Krebs on Security

DHS Alerts Contractors to Bank Data Theft

January 21, 2014

A security breach at a Web portal for the U.S. Department of Homeland Security has exposed private documents and some financial information belonging to at least 114 organizations that bid on a contract at the agency last year.

“This letter is to inform you that your company’s bank account information may have been improperly accessed because of this incident,” reads a letter sent to affected organizations earlier this month by DHS privacy officer Christopher Lee. “The incident appears to have occurred sometime over the prior four months.”

The letter was sent to organizations that bid on a 2013 contract to help DHS’s Science & Technology division develop new communications technologies for first responders. According to DHS, the documents were downloaded from a department Web portal by unauthorized persons outside of the agency, although it hasn’t yet determined the cause or source of that access.

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The Adventures of a Cybercrime Gumshoe

January 18, 2014

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I was fortunate to spend several hours this past week with two reporters whose work I admire. Both wanted to learn more about my job as an independent investigative reporter. Their stories about my story are below.

Mark Stencel, a former colleague at Washingtonpost.com who similarly worked his way up from an entry-level job at the publication, wanted to hear about the challenges and rewards of going solo. Stencel’s piece, Reporter Brian Krebs Hacks it on His Own, One Scoop at a time, was written for poynter.org, an online publication for and about journalists.

Stencel writes:

“All of this reporting pays off with loyal readers, even at companies who fear finding themselves covered on his site. “As someone who does payment card security for a brick and mortar retailer, ‘Brian Krebs’ is a name I never ever want to see flash across my Caller ID,” one admirer wrote in a recent reader comment.”

Separately, I spent half a day with with Business Week reporter Karen Weise, whose profile, The Cybersecurity Blogger Hackers Love to Hate, appears in this coming week’s print edition. Weise observes:

“Krebs’s talent for exposing the weaknesses in online security has earned him respect in the IT business and loathing among cybercriminals. His track record of scoops, including the Dec. 18 revelation that hackers stole tens of millions of customers’ financial data from Target (TGT), has helped him become the rare blogger who supports himself on the strength of his reputation for hard-nosed reporting.”

My favorite part of both these stories are the observations from readers. For instance, Weise quoted Lance James, head of intelligence at Deloitte, with whom I co-presented last year at the Black Hat conference in Las Vegas.

“No intelligence agency could get as much as Brian Krebs does,” BW quotes James as saying. “Everybody wants to share with him.”

Fortunately, that’s very true: Key information that informs some of my best scoops is just as likely to come from people actively engaged in cybercrime as it is industry experts working to fight fraud. So, once again, a sincere thank you to all of my readers — lovers and haters alike.

A Closer Look at the Target Malware, Part II

January 16, 2014

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Yesterday’s story about the point-of-sale malware used in the Target attack has prompted a flood of analysis and reporting from antivirus and security vendors about related malware. Buried within those reports are some interesting details that speak to possible actors involved and to the timing and discovery of this breach.

As is the case with many data breaches, the attackers in this attack used a virtual toolbox of crimeware to get the job done. As I noted in a Tweet shortly after filing my story Wednesday, at least one of those malware samples includes the text string “Rescator.” Loyal readers of this blog will probably find this name familiar. That’s because Rescator was the subject of a blog post that I published on Dec. 24, 2013, titled “Who is Selling Cards from Target?“.

In that post, I examined a network of underground cybercrime shops that were selling almost exclusively credit and debit card accounts stolen from Target stores. I showed how those underground stores all traced back to a miscreant who uses the nickname Rescator, and how clues about Rescator’s real-life identity suggested he might be a particular young man in Odessa, Ukraine.

This afternoon, McAfee published a blog post confirming many of the findings in my story yesterday, including that two malware uploaders used in connection with the Target attack contained the Rescator string:

“z:\Projects\Rescator\uploader\Debug\scheck.pdb”.

A private message on cpro[dot]su between Rescator and a member interested in his card shop. Notice the ad for Rescator’s email flood service at the bottom.

Earlier this morning, Seculert posted an analysis that confirmed my reporting that the thieves used a central server within Target to aggregate the data hoovered up by the point-of-sale malware installed at Target. According to Seculert, the attack consisted of two stages.

“First, the malware that infected Target’s checkout counters (PoS) extracted credit numbers and sensitive personal details. Then, after staying undetected for 6 days, the malware started transmitting the stolen data to an external FTP server, using another infected machine within the Target network.”

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A First Look at the Target Intrusion, Malware

January 15, 2014

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Last weekend, Target finally disclosed at least one cause of the massive data breach that exposed personal and financial information on more than 110 million customers: Malicious software that infected point-of-sale systems at Target checkout counters. Today’s post includes new information about the malware apparently used in the attack, according to two sources with knowledge of the matter.

The seller of the point-of-sale “memory dump” malware allegedly used in the Target attack.

In an interview with CNBC on Jan. 12, Target CEO Gregg Steinhafel confirmed that the attackers stole card data by installing malicious software on point-of-sale (POS) devices in the checkout lines at Target stores. A report published by Reuters that same day stated that the Target breach involved memory-scraping malware.

This type of malicious software uses a technique that parses data stored briefly in the memory banks of specific POS devices; in doing so, the malware captures the data stored on the card’s magnetic stripe in the instant after it has been swiped at the terminal and is still in the system’s memory. Armed with this information, thieves can create cloned copies of the cards and use them to shop in stores for high-priced merchandise. Earlier this month, U.S. Cert issued a detailed analysis of several common memory scraping malware variants.

Target hasn’t officially released details about the POS malware involved, nor has it said exactly how the bad guys broke into their network. Since the breach, however, at least two sources with knowledge of the ongoing investigation have independently shared information about the point-of-sale malware and some of the methods allegedly used in the attack.

‘BLACK POS’

On Dec. 18, three days after Target became aware of the breach and the same day this blog broke the story, someone uploaded a copy of the point-of-sale malware used in the Target breach to ThreatExpert.com, a malware scanning service owned by security firm Symantec. The report generated by that scan was very recently removed, but it remains available via Google cache (Update, Jan. 16, 9:29 a.m.: Sometime after this story ran, Google removed the cached ThreatExpert report; I’ve uploaded a PDF version of it here).

According to sources, “ttcopscli3acs” is the name of the Windows computer name/domain used by the POS malware planted at Target stores; the username that the malware used to upload stolen data data was “Best1_user”; the password was “BackupU$r”

According to a source close to the investigation, that threatexpert.com report is related to the malware analyzed at this Symantec writeup (also published Dec. 18) for a point-of-sale malware strain that Symantec calls “Reedum” (note the Windows service name of the malicious process is the same as the ThreatExpert analysis –“POSWDS”). Interestingly, a search in Virustotal.com — a Google-owned malware scanning service — for the term “reedum” suggests that this malware has been used in previous intrusions dating back to at least June 2013; in the screen shot below left, we can see a notation added to that virustotal submission, “30503 POS malware from FBI”.

The source close to the Target investigation said that at the time this POS malware was installed in Target’s environment (sometime prior to Nov. 27, 2013), none of the 40-plus commercial antivirus tools used to scan malware at virustotal.com flagged the POS malware (or any related hacking tools that were used in the intrusion) as malicious. “They were customized to avoid detection and for use in specific environments,” the source said.

That source and one other involved in the investigation who also asked not to be named said the POS malware appears to be nearly identical to a piece of code sold on cybercrime forums called BlackPOS, a relatively crude but effective crimeware product. BlackPOS is a specialized piece of malware designed to be installed on POS devices and record all data from credit and debit cards swiped through the infected system.

According the author of BlackPOS — an individual who uses a variety of nicknames, including “Antikiller” — the POS malware is roughly 207 kilobytes in size and is designed to bypass firewall software. The barebones “budget version” of the crimeware costs $1,800, while a more feature-rich “full version” — including options for encrypting stolen data, for example — runs $2,300.

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Security Updates for Windows, Java, Flash & Reader

January 14, 2014

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Adobe, Microsoft and Oracle today each issued security updates to fix serious vulnerabilities in their products. Adobe released patches for AIR, Acrobat, Flash and Reader, while Microsoft pushed out fixes to shore up at least a half dozen security weaknesses in Windows and Office. Oracle released an update for Java that fixes at least three dozen security holes in the widely-used program.

All of the vulnerabilities that Microsoft fixed this month earned “important” ratings; not quite as dire as those labeled “critical,” which involve flaws so dangerous that they can be exploited by bad guys or malware to break into systems with no user interaction. Nevertheless, flaws marked “important” can be quite dangerous, particularly when used in tandem with other attack techniques.

By way of illustration, this month’s MS14-002 patch addresses an important zero-day flaw that was first found to be exploited in targeted attacks late last year. In one version of this attack, documented quite nicely in this fascinating yet somewhat technical writeup from Trustwave Spiderlabs, attackers used this Windows flaw in combination with a bug in Adobe Reader. According to Trustwave, the bad guys in that attack included the Windows flaw as a means of bypassing Adobe Reader’s security sandbox, a technology designed ensure that any malicious code embedded in documents only runs under limited privileges (i.e., isn’t allowed to invoke other programs or alter core system settings).

In short, don’t put off applying this month’s patches from Microsoft. They are available via Windows Update or Automatic Update. Also, Microsoft took this opportunity to remind Windows XP users that the company will no longer be supporting Windows XP after April 2014 (guess I will have to retire the above broken Windows graphic as well). The lack of ongoing security updates for XP means it will likely become an even bigger target for attackers; if you rely on XP, please consider transitioning to a newer operating system sometime soon. Who knows, it might be a great excuse to try Linux, which tends to be very light on resources and ideal for older hardware. If you’ve been considering the switch for a while, take a few distributions for a spin using one of dozens of flavors of Linux available via Live CD.

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Hackers Steal Card Data from Neiman Marcus

January 10, 2014

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Responding to inquiries about a possible data breach involving customer credit and debit card information, upscale retailer Neiman Marcus acknowledged today that it is working with the U.S. Secret Service to investigate a hacker break-in that has exposed an unknown number of customer cards.

Earlier this week, I began hearing from sources in the financial industry about an increasing number of fraudulent credit and debit card charges that were being traced to cards that had been very recently used at brick-and-mortar stores run by the Dallas, Texas based high-end retail chain. Sources said that while it appears the fraud on those stolen cards was perpetrated at a variety of other stores, the common point of purchase among the compromised cards was Neiman Marcus.

Today, I reached out to Neiman Marcus and received confirmation that the company is in fact investigating a breach that was uncovered in mid-December.

Neiman Marcus spokesperson Ginger Reeder said the company does not yet know the cause, size or duration of the breach, noting that these are details being sought by a third-party forensics firm which has yet to complete its investigation. But she said there is no evidence that shoppers who purchased from the company’s online stores were affected by this breach.

The entirety of the company’s formal statement is as follows:

“Neiman Marcus was informed by our credit card processor in mid-December of potentially unauthorized payment card activity that occurred following customer purchases at our Neiman Marcus Group stores.

We informed federal law enforcement agencies and are working actively with the U.S. Secret Service, the payment brands, our credit card processor, a leading investigations, intelligence and risk management firm, and a leading forensics firm to investigate the situation. On January 1st, the forensics firm discovered evidence that the company was the victim of a criminal cyber-security intrusion and that some customers’ cards were possibly compromised as a result. We have begun to contain the intrusion and have taken significant steps to further enhance information security.

The security of our customers’ information is always a priority and we sincerely regret any inconvenience. We are taking steps, where possible, to notify customers whose cards we know were used fraudulently after making a purchase at our store.”

The disclosure comes as many in the retail sector are seeking more information about the causes of the breach at nationwide retail giant Target, which extended from around Thanksgiving 2013 to Dec. 15, and affected some 40 million customer debit and credit cards.

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Target: Names, Emails, Phone Numbers on Up To 70 Million Customers Stolen

January 10, 2014

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Nationwide retail giant Target today disclosed that a data breach discovered last month exposed the names, mailing addresses, phone number and email addresses for up to 70 million individuals.

The disclosure comes roughly three weeks after the company acknowledged that hackers had broken in late last year and stolen approximately 40 million customer debit and credit card records.

“As part of Target’s ongoing forensic investigation, it has been determined that certain guest information — separate from the payment card data previously disclosed — was taken during the data breach,” the company said in a statement released Friday morning. “This theft is not a new breach, but was uncovered as part of the ongoing investigation. At this time, the investigation has determined that the stolen information includes names, mailing addresses, phone numbers or email addresses for up to 70 million individuals.”

Target said much of the data is partial in nature, but that in cases where Target has an email address, it will attempt to contact affected guests with informational tips to guard against consumer scams. The retail giant was quick to note that its email communications would not ask customers to provide any personal information as part of that communication.

Target Chairman Gregg Steinhafel apologized for any inconvenience that the breach may have caused customers, and said he wanted customers to know that “understanding and sharing the facts related to this incident is important to me and the entire Target team.”

Nevertheless, the company still has not disclosed any details about how the attackers broke in. This lack of communication appears to have spooked many folks responsible for defending other retailers from such attacks, according to numerous interviews conducted by this reporter over the past few weeks.

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Firm Bankrupted by Cyberheist Sues Bank

January 8, 2014

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A California escrow firm that was forced out of business last year after a $1.5 million cyberheist is now suing its former bank to recoup the lost funds.

A state-appointed receiver for the now defunct Huntington Beach, Calif. based Efficient Services Escrow has filed suit against First Foundation Bank, alleging that the bank’s security procedures were not up to snuff, and that it failed to act in good faith when it processed three fraudulent international wire transfers totaling $1,558,439 between December 2012 and February 2013.

The lawsuit, filed in the Superior Court for Orange County, is the latest in a series of legal battles over whether banks can and should be held more accountable for losses stemming from account takeovers. In the United States, consumers have little to no liability if a computer infection from a banking Trojan leads to the emptying of their bank accounts — provided that victims alert their bank in a timely manner. Businesses of all sizes, however, enjoy no such protection, with many small business owners shockingly unaware of the risks of banking online.

As I wrote in an August 2013 story, the heist began in December 2012 with a $432,215 fraudulent wire sent from the accounts of Huntington Beach, Calif. based Efficient Services Escrow Group to a bank in Moscow. In January, the attackers struck again, sending two more fraudulent wires totaling $1.1 million to accounts in the Heilongjiang Province of China, a northern region in China on the border with Russia.

This same province was the subject of a 2011 FBI alert on cyberheist activity. The FBI warned that cyber thieves had in the previous year alone stolen approximately $20 million from small to mid-sized businesses through fraudulent wire transfers sent to Chinese economic and trade companies.

Efficient Services and its bank were able to recover the wire to Russia, but the two wires to China totaling $1.1 million were long gone. Under California law, escrow and title companies are required to immediately report any lost funds. When Efficient reported the incident to state regulators, the California Department of Corporations gave the firm three days to come up with money to replace the stolen funds.

Three days later, with Efficient no closer to recovering the funds, the state stepped in and shut the company down. As a result, Efficient was forced to lay off its entire staff of nine employees.

On Dec. 6, the lawyer appointed to be Efficient’s receiver sued First Foundation in a bid to recover the outstanding $1.1 million on behalf of the firm’s former customers. The suit alleges that the bank’s security procedures were not “commercially reasonable,” and that the bank failed to act in “good faith” when it processed international wire transfers on behalf of the escrow firm.

Like most U.S. states, California has adopted the Uniform Commercial Code (UCC), which holds that a payment order received by the [bank] is “effective as the order of the customer, whether or not authorized, if the security procedure is a commercially reasonable method of providing security against unauthorized payment orders, and the bank proves that it accepted the payment order in good faith and in compliance with the security procedure and any written agreement or instruction of the customer restricting acceptance of payment orders issued in the name of the customer.”

As evidenced by the dozens of stories in my series, Target: Small Businesses, companies do not enjoy the same protections as consumers when banking online. If a banking Trojan infection results in cyber thieves emptying the bank accounts of a small business, that organization is essentially at the mercy of their financial institution, which very often in these situations disavows any responsibility for the breach, and may in fact stonewall the victim company as a result. That can leave victim organizations in a quandary: They can swallow their pride and chalk it up to a learning experience, or opt to sue the bank to recover their losses. Of course, suing your bank can be cost-prohibitive unless the loss is significantly larger than the amount the victim might expect to spend hiring lawyers to pursue the case on the often long road to settlement or trial.

The plaintiffs in this case allege that part of the reason the bank’s security procedures were not commercially reasonable was that one component of the bank’s core security protection — the requirement that customers enter a code generated by a customer-supplied security token that changes every 32 seconds — had failed in the days leading up to the fraudulent transfers. I would argue that security tokens are a mere security speed bump whose effectiveness is easily bypassed by today’s cyber thieves. But in any case, this lawsuit claims that rather than address that failure, the bank simply chose to disable this feature for Efficient Services.

First Foundation did not return calls seeking comment. But the bank did produce an incident report that is now public record, thanks to this lawsuit (see the “Exhibit J” section of this PDF case document). The document states that the company had previously performed international wire transfers, and so it saw nothing unusual about half-million-dollar transfers to China. According to the plaintiffs, however, Efficient escrow had merely inquired about the possibility of international wires, yet had not actually performed wire transfers outside of the United States previously.

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Deconstructing the $9.84 Credit Card Hustle

January 6, 2014

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Over the holidays, I heard from a number of readers who were seeing strange, unauthorized charges showing up on their credit and debit cards for $9.84. Many wondered whether this was the result of the Target breach; I suppose I asked for this, having repeatedly advised readers to keep a close eye on their bank statements for bogus transactions. It’s still not clear how consumers’ card numbers are being stolen here, but the fraud appears to stem from an elaborate network of affiliate schemes that stretch from Cyprus to India and the United Kingdom.

One reader said the $9.84 charge on her card came with a notation stating the site responsible was eetsac.com. I soon discovered that there are dozens of sites complaining about similar charges from similarly-constructed domains; for example, this 30-page thread at Amazon’s customer help forums includes gripes from hundreds of people taken by this scam.

I did a bit of digging into that eetsac.com domain, ordering a historic WHOIS report from domaintools.com. The report shows that the domain eetsac.com was originally registered using the email address walter.kosevo@ymail.com. Domaintools also reports that this email address was used to register more than 230 other sites; a full list is available here (CSV).

A closer look at some of those domains reveals a few interesting facts. Callscs.in, for example, is a Web site for a call center and a domain that has been associated with these $9.84 fraudulent charges. Callscs.in lists as its local phone number 43114300. That number traces back to a call center in India, Call Connect India, Inc., which registers its physical address as Plot No 82, Sector 12 A, Dwarka. New Delhi – 110075.

The next site like that one on the list — cewcs.com — references the domain insiderwebeducationpro.com, another domain on the list of sites registered to that ymail.com email address. The homepage of insiderwebeducationpro.com lists the following contact information:

Lasorea Ltd.
Site and billing supported by:cewcs.com cs@cewcs.com
Premier Business Centre 47-49 Park Royal Road
London UK NW107LQ
8555311090

A search at companieshouse.gov.uk, a government site which maintains records about companies based in the United Kingdom, turned up incorporation records (PDF) showing that Lasorea Ltd. was founded in January 2013 by Emil Darbinian, a 28-year-old self-described accountant from Nicosia, Cyprus. Other records searches on Mr. Darbinian indicate he owns at least two other companies at the same address, including Testohealth Labs. Ltd — which appears to be a software company — and a firm called Levantos Venture Ltd. Mr. Darbinian did not return messages seeking comment.

Another domain on the list — etosac.com — is listed as the support and billing site for webtutorialpro.com, a site which bills itself as an “affiliate learning system.” In fact, of the 235 domains registered to walter.kosevo@ymail.com, all seem to be either affiliate programs of one kind (diet pills, work-at-home) or support/call center sites.

Dozens of sites like this one are the apparent source of the $9.84 charges.

Webtutorialpro.com lists on its homepage a company named Lukria, Ltd., and an address at the same London business park as Mr. Darbinian’s companies. If we step through the signup process to become an affiliate at Webtutorialpro.com, we can see that everything — from the “online store in a box” to “pay per click extreme” and the tutorial on “how to get FREE web traffic — all retail for….wait for it….$9.84!

Lukria, according to incorporation documents (PDF) purchased from companieshouse.co.uk, was created on the same day as Lasorea Ltd., and lists as its director a Sergey Babayan, also from Cyprus. According to the Facebook pages of both Mr. Darbinian and Mr. Babayan, the two men are friends. Mr. Babayan has not responded to requests for comment.

Mr. Babayan’s Facebook profile says he works at a company called Prospectacy Limited, which LinkedIn says is an accounting firm in Nicosia, Cyprus. According to Prospectacy’s Web site, this company specializes in “corporate services,” including “company formation,” “banking,” and “virtual office” services. The company seems to be in the business of establishing offshore firms; according to a reverse WHOIS record lookup from domaintools.com, the email address used to register Prospectacy’s domain also was used to register at least ten other domains, including registerincyprus.com, registerinuk.com, setupincyprus.com and setupineu.com.

A number of these affiliate sites include on their home page links to credorax.com, a ~~Southborough, Mass. based acquiring bank~~ Malta-based acquiring bank that is in the business of processing credit and debit card payments for merchants. It’s not clear whether either cewcs.com or insiderwebeducationpro.com use Credorax Inc. for payment processing, but it seems to suggest that by association. I reached out to Credorax to learn whether this site (and perhaps others that are the subject of this story) are customers, and will update this story if I hear back from them.

Update, 12:43 p.m. ET: I heard from Michael Burtscher, vice president of acquiring risk and fraud management at Credorax. Burtscher clarified that his company has offices in the U.S. but is based in Malta. Burtscher confirmed that Credorax had until recently helped to process cards for the network of sites named in this story, but that the company has severed that relationship. He declined to say when exactly the relationship ended, or indeed whether my information about the client’s identities was accurate. Burtscher would only say that Credorax terminated its relationship with the client in response to consumer complaints about the fraudulent charges. “This was one of those cases where when we onboarded them it looked like a legitimate account, but when we saw there were issues we decided to take action.”

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Happy 4th Birthday, KrebsOnSecurity.com!

December 29, 2013

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Dec. 29 marks the 4th anniversary of KrebsOnSecurity.com! Below are a few highlights from this past year, and a taste of what readers can look forward to here in 2014.

If there was an important data breach in 2013, chances are that news of it first broke on this blog. Among KrebsOnSecurity’s biggest scoops this year were stories about breaches at Adobe, Bit9, Experian, LexisNexis, Target and The Washington Post.

Some of these stories are ongoing and will unfurl reluctantly but gradually throughout 2014. Look for a more thorough explanation of what really happened when Experian sold more than a year’s worth of consumer credit data directly to an underground service marketed to identity thieves, for example. And of course, we will almost certainly learn more about the “how” and “who” of the massive attack on Target.

The audience for this blog has grown tremendously in the past year. The site now attracts between 10,000 and 15,000 visitors per day. For the first time in its existence, KrebsOnSecuirty is on track to exceed more than 1 million pageviews this month (fittingly, this should come to pass sometime today).

That growth would not have been possible without you, dear loyal readers. 2013 featured more blog posts and more in-depth investigations than perhaps any other year, but the real value in this site comes from the community that has sprung up around it. Readers submitted more than 10,000 comments this past year. More than two dozen of you also supported this site directly via the PayPal or Bitcoin donation links in the blog sidebar. Whichever way you supported this site in 2013, a hearty THANK YOU for your contribution and encouragement.

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