Schmidt to lead Obama's cybersecurity drive

To: The Editors of CSO/Chief Security Officer Magazine

Investigative journalists will want to examine Howard Schmidt's involvement in the cover-up of serious identity fraud within the leadership of Carnegie Mellon's CyLab, where Schmidt has long been a "Distinguished Fellow."
CyLab website, http://www.cylab.cmu.edu/about/people.html

Schmidt's colleague William Guttman was CyLab's most-publicized Founding Director.
Pittsburgh Post-Gazette, http://www.postgazette.com/businessnews/20011101faces1101bnp3.asp

But in reality Guttman was what security analysts call an "insider threat" ... in theater/TV terms -- a 'Music Man' with Oxford degrees, an academic 'Joe Millionaire' with a blatantly fraudulent resume. (Irony alert: CyLab touts its funding of CERT's publication entitled: "Common Sense Guide to Prevention and Detection of Insider Threats.")
CERT website, http://www.cert.org/insider_threat/

Guttman's public record claim-to-fame was (and remains) his science fiction assertion that he was the CEO and architect of a super-successful Pittsburgh dot-com.
CMU website, http://www.cmu.edu/cmnews/011205/011205_directors.html

Back here on planet Earth, public record SEC reports filed by Guttman himself in March 2000 show that his "Printcafe Software" yet another 'dot-con' fast-buck IPO scheme.

During a frantic six-week, $144 million, debt and venture capital shopping spree, Guttman used other people's money to "roll-up" five competing companies ... with an eye to an instant IPO that would have made Guttman and his cronies into overnight dot-com millionaires.
SEC website, http://www.sec.gov/Archives/edgar/data/1108507/0000950149-00-000602-index.html

Public record SEC documents show that Guttman and his dot-com executives gave themselves no-risk company loans to purchase massive amounts of dirt-cheap pre-IPO Printcafe stock. A successful IPO at $10/share would have resulted in a windfall profit of $16 million for Guttman. (This sort of executive IPO looting became illegal in 2002, under Sarbanes-Oxley.)
SEC website, http://www.sec.gov/Archives/edgar/data/1108507/0000950149-00-000507-index.html

The public record shows that the Internet "bubble" burst in Mar 2000, the same week that Guttman announced his quickie Printcafe IPO.
Wikipedia, http://en.wikipedia.org/wiki/Dot-com_bubble

Now, instead of holding bags of Printcafe IPO loot, Guttman and his 'Pittsburgh pirates' were saddled with the management of five formerly competing companies, crushing debt, and no prospect of a life-saving IPO for two more years.

Worse yet, public record SEC reports show that under Guttman's leadership, Printcafe's aggregate revenue plunged from $55 million to $25 million during the year 2000. (Why? Because Guttman halted sales of the acquired software products in favor of a fictive, never-functional "e-commerce solution.")
SEC website, http://www.sec.gov/Archives/edgar/data/1108507/999999999702027578/9999999997-02-027578-index.htm

The public record shows that Printcafe's June 2002 "Hail Mary" was the "worst IPO of the year" as share prices nose-dived from $10 to under $1 (which is 'delisting' territory) in just a few months.
IPO Monitor, http://www.ipomonitor.com/reviews/2002/pages/bestworst.shtml

Printcafe became the most-ridiculed dot-com on www.F'dCompany.com after management sicced attorneys on webmaster Phil Kaplan in an attempt to determine the identity of whistle-blowers who had revealed that the dot-com was insolvent. Kaplan ignored all the legal huffing-and-puffing and gave the lawyers a single-digit salute by declaring Printcafe to be the "F'dCompany-of-the-Week." (Kaplan wrote: "It's just too bad I turned in my book last week -- PrintCafe.com woulda gotten a special mention.")
http://www.amazon.com/exec/obidos/ASIN/0743228626/fc-20
http://www.post-gazette.com/businessnews/20011128print1128bnp5.asp (the legal paperwork was hilariously titled: "PrintCafe vs. Ex-DLJ, sucky-me, and idiot!")

The public record shows that Guttman golden-parachuted out of the tail-spinning Printcafe, carrying a briefcase full of investor cash ($500,000 in the form of a loan that he never repaid).
http://www.post-gazette.com/yourbiz/20020218boselovic0218p2.asp

The public record shows that in Oct 2003 the insolvent PCAF:NASDAQ became yet another "spectacular dot-com flameout" and was sold off in a fire-sale auction after destroying hundreds of jobs and losing $250 million of public and private money.
Pittsburgh Post-Gazette, http://www.post-gazette.com/pg/03259/222416-28.stm

The public record shows that in 2003, Printcafe's officers and directors were named as defendants in a barrage of federal class action lawsuits for securities fraud, filed by devastated investors. (They settled, rather than go on trial in Pittsburgh's federal district court where they would have had to face "CI" [confidential informant] testimony and "smoking gun" documentary evidence. Had there been a trial, former CEO William Guttman would have been the star witness.)
Google, "Printcafe securities fraud"

Ironically, the public record birth announcement of Carnegie Mellon's CyLab appeared on the same day in October 2003, on the same page, in a paragraph adjacent to ... the death notice of Guttman's insolvent Printcafe dot-com!
Pittsburgh Post-Gazette, http://www.post-gazette.com/pg/03295/233305-28.stm

The public record shows that Schmidt's CyLab colleague was also the architect and manager of Aileron Capital, a hedge fund that was shut down in 2006 by then-CEO Richard Fuld of Lehman Bros. after investors threatened Fuld with lawsuits for managerial looting and fraud.
Pittsburgh Post-Gazette, http://www.post-gazette.com/pg/06358/748433-28.stm

The public record further shows that Schmidt's involvement with Guttman goes back at least to the Fall of 2002 when they shared a Carnegie Mellon stage during a White House Town Hall meeting on Cybersecurity, where Schmidt presented a draft of his now well-known "National Strategy to Secure Cyberspace."
CMU website, http://www.cmu.edu/cmnews/extra/2002/021022_whtown.html
CF Mail Archive, http://www.mail-archive.com/cf-community@houseoffusion.com/msg45442.html

The public record shows that after the Town Hall meeting, Schmidt received a personally guided tour from Guttman, and a briefing about Guttman's big-money "Sustainable Computing Consortium" which was funded by grants from Microsoft and NASA among others.
CMU website, http://www.cmu.edu/cmnews/021121/021121_hostmtg.html

The public record shows that prominent dues-paying members IBM, Microsoft, and NASA are now conspicuously absent from CyLab's partner roster. (Enquiring minds might correctly assume that IBM's and Microsoft's attorneys and NASA's Inspector General investigated the self-same sustained whistle-blowing that CMU and Schmidt have ignored.)
CyLab website, http://www.cylab.cmu.edu/partners/current_partners.html

The public record shows that although dues-paying commercial partners have been fleeing CyLab (membership is down from 48 to 23), Guttman remains prominently employed by Carnegie Mellon where he serves as a "Special Advisor" to the Provost and is also the Chairman of iCarnegie, the university's for-profit international education initiative.
CMU website, http://www.heinz.cmu.edu/australia/faculty-and-research/faculty-profiles/faculty-details/index.aspx?faculty_id=42

WHISTLE-BLOWING AND COVER-UP

ITEM: CMU Trustee Chairman David Shapira stonewalled repeated whistle-blows about Carnegie Mellon's "Joe Millionaire" problem. Shapira may have been gun-shy about fraud issues. The public record shows that his own lawyer exposed his suppression of evidence in a massive scandal of the 90's. (Shapira's Phar-Mor fraud was TWICE the size of Guttman's Printcafe fraud!)
PBS Frontline 8-Nov-1994, "How to steal $500 million", http://www.pbs.org/wgbh/pages/frontline/programs/transcripts/1304.html

ITEM: CMU President Jared Cohon Cohon has been a member of the President's Homeland Security Advisory Council since he was appointed by George Bush in June 2002.
CMU website, http://www.cmu.edu/cmnews/020621/020621_hscouncil.html

ITEM: Since November 2003, Cohon has engaged in a sustained stonewall of exhaustive whistle-blowing about Carnegie Mellon's "Joe Millionaire" problem.

ITEM: At the October 2004 National Press Club Cybersecurity Journalism Awards Banquet, Cohon stated that Carnegie Mellon's CyLab does NOT security-clear its Directors. Appallingly, Guttman was in attendance at that banquet, seated among the award candidates at one of the head tables.
CMU website, http://www.carnegiemellontoday.com/article.asp?aid=146

ITEM: CyLab Fellow Schmidt dismissed a whistle-blowing e-mail as 'spam,' and his comments were circulated by CMU's General Counsel to Microsoft Security and to the editors of Chief Security Officer Magazine.

ITEM: CMU General Counsel Mary Jo Dively has spun like an Olympic figure skater, asserting to Microsoft and CSO magazine 1) that Guttman's published resume had NOT been 'sanitized' (when in fact it was clearly given a makeover to expunge false dates and material misrepresentations!), and 2) that the whistle-blower had personal issues with Guttman (when in fact they have never met!).
Dively e-mail, Tue10Apr2007, 9:35AM (Schmidt and Dively were apparently unaware that the whistle-blower's attorney was among the numerous cc:'s on the original "spam" e-mail sent to Schmidt)

==> Howard Schmidt participated in a major academic fraud cover-up that is a contender for America's "Cybersecurity Story of the Year."

Former Rep. Traficant of Ohio -- a fierce critic of government absurdity -- might have closed this whistle-blow about Schmidt thus:

"Beam me up, Mr. Speaker! With a Cybersecurity Czar like this, who needs cyber-enemies? I yield back the unused portion of my IQ to the Keystone Kops of Carnegie Mellon's stonewalling Administration."