FUTURES RESEARCH

9055 - THE MULTI-ARMED BANDIT - 1998

I don't know why people are so attracted by the idea of an illegal pit. Perhaps it is all those dealers screaming their buy and sell orders at each other. I guess it must be something like that, for every pit we have raided has been covered by cameras; broadcasting pictures of every bead of sweat on the backs of their necks. You could almost smell the acrid heat rising off the dealer's agitated bodies. These broadcasts were typically distributed across the web, but sometimes even justified private channels. Maybe it is seen by the audience as a new form of sport; bear baiting for our modern times. Certainly the players - those many on the net just as much as the few in the pit - have almost as much to lose. For them it can be true financial suicide, and so maybe the very visible danger is the turn-on for the watchers. Once or twice we have even found live audiences at the event. That makes the job even easier. Indeed, all the pits which sell to the wider audiences are relatively easy to locate and shut down. The promoters never learn. There will always be a desperate punter, wanting to join the action, but not rich enough to do so get into the act, who will try to raise a stake on the secondary markets - and that is the give-away we are waiting to pounce on. Anyway, as a matter of course, we keep tabs on all the regulars and not a few of them are our own under-cover agents. Besides which a large pit takes a deal of setting up - and leaves a purchase trail you can spot from the moon. You don't just need a large space for the action, and the special furnishings - which are a real give-away - but above all you need the video feeds. It all costs money, legitimate money since the suppliers long ago learned to avoid hot money, and that is also easy to track. These promoters are on a hiding to nothing - which is why we enjoy the smell of danger surrounding them almost as much as the audience!

On the day in question, I was one of the team hitting a pit that had been under observation for a number of months. We had generously allowed it to continue, even when its promoters started boasting - almost publicly - that they were invulnerable. For us, though, it offered a superb opportunity for building our database of other operations. Indeed, the promoters even attracted increasing numbers of other operators, who came for advice and to sit at the feet of these new masters of the business; and we had them all on video - ironically, the promoters' own video! In turn, these other promoters' operations were bugged. In fact, on the basis of these leads alone, we ultimately closed down another hundred and fifty pits; which went some way to consoling my boss for the threat of a senate investigation into bribery - for allowing the pit to stay open. But even with the hearings fast approaching, it was such good value that we kept it open until the very last minute. The videos made of their back-room operations, as much as of the pit itself, are still used to train our new operatives. As the icing on the cake, we were subsequently able to trace, and confiscate, every cred that had changed hands - and that paid for an awful lot of operative overtime.

You will by now appreciate that hitting pits represents something of a personal vendetta for me. I hate pits. It is not just the tax they evade. It is true that the Tobin tax on all financial transactions, even though it is less than a tenth of one percent, has raised billions for the poor of the world. At first it was used to rapidly bring the economies of the developing counties more into line with those of the developed ones. By so doing, it defused many of the stresses - the flash-points which in retrospect we now recognise - which threatened to detabilise the first years of the century. Now, of course, it helps the under-classes everywhere; paying for their on-going education, giving them a new start in life, giving them new hope. Avoiding the Tobin tax is, the way I see it, stealing that hope from the most vulnerable in our society; a despicable act if there ever was one.

But that was not the only reason for my anger. My father's business had been destroyed by the illegal dealings of such markets. You will remember Black Monday, when the Tobin tax was first brought in and some of the offshore secondary markets tried to bypass it. It was before we had any real powers, indeed it was the stimulus which resulted in our becoming one of the most powerful law enforcement agencies. We may not have quite as many agents as some of the other branches of government, but ours are the best trained  - a quarter of them hold second or third level doctorates - and our budget is certainly the biggest. On Black Monday, as the money poured into the illegal markets in the few countries which had not signed the treaties, the currencies started to oscillate; almost as a turbulent stream gets out of control and destroys the communities on its banks. In this way, those oscillations immediately destroyed the weaker currencies, and some of the countries behind these are still basket cases. But they also destroyed millions of legitimate businesses around the world - my father's amongst them. He was not a gambler, not even a speculator; but his bank had chosen to underwrite his export operations by one of those complex derivatives, mixtures of future options and insurance covers, which were so fashionable at the time. Despite everyone's promises that such packages were guaranteed to be shockproof, almost all of them fell apart under the stress of those oscillations; and my father's business was swept under by that tidal wave. Even now I can't believe the way investors bought such derivatives, They didn't even know what they really contained. Paradoxically, they were supposed to be hedges, insurances against future financial instabilities; and indeed that was how they started, and were subsequently promoted - and why my father's bank bought into them. But you have to ask, if they were so safe why were they also promoted as the way to get rich quick. They surely should have had the smell of the con-artist on them; they even looked like the shell game, now you see it now you don't, make your money and save it. Anyway, Black Monday put paid to them. Any form of trading in derivatives can now get you five to ten in the slammer, but that is no consolation to my father, who ended up a broken man.

Now you can see why I so enjoy going on a raid, though I am no longer really a field operative. I have to be there, I get such a kick out of the disbelieving looks on the faces of the operators and punters! Anyway, I was there for this particular bust. The locations can be exotic, a favourite is a cruise-liner in mid-ocean, but I have seen them on jumbo jets and even - during the night - in the studios of the major networks; now those did have rich video links! This one was easy to hit though, for it was in a disused theatre off Broadway. How the promoters expected the constant flow of spectators to the live event, in and out of a boarded up building on the most famous street in the world, to go unnoticed I will never know. Even the senators who demanded an investigation couldn't miss that, and some of them are so gaga that they have difficulty in finding a urinal. But, I guess, like most of the criminals I have come across they probably were not well endowed in the IQ department. The bust was, as a result, a piece of cake. After all the months of surveillance, we knew every nook and cranny in the building. The virtual reality set-up, on which we liked to plan and train if we had the time, was spot on. It was a large operation, with almost two hundred agents involved, but it went down like clockwork. I went in with one of the advance teams, which smashed its way in through one of the theatre's disused emergency exits - pit operators didn't worry about such things as safety rules, even for a live event. As a result, we emerged close to the pit itself, which added to my fun. I had watched so many videos of that pit that I felt I knew the dealers personally, and it was a nice change to see the sweat pouring off them because of fear rather than exercise.

The excuse for my presence was the genuine need to capture all the computer records, I was the head of the remote investigation section, for this made prosecution much easier. Even so, I almost missed the bug-bomb when we were routinely logging the records the next day. I simply didn't expect it; and it was lucky that one of my assistants had seen one like it before. Despite its size, the pit had been strictly an amateur set-up. So none of us had ever dreamt that it might be linked to one of the rings. Indeed, I still don't understand why it was. The two are normally poles apart. I have already explained the strange psychology of the pits. The rings are very different. They don't operate with crowds, but with individuals - lonely individuals playing at home. Fortunately the demand is small, for they are incredibly difficult to put out of business. They offer much the same thrill you can get from a one-armed bandit; except that the latter are quite legal, you can play them in your local superstore. But the rings are the bane of my life. Despite the fact that there are far fewer of them than the pits, they take almost all the time of my section.

At first, therefore, we were delighted that we had found a live entry into a ring - for there was no other reason for the bug-bomb to be there. To be honest, our biggest busts of rings come from pure luck rather than earnest detective work! Where the patterns can lead you to a pit in less than a week, rings show almost nothing. They are much more professional, and employ the best hackers; to make their code look as innocent as that which might switch on your kettle - for that welcome cup of coffee. Even I can't immediately recognise a ringer, we usually have to take apart every line of code before we are sure.

Once past the bug-bomb, we knew this was a ringer because, amateur as ever, the pit promoters had labelled it as such! But it was larger than usual, and seemed to have far more hyper-links than I would have expected. Normally you expect them to be running something like a short-term derivative against the punter's bets, with him in effect betting against the house - as in roulette. Occasionally the punter is also allowed to place his bet in a pool, playing against other - unseen - opponents. But this ringer seemed to go much further. But to where and why?

In fact, this was an easy question to answer, though how it worked proved much more difficult to unravel. The hyper-link addresses led us straight to the major financial markets - which were, of course, perfectly legal; and this was when alarm bells started to ring. Anything that threatened their integrity was always worrying for us, we all had the memory of Black Monday at the back of our minds. Normally, though, even the most sophisticated rings didn't try this, it almost guaranteed that they would be rapidly detected - no matter how gifted their hackers were. And the essence of a ring was that it should be undetectable. It is one activity where it definitely does not pay to advertise!

With the hyper-links known, it was easy to check the markets themselves; and, with a massive sigh of relief, we found that they had not yet been invaded. But our relief was to be short-lived. I should, at this stage, explain that we handle such software in much the same way that the bomb-squads handle the real bombs placed by the international terror groups. The rings have learned to build in virulent software viruses, which are far more deadly to the computer nets than the X viruses of the international terrorist groups are to people. They destroy all the evidence as soon as you start to dissect them; and typically wreck the whole operating system at the same time. So we work on them in carefully isolated machines. Even then all links to the outside are by infrared devices, so that when they crash nothing else of importance is brought down with them. It is pains-taking work, the computers crash and are reloaded; moving forward one small step at a time. It often takes days to unravel all the secrets of the code. This one was larger, and might take weeks of effort.

But the real problem emerged much earlier than that, indeed within a few hours. I was in bed asleep when they rang to call me in. This was nothing new. We worked around the clock, and in parallel, to that we didn't waste a second. If the punters can put any distance between you and themselves, and it is often an ocean that they cross, you can have the devil's own job in getting them back. But this time the note of alarm in my deputy's voice was very obvious - even though he wouldn't give me all the details over the vidlink. My immediate response was to wonder how bad could the situation be, if he was already worried about leaks, from anyone overhearing our conversation?

It turned out to be much worse than I had thought possible. They had found another bug-bomb, this time tied to a hyper-link. I suspect it was a mistake by the hacker, there was no rational reason for this link - the code wasn't going to be used for any blackmail attempt. But writing such deliberately complex code breeds mistakes. In normal code you carefully build in an obvious structure, so other programmers can clearly follow what you are doing; so they can see how the pieces plug together, when they need to repair something later on. But in a ringer the last thing you want is for the code to be easy to follow, and that means sometimes you get lost yourself! I suspect something like that had happened here. The hacker thought he was attaching the bug-bomb to the backbone code when in fact he was putting it onto the hyperlink. Worse, it turned out, the backbone code where it was attached was used by almost all the hyperlink traffic and, when the first such message passed the bug-bomb would go off immediately. Paradoxically, it would see the hyperlinking itself as an attempt to disable it; and boom! The 'booms' would reverberate around the world, and would destroy financial system after system. The virus was the most virulent we had ever seen.

I had no hesitation in declaring an immediate code red double plus, even though it was still the middle of the night. My superiors would be cursing me as they were dragged out of their beds, without even being told why! But there was no doubt it was justified, for financial meltdown was a real possibility. I was glad to see that my deputy had already activated our war-room, and its screens were already coming alive as bleary-eyed staffers took up their positions.

This was the biggest bug-bomb we had ever faced, and that undoubtedly posed a new set of problems. Worse, we didn't even know what these were, let alone how to deal with them. We had to operate in the first instance by a form of triage, separating the major problems which had to be dealt with immediately from those we could handle later. Above all, though, as in defusing any bomb, we had to avoid it being triggered. So, the first task force was targeted at trying to understand the timescales the promoters were working to. When did they plan to start up the software? Would they be panicked into going early when they heard about our pit bust? The bust had been very successful, so a news conference was already scheduled for later that day. We cancelled that immediately, and counted our lucky stars that we hadn't already announced our good news. Even so our agents were already on their way to editorial rooms across the continent to impose a clamp - just in case there had been a leak. The bust, of course, had been on Broadway; so half of Manhattan must have seen it - we just had to hope that the ring promoters were out of town!

Our team on site, of course, was keeping all the communications normal, running historical video-records of previous pit activities; that was routine anyway, to ensure that our follow-up operations weren't compromised. At the same time, a second team was racing to locate the source of the ringer. It meant analysing thousands of comms records, to determine where it had come from, but we started with some advantages. It was an unusually large chunk of code, so it should be easier to track through the logs of the comms companies, and the ring promoters were real amateurs. They might have had high ambitions, but they almost certainly had done nothing like this before. They would not, therefore, have been very efficient at covering their tracks; in any case they probably would have seen no reason to. On the other hand, our carefully collected database of punter names and addresses would not help us with the basic problem this time. Our third task force would be checking these; in order to be ready to defuse any bug-bombs that had already been delivered to them in advance of the action. But it needed only one punter to be missed - and no database could be that accurate - for the bug-bomb to go off. Accordingly, the fourth task-force had been decanted onto the financial markets. If we thought that the bug-bomb was about to go off, they would shut everything down. That would, however, be almost as bad as meltdown. It would take little more than flipping switches to take the markets off-line, but it would take more than twenty four hours to bring them back up again; and who knew what damage might be done in that time. There was even a chance that, perhaps even responding to a false alarm, we could initiate meltdown ourselves. But that was only a percentage chance, the bug-bomb would definitely do it.

The news from the first task-force was not reassuring. They had no psychological profiles yet. There was as yet almost no evidence to form the basis for these. But they still reasoned that the delivery of the bug-bomb was imminent. There was some leeway, because it was likely that the operators would want to hit the main markets in the US first. Indeed, the little evidence we already had indicated that it was primarily a US operation, and that meant most of the punters were likely to be the same. The markets would not open for three hours yet, so we had at least this time before meltdown. Perhaps we had a bit more leeway beyond that time, since it was thought that the operators would allow as many punters to wake up and connect before they played their deadly game. In addition, the security checks are most rigorous at the opening. Finally, even though volatility is highest just after opening, the rings actually favour the more stable market which develops later in the day; making their profits more safely from small fluctuations. So, perhaps we had as much as six hours. But that wasn't much time to save the world!

Our first important break came from the second force. Only three hours into the operation, their tracking paid dividends. The ringer was traced back to an industrial estate in Detroit. I was able to follow the subsequent bust on the war-room monitors. But even from these it was possible to see that it wasn't going to be an easy bust. The small estate had been built on the site of a sand and aggregates wharf on the Detroit River. Between the main road and the river some dozen or so small warehouse units had been built, around a central car-parking area. The immediate problem was that there was just a single road in. Of course our local operatives would bring in extra support over the roofs, and up the river, but secondary back-up such as this was never as predictable as groups on the ground.

There was an inevitable routine to this type of bust. First the observation points were set up. I could already choose half a dozen separate viewpoints, from the earliest one - on top of the Renaissance Centre just down the road - to the latest one - in the one small van they had been able to park close to the target. Unfortunately this was the last remaining space, which limited our other actions. The warehouse unit looked harmless, much like thousands of others across the city; and I guess the occupants saw it that way too. Even so, our operatives went in wearing body armour and fully equipped with automatic weapons, we don't take any chances with their lives, even though these are rarely ever needed. Most promoters were more likely to faint at the sight of a gun than use one of their own! The two operatives we had lost in recent years had fallen prey to trigger-happy, but otherwise innocent, bystanders - who thought our guys were a hit-team for the mob! You will appreciate that we can scarcely advertise in advance who we are, and cannot fire our own weapons unless under direct threat; just one innocent bystander mown down and yet another senate investigation would head our way.

The second phase was also standard. Explosive cutters were fitted to all power and communications lines into the building. These would be fired as the operatives went in, hopefully cutting off all danger of any virus being released on the outside world - as well as protecting as much of the evidence as possible. Satellite dishes were more of a problem. If they were exposed on the roof our sharpshooters could knock them out. But, as they could now fit into your shirt pocket, they could be hidden anywhere under the roof; as it seemed they were here.

So the third phase was the critical one. Our heavies had been well trained by the Special Forces, and operated in much the same way. Using battering rams, sometimes backed up by explosive charges, they gained rapid entry and immediately tossed in stun grenades as well as firing their automatic weapons in the air. We didn't intend to shoot anyone. That could be too expensive in terms of litigation - even if it was proved that those injured were criminals. But the ear-drum shattering noise, along with the shock-troops' traditional black uniforms and balaclavas, were designed to disorient the criminals - as much so they did not make any moves on the computers as to allow them to be taken prisoner. I must say we had almost a hundred per cent success, few of our targets even got as far as the nearest keyboard; and this was the case here. I was soon looking at a group of what might have been chapter of the local Round-Table, had they not been lying face down on the floor, still screaming 'Don't shoot me, don't shoot me!'

The next wave immediately swept into the building. These were our techies, the software experts who made the evidence safe; and downloaded it to our own machines. In this case their work was even more urgent, we had to find out who the bug-bombs had been shipped to; and we were already into injury time! Dozens of copies of the key electronic records were made and distributed to the teams whose job it was to find the databases themselves. Even with normal code, and using the most powerful commercial machines, it would take hours to sort the terabytes of data we found; and, of course, we expected it to be heavily encrypted. We had, though arranged for all the massive code-breaking machines of the security forces to be brought into play. And, we got a very lucky break. Unbelievably, the data was not encrypted! Even so, it was the best part of an hour before the relevant databases were found.

These lists were then run against our own databases and, as soon as a match was found, the team targeted on it went in - following much the same procedures as we had already used. These were crucial operations, so we could justify the literally thousands of operatives on stakeout around the world. Fortunately, it turned out that all the punters were located in the mid-West; recruited personally by the promoters. So only a dozen or so names were not on our own hit-lists; and these were taken out almost as soon, by helicopter-borne assaults.

I suppose the operation was almost routine, and we claimed in the later media briefings that it went like clockwork; and it did. But I was a nervous wreck by the time it finished. We had always been just one false move away from meltdown. My reward was both a promotion and the, very necessary, rest which training for that promotion entailed. That's why I am now on my way to take overall charge of our operations on the new frontier, on the asteroids and beyond.

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