Mission Compromised (25 page)

The match was perfect. Korman had a genius for every kind of communications technology. Some in the industry said he could “make electrons dance.” And Marat, it turned out, was a master salesman. He took their ultrasophisticated digital encryption algorithms, with complementary hardware and software, to the master communicators at the Pentagon, the Defense Communications Agency, the National Security Agency, and the White House Communications Agency. Marat convinced them that if they wanted to protect their classified communications from the Soviets and Chinese, they absolutely
had
to have SCTI's equipment.

By 1983, the company's little prototype EncryptionLok-1A device, no bigger than a TV remote, was being alpha-tested in the most sensitive sites in the U.S. government: the National Military Command Center at the Pentagon, North American Air Defense Command out in Colorado, the State Department, the CIA, the National Reconnaissance Office, the National Security Agency, NASA, the FBI, and, of course, the White House. Shortly thereafter the Pentagon ordered that they be put on every nuclear submarine and in every ballistic missile silo. They were purchased through a $288-million secret defense appropriation tacked onto another bill at the last minute that passed without fanfare.

But SCTI's big break came just a year later when the company won another multimillion-dollar sole-source classified contract to produce major quantities of the little secure communications devices for the most highly classified undertaking in the U.S. government: the supersensitive Continuity Project. President Reagan was adamant that, before he could enter into talks with the Soviets aimed at reducing nuclear arms, we had to ensure that the Soviets could never “decapitate” our government. He sought and received from Congress billions of dollars for the highly classified construction and deployment of covertly pre-positioned mobile command-and-control facilities for use in the event of a Soviet attack so the U.S. would never be without a civilian president.

The Project required
thousands
of the little EncryptionLok-1A devices so that a president, even in the most difficult of circumstances, could still transmit and receive secure communications—data, telephone, and video—to and from U.S. military commands, the State Department, CIA, NSA, the Secret Service, and FBI. It was the break that Korman and Marat had been hoping for.

Because secure communications were so essential to the Project, Jules Wilson, a senior officer at the National Security Agency, was appointed communications czar and charged with the responsibility for certifying all equipment to be used in the “presidential emergency communications suites.” Wilson put together a small team of communications, encryption, and security experts that he dubbed the “Comm Hawks” and set out to find the best means of ensuring that the civilian president would always have a secure means of communications—be it by telephone, fax, computer, radio, or video. The Comm Hawks unanimously agreed that nothing was better than the EncryptionLok-1A—which was the first time the device became
known within the small circle aware of its existence as the more abbreviated “EL-1A.”

The Project was coordinated at the White House by a single officer on the National Security Council staff. His office, on the third floor of the Old Executive Office Building, had an innocuous title on the door: Special Projects Office.

 

 

Until the Continuity Project came along, SCTI had been building each EncryptionLok-1A individually as a discrete unit. But starting in 1984, the company had to gear up a full-scale production line so that each new unit would have a unique identifier code built into its encryption algorithm. This model would become the EL-2. However, before SCTI could start producing EL-2 units for the “presidential emergency communication packages,” the company was told that they would have to satisfy Jules Wilson at NSC about a couple of major concerns. The Korman technology was so sophisticated that the information being sent through an EL-2 unit was impossible to decrypt, even with the most powerful computers and the government's best code people. National Security Agency scientists at Fort Meade, Maryland, using Kray supercomputers, spent several months trying to crack the EncryptionLok-2 codes. The experts were good. But Korman's software and ideas were better. So the U.S. government bought more of these wonderful devices, and SCTI logged hundreds of millions in sales of the EL-2s.

All went blissfully well until late 1988. Experts at NSA and the FBI turned in a top-secret assessment to the Vice President who was then, because of the recent elections, the Republican President-elect. The report may have been the first instance of intelligence cooperation
between the agencies without threats or coercion. Whatever the reason, the NSA and FBI experts were terrified that if an EL-2 unit should fall into the wrong hands, an adversary or sophisticated criminal operation could reverse-engineer the technology, build their own version of the EncryptionLok technology, and then the secret military and government codes would be useless. Worse than that, America's intelligence community would forever lose the ability to crack
their
codes.

Jules Wilson, a code-cracker, and two security experts from the Comm Hawks went to see Korman in his new digs. SCTI had already made enough to vacate the shabby warehouse in Paramount and move the company into a new, shiny, silver-and-glass structure overlooking Newport Beach. Were it not for the twelve-foot-high security fence, the guarded gate, two K-9 security teams walking the perimeter of the building, and the armed guards at the front desk, the SCTI facility would look like any other California high-tech giant. Korman thought that his highly visible security measures would be the crowning touch, but the government geeks weren't impressed.

Nor were they impressed at Korman's responses to their concerns. So, because he couldn't offer them ironclad guarantees for their reverse-engineering or penetration problems, they required SCTI to make two changes to the EncryptionLok technology as a condition of granting the company the contract for any more devices that they called “contingency communications packages.”

First, they wanted Korman to build a GPS transponder chip into each EL-2 device and link it to that unit's identifier code so that NSA could “interrogate” any unit, anywhere in the world, to determine its location. That way if it ever found its way into the wrong hands they'd know it. Second, SCTI had to create an internal “command/destruct” circuit inside each unit so that, at a predetermined signal, the internal
circuitry of the EL-2 would fry itself into a small pile of molten silicon, plastic, precious metal, and circuit boards. The command/destruct circuitry would permit a higher headquarters to send a coded signal to any EncryptionLok-2 device determined to be “out of location” and potentially in the wrong hands. If that were the case, the commander of that unit could instantly render the unit totally useless to anybody, forever, before the technology could be compromised.

Korman's engineers struggled with the problems, believing that adding these features would also likely add size and weight to what was to become STCI's model EL-3, posing other problems in retrofitting the devices into already customized communications equipment and military gear.

But it took Korman less than two weeks, working on his own, to come up with the modifications that Jules Wilson and the Comm Hawks demanded. Korman and Marat flew to Washington with three prototypes and demonstrated them to Wilson and his team. All three units performed perfectly, though when the command/destruct signal was sent to the third unit, it emitted a curl of black, acrid smoke and what sounded like a little high-pitched cry as its circuits immolated themselves. Korman almost cried as he watched the third prototype frying on an asbestos pad sitting on Wilson's conference table. It had cost them nearly $2 million of research and development to make them, and now they were just melted rubbish.

The generals and bureaucrats examined the burned device. It was perfect. All that remained was a small, greasy black glob of charred and melted elements. Korman had sealed some volatile chemical components in a hollowed-out composite sleeve. The chemicals were inert unless mixed as part of the command/destruct sequence, but then they were fatal to the unit.

One of the government dweebs took out some tools and tried to take the unit apart to see if any internal elements survived to enable someone to guess at reverse-engineering. Nope. Cross-section slices of the device further revealed absolutely no trace of identifiable components. It would be impossible to reverse-engineer a destroyed EL-3. Period. The matter was closed.

The government buyers were satisfied and asked how much these changes would cost. Stan Marat had already estimated that the work to produce the newly modified EL-3 on a quantity production run with the new specs might be one thousand more than they were costing them now. But Korman, sensing the government's urgency and the lack of any competing vendor, quickly blurted out that “the per-unit cost to the government for each EncryptionLok-3 will rise from forty-three thousand to fifty-eight thousand dollars.” Nobody blinked.

By the time Korman and Marat got back to California that night, they had government authority to scrap the model EL-2 and put the EL-3 into production with a purchase order for eight thousand of the new units to be delivered over the next forty-eight months. The order had come over a fax machine that was hooked up to a new EL-3 unit in Korman's office, and across the top of the page in bold letters were the words
TOP SECRET
and below that,
SENSITIVE COMPARTMENTED INFORMATION
and below that, in much smaller type:
Special Projects Office.
The next four pages detailed technical, payment, and delivery requirements, much the same as other purchase orders that they had received over the past three years.

There was one new stipulation in this contract, however: a strict nondisclosure agreement. If SCTI accepted this purchase order, there could be no announcement of any kind in any trade publication regarding the contract or the modifications that had been made in the
EncryptionLok technology. SCTI was not even allowed to reveal to its other U.S. government customers that the improved model existed nor that they had received the contract award to make them. Only the National Security Agency the National Security Council's Special Projects Office, and the SCTI founders were allowed to have this information under threats of imprisonment and fines. Jules Wilson had told them that they were privy to “the greatest national security secret in postwar history.” While Korman and Marat doubted
that
, they weren't about to test their skepticism.

For Korman and Marat, this new nondisclosure stipulation was a problem. They had already figured out that if these GPS-locate and command/destruct features were so valuable to this one customer, then they should also be important to those government agencies that had already purchased thousands of units
without
these capabilities. But if they couldn't even tell their existing government customers about this upgrade, what good was it once this contract was done?

“I don't like it,” said Marat. “It ties our hands.”

“Don't like it? What don't you like about
$464 million?
That's what this contract is worth! Are you crazy?” shouted Korman. He always shouted when he was agitated. Marat was used to it.

“Besides, that's why I marked up the cost at the demonstration—to cover our R & D and future lost sales,” Korman said. But both knew he was lying; he'd raised the price only because he knew that he could get away with it.

Korman initialed the corner of each of the first three pages, signed the last page on the line labeled “Accepts,” and turned to Marat and said, “Now, find a way around that nondisclosure so that we can replace all those old EL-1As and EL-2s already out there with these new models.”

It was while he was driving home that night that it occurred to Stanley Marat that what SCTI needed was a stable of “brass hats” to push their product very quietly through the corridors of the Pentagon.

Much later on, Marat admitted to friends that he should have quit that night. Quit while he was ahead. But he didn't because the money was so good. And so easy.

Up to this point, Korman and Marat had been operating within the boundaries of the law, if not full propriety. Sure, the price tag for the EncryptionLok-3 was a whole lot higher than it should be, but nobody else had this technology—
and so what?
They
reasoned, if some plumbing company could get six hundred bucks for a toilet seat on a DOD contract, why shouldn't they be able to charge what the traffic would bear?

“Besides,” roared Korman one day when Marat seemed to be feeling pangs of guilt over how much they were charging for a device that cost them less than five thousand dollars to make, “if those fools in Washington don't know enough to come back and ask for a lower price, why should we
offer
it to them?”

Marat shrugged, went out, and bought himself a new BMW, which he paid for with a check.