August 2007 Newsletter

Enhanced Electronic Forensics

We are fortunate to be joined by Paul Price who will direct our firm’s efforts in the collection and analysis of electronic evidence as well as consulting on network security.

For the past 20 years, Paul has served in both state and federal law enforcement, most recently with the College Station Police Department, as a Computer Forensic Examiner. Paul established the regional Computer Forensic Laboratory in College Station, where he was responsible for its operation and oversight for the other law enforcement examiners. His background includes specialized assignments in Financial Crimes Investigation, Crime Scene, Computer Forensics, and Counterterrorism. Paul spent the last five years of his law enforcement career on assignment with the FBI working National Security matters and he maintains a current TS/SCI security clearance.

Paul has worked on several high profile projects, primarily involving financial investigations. His work requires him to identify, preserve, analyze, and document electronic media for purposes of evidentiary or root cause analysis and he has testified as a forensic expert in several matters.

Please contact Paul with questions at or call him at 713-351-7150. Please click here to see some of Paul’s case experiences and credentials.

Employer Owned Life Insurance

Generally, under Internal Revenue Code §101, death benefit proceeds received from a life insurance contract by reason of the death of the insured are excludable from the beneficiary’s taxable income. However, IRC §101(j)(1), which was added by the Pension Protection Act of 2006 (2006 PPA), limits this exclusion amount for an "employer-owned life insurance contract" to the sum of the premiums and other amounts paid by the policyholder for the life insurance contract. In other words, if an employer is a policy holder of a life insurance contract, the proceeds must be included in taxable income for amounts that are in excess of the premiums (and any other amounts) paid on the policy. However, the changes in the Code can be avoided with proper planning.

Historically, it is common practice for firms providing professional services to obtain life insurance contracts on key employees to offset their economic losses that ultimately occur upon the death of key employees. Unfortunately, this rule negatively targets exactly this type of life insurance contract by exposing employers to income taxes on life insurance proceeds they receive as a result of an employee’s death.

Proper planning by the employer will enable the employer to exclude the full amount of the life insurance proceeds under certain conditions. The conditions are as follows: 1) the employer provides written notice about the insurance to the employee and the employee agrees to be insured and either 2(a) the employee is an employee within the 12-month period before death, or (b) at the time the contract was issued, was a director or highly compensated employee or 3) the amount is paid to the family or designated beneficiary of the employee.

Please contact Allen Wendler at 713-351-7120 if you have specific questions about this matter.

Data Hiding Techniques

Over the last decade, the proliferation of advanced technology used to conceal data and transmit covert messages has been a cause for great concern within the information security community. Steganography (Greek for hidden writing) or Stego as it is commonly known refers to the digital manipulation of binary files for the purpose of hiding data. There are several tools freely available on the Internet and experts predict there have been more than a million downloads of these products.

The methodologies used by Steganography software are different but generally consist of two basic parts, a carrier file and the data to be hidden. Data can be concealed in any text, picture, video, or audio file. However pictures are the medium most commonly used by freeware Steganography tools. Their large size allows for more data to be hidden and there is no detectable difference between the original image and the one containing the hidden data. Many of the tools require very little to no computer knowledge and are as easy as the push of a button to conceal valuable information.

For example, the entire text of this article is hidden in one of these pictures. Can you tell which one contains hidden data?

When concerned about intellectual property misappropriation, one should consider Steganographic analysis of subject computer files. Please contact Paul Price at or 713-351-7150 to learn more about Steganography.

Invested in Treasuries?

We noted an instance recently where one financial institution unilaterally changed an investment from being directly in U. S. Treasury obligations to being in a Treasury bond fund run by an investment firm, possibly because the fees to the institution were much higher on the latter. There are two problems we perceive from this action, first is the default risk of the bond fund is higher than the default risk of the U. S. Treasury (especially as seen in the newspapers today) and second is the volatility of returns in a bond fund is much greater than a repurchase agreement (the prospectus of this particular fund showed returns in some years well below Treasury bill yields).

We suggest a review of presumed Treasury and agency investments to determine the nature of such investments.

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If you would like to read more about us and the work we have done, please see

Selected Engagements and Experience for Paul Price

Investigated and federally prosecuted an international Internet fraud ring. Over 500 victims worldwide were managed by a single investigator in one of the first e-crimes indicted by the US Attorneys Office in the Southern District of Texas.

Analyzed and recovered electronic communications in one of the first Internet related homicides in Texas.

Recovered e-mail and financial records that led to the conviction of a high profile Identity Theft ring that had been in operation for almost a decade.

At the request of the Texas Rangers, analyzed and recovered deleted data in the South Texas shooting of a US Border Patrol Agent.

Chief law enforcement consultant on project with SHSU and NW3C to develop a Live Computer System Capture and Triage Tool for law enforcement.

Involved in the execution of several search warrants issued by the court of the Foreign Intelligence Surveillance Act (FISA). The nature of these national security matters requires surreptitious entry and security countermeasures.

Analyzed and recovered deleted data that led to the successful recovery of a runaway teenager.

Analyzed electronic evidence in Arabic, Russian, Spanish, and other foreign languages.

Trained law enforcement and private sector on computer forensics, network security, and fraud prevention.

Processed electronic evidence in multi-agency investigation of serial bank robbery suspects responsible for more than half a million dollars in losses across the state.

Contract instructor for Digital Forensic training at Sam Houston State University.

Education, Affiliations, and Training for Paul Price

National White Collar Crime Center- Data Acquisition and Recovery

Center of Excellence in Digital Forensics - Internet & E-mail Forensics

Guidance Software/CyberEvidence/EnCase Phase II

Center of Excellence in Digital Forensics - Advanced Digital Forensics

Federal Bureau of Investigation – Information Security (INFOSEC)

National White Collar Crime Center - Secure Techniques for Online Preview (STOP)

Center of Excellence in Digital Forensics - Network Forensics

Houston Police Department Video Forensic Analysis

High Tech Crime Institute - Computer Exploitation and Investigation

Center of Excellence in Digital Forensics - Linux for Investigators

Member of High Technology Crime Investigation Association (HTCIA)

Member of Institute of Computer Forensic Professionals (ICFP)

Member of High Tech Crime Consortium (HTCC)

Master Texas Peace Officers License

Masters of Digital Forensics student at Sam Houston State University

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