Verint makes a mint from govt. spyware

If you're under FBI surveillance, there's a good chance your phone calls and Internet traffic are traveling over the equipment of Verint Systems -- a company that's doing very well these days, writes SecurityFocus' Kevin Poulsen.

New York-based technology firm Verint Systems recently launched a product called "IntelliFind" that claims impressive capabilities. The system is designed to be attached to the phone lines at a company's call center, where it silently monitors every telephone call, and -- using advanced voice recognition technology -- picks out conversations in which certain keywords are spoken, dumping a digital recording into a searchable database. "You can decide you want to see all the calls where product 'xyz' was mentioned, and then you can pick one and listen to that entire call," says Alan Roden, Verint's VP of corporate development.

If IntelliFind sounds like something that would normally be found on a supercomputer humming in an NSA basement, there's a reason. Behind business intelligence offerings like IntelliFind, and a line of networkable video cameras, Verint is a leading maker of electronic surveillance equipment and software for the United States and other governments. And it turns out that while other technology firms are struggling in a down economy, the business of helping governments with their spying may be a growth industry. In quarterly results announced Wednesday, Verint, a subsidiary of Comverse Technology, posted record sales of $42 million for the fourth quarter of fiscal year 2002 -- the company's third straight quarter of growth since going public in May 2002.

"During the year we believe that a greater interest in gathering intelligence to prevent criminal activity by government and law enforcement agencies resulted in greater demand for our communication interception solutions," said company president Dan Bodner in a conference call for analysts. "Over the past year we enhanced our competitive position by entering new markets, expanding our customer base, and introducing new capabilities for the analysis of content and culled data collected from wireline, wireless and data networks."

Among those new markets was an unnamed country "in the Latin America region" whose government recently placed a multi-million dollar order for communications interception systems, said Bodner.

Bodner didn't say what the Latin American government bought with that money, but the mainstay of Verint's electronic surveillance business is its "STAR-GATE" and "RELIANT" products, which operate on the supply and consumption sides of domestic spying respectively. The RELIANT system acts as a government agency's big ear, collecting and managing intercepted voice, e-mail, fax, SMS, data, chat, and Web browsing -- all on a single platform. On the delivery side, STAR-GATE does the actual wiretapping, and is primarily marketed to telephone companies trying to comply with the 1994 Communications Assistance for Law Enforcement Act (CALEA), which requires telecommunications carriers to keep their networks wiretap friendly for the FBI. An ISP version of STAR-GATE lets Internet providers conduct lawful surveillance of their customers and send the intercepted data to law enforcement over private networks.

PATRIOT Profits

With recent legislation and court decisions granting U.S. law enforcement agencies greater spying powers than they've had since the Nixon administration, government surveillance solutions look like a good bet, and other technology companies are getting in on the game. Last Fall, VeriSign launched its "NetDiscovery" service -- a turnkey CALEA solution for telephone companies that sends intercepted communications to law enforcement over a national IP-based network, using Verint STAR-GATEs for the taps. And last August, computer security company Network Associates got into the Carnivore business with its acquisition of Utah-based Traxess, makers of the "DragNet" Internet spy tool.

And for every company that makes the news with a surveillance system, there may be countless more that nobody's ever heard of. When the non-profit Electronic Privacy Information Center recently obtained a list of companies vying for a piece of the Defense Department's "Total Information Awareness" computerized spying project, the list of bidders included nearly as many obscure companies as it did brand name defense contractors. "It looks like there's this whole world of these little security technology companies that are probably doing well these days," says EPIC attorney David Sobel.

But Gartner analyst John Pescatore isn't convinced that there's big money in domestic surveillance. Instead, he says, the real opportunities are in helping the U.S. perform surveillance internationally. Indeed, according to its quarterly report, Verint has a subsidiary that provides communications interception solutions to what's described demurely as "various U.S. government agencies." The subsidiary's offices hold a facility security clearance from the Defense Department, and are located in Chantilly, Virginia, a stone's throw from most of America's intelligence agencies.

"Certainly with the USA-PATRIOT Act and all this homeland security stuff, there's been more effort in domestic collection," says Pescatore. "But the domestic type money has been a lot slower to start flowing than the national intelligence stuff... There's been definite growth there."

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