Report of Detective J. Lilley

NARRATIVE:

On 11/01/93 at 11:40 a.m., I met with the above mentioned Intel
employees at the Intel building where I was advised of their discovery
that one of their contract employees, Randal Schwartz, had been
illegally bypassing access gates to systems and illegally utilizing
password cracking programs to crack passwords to computer systems.
(Refer to attached report by Mark Morrissey for details).

On 11/01/93 at 6:35 p.m., myself and the above named individuals served
a search warrant at 12290 SW Butner Road at the residence of Randal
Schwartz.  At the time of service, I read the search warrant in it's
entirety to Mr. Schwartz and his brother, immediately followed by
reading them their Miranda rights to which they both acknowledged
understanding.  While the other Washington County Officers conducted
the search warrant, I conducted an interview with Randal Schwartz
regarding his activities at Intel and I was variously assisted in the
technical aspects of the interview by Mr. Cower, Mr. Stites, and Mr.
Pierce.

Initially, Mr. Schwartz admitted to me that he had in fact bypassed
access gates to Intel systems, explaining that the did this in order to
be able to receive "E-mail" messages at his work station in Intel.
While Mr. Schwartz admitted that he knew what he was doing was both
against department policy and, to use his words, "technically illegal",
he stated that his only intent was to make it more convenient for him
to correspond through computer mail at his work station rather than
having to wait until he got back home.

I then asked him about his use of the password cracking program "CRACK"
to break passwords that would allow him to access files in Intel
computer systems referred to as "BRILLIG" and Intel Supercomputer's
Systems Division (SSD).  Mr.  Schwartz freely admitted to me that he
had in fact employed the "CRACK" program to access passwords for both
"BRILLIG" and SSD but told me that his only reason for doing so was to
test both security systems that should have prevented anyone from using
the crack type program to access passwords.

I then began to go into these matters with Mr. Schwartz.  As a result
of questions by me, along with information volunteered to me by Mr.
Schwartz, I learned the following from Mr. Schwartz.

Schwartz stated that he had been accessing Intel's "MINK" system by a
method known as "backdooring" until about April of 1993.  Again, he
stated that this was in order to enable him to receive electronic mail
at his work station at Intel but at this point, Schwartz admitted to me
that while conducting this backdooring, he knew it was against Intel
policy and could possibly be considered a criminal act.  Mr. Schwartz
admitted to me that he was confronted by Mark Morrissey and an Intel
employee by the name of Dirk Brandewie and advised that what he was
doing was not permitted and that he was to reinstall the appropriate
gates to the "MINK" system to prevent outside access,  Mr. Schwartz
told me that he in fact did do that and that for a while, he attempted
to use another system known as "HERMES" but found that the Hermes
system was too slow for his needs and so he then wrote a new program,
different from the first, that enabled him to re-access "MINK" in order
to receive electronic mail.  Mr.  Schwartz admitted to me that he was
confronted again by Mr. Morrissey and Mr. Brandewie (about July of
1993) at which time, he was once again told that this activity was not
permitted and that he was to cease doing it.

Mr. Schwartz then went into some detail as to his activities regarding
access the "BRILLIG" system and the SSD system and the using of the
Intel "SNOOPY" system to speed up the accessing "CRACK" program to
obtain passwords to allow him access to the systems.  At this point,
Mr. Schwartz readily acknowledged that not only was this activity
against Intel policy but there was no doubt in his mind that he could
also be found criminally liable for this activity.  However, Mr.
Schwartz was very adamant that his only purpose in conducting these
exercises was to try and find out how hardened these two systems were
against attempts to crack their password codes using "CRACK"
programming or similar.  Mr. Schwartz did acknowledge however that
another reason he was attempting to crack a "BRILLIG" password was that
his contract with the "BRILLIG" system was soon due to end and he
wished to ensure that he would continue to have password access to the
"BRILLIG" system after his contract ended and his personal password
revoked.

In response to our questions, Mr. Schwartz was adamant that at not time
did he ever actually access files using any of the cracked passwords
that he had obtained using the "CRACK" program.  However, on further
questioning, Mr. Schwartz did admit to me that about three years ago,
while working at "I-WARP" (and Intel subsidiary) that he had, in fact
access files in the I-WARP system through a process known as "ROOT" and
that at that time, he had taken the further step of actually viewing
information from files he had accessed.  He admitted to me that when he
had done that he had known at the time that what he was doing was both
against Intel policy and also illegal.  However, again, Mr. Schwartz
denied that during his accessing of "BRILLIG" and SSD, he had never at
any time either viewed the contents of any file that he had accessed,
not had he made any copies of any kind of any of those files.

Through conversation with Mr. Schwartz, I learned from him that he had
worked for Tektronix between the years of 1978 and 1983 and that at one
point (he believed somewhere around 1981) he had actually been
suspended at Tektronix for engaging in similar activities.  He also
went on to admit that he worked for a company called Tandem between the
years of 1986 and 1987 and that as an April Fools joke on one of those
years, he had also illegally cracked password and accessed files in
Tandem's systems.  He stated that as a result of this activity, he was
actually "technically terminated" for about two hours.  Mr. Schwartz
stated however that he was immediately reinstated by a supervisor who
took the point of view that in fact what Mr. Schwartz had been doing
was actually part of his job description which was testing security
systems within computer systems for Tandem.  Mr. Schwartz stated that
in fact, at that point in time, he was writing a book about security
systems and that he was doing this in part as research for his book.

During the course of our conversation, Mr. Schwartz made mention of the
fact that on occasion, he had entertained private fantasies of engaging
in computer espionage but explained that they were merely idle
daydreaming and that it was not something that he had given any serious
consideration to.  We began to explore this avenue in greater depth and
during further discussion, Mr. Schwartz admitted to me that in the
course of his espionage fantasy, he had given thoughts to such matters
as what type of information would be the most valuable to competitors,
what people or organizations would be most interested in this
information who would provide the greatest reward.  On urging from me,
he admitted that he suspected that the Cray Organization would probably
be the biggest competitor who would be the most interested, and pay the
most for, any intelligence that he obtained from Intel systems.

Mr. Schwartz at first was very vague in his answers as to what
information he would obtain and where he would obtain it, etc.
However, on further discussions with me, he became more specific about
the types of information, how he would access it, and who he would take
it to.  At one point, I asked Mr. Schwartz if he had ever taken any
active steps in carrying out this fantasy and his response to me was,
"I never to any steps externally to carry out this fantasy".  I then
asked him if that meant that he had possibly contacted somebody within
the Intel cooperation regarding this fantasy at which point he stated,
"No, no, I meant externally beyond the tips of my fingers, outside my
mind."

Mr. Schwartz also discussed with the Intel personnel in the interview
with me more technical aspects of his activities within Intel and
outside companies that he had contracts with.  These statements were
better understood and assessed by the Intel personnel.  Refer to their
reports on those aspects of our interviews.

At 9:00 p.m., we concluded our interviews and the service of the search
warrant of Mr. Schwartz's residence and cleared to return to the
Washington County Sheriff's Office.

On 11/02/93, I served a search warrant at Mr. Schwartz's business
address at Stone Hedge Consulting Services, 4470 SW Hall St. #107,
Beaverton, Oregon, finding that address was merely a private PO Box
service and that Box 107 was a mailbox for Mr. Schwartz.  On service of
the search warrant at that location, I learned that there was only
routing mail in Mr. Schwartz's box and did not see or find anything
that was covered by the search warrant issued.

It should also be noted that on 11/01/93, while serving the search
warrant at Mr. Schwartz's residence, Intel personnel at our direction,
shut down Mr. Shcwartz's work station at Intel in order to maintain
evidentiary integrity of that work station.

On 11/02/93 at 10:00 a.m., I gave Intel personnel the service copy of
the search warrant, authorizing the search of Mr. Shcwartz's work
station on Intel property.

Investigation ongoing.  No further action taken to this date.