Florida hit by "tsunami" of tax identity fraud

MIAMI (Reuters) - Bruce Parton was only a few weeks from retirement after 30 years as a mail carrier in sunny Florida.

He never lived to fulfill his retirement plan of moving back to a quiet life in the Catskill mountains of New York, not far from where he grew up on Long Island.

Instead, he was gunned down on his daily mail route in December 2010 by members of an identity theft ring who stole his master key as part of a scheme to claim fraudulent tax refunds.

Using stolen names and Social Security numbers, criminals are filing phony electronic tax forms to claim refunds, exploiting a slow-moving federal bureaucracy to collect the money before victims, or the Internal Revenue Service, discover the fraud.

Parton was a victim of what officials say has ballooned into a massive, and dangerous, illegal industry that could cost the nation $21 billion over the next five years, according to the U.S. Treasury Department.

While that is a relatively small sum compared to the $1.1 trillion collected from individual tax payers in the last fiscal year, the crime has been growing by leaps and bounds in the last three years.

"We are on the top of a national trend that is causing a hemorrhage of tax dollars," said Wifredo Ferrer, United States Attorney for south Florida. "It's a tsunami of fraud."

While the IRS says it has detected cases in every state except North Dakota and West Virginia, the fraud's epicenter is Florida, and it is mostly concentrated in Miami and Tampa.

Miami has 46 times the per-capita rate of false tax refund claims than the rest of the country, and 70 times the national average in dollar terms, Ferrer told Reuters.

"For whatever reason, we always tend to lead the nation when it comes to fraud," he said, noting that his office has been battling massive Medicare fraud in recent years that has since spread to other parts of the country.

Florida's high proportion of older residents, who can be more vulnerable to fraud, may be one reason for the high levels of fraud in the state.

Nationwide, the number of cases of tax identity theft detected by authorities sky-rocketed to more than 1.2 million cases in 2012 from only 48,000 in 2008, according to the Treasury Department.

The real number of phony tax filings is likely much higher as the fraud is hard to track, according to a November General Accountability Office report.

GANG LINKS

The tax ID theft problem is particularly troubling as, unlike Medicare fraud, it is associated with violent crime and armed gangs.

Tampa police first detected it in 2010 when officers discovered wanted street criminals engaged in tax fraud. "They were holed up in hotels with laptops churning out tax claims," said congresswoman Kathy Castor, who represents the area and is pressing the IRS to get tougher on the fraud.

When agents raided a Howard Johnson in East Tampa in late 2010, they found suspects smoking marijuana and four laptop computers being used to file fraudulent tax returns on Turbo Tax, the tax preparation software, according to police records.

The suspects had lists of personal information containing more than 1,000 names and confidential personal information, multiple re-loadable debit cards, and records of numerous financial transactions. The investigation revealed that the suspects had been camped out in the hotel room for more than a week filing claims.

Tax identity fraudsters are apparently drawn by the ease of the crime, officials say.

"The scheme is very basic, it works virtually the same in almost every case," said Ferrer. "All they need is your name and the tax ID number."

Armed with that information a refund claim can be filed electronically, making up other details on the form, including addresses, employer data, income and deductions.

Criminals obtain the vital numbers using various tactics, often by bribing office workers with access to personnel files inside companies, as well as large public institutions such as hospitals and schools, according to prosecutors.

Last summer a hacker stole 3.8 million unencrypted tax records from the South Carolina Department of Revenue in what is believed to be the largest security breach of a U.S. tax agency. Authorities say they do not know the hacker's motive.

One North Miami man, Rodney Saint Fleur, was charged last year with using the LexisNexis research service account at the law firm where he worked to access names and Social Security numbers of 26,000 people as part of an identity theft scheme, according to court documents.

Victims in Florida have varied from hospital patients, to Holocaust survivors at an elderly Jewish community center, as well as active duty military serving overseas.

In December, a former U.S. Marine from North Miami was sentenced to nearly five years in prison for stealing the identities of more than 40 fellow Marines stationed at Camp Leatherneck in Afghanistan as part of a plot to claim $54,000 in fraudulent income-tax refunds.

In Parton's case the criminals were after his master key that gives postal workers access to mail drop-off boxes and apartment mailboxes. He was shot twice in the chest by a gunman as part of a plot to steal identities in people's mail for tax refund fraud.

The gunman, Pikerson Mentor, 31, was sentenced last month to life plus 42 years.

More than 600 people turned up for Parton's funeral, including postal workers and people who got to know him on his route. "He had been doing that mail route for 10 years and he always had a smile for everyone," said his daughter, Nina Parton.

The criminals stay under the radar using identities of the elderly or the very young, who are unlikely to be filing for earned income, as well as the deceased. They typically claim small refunds, around $3,000, but use multiple identities, with payments often made to pre-paid debit cards.

FIGHTING BACK

The IRS said last week it is intensifying a crackdown on identify theft, with 3,000 agents devoted to tackling the problem, double the number assigned in 2011.

The number of IRS criminal investigations into identity theft more than tripled in the year to September 2012, and it was on pace to double again this year, acting IRS Commissioner Steven Miller told reporters.

The tax collection agency prevented $20 billion in attempted tax refund fraud in fiscal year 2012, up from $14 billion a year earlier, he said.

"It's one of the biggest challenges that faces the IRS today," Miller said. "We're doing much better on all fronts but we have much more to do."

Despite the increase in investigations, the agency still had a backlog of 300,000 cases of people waiting for legitimate refunds after they were victims of fraud. It takes an average of six months to resolve a case, Miller said.

"The IRS have put a lot of resources on it, but they always seem to be behind the curve," said Keith Fogg, a tax professor at Villanova University School of Law.

Electronic filing, which now accounts for 80 percent of returns and was introduced to speed up delivery of refunds, has made the system more vulnerable to fraud.

The IRS is seeking to speed up the loading of data from W-2 payroll forms issued at the beginning of the tax season, a time lapse which gives fraudsters a window of opportunity to file using false data.

The IRS is also looking for ways to authenticate the identity of tax filers at the time of filing to pre-empt fraud, as well as working with the Social Security Administration to limit access to a registry of social security data of deceased tax payers, the so-called "Death Master File", a frequent target of fraud.

"We will not be prosecuting our way out of this. That's not going to be the answer. We're going to have to make it more and more difficult for criminals to profit from this behavior," said Miller. "If they're not successful they will move onto something else."

(Editing by Mary Milliken and Claudia Parsons)

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Letter From Washington: A Sensible Deal Can Avert a 'Sequester' Disaster

WASHINGTON — Democrats and Republicans in Washington agree: It would be a disaster if the “sequester,” with its more than $1 trillion of cuts to U.S. defense and domestic spending, took effect on March 1, as scheduled.

Defense Secretary Leon E. Panetta says the reductions to the Pentagon budget would undermine national security; the cuts to already pared-down domestic spending will set back critical needs like cancer research; Head Start, the preschool program for low-income children; and funding for the Border Patrol. The U.S. economic recovery would be impeded, at a cost of as many as 750,000 jobs.

President Barack Obama says the cuts “are a really bad idea.” In a rare display of accord, the House speaker, John A. Boehner, says the “meat ax” approach would “weaken” the nation’s defense. Mr. Obama and Mr. Boehner were two of the authors of the 2011 sequester agreement, figuring a sensible alternative would have emerged by now.

It has not, and the sequester could kick in on March 1, even if only temporarily. It is a textbook case of Washington dysfunction.

Both sides created this debacle, but there is no equivalency of blame today. Any alternative must emphasize cuts in mandatory entitlement programs and add revenue. Mr. Obama, publicly and privately, has left no doubt that he will surrender the Democrats’ political trump card and accept cuts in entitlement programs like Medicare, which offers health coverage to the elderly and disabled. Republican leaders insist that they will not give any ground on new revenue, without which there can be no deal.

An impasse would be unsettling to markets and the economy in the long run, even if deficit hawks exaggerate the severity of the crisis.

“The 10-year budget outlook remains tenuous,” says Bill Gale, director of economic studies at the Brookings Institution. “Even if seemingly everything goes right — in economic terms and political terms — we are still on the edge of dangerously high debt and deficit levels.”

It is not hard to devise a feasible alternative, if the irrational politics are put aside. First, any deficit-reduction plan should wait two years. That is because, as broke as Washington is, the deficit has already been narrowed by almost $2.5 trillion over the coming decade. In the short term, the government needs to bolster the shaky recovery by spending more on infrastructure and other projects.

Then, it should put in place a long-term $1 trillion deficit-reduction package, half of which is achieved through entitlement cuts, one-third through tax increases and the rest by shrinking discretionary programs, chiefly defense, which are funded through annual appropriations from Congress. That would send an encouraging sign to markets and help the economy, but only if it is a long-term plan, rather than the one-year fix that Senate and House Democrats are proposing.

Entitlements or mandatory programs like Medicare and Social Security, the government retirement system, make up almost 60 percent of the U.S. budget and are the engine of chronic deficits. Getting $500 billion over 10 years would not be pain-free, though it does not have to hurt those who can least afford to sacrifice.

The president has said he would go along with the scope of the Bowles-Simpson deficit commission’s proposed cuts to Medicare. That is about $350 billion. It would not require cuts for the most needy but would contain a means test for more affluent senior citizens. A sensible deal would not increase the eligibility age and would introduce more stringent cost controls and hit up drug companies for a little more.

Half the remaining savings could come from changing the formula for the cost-of-living increases for Social Security and other inflation-adjusted entitlements. That is a realistic proposal if protections are carved out for the very poor and the very elderly. The Center for American Progress has offered workable specifics. The rest could come from cutting agricultural subsidies and other entitlement programs.

The White House would buy this, and it has been the dream of Republicans for years.

On taxes, Republicans contend that the fiscal cliff deal in January, which raised taxes on the wealthy by $600 billion, means any further revenue-raisers are off the table.

A number of party leaders also pay lip service to the Bowles-Simpson recommendations, which proposed $1 of new revenue for every $2 of spending cuts, after eliminating former President George W. Bush’s high-end tax cuts. If these Republicans have their way and the sequester or any alternative to it is exclusively spending cuts, that ratio would be more than four to one.

The easiest way to get those revenues would be a plan resembling the administration’s proposal to limit deductions to the 28 percent rate and then exclude charitable deductions from that cap. That would raise more than $300 billion.

The other Republican argument is that any tax changes should await broad tax reform. But limiting deductions would not narrow their options or dash their hopes of using changes to the tax code as a vehicle for lowering rates.

There are endless possibilities for curbing tax breaks in a revenue-neutral measure that also lowers rates, such as scaling back big-ticket items like the home mortgage deduction, the health care exclusion or the preferential treatment for capital gains. Other changes are politically appealing, like ending the carried-interest loophole for rich investors or the tax breaks for the oil and gas industries.

What should not be cut is nondefense discretionary spending, like veterans’ programs, medical and scientific research and education. Even without the sequester, these programs are headed toward their lowest level, as a percentage of the economy, since the Eisenhower administration.

An entitlements and revenue-based deal, however, would approximate the Bowles-Simpson targets, and engender confidence in markets and businesses. The politicians could then turn to tax reform, immigration, gun violence, maybe a modest climate-change measure, and substantive oversight.

As a bonus, a successful deal might also lessen public cynicism about Washington.

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Leading Cuban dissident departs for world tour

HAVANA (Reuters) – Cuba‘s best-known dissident, blogger Yoani Sanchez, checked in without incident at Havana’s international airport on Sunday on her way to Brazil, the first stop on an 80-day-tour of a dozen countries.

She was sent off with hugs by a small group of family members and friends.

Sanchez was granted a passport two weeks ago under Cuba’s sweeping immigration reform that went into effect this year, after being denied permission to travel more than 20 times over the past five years.

“I made it through immigration, now I only need to board the plane and take off,” said Sanchez, who has promised to tweet throughout her saga.

In another tweet to her followers as she waited to board her plane, she added: “To tell the truth, my knees haven’t stopped trembling.”

Sanchez is one of a number of high profile government opponents who have received a passport under the new regulations, but the first to actually take advantage of the measure.

A few lesser-known dissidents have been denied passports.

Sanchez criticized the new law for not simply granting all Cubans the right to travel, but told Reuters at the airport, “I plan to take full advantage of it and push it to the limit.”

The old travel law was put in place in 1961 to slow the flight of Cubans after the island’s 1959 revolution.

The new law scrapped the much-hated requirement of having to obtain an exit visa and loosened other restrictions that had discouraged Cubans from leaving and traveling.

It was one of the wide-ranging reforms President Raul Castro has enacted since he succeeded his older brother, Fidel Castro, in 2008.

There are still travel restrictions, mainly for national security reasons and for those with pending legal cases.

PRIZE MONEY FOR A FREE PRESS

Sanchez, who has won a number of international prizes for her blog but has been denied permission to travel to collect them, said she would now do so and planned to use part of the prize money to “found a free press in Cuba.”

“I plan to visit various media and make contact to learn how a modern press runs,” she said.

Sanchez, a 37-year-old Havana resident, has incurred the wrath of Cuba’s government for constantly criticizing its communist system in her “Generation Y” blog, and using Twitter to denounce repression.

She is one of the world’s best-known bloggers and has tens of thousands of followers abroad, but few in Cuba where the government severely restricts the Internet.

Her blog is named after the penchant of Cuban parents during the Cold War era of Soviet backing for the island of choosing names for their children starting with “Y” because of the many popular Russian names starting with that letter.

Sanchez, considered Cuba’s pioneer in social networking, told Reuters earlier this week that she would visit the headquarters of Google, Twitter and Facebook, and travel to Brazil, Argentina, Peru, Mexico, the United States, Spain, Italy, Poland, the Czech Republic and other countries.

Cuba’s leaders consider dissidents traitorous mercenaries in the employ of the United States and other enemies. Official bloggers regularly charge that Sanchez’s international renown has been stage-managed by Western intelligence services.

But Sanchez is also a critic of U.S. policy toward her homeland. In a recent blog, she said the decades-old trade embargo had failed to stifle the Cuban government and was exploited by Havana as “a big bad wolf to blame for everything.”

“The big news is not now, but in 80 days when she will return,” Bert Hoffmann, a Cuba expert at the German Institute of Global and Area Studies in Hamburg, said.

“Many regime opponents have left Cuba for exile, but this is the first time a prominent dissident sets out on a high-profile world tour to then come back to the island.”

Sanchez’s travels and eventual return to Cuba are being carefully monitored by governments and human rights advocates as a test of Cuban authorities’ commitment to free travel.

“She is gone, now let’s see if the government lets her back in or forces her into exile,” a European diplomat said.

(Reporting By Marc Frank; Editing by Sandra Maler)

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UN warns risk of hepatitis E in S. Sudan grows

GENEVA (AP) — The United Nations says an outbreak of hepatitis E has killed 111 refugees in camps in South Sudan since July, and has become endemic in the region.

U.N. refugee agency spokesman Adrian Edwards says the influx of people to the camps from neighboring Sudan is believed to be one of the factors in the rapid spread of the contagious, life-threatening inflammatory viral disease of the liver.

Edwards said Friday that the camps have been hit by 6,017 cases of hepatitis E, which is spread through contaminated food and water.

He says the largest number of cases and suspected cases is in the Yusuf Batil camp in Upper Nile state, which houses 37,229 refugees fleeing fighting between rebels and the Sudanese government.

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G20 steps back from currency brink, heat off Japan

MOSCOW (Reuters) - The Group of 20 nations declared on Saturday there would be no currency war and deferred plans to set new debt-cutting targets, underlining broad concern about the fragile state of the world economy.

Japan's expansive policies, which have driven down the yen, escaped direct criticism in a statement thrashed out in Moscow by policymakers from the G20, which spans developed and emerging markets and accounts for 90 percent of the world economy.

Analysts said the yen, which has dropped 20 percent as a result of aggressive monetary and fiscal policies to reflate the Japanese economy, may now continue to fall.

"The market will take the G20 statement as an approval for what it has been doing -- selling of the yen," said Neil Mellor, currency strategist at Bank of New York Mellon in London. "No censure of Japan means they will be off to the money printing presses."

After late-night talks, finance ministers and central bankers agreed on wording closer than expected to a joint statement issued last Tuesday by the Group of Seven rich nations backing market-determined exchange rates.

A draft communiqué on Friday had steered clear of the G7's call for economic policy not to be targeted at exchange rates. But the final version included a G20 commitment to refrain from competitive devaluations and stated monetary policy would be directed only at price stability and growth.

"The mood quite clearly early on was that we needed desperately to avoid protectionist measures ... that mood permeated quite quickly," Canadian Finance Minister Jim Flaherty told reporters, adding that the wording of the G20 statement had been hardened up by the ministers.

As a result, it reflected a substantial, but not complete, endorsement of Tuesday's proclamation by the G7 nations - the United States, Japan, Britain, Canada, France, Germany and Italy.

As with the G7 intervention, Tokyo said it gave it a green light to pursue its policies unchecked.

"I have explained that (Prime Minister Shinzo) Abe's administration is doing its utmost to escape from deflation and we have gained a certain understanding," Finance Minister Taro Aso told reporters.

"We're confident that if Japan revives its own economy that would certainly affect the world economy as well. We gained understanding on this point."

Flaherty admitted it would be difficult to gauge if domestic policies were aimed at weakening currencies or not.

NO FISCAL TARGETS

The G20 also made a commitment to a credible medium-term fiscal strategy, but stopped short of setting specific goals as most delegations felt any economic recovery was too fragile.

The communiqué said risks to the world economy had receded but growth remained too weak and unemployment too high.

"A sustained effort is required to continue building a stronger economic and monetary union in the euro area and to resolve uncertainties related to the fiscal situation in the United States and Japan, as well as to boost domestic sources of growth in surplus economies," it said.

A debt-cutting pact struck in Toronto in 2010 will expire this year if leaders fail to agree to extend it at a G20 summit of leaders in St Petersburg in September.

The United States says it is on track to meet its Toronto pledge but argues that the pace of future fiscal consolidation must not snuff out demand. Germany and others are pressing for another round of binding debt targets.

"We had a broad consensus in the G20 that we will stick to the commitment to fulfill the Toronto goals," German Finance Minister Wolfgang Schaeuble said. "We do not have any interest in U.S.-bashing ... In St. Petersburg follow-up-goals will be decided."

The G20 put together a huge financial backstop to halt a market meltdown in 2009 but has failed to reach those heights since. At successive meetings, Germany has pressed the United States and others to do more to tackle their debts. Washington in turn has urged Berlin to do more to increase demand.

Backing in the communiqué for the use of domestic monetary policy to support economic recovery reflected the U.S. Federal Reserve's commitment to monetary stimulus through quantitative easing, or QE, to promote recovery and jobs.

QE entails large-scale bond buying -- $85 billion a month in the Fed's case -- that helps economic growth but has also unleashed destabilising capital flows into emerging markets.

A commitment to minimize such "negative spillovers" was an offsetting point in the text that China, fearful of asset bubbles and lost export competitiveness, highlighted.

"Major developed nations (should) pay attention to their monetary policy spillover," Vice Finance Minister Zhu Guangyao was quoted by state news agency Xinhua as saying in Moscow.

Russia, this year's chair of the G20, admitted the group had failed to reach agreement on medium-term budget deficit levels and expressed concern about ultra-loose policies that it and other emerging economies say could store up trouble for later.

On currencies, the G20 text reiterated its commitment last November, "to move more rapidly toward mores market-determined exchange rate systems and exchange rate flexibility to reflect underlying fundamentals, and avoid persistent exchange rate misalignments".

It said disorderly exchange rate movements and excess volatility in financial flows could harm economic and financial stability.

(Additional reporting by Gernot Heller, Lesley Wroughton, Maya Dyakina, Tetsushi Kajimoto, Jan Strupczewski, Lidia Kelly, Katya Golubkova, Jason Bush, Anirban Nag and Michael Martina. Writing by Douglas Busvine. Editing by Timothy Heritage/Mike Peacock)

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Russians Seek Clues and Count Blessings After Meteor Blast

CHEBARKUL, Russia —After a brilliant flash illuminated the sky on Friday morning like a second sun, Alyona V. Borchininova and several others in this run-down little town in the rust belt of western Siberian wandered outside, confused and curious.

They followed the light’s path to the town’s lakefront, where they trudged for about a mile over the open ice until they came to a startling sight: a perfectly round hole in the ice, about 20 feet in diameter, its rim glossy with fresh ice that had crusted on top of the snow.

“It was eerie,” Ms. Borchininova, a barmaid, said Saturday. “So we stood there. And then somebody joked, ‘Now the green men will crawl out and say hello.’ ”

Russians are still coming to terms with what NASA scientists say was a 7,000-ton chunk of space rock that came hurtling out of the sky at 40,000 miles an hour, exploding over the Ural Mountains, spraying debris for miles around and, amazingly, killing no one.

As the Russian government pursued the scientific mysteries of Friday’s exploding meteor by sending divers into the inky waters of the hole in Lake Chebarkul on Saturday, residents reacted with a kind of giddy relief and humor over their luck at having survived a cosmic near miss.

NASA estimates that when the meteor entered the atmosphere over Alaska, it weighed 7,000 to 10,000 tons and was at least 50 feet in diameter, a size that strikes the Earth about once every hundred years. They said it had exploded with the force of 500 kilotons of TNT.

The shock wave injured hundreds of people about 54 miles away in the industrial city of Chelyabinsk, most from broken glass; collapsed a wall in a zinc factory; set off car alarms; and sent dishes flying in thousands of apartments. Broken windows exposed people and pipes to the Siberian winter; many residents focused Saturday on boarding windows and draining pipes, to preserve heating systems.

If pieces of meteorite reached the surface, as NASA said was likely, they fell largely into the sea of birch and pine trees of Siberia, now blanketed in snow.

Lake Chebarkul is one of four sites the government believes to felt a significant impact, the minister of emergency situations, Vladimir Pushkov, told Interfax.

As the sun rose Saturday, the snow crystals sparkling in the sun like a million tiny mirrors, steam wafted from the site, apparently related to the work of divers, but the lake yielded little to shed light on the mystery.

Mr. Pushkov later said divers found nothing on the lake bed, but did not rule out meteor shrapnel as the cause of the hole.

“Experts are studying all possible places of impact,” he said. “We have no reports of confirmed discoveries.”

The discovery of a confirmed fragment could help scientists better apprehend the composition of the meteor, perhaps shedding light on how close it was to descending further before exploding from the heat, or of hitting the surface, potentially causing vastly more casualties in this region of military and industrial towns, a major nuclear research site and waste repository and other delicate infrastructure.

In Chelyabinsk, the worst hit town, most who had sought medical attention were released from hospitals by Saturday, the Ministry of Health reported. A total of 1,158 people, including 298 children, asked for medical assistance. Of these 52 people were hospitalized. By Saturday afternoon, 12 adults and three children remained in hospitals.

Health officials evacuated to Moscow a woman who broke two vertebrae after falling down a flight of stairs. One man’s finger was cut off by broken glass.

Overshadowing these misfortunes, a fourth-grade teacher in Chelyabinsk, Yulia Karbysheva, was being hailed as a hero for saving 44 children from glass cuts by ordering them to crawl under their desks after she saw the flash. Having no idea what it was, she executed a cold war-era duck-and-cover drill, with salutary results.

Ms. Karbysheva, who remained standing, was seriously lacerated by glass that severed a tendon in her arm, Interfax reported; not one of her students suffered a cut.

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Facebook says it was a target of sophisticated hacking

SAN FRANCISCO/LOS ANGELES (Reuters) – Facebook Inc said on Friday hackers had infiltrated some of its employees’ laptops in recent weeks, making the world’s No.1 social network the latest victim of a wave of cyber attacks, many of which have been traced to China.

It said none of its users’ data was compromised in the attack, which occurred after a handful of employees visited a website last month that infected their machines with so-called malware, according to a post on Facebook’s official blog released just before the three-day U.S. President’s Day weekend.

“As soon as we discovered the presence of the malware, we remediated all infected machines, informed law enforcement, and began a significant investigation that continues to this day,” Facebook said.

It was not immediately clear why Facebook waited until now to announce the incident. Facebook declined to comment on the reason or the origin of the attack.

A security expert at another company with knowledge of the matter said he was told the Facebook attack appeared to have originated in China.

The attack on Facebook, which says it has more than 1 billion members, underscores the growing threat of cyber attacks aimed at a broad variety of targets.

Twitter, the micro blogging social network, said earlier this month it had been hacked and that about 250,000 user accounts were potentially compromised, with attackers gaining access to information, including user names and email addresses.

Newspaper websites, including those of The New York Times, The Washington Post and The Wall Street Journal, have also been infiltrated. Those attacks were attributed by the news organizations to Chinese hackers targeting coverage of China.

Earlier this week, U.S. President Barack Obama issued an executive order seeking better protection of the country’s critical infrastructure from cyber attacks.

“INFILTRATED”

Facebook noted in its blog post that it was not alone in the attack, and that “others were attacked and infiltrated recently as well,” although it did not specify who.

The Federal Bureau of Investigation declined to comment, while the U.S. Department of Homeland Security did not immediately return a call seeking comment.

In its blog post, Facebook described the attack as a “zero-day” attack, considered to be among the most sophisticated and dangerous types of computer hacks. Zero-day attacks, which are rarely discovered or disclosed by their targets, are costly to launch and often suggest government involvement.

While Facebook said no user data was compromised, the incident could raise consumer concerns about privacy and the vulnerability of personal information stored within the social network.

Facebook has made several privacy missteps in the past because of the way it handled user data. It settled a privacy investigation with federal regulators in 2011.

According to one person familiar with the situation, the type of information on the employee laptops that were compromised included “snippets” of Facebook source code and employee emails.

Facebook said it spotted a suspicious file and traced it back to an employee’s laptop. After conducting a forensic examination of the laptop, Facebook said it identified a malicious file, then searched company-wide and identified “several other compromised employee laptops”.

Another person briefed on the matter said the first Facebook employee had been infected via a website where coding strategies were discussed.

The company also said it identified a previously unseen attempt to bypass its built-in cyber defenses and that new protections were added on February 1.

Because the attack used a third-party website, it might have been an early-stage attempt to penetrate as many companies as possible.

If they followed established patterns, the attackers would learn about the people and computer networks at all the infected companies. They could then use that data in more targeted attacks to steal source code and other intellectual property.

Another fear for such a popular website is that hackers could use central controls to infect wide swathes of its user base at once.

In January 2010, Google reported it had been penetrated via a “zero-day” flaw in an older version of the Internet Explorer Web browser. The attackers were seeking source code and were also interested in Chinese dissidents. Google reduced its operations in China as a result.

(Additional reporting by Alexei Oreskovic in San Francisco and Tim Reid in Los Angeles; Editing by Paul Tait)

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Reeva Steenkamp's Reality Show Will Still Air This Weekend in Tribute to Her, Says Producer

By Dahvi Shira

02/15/2013 at 01:00 PM EST

The show must go on, according to the creator of Tropika Island of Treasure 5.

The producer of the South African reality show, Samantha Moon, issued a statement, announcing that pre-taped series, which features Reeva Steenkamp, who was murdered on Thursday, will indeed air on Saturday as planned.

"Reeva was an intelligent, beautiful and amazing woman, and we feel it would be an injustice to keep that unknown from those who did not know her personally," Moon says in the statement. "Every episode that she is in, every frame that she so ably dominates – shines with her light and her laughter echoes in every conversation, and we want to share these special memories with the rest of South Africa."

In addition, Moon says, this week's episode of Tropika Island "will be dedicated to Reeva's memory, coupled with a special tribute to her."

The model's boyfriend Oscar Pistorius, 26, has been charged with her murder. A weeping Pistorius appeared in court Friday morning, where prosecutors said they would pursue a charge of premeditated murder. In a statement released on Friday afternoon, his family disputes the killing in the "strongest terms."

Steenkamp's death has left her show crew "absolutely devastated," as Moon goes on to say in another statement.

"Reeva was a wonderful human being and an extremely talented and intelligent woman. Her kind and loving spirit was evident to all who knew her and her zest for life will be truly missed," she says.

Reeva will be cremated at a private ceremony in Port Elizabeth, her family tells PEOPLE. And they plan to tune in to Tropika when it premieres.

• Reporting by MIKE BEHR

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Study: Fish in drug-tainted water suffer reaction

BOSTON (AP) — What happens to fish that swim in waters tainted by traces of drugs that people take? When it's an anti-anxiety drug, they become hyper, anti-social and aggressive, a study found. They even get the munchies.

It may sound funny, but it could threaten the fish population and upset the delicate dynamics of the marine environment, scientists say.

The findings, published online Thursday in the journal Science, add to the mounting evidence that minuscule amounts of medicines in rivers and streams can alter the biology and behavior of fish and other marine animals.

"I think people are starting to understand that pharmaceuticals are environmental contaminants," said Dana Kolpin, a researcher for the U.S. Geological Survey who is familiar with the study.

Calling their results alarming, the Swedish researchers who did the study suspect the little drugged fish could become easier targets for bigger fish because they are more likely to venture alone into unfamiliar places.

"We know that in a predator-prey relation, increased boldness and activity combined with decreased sociality ... means you're going to be somebody's lunch quite soon," said Gregory Moller, a toxicologist at the University of Idaho and Washington State University. "It removes the natural balance."

Researchers around the world have been taking a close look at the effects of pharmaceuticals in extremely low concentrations, measured in parts per billion. Such drugs have turned up in waterways in Europe, the U.S. and elsewhere over the past decade.

They come mostly from humans and farm animals; the drugs pass through their bodies in unmetabolized form. These drug traces are then piped to water treatment plants, which are not designed to remove them from the cleaned water that flows back into streams and rivers.

The Associated Press first reported in 2008 that the drinking water of at least 51 million Americans carries low concentrations of many common drugs. The findings were based on questionnaires sent to water utilities, which reported the presence of antibiotics, sedatives, sex hormones and other drugs.

The news reports led to congressional hearings and legislation, more water testing and more public disclosure. To this day, though, there are no mandatory U.S. limits on pharmaceuticals in waterways.

The research team at Sweden's Umea University used minute concentrations of 2 parts per billion of the anti-anxiety drug oxazepam, similar to concentrations found in real waters. The drug belongs to a widely used class of medicines known as benzodiazepines that includes Valium and Librium.

The team put young wild European perch into an aquarium, exposed them to these highly diluted drugs and then carefully measured feeding, schooling, movement and hiding behavior. They found that drug-exposed fish moved more, fed more aggressively, hid less and tended to school less than unexposed fish. On average, the drugged fish were more than twice as active as the others, researcher Micael Jonsson said. The effects were more pronounced at higher drug concentrations.

"Our first thought is, this is like a person diagnosed with ADHD," said Jonsson, referring to attention deficit-hyperactivity disorder. "They become asocial and more active than they should be."

Tomas Brodin, another member of the research team, called the drug's environmental impact a global problem. "We find these concentrations or close to them all over the world, and it's quite possible or even probable that these behavioral effects are taking place as we speak," he said Thursday in Boston at the annual meeting of the American Association for the Advancement of Science.

Most previous research on trace drugs and marine life has focused on biological changes, such as male fish that take on female characteristics. However, a 2009 study found that tiny concentrations of antidepressants made fathead minnows more vulnerable to predators.

It is not clear exactly how long-term drug exposure, beyond the seven days in this study, would affect real fish in real rivers and streams. The Swedish researchers argue that the drug-induced changes could jeopardize populations of this sport and commercial fish, which lives in both fresh and brackish water.

Water toxins specialist Anne McElroy of Stony Brook University in New York agreed: "These lower chronic exposures that may alter things like animals' mating behavior or its ability to catch food or its ability to avoid being eaten — over time, that could really affect a population."

Another possibility, the researchers said, is that more aggressive feeding by the perch on zooplankton could reduce the numbers of these tiny creatures. Since zooplankton feed on algae, a drop in their numbers could allow algae to grow unchecked. That, in turn, could choke other marine life.

The Swedish team said it is highly unlikely people would be harmed by eating such drug-exposed fish. Jonsson said a person would have to eat 4 tons of perch to consume the equivalent of a single pill.

Researchers said more work is needed to develop better ways of removing drugs from water at treatment plants. They also said unused drugs should be brought to take-back programs where they exist, instead of being flushed down the toilet. And they called on pharmaceutical companies to work on "greener" drugs that degrade more easily.

Sandoz, one of three companies approved to sell oxazepam in the U.S., "shares society's desire to protect the environment and takes steps to minimize the environmental impact of its products over their life cycle," spokeswoman Julie Masow said in an emailed statement. She provided no details.

___

Online:

Overview of the drug: http://www.nlm.nih.gov/medlineplus/druginfo/meds/a682050.html

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Wall Street flat after data, S&P on pace for seventh weekly gain

NEW YORK (Reuters) - U.S. stocks were little changed on Friday and the S&P 500 remained on track for a seventh week of gains after upbeat consumer sentiment data, as equities continued a phase of consolidation after a strong start to the year.

The S&P 500, up nearly 7 percent so far this year, is facing strong technical resistance near the 1,525 level. But investors, expecting the index to advance further in the quarter, have held back from locking in profits.

"The market has run awfully hard on a year-to-date basis and certainly some consolidation, a couple of percentage points of pullback, is probably at hand, probably healthy and is probably where we are," said Jim Russell, senior equity strategist for U.S. Bank Wealth Management in Cincinnati.

Data released Friday illustrated the bumpy road the U.S. economic recovery continues to take.

The New York Federal Reserve said manufacturing in New York state expanded for the first time in seven months, while Thomson Reuters/University of Michigan's preliminary reading of consumer sentiment rose from the prior month and beat expectations.

But data also showed U.S. manufacturing fell in January after a rise in the prior month.

"We are at a point where the macro news will continue to be a two-steps forward, one-step back kind of progression, with most of the news showing a firmness, but an occasional data point that will represent a step back," Russell said.

The Dow Jones industrial average <.dji> added 5.07 points, or 0.04 percent, to 13,978.46. The Standard & Poor's 500 Index <.spx> shed 0.20 points, or 0.01 percent, to 1,521.18. The Nasdaq Composite Index <.ixic> gained 1.02 points, or 0.03 percent, to 3,199.68.

The benchmark S&P 500 is on track to register its seventh straight week of gains by the close of trading Friday, a feat not seen since a run of consecutive weekly gains between December 2010 and January 2011.

A surge in merger and acquisition activity, with more than $158 billion in deals announced so far in 2013, has given further support to the equity market as it points to healthy valuations and bets on the economic outlook.

Herbalife shares jumped 13.1 percent to $42.27 a day after billionaire investor Carl Icahn said in a regulatory filing that he now owns 13 percent of Herbalife and was ready to put it in play.

MeadWestvaco Corp climbed 10.6 percent to $35.04 as the biggest percentage gainer on the S&P index after activist investor Nelson Peltz's Trian Fund Management LP said in an SEC filing it had bought about 1.6 million shares of the packaging company.

Burger King Worldwide shares gained 2.4 percent to $16.98 after it beat estimates with a 94 percent rise in fourth-quarter profit, thanks to new menu additions.

Oil service stocks declined, weighed by a 5.8 percent drop in shares of Transocean to $55.89, after the rig contractor reported its fleet update and Deutsche Bank cut its rating on the stock to "sell." The PHLX oil service sector <.osx> lost 1.9 percent.

(Editing by Bernadette Baum)

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