Sep 19

Secret Service Investigates Breach at U.S. Govt IT Contractor

The U.S. Secret Service is investigating a breach at a Virginia-based government technology contractor that saw access to several of its systems put up for sale in the cybercrime underground, KrebsOnSecurity has learned. The contractor claims the access being auctioned off was to old test systems that do not have direct connections to its government partner networks.

In mid-August, a member of a popular Russian-language cybercrime forum offered to sell access to the internal network of a U.S. government IT contractor that does business with more than 20 federal agencies, including several branches of the military. The seller bragged that he had access to email correspondence and credentials needed to view databases of the client agencies, and set the opening price at six bitcoins (~USD $60,000).

A review of the screenshots posted to the cybercrime forum as evidence of the unauthorized access revealed several Internet addresses tied to systems at the U.S. Department of Transportation, the National Institutes of Health (NIH), and U.S. Citizenship and Immigration Services (USCIS), a component of the U.S. Department of Homeland Security that manages the nation’s naturalization and immigration system.

Other domains and Internet addresses included in those screenshots pointed to Miracle Systems LLC, an Arlington, Va. based IT contractor that states on its site that it serves 20+ federal agencies as a prime contractor, including the aforementioned agencies.

In an interview with KrebsOnSecurity, Miracle Systems CEO Sandesh Sharda confirmed that the auction concerned credentials and databases were managed by his company, and that an investigating agent from the Secret Service was in his firm’s offices at that very moment looking into the matter.

But he maintained that the purloined data shown in the screenshots was years-old and mapped only to internal test systems that were never connected to its government agency clients.

“The Secret Service came to us and said they’re looking into the issue,” Sharda said. “But it was all old stuff [that was] in our own internal test environment, and it is no longer valid.”

Still, Sharda did acknowledge information shared by Wisconsin-based security firm Hold Security, which alerted KrebsOnSecurity to this incident, indicating that at least eight of its internal systems had been compromised on three separate occasions between November 2018 and July 2019 by Emotet, a malware strain usually distributed via malware-laced email attachments that typically is used to deploy other malicious software.

The Department of Homeland Security did not respond to requests for comment, nor did the Department of Transportation. A spokesperson for the NIH said the agency had investigated the activity and found it was not compromised by the incident.

“As is the case for all agencies of the Federal Government, the NIH is constantly under threat of cyber-attack,” NIH spokesperson Julius Patterson said. “The NIH has a comprehensive security program that is continuously monitoring and responding to security events, and cyber-related incidents are reported to the Department of Homeland Security through the HHS Computer Security Incident Response Center.”

One of several screenshots offered by the dark web seller as proof of access to a federal IT contractor later identified as Arlington, Va. based Miracle Systems. Image: Hold Security.

The dust-up involving Miracle Systems comes amid much hand-wringing among U.S. federal agencies about how best to beef up and ensure security at a slew of private companies that manage federal IT contracts and handle government data.

For years, federal agencies had few options to hold private contractors to the same security standards to which they must adhere — beyond perhaps restricting how federal dollars are spent. But recent updates to federal acquisition regulations allow agencies to extend those same rules to vendors, enforce specific security requirements, and even kill contracts that are found to be in violation of specific security clauses.

In July, DHS’s Customs and Border Patrol (CPB) suspended all federal contracts with Perceptics, a contractor which sells license-plate scanners and other border control equipment, after data collected by the company was made available for download on the dark web. The CPB later said the breach was the result of a federal contractor copying data on its corporate network, which was subsequently compromised.

For its part, the Department of Defense recently issued long-awaited cybersecurity standards for contractors who work with the Pentagon’s sensitive data.

“This problem is not necessarily a tier-one supply level,” DOD Chief Information Officer Dana Deasy told the Senate Armed Services Committee earlier this year. “It’s down when you get to the tier-three and the tier-four” subcontractors.

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  1. Cobalt Strike – nice.

    • Suspiciously included in a screenshot… probably trying to seem legit by casually showing that. That makes me think they don’t have good, up to date, information. It seems desperate, like “look, I’m a leet hax0r”.

  2. Does anyone believe it was only old stuff?

    • Yes. Absolutely.

      99% of the data out there is “old stuff”. Because as companies at least try to practice good cyber security… they won’t go back and scrub the old data from where the reside…. much easier to just change passwords than to scrub the entire environment of any existence of the old credentials.

      • All it takes is for ONE of the credentials to be valid.

        Frankly, in my experience, I’ve seen *test* credentials have much longer shelf life than production creds.

        Consider this: in this case, according to the CEO, it is the test environment that has been breached. This lends more credence to the fact that less security is applied there than in the production environment, which means that it is more likely that the creds still work.

        Maybe they won’t easily lead to access to production or maybe they will, but the idea that better security hygiene is being performed in that environment is undermined by the mere fact of its breach.

        • Agreed. But if we accept that the CEO was right about these creds being for a test environment… we also should accept what he says about them being invalid, “and it is no longer valid.”

          Even if they did miss something years ago, best believe they are going back to ensure that everything had been changed since that screenshot.

    • >Does anyone believe it was only old stuff?

      No. Not from what I have seen across dozens of environments, in multiple industries, whether large or small.

  3. There is plenty of good information on most test systems. Dismissing the importance of the data because it is test data is poor thinking.

    Also, given the glacial pace of most federal government departments and agencies, even years-old data is still good data.

    Another instance of a corporate breach response consisting of “hide and minimize”.

    • True. Service accounts and database credentials are usually the last to be rotated, if ever. So it is definitely true that “old data” or credentials on “test systems” are still very valuable…
      The key phrase is “it is no longer valid.” Which suggests that these credentials are no longer going to work even for test systems.

      I certainly don’t fully trust the CEO who has every incentive to “hide and minimize” the breach. But he would be very stupid to outright lie, since the investigation will find this out. The reputational hit will be detrimental and may sink the company.

      On the other hand… the anonymous “dark web seller” has every incentive to lie.
      No real world consequences for exaggerating the loot. Some sucker could pay 6BTC (~$60,000) and this guy is gone. There isn’t much honor in thieves.

      So it comes down to, who are you going to believe more. The CEO who may lose his company for lying to federal investigators? Or some anonymous guy on the dark web?

      • like the ceo isn’t going to lie. we live in the real world joe. i trust the hackers more in this case because now they have the test systems and know how the real systems are designed. too easy to get in now, using the old framework as leverage, then pivoting for persistence and system level access. hell, if i had permission i could probably get in in about an hour. to the gov’s sites, not this 3d party’s, using the screenshots and linkedin. and i am not even a leet haxor.

        • Oh the arrogance.
          Sure, test systems do provide insight into an environment. Depending how old it is, it could resemble the real network. Then again, it may not. But this guy isn’t selling a detailed network diagram. He is selling credentials that are old and probably won’t work. Those credentials were probably rotated years ago.

          The CEO is not anonymous, and faces severe consequences for lying. Yeah, he might lie. That’s the real world.
          But you are naive to trust some rando dude on the dark web just because he shows a screenshot and demands $60,000.
          A sucker is born every minute, and this guy is going to get away with selling a box of old crap, and then move along.
          Do you really think a criminal who is fine at hacking and stealing, draws the line at lying to people?
          Haha… naive suckers every minute. He’ll probably get his Bitcoin, because someone like you will buy his fake warez.

          • Internet Achievement Unlocked!

            Congratulations on your Internet Achievement, Joe! With the powers vested in me, I hereby award you with two Internet Achievement Medals:

            – 1 Platinum medal: “Mr. Argumentative”
            – 1 Gold medal with Silver Star: “Ad Hominem Champ”

            Keep up the great work, Joe! You are doing the internet a service with constant arguments and unnecessary ad hominem attacks on strangers on our dear internet.

            –Internet Medal Hander-Outter Extraordinaire 2.0

            • Who was the ad hominem attack against exactly? The anonymous hacker selling invalid creds… or the anonymous commentator who made the claim of being able to get into government systems within an hour?

              Perhaps the high and mighty (and sarcastic) should look up what an ad hominem attack really means.

    • I agree. Our test system is typically a periodic snapshot of our production system. While the credentials differ, the goodies in the data are real and valuable.

      • But only the credentials are for sale… so even if there is value in the test environment… that isn’t for sale.
        It’s like buying “a chance to win”. They are nearly always a scam. If these creds don’t work, and they probably don’t…. then there is very little value.

  4. I’m hoping somebody on that criminal forum paid the ~$60k to have access to all of that information, but the admin saw this article and changed the passwords forcing them to be out ~$60k now.

  5. The Sunshine State

    More Russian wannabe “script kiddies” with Asperger’s who will get caught due to a lack of good OPSEC?

    Stay tuned !

    • Looks like you are getting your articles confused.
      People running botnets, or active campaigns have to continuously practice good OPSEC to avoid getting caught.
      People who hack once and just sell breach data on the dark web don’t get caught very often. They don’t really have to stay active, and being one seller is MUCH easier to manage anonymously compared to running the store or service.

      Also, why would anyone in Russia try to claim Asperger’s? They just have to be Russian, and avoid attacking any political allies. They won’t be prosecuted.

      • The Sunshine State

        You didn’t know ” Asperger’s” is the go to excuse for cyber-criminals LOL

        Miscreants in Russia do get caught and are extradited back to the United States for prosecution.

        • Who “in Russia” has been extradited?
          Are you talking about the russian guy who was arrested and extradited from Czech Republic to the US? Russia tried to fight it.

          Go ahead, name all the hackers who have used Asperger’s as a defense. It’ll be counted on one hand.

      • I think Sunshine State was being sarcastic, not literal in their comment – all you ever hear when reading articles about perpetrators of cyber crime getting caught is that it was some particular nation state backed group or it was some teenage kid in their bedroom who is super intelligent and bored because they have autism or some form of learning disability which makes them socially awkward or unacceptable in their own eyes.

        • “all you ever hear when reading articles”
          Sounds like a case of observer bias.

          Mostly it is the comment section that focuses and exaggerates these claims that so many hackers are using Asperger’s as a defense.

    • Haha…Good one!

  6. The move to hold federal contractors to the same standard is hardly recent or new – it was literally years in the making and has been in place for at least two years. A Federal Record entry of proposed contract changes, testimony, proposed standards at NIST, etc., led to additions to the standards from NIST to all DoD contracts. NIST SP 800-171.

  7. I’m mildly curious why the investigative agency is the Secret Service, rather than the FBI. I would have contacted the latter one.

    • Hi Tim,
      The reason for the Secret Service being the investigating branch is part of the Patriot Act. The Patriot Act mandated that Secret Service enact Electronic Crimes Task Force teams. They are responsible for investigating crimes against United States financial institutions and critical infrastructure.


      • Very interesting. Many thanks for the info, Ryan.

      • Yep…. and even long before the Patriot Act… even before the FBI existed, to the very founding of the Secret Service in 1865… they have always be the premier investigative agency related to financial crime. We only know them today for the Presidential Protective Division because they were best federal law enforcement agency at the time so Congress wanted them for Presidential protection in 1901…. still before the FBI.

      • The reason is primarily that the Secret Service is part of DHS.

    • They have quite a good cyber team. USSS has both Financial and Electronic crimes forces. Obviously there is a lot of overlap between the two these days.

  8. Perhaps we finally found Hillary’s 30,000 missing emails ?

  9. Those emails still lost? I would check in the house and the Senate, they are supposed to have direct copies off the nipple server. If not there, they could get the originals from the state depts server. Which were copied by the FBI. Come to think of it, they probably are missing now.

  10. DOE regulates Nuclear facilities and sure enough this company consults on Nuclear security. They will find out which insider sold access. Hopefully it’s not too late because some bad actors have been already penetrating the power grid. https://www.utilitydive.com/news/ferc-nerc-propose-to-publicly-identify-utilities-violating-cybersecurity-s/562205/

    Thank you Brian. And yes, it is a contracting issue. The biggest tech companies do not allow contractors in sensitive roles. One even segregates their contractors. When I interviewed with this company they told me they would pay me so well I’d never leave them. I really wanted the job and hence that’s the secret sauce. Take care of employees and pay them well and they return that dedication. Contractors have no such loyalty.

  11. Simple way to clear test environments. Boot from a DOS floppy, CD to C: and do DEL *.*

  12. Does anyone else worry that the guidelines are primarily for what to do _after_ a breach event takes place, but are very light on allocations for checking and adversarily testing systems to prevent breaches in the first place?

  13. As near as I can tell, Miracle Systems CEO Sandesh Sharda has a Masters in Business Management. I haven’t been able to find out if he has any training/education in STEM or IT Security. I know a CEO is only suppose to find the right people and manage them, and that a CEO generally can’t screw in a light bulb, but I’ve always been uncomfortable with sensitive information being handled by organizations where the top people didn’t have at least some training in IT Security. Can we say Whaling? I think it has been mentioned on comments here on Krebs before that we would all like to see mandatory training for the C-suits. Anyone else have a comment?

  14. Unfortunately, government agencies often subcontract to get around regulations and costs.

    In some cases government agencies subcontract to other countries to perform actions that would be illegal if performed by an entity in United States of America.

    The solution is to introduce legal accountability. This will drive service prices through the roof but at least the services will be more secure as they should be in the first place.

    As much as I hate Sarbanes Oxley, it placed legal responsibility with the officers of the corporation. As a result, we now perform regular internal audits to ensure accuracy. Something we should have been doing as part of the job before Sarbanes Oxley. Sadly it is a boing pain in the butt and drives costs up and reduces productivity. But, it is the right thing to do.

  15. This is why there has been such a push towards NIST SP800-171. The aggressor doesn’t need to get into the government systems; just those of the contractors working for them.

  16. Has the culprit been identified as having a personality or mental disorder yet? Or will this just get blamed on yet another crumbling slavic or Asian nation east of Brussels?

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