Questions Over Veterans' Data Loss

Officials' Response To News Of Information Theft Scrutinized

(CBS/AP) 
"He wasn't authorized to do that. In fact, that behavior was a violation of our policies," Deputy Secretary Gordon Mansfield told CBS Radio News.

Since 2001, the IG has reported security vulnerabilities related to the operating system, passwords, a lack of strong detection alerts and a need for better access controls, he wrote.

But privacy experts said Tuesday the potential for fraud is significant.

An estimated 3.6 million U.S. households, or three of every 100, reported being victims of identity theft in the last half of 2004, a U.S. Justice Department study found. The VA security breach is second only to a hacking incident last June at CardSystems Solutions in which the accounts of 40 million credit card holders were compromised.

"One thing we need to start doing is punishing people who violate the rules," said Barry Steinhardt, director of the technology and liberty program at the American Civil Liberties Union.

He noted that name, date of birth and Social Security number enable identity thieves to obtain credit reports, bank and credit card accounts and place of residence. In other cases, such information could let terrorists use false identities to board planes or allow illegal immigrants to get a job.

According to the Justice Department, burglars struck the home of the unidentified VA employee in early May and took a government-owned laptop with disks.

After the incident, the employee promptly informed the VA, which did not tell FBI until late last week, according to two law enforcement officials who spoke on condition of anonymity because they are not authorized to talk publicly about the investigation.

Matthew Burns, a VA spokesman, did not return repeated phone calls regarding the timing of the disclosure. In a news briefing Monday, Nicholson said the agency was seeking to act promptly to inform veterans by notifying members of Congress and setting up a call center and Web site.

Meanwhile, the White House sought to reassure the nation's veterans as Democrats pressed for a full investigation and accountability for the incident.

"This is a scandal," said Senate Democratic leader Harry Reid, D-Nev., in a briefing with reporters. "The information was kept from the American public. I would hope that the administration is figuring out a way to find out what happened and then find out some way to make sure that all these veterans are made whole."