White House want to be tagged with stopping the deportation of these Nazi monsters? You were the devil if you opposed it."
 

The year before Bartesch died, Congress amended U.S. law so that individuals deported for aiding in the Nazi persecution also would lose their Social Security benefits. But if a Nazi suspect left before a final deportation order was issued, the benefits could continue.

____

The Clinton administration in 1997 began internal discussions over whether to terminate benefits to Nazi suspects when they were stripped of their citizenship, which is called denaturalization, instead of when they were deported. That would have lowered the threshold for terminating a suspect's benefits.

The acting commissioner of the Social Security Administration at the time, John Callahan, initiated the debate. "Social Security benefits cannot, and should not, be used as a bargaining tool," Callahan wrote in an April 1997 memo to Clinton's domestic policy chief.
 

Callahan did not respond to the AP's requests for comment.
 

Elena Kagan, then a top deputy in the domestic policy office and now a U.S. Supreme Court justice, seemed unmoved by Callahan's plea. "This is a pretty snotty letter," Kagan jotted in the margin of the memo.
 

The Justice Department supported the proposal, albeit tepidly, the records show.
 

But working behind the scenes, a pair of influential Jewish groups succeeded in getting the White House to back down. The World Jewish Congress and the American Gathering of Holocaust Survivors threatened to publicly accuse the administration of being soft on Nazi prosecutions if it went forward.
 

Sher, the former OSI chief, boosted the hand the Jewish groups were playing. After a stint with the powerful American Israel Public Affairs Committee, he was now representing the American Gathering of Holocaust Survivors.
 

The groups argued closing the loophole would result in greater leniency for Nazi suspects. Federal judges hearing the denaturalization cases, they said, would not see perpetrators of the Holocaust before them, but feeble old men who were on the verge of not only losing their citizenships, but their Social Security too. That would undercut the primary goal of getting suspects out of the U.S. and to countries willing to prosecute them.
 

Inside the Clinton White House, senior aides found this logic hard to grasp. But it was a fight they did not want.
 

The arguments for preserving the loophole do "not sound fully compelling, EXCEPT that it is impossible to ignore who is raising the concern," a White House staffer wrote in a memo to Kagan. The groups promised to "protest vociferously," it added. The proposal was shelved.
 

Two years later, in 1999, U.S. Rep. Bob Franks, a Republican from New Jersey, introduced legislation to cut off benefits for any Nazi persecutor who left the country voluntarily, whether they were U.S. citizens or not.
 

This time, the Justice Department's stance was unequivocal. The bill, it said, would undercut the OSI's mission.
 

Sher defended the department's stance. Six years to 10 years in litigation costs could be saved if suspects left voluntarily, he said. During that time, they would continue to receive retirement benefits as well as Medicare, Sher said.
 

Not all Jewish groups favored keeping the loophole.
 

Rabbi Marvin Hier, who still heads the Simon Wiesenthal Center he founded in 1977, wanted it shut. There was "no will" in Europe to prosecute Nazi suspects, he said, and the benefits they collected allowed them to live in relative comfort.
 

"Someone receiving an American pension could live very well in Europe or wherever they settled," Hier said. "We, in effect, were rewarding them. It didn't make any sense."
 

Despite attracting nearly 50 co-sponsors, the Franks bill failed to pass after running into opposition similar to what the Clinton White House faced. Franks died in 2010.
 

U.S. Rep. Carolyn Maloney of New York, a senior Democrat on the House Oversight and Government Reform Committee, said in an AP interview she plans to introduce legislation to close the loophole.
 

"It's absolutely outrageous that Nazi war criminals are continuing to receive Social Security benefits when they have been outlawed from our country for many, many, many years," said Maloney, a co-sponsor of the Franks legislation.

 

Many of the former Nazis who came to the U.S. after World War II blended in just as Hartmann and Denzinger did. They worked, raised their families, paid their taxes. They said little about what they did during the war.
 

American immigration law barred entry to members of Hitler's Nazi party, the fanatical SS units, and anyone else tied to a group considered hostile to the U.S. The rules were amended in the early 1950s. The list of banned organizations was dropped and the focus shifted to keeping out individuals who "personally advocated or assisted in the persecution of any person or group of persons because of race, religion or national origin."
 

The SS units responsible for guarding the Nazi death and concentration camps were called Totenkopf, or Death's Head, and their troops wore a silver skull-and-crossbones on their uniform collars. They were still generally refused entry after the change. But other SS members designated primarily for combat roles were more likely to be let in.
 

Many got around the restrictions by simply lying about their service in the SS, only to be found decades later by OSI. Others such as Rudolph, whose skills as a rocket scientist trumped what officials knew about his background, were intentionally allowed in.
 

In addition to Denzinger and Hartmann, Peter Mueller, 90, a former guard at the Natzweiler camp in France, lives in a nursing home in Worms, Germany. Wasyl Lytwyn, 93, who served in the SS Trawniki unit that took part in the destruction of the Jewish ghetto in Warsaw, is believed to be living in Ukraine.
 

Lytwyn's 1995 settlement agreement stipulates that his Social Security benefits would not be affected by leaving. Mueller would have been eligible for benefits based on the circumstances of his departure, but the Social Security Administration would neither confirm nor deny whether he was receiving payments.
 

Hartmann, the former Nazi SS guard living in Berlin, volunteered for the SS in 1943 and was assigned to the Death's Head unit guarding Sachsenhausen, a concentration camp on the outskirts of the Nazi capital.
 

Prisoners at Sachsenhausen were forced into slave labor, tortured and subjected to horrific medical experiments that included sterilizations, castrations and injecting infectious material into a prisoner's body, according to the U.S. Holocaust Memorial Museum. An estimated 30,000 prisoners died of starvation, disease, exhaustion or were murdered.
 

After the war, Hartmann, his wife and son first settled in Mankato, Minnesota. The family then moved to Helena, Montana, where he worked at the local newspaper, The Independent Record, as a typesetter. He was granted U.S. citizenship in 1961.
 

When the news broke about Hartmann in 2007, Nathan Gasch, an Auschwitz survivor and Hartmann's neighbor in a quiet Arizona retirement community called Leisure World, told reporters of an unnerving visit to Hartmann's home. There, on the wall, was a picture of Hartmann dressed in an SS uniform and wearing a Nazi cap. Gasch did not notify the authorities. "I just let it go," said Gasch, who died last year.
 

Hartmann secured his departure deal in 2007 after reaching an agreement with the OSI in which he acknowledged lying about his Nazi past when he immigrated to the United States in 1955. As part of a settlement reached in U.S. District Court in Washington, the Romanian-born Hartmann agreed to leave the U.S. at his own expense.
 

The court's ruling was based on information provided by the OSI. But the AP uncovered documents through a FOIA request to the National Archives that showed Hartmann did tell American authorities, when he was applying to immigrate, about his service in the SS and as a camp guard at Sachsenhausen.
 

Carr, the Justice Department spokesman, did not specify in an email Wednesday whether the documents were turned over to Hartmann. He said Hartmann admitted making misrepresentations about being at Sachsenhausen. Even if he hadn't, Carr wrote, his citizenship still would be revoked because of the SS connection.

 

Denzinger was born in Cepin, Yugoslavia (now Croatia), a town outside Osijek with a large population of ethnic Germans. In 1942, at age 18, he began serving in one of the Death's Head battalions.
 

His first posting was to Mauthausen, where he trained to be an armed camp guard. He was subsequently stationed in several other camps, including Sachsenhausen and the Auschwitz death camp complex in occupied-Poland where the Holocaust Museum estimates nearly a million Jews were killed.
 

On his immigration visa and, later, his application for U.S. citizenship, Denzinger omitted any references to the SS or death camps, writing only that he served in the German army.

His citizenship was revoked by a federal judge in November 1989, a few months after he fled.

Thomas Denzinger said his father did not want to put his family through a long and public legal proceeding.
 

"He's made a new life for himself over there," he said. "But he's angry. He claims he was drafted into the army and he did as he was told. You do as you are told or they line you up against a wall and shoot you. You don't have any choice."
 

Croatian authorities this year opened an investigation of Denzinger's World War II service. They would not comment on the inquiry while it is ongoing.
 

In Osijek, a town of baroque spires and cobblestone squares, Denzinger occupies the entire second floor of his riverfront building, and has a live-in helper to attend to his needs.
 

He spends tranquil days gazing out at the marina from his spacious apartment, and has a routine of riverside strolls and turkey cutlets and Cokes at his favorite Italian restaurant, where he's known as a generous tipper.
 

And the former Auschwitz guard has meticulously choreographed another departure.
 

His gravestone — including a photograph of himself wearing a suit and tie — is already in place in Cepin's Catholic Cemetery about 10 kilometers (6 miles) from his apartment.
 

The black marble slab is polished to a high gloss in the third row of the cemetery, not far from the chapel. It is engraved with an epitaph from his "loved ones": "Proud that we had you; happy that we were with you; eternally sad that we lost you."

 

Herschaft reported from New York and Lardner from Washington.

 

Associated Press writers Gene Johnson in Seattle; Rachel La Corte in Olympia, Washington; Darko Bandic in Osijek; Monika Scislowska in Warsaw; and Eric Tucker and Stephen Ohlemacher in Washington contributed to this report.

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Americans face post-foreclosure hell as wages garnished, assets seized

Reuters

By Michelle Conlin 10/13/2014

         

© REUTERS/Mario Anzuoni A lock secures a chain on the steel fence of a foreclosed home previously owned by U.S. Bancorp in Los Angeles, California July 17, 2012. 

             

NEW YORK - Many thousands of Americans who lost their homes in the housing bust, but have since begun to rebuild their finances, are suddenly facing a new foreclosure nightmare: debt collectors are chasing them down for the money they still owe by freezing their bank accounts, garnishing their wages and seizing their assets.

 

By now, banks have usually sold the houses. But the proceeds of those sales were often not enough to cover the amount of the loan, plus penalties, legal bills and fees. The two big government-controlled housing finance companies, Fannie Mae and Freddie Mac, as well as other mortgage players, are increasingly pressing borrowers to pay whatever they still owe on mortgages they defaulted on years ago.
 

Using a legal tool known as a "deficiency judgment," lenders can ensure that borrowers are haunted by these zombie-like debts for years, and sometimes decades, to come. Before the housing bubble, banks often refrained from seeking deficiency judgments, which were seen as costly and an invitation for bad publicity. Some of the biggest banks still feel that way.

 

But the housing crisis saddled lenders with more than $1 trillion of foreclosed loans, leading to unprecedented losses. Now, at least some large lenders want their money back, and they figure it’s the perfect time to pursue borrowers: many of those who went through foreclosure have gotten new jobs, paid off old debts and even, in some cases, bought new homes.

 

"Just because they don't have the money to pay the entire mortgage, doesn't mean they don't have enough for a deficiency judgment," said Florida foreclosure defense attorney Michael Wayslik.
 

Advocates for the banks say that the former homeowners ought to pay what they owe. Consumer advocates counter that deficiency judgments blast those who have just recovered from financial collapse back into debt — and that the banks bear culpability because they made the unsustainable loans in the first place.

 

“SLAPPED TO THE FLOOR”

 

Borrowers are usually astonished to find out they still owe thousands of dollars on homes they haven't thought about for years.

 

In 2008, bank teller Danell Huthsing broke up with her boyfriend and moved out of the concrete bungalow they shared in Jacksonville, Florida. Her name was on the mortgage even after she moved out, and when her boyfriend defaulted on the loan, her name was on the foreclosure papers, too.
 

She moved to St. Louis, Missouri, where she managed to amass $20,000 of savings and restore her previously stellar credit score in her job as a service worker at an Amtrak station.

 

But on July 5, a process server showed up on her doorstep with a lawsuit demanding $91,000 for the portion of her mortgage that was still unpaid after the home was foreclosed and sold. If she loses, the debt collector that filed the suit can freeze her bank account, garnish up to 25 percent of her wages, and seize her paid-off 2005 Honda Accord.

 

"For seven years you think you're good to go, that you've put this behind you," said Huthsing, who cleared her savings out of the bank and stowed the money in a safe to protect it from getting seized. "Then wham, you get slapped to the floor again."

 

Bankruptcy is one way out for consumers in this rub. But it has serious drawbacks: it can trash a consumer's credit report for up to ten years, making it difficult to get credit cards, car loans or home financing. Oftentimes, borrowers will instead go on a repayment plan or simply settle the suits — without questioning the filings or hiring a lawyer — in exchange for paying a lower amount.

 

Though court officials and attorneys in foreclosure-ravaged regions like Florida, Ohio and Illinois all say the cases are surging, no one keeps official tabs on the number nationally. "Statistically, this is a real difficult task to get a handle on," said Geoff Walsh, an attorney with the National Consumer Law Center.  

 

Officials in individual counties say that the cases, while virtually zero a year or two ago, now number in the hundreds in each county. Thirty-eight states, along with the District of Columbia, allow financial institutions recourse to claw back these funds. 

 

"I've definitely noticed a huge uptick," said Cook County, Illinois homeowner attorney Sandra Emerson. "They didn’t include language in court motions to pursue these. Now, they do."

"A CURSE"

 

Three of the biggest mortgage lenders, Bank of America, Citigroup, JPMorgan Chase & Co and Wells Fargo & Co., all say that they typically don't pursue deficiency judgments, though they reserve the right to do so. "We may pursue them on a case-by-case basis looking at a variety of factors, including investor and mortgage insurer requirements, the financial status of the borrower and the type of hardship," said Wells Fargo spokesman Tom Goyda. The banks would not comment on why they avoid deficiency judgments.

 

Perhaps the most aggressive among the debt pursuers is Fannie Mae. Of the 595,128 foreclosures Fannie Mae was involved in – either through owning or guaranteeing the loans - from January 2010 through June 2012, it referred 293,134 to debt collectors for possible pursuit of deficiency judgments, according to a 2013 report by the Inspector General for the agency’s regulator, the Federal Housing Finance Agency.

 

It is unclear how many of the loans that get sent to debt collectors actually get deficiency judgments, but the IG urged the FHFA to direct Fannie Mae, along with Freddie Mac, to pursue more of them from the people who could repay them.

 

It appears as if Fannie Mae is doing just that. In Florida alone in the past year, for example, at least 10,000 lawsuits have been filed — representing hundreds of millions of dollars of payments, according to Jacksonville, Florida-based attorney Chip Parker.

 

Parker is about to file a class action lawsuit against the Dallas-based debt collection company, Dyck O'Neal, which is working to recoup the money on behalf of Fannie Mae. The class action will allege that Dyck O'Neal violated fair debt collection practices by suing people in the state of Florida who actually lived out of state. Dyck O'Neal declined to comment.

 

In Lee County, Florida, for example, Dyck O'Neal only filed four foreclosure-related deficiency judgment cases last year. So far this year, it has filed 360 in the county, which has more than 650,000 residents and includes Ft. Myers. The insurer the Mortgage Guaranty Insurance Company has also filed about 1,000 cases this past year in Florida alone.

 

Andrew Wilson, a spokesman for Fannie Mae, said the finance giant is focusing on "strategic defaulters:" those who could have paid their mortgages but did not. Fannie Mae analyzes borrowers' ability to repay based on their open credit lines, assets, income, expenses, credit history, mortgages and properties, according to the 2013 IG report.  "Fannie Mae and the taxpayers suffered a loss. We're focusing on people who had the ability to make a payment but decided not to do so,” said Wilson.

 

Freddie Mac spokesman Brad German said the decision to pursue deficiency judgments for any particular loan is made on a "case-by-case basis."
 

The FHFA declined to comment.

 

But homeowner-defense lawyers point out that separating strategic defaulters from those who were in real distress can be tricky. If a distressed borrower suddenly manages to improve their financial position – by, for example, getting a better-paying job - they can be classified as a strategic defaulter.

 

Dyck O'Neal works with most national lenders and servicing companies to collect on charged-off residential real estate. It purchases foreclosure debts outright, often for pennies on the dollar, and also performs collections on a contingency basis on behalf of entities like Fannie Mae. "The debt collectors tend to be much more aggressive than the lenders had been," the National Consumer Law Center's Walsh said.

 

A big reason for the new surge in deficiency claims, attorneys say, is that states like Florida have recently enacted laws limiting the time financial institutions have to sue for the debt after a foreclosure. In Florida, for example, financial institutions now only have a year after a foreclosure sale to sue — down from five.

 

Once financial institutions secure a judgment, they can sometimes have years to collect on the claim. In Maryland, for example, they have as long as 36 years to chase people down for the debt. Financial institutions can charge post-judgment interest of an estimated 4.75 percent a year on the remaining balance until the statute of limitation runs out, which can drive people deeper into debt.

 

"This is monumentally unfair and damaging to the economy," said Ira Rheingold, the executive director of the National Association of Consumer Advocates. "It prevents people from moving forward with their lives."

 

Software developer Doug Weinberg was just getting back on his feet when he got served in July with a $61,000 deficiency judgment on his old condo in Miami's Biscayne Bay. Weinberg thought the ordeal was over after Bank of America, which rejected Weinberg’s short sale offers, foreclosed in 2009.

 

"It's a curse," said Weinberg. "It's still haunting me. It just doesn't go away."
 

(Reporting by Michelle Conlin in New York; Editing by Dan Wilchins and Martin Howell)