Code Name "VERAX": Snowden Uncovered - The Geneva Decision

Much of what I saw in Geneva really disillusioned me about how my government functions and what its impact is in the world," Snowden told The Guardian. "I realized that I was part of something that was doing far more harm than good."

Aberrations In the System

Mr. Snowden's story about Geneva was an aberration in the system.  Not only because it seemed out of place with the rest of his story about seeing unmitigated data collections, a story unto itself, nor simply because it sounded like a movie; an unnecessary embellishment when the information that was about to be released was already a significant weight for his version of "the truth".  It was an aberration because it did not fit other common practices employed for developing a resource that are far less risky if also far less sexy. 

Developing an informant is the key phrase,  A banker in an important position at a bank is not a "throw away" informant.  This would be a source that would and could be used over a longer period of time so it would be imperative to develop a relationship, not potentially kill him or her. 

Whether it was because it was unnecessary backdrop against the rest of the story, because it was too movie-esque or outside of more common practices, Mr. Snowden presented an aberration.  This aberration  begged for more attention to his time in Geneva, a time when his personnel file would show he had already attempted or had obtained information and when his own aberrant behavior had brought him unwanted attention. 

Geneva - March 2007 to February 2009

We know that Mr. Snowden was a security guard at the University of Maryland in 2006.  The University of Maryland has several federal research, education and training programs including language program for the DoD and counter terrorism related to the CIA.  Mr. Snowden ingeniously interprets that to mean he was employed by the CIA in 2006 instead of the University of Maryland.  He also reports on his various resumes that he attended the University of Maryland although investigation's indicate he took one semester at an off campus facility in 2009. 

During this time, he meets his girlfriend, Lindsay Mills, who is attending the Maryland Institute College of Arts.  Snowden commented on his Ars Technica account under the name "TheTrueHOOHA" that he had been approached in April of 2006 to do a photo shoot: (photos here)

After several comments, Snowden confirms that he actually has a girlfriend.  Lindsay Mills was studying photography among other subjects and may have introduced Snowden to a photographer acquaintance.  The original archived post at Ars Technica has been disabled as of 02/08/14 (previously available). 

By this time, Snowden had taken a few courses at Arundel Community College where he obtains a GED, had learned some Japanese and some basic Mandarin Chinese along with several programing courses.  He does not receive a degree. 

While working as a security guard at the MU campus, Snowden applies for a position at the CIA as a "communications officer" and receives a reference describing him as a "brilliant IT guy".  A comment that is repeated later by a fellow former employee.  In short order, Mr. Snowden is off to Geneva. 

The Swiss foreign ministry confirmed that Snowden lived and worked in Geneva, where it says he was accredited to the United Nations as a U.S. Mission employee from March 2007 to February 2009.

He leaves behind his then girlfriend, not for the last time, for a life of adventure where, despite most of his claims, he appears to have enjoyed flying to London, Paris, Italy and other areas, living in an apartment furnished by the CIA and making general observations about people and places. 

By April, a few months into his Swiss adventure, the chats show that Snowden was warming to the country. "Yeah… It's pretty cool so far," he wrote. "The girls are gorgeous, too. Oh, and prostitution is legal."

He is a prolific poster on Ars Technica during his time in Geneva and regularly defends the security and intelligence practices:

Snowden may have leaned libertarian on some issues, but he also exhibited strong support for America's security state apparatus. He didn't just work for it as a quiet dissident. Four years before he would leak the country's secrets, Snowden was cheering its actions and insisting that it needed healthy funding. To anyone who questioned US actions in his favored online hangout, he could be derisive. 

Livid about the across-the-board defense cuts that were planned under Obama, Snowden acidly joked that "[m]aybe we could just outsource our defense needs to india."... 

Worse yet, during a remarkable January 2009 chat, Snowden wrote that Obama had "appointed a fucking politician to run the CIA."

How To Copy Files Without Throwing A Flag

 Updated - August 17, 2007, Snowden makes a request for a program that can copy 2 files once a week from a windows based computer system that he claims is "for work" -

Greetings, Old Ones. I come humbly seeking the ageless wisdom of the collective. My knowledge is but the smallest mite in comparison to your great, chitinous shells.
I need to write a script here at work to copy two files once a week and append that day’s date to the names. Thinking this should be pretty easy, I wrote a little batch file figuring the relevant operation would simply be the following:
copy x:\source\file1.txt x:\destination\file1%date%.txt
copy x:\source\file2.txt x:\destination\file2%date%.txt
Then I’d simply make the .bat file a scheduled task that runs weekly and hope for the best.
Unfortuantely, the problem with this seems to be that Windows can’t understand that kind of syntax. Apparently variables are completely incompatible with filenames in the windows command line

Money and the Inversion Exchange Market

While Snowden does post some political commentary that is Libertarian in view and has a past history of writing about internet privacy, much of his commentary seems to be about monetary and budget policy. 

Some of his observations regarding Switzerland are also related to money including that he cannot get tap water at a restaurant, but has to buy in at $5/glass bottle and that hamburgers are $15 and not nearly as good as McDonald's.  He does have an observation about McDonald's:

"Jesus christ are the swiss rich," he wrote. "The fucking mcdonald's workers make more than I do. They make like 50,000 franc a year."

According to the most current information, the Swiss Franc was worth .80 cents to the dollar. This would make Mr. Snowden's salary, if he was being honest, between $35,000 and $40,000/year UPDATE: Snowden claims to be making $70k/yr in Ars Technica forum which is actually 56k Fr in Switzerland on which he did not pay taxes nor did he pay for his own rent and utilities.  According to Glass Door's most current postings of similar current salaries, This is actually a little over stated. That is not a starting position salary.  It's typically closer to $56k/year US in this field. 

Price per 1L of petrol (.25 gal gasoline) was approximately 1.25 Fr = $5/gal in 2008.  Despite a comfortable salary, Mr. Snowden would have found Geneva an expensive place to live and the rest of his European destinations not much cheaper. 

Just prior to Obama's election, he discussed unemployment, the devaluing of the dollar and short selling stocks. 

Obama was "planning to devalue the currency absolutely as fast as theoretically possible," he wrote. Rising unemployment was a mere "correction," a "necessary part of capitalism."

< User12>	how then do you deal with 12% unemployment
<TheTrueHOOHA>	can't have it both way. Almost everyone was self-employed prior to 1900. Why is 12% employment so terrifying?
<TheTrueHOOHA>	that's nothing.
< User12>	we'll see what happens. im tired of trying to predict how this will all turn out it's a huge fucking mess
<TheTrueHOOHA>	short selling FTW. :D

Snowden didn't short stocks just to make money—he did it because it was the right thing to do. He saw himself as a paladin of the markets, bringing "liquidity" to all.

Mr. Snowden apparently found time and money to play the stock market.  Some time in 2008, he had discovered the Inversion Exchange Market :

An inverse S&P 500 ETF, for example, seeks a daily percentage movement opposite that of the S&P. If the S&P 500 rises by 1%, the inverse ETF is designed to fall by 1%; and if the S&P falls by 1%, the inverse ETF should rise by 1%. Because their value rises in a declining market environment, they are popular investments in bear markets.^[1]

If one invests $100 in an inverse ETF position in an asset worth $100, and the asset's value changes to $80 and then to $60, then the value of the inverse ETF position will increase by 20% (because the asset decreased by 20% from 100 to 80) and then increase by 25% (because the asset decreased by 25% from 80 to 60). So the ETF's value will be $100*1.20*1.25=$150.

However if the market swings back to $100 again, then the net profit of the short position is zero. However, since the value of the asset increased by 67% (from $60 to $100), the inverse ETF must lose 67%, meaning it will lose $100. Thus the investment in shorts went from $100 to $140 and back to $100. The investment in the inverse ETF, however, went from $100 to $150 to $50.

In other words, if someone takes a inverted short selling position and the market suddenly takes a sharp turn for the better, that person would lose more than the difference in value between the short sell price and the value of the stock, possibly cutting the original investment down to half or less of it's original value.  It's a very risky market.  (read entire for best understanding)

Since the risk of loss on a short sale is theoretically infinite, short selling should only be used by experienced traders who are familiar with its risks.
Apart from this risk of runaway losses, the short seller is also on the hook for dividends that may be paid by the shorted stock. In addition, for heavily shorted stocks there is a risk of a “buy in.” This refers to the fact that a brokerage can close out a short position at any time if the stock is exceedingly hard to borrow and the stock's lenders are demanding it back.

Again, if the market starts rapidly improving and the lender sees an opportunity to make back losses, they can "call the loan" and the short seller has to pay it back immediately plus the increased value of the stock and any "dividends due".  Worse, if the lending brokerage doesn't demand it back, but bets on the stock rising even higher, the short seller could experience "infinite loss", being on the hook for an ever increasing amount of money.

In November of 2008, just after the presidential elections, Snowden complained:

he "lost $20,000 in october alone," but he was confident that short-selling was the way to get it back. "I made $1200 today on ultrashort etfs," he wrote later that day. "only $18800 to go before I make up my losses for the year."

It is unclear where Snowden obtained the money to play the stock market to that extent.  He was betting on the stock market to continue to keep falling to make up his losses:

< User13>	I wouldn't be surprised to see the Dow hit 6xxx numbers... I figure that's as low as it goes, of course it may flatline there for a while.
< User15>	pray for 5;s
< User16>	why?
< TheTrueHOOHA>	because then i'll be filthy fucking rich

In December, 2008, he crowed: 

< TheTrueHOOHA>	HAHAHAHAHAHAHA. Money, bitches!
< TheTrueHOOHA>	I just want to point out that all of you bottom callers were wrong, and I, in fact, was right. That is all.
< User17>	??
< TheTrueHOOHA>	Stock market. Fake rally earlier today, then it had a heart attack in the final hour.

In early January, 2009, Snowden was still riding high and defending the secrecy of intelligence information.  He was particularly upset about "anonymous officials" who "leaked" the "Stuxnet virus" used against Iranian nuclear facilities:

< TheTrueHOOHA>	VIOLATING NATIONAL SECURITY? no
< User19>	meh.
< User19>	national security.
< TheTrueHOOHA>	Um, YEEEEEEEEEEEES.
< TheTrueHOOHA>	that shit is classified for a reason
< TheTrueHOOHA>	it's not because "oh we hope our citizens don't find out"
< TheTrueHOOHA>	it's because "this shit won't work if iran knows what we're doing."

But something began to change early in 2009.  The stock market, according to Dow Jones, had began a rapid improvement starting in January 2009, recording a 37% increase by the end of the year. 

While at the same time, the Inversion Exchange Market took a rapid nose dive. 

The two most popular funds:

Rydex lost 27.5% by the end of 2009 after recording a record high increase of 40.95% by the end of December 2008.  (see chart above)

ProShares does not say what it recorded for 2008, but it's 5yr loss was 37.5%

What this would mean for Mr. Snowden would depend on the shares that he had purchased and how quickly he could close the "short position", purchasing shares on the open market at an ever increasing price (loss) to replace those he had "borrowed".  Or, if he tried to hold on to them, thinking it was an aberration, thinking they would drop again, his losses would have continued to spiral well beyond the cost of his initial investment.  "Theoretically, infinite loss."  Catastrophic failure.

 

Updated: If Snowden did make money, he may have put it in an IRA:

 

Another advantage of inverse ETFs is that they may be held in IRA accounts, while short sales are not permitted in these accounts.

 

The Geneva Decision

February, 2009, he wrote a comment on a Ars Technica, an odd outburst considering he had just been defending the intelligence community the month before and insisting that "leakers should be shot in the balls": 

"Too bad the [Australian] government is luddite technophobes... USA FUCK YEAH... WE LOVE THAT TECHNOLOGY SHIT. HELPS US SPY ON OUR CITIZENS BETTER."

 And, on February 14, 2009, he placed an interesting request on an Ars Technica forum: 

Old Ones, Sages, Great Minds of the Hive; I pray for your wisdom.
This seems like it should be a reasonably simple question, but I admit that I am ignorant of almost all things virtualized.
TL;DR: How do you launch a VM from a LiveCD? The goal here is to be able to bring a LiveCD (Virus/Malware/Keylogger-free VM-launching platform) and a USB drive (VM Image) to any given computer and be able to your work through the VM without leaving anything behind on the physical host machine.
Follow-on: Are there any software packages out there that support this functionality out of the box?
Thank you for your help.
-TTH

His supervisor had noticed a distinct change in Snowden's attitude and work behavior and wrote a derogatory report "Just as Edward J. Snowden was preparing to leave Geneva and a job as a C.I.A. technician" at the end of February.  It is not clear whether Snowden resigned under duress due to the derogatory report or if he had already resigned. 

The C.I.A. suspected that Mr. Snowden was trying to break into classified computer files to which he was not authorized to have access, and decided to send him home, according to two senior American officials

"Send him home" may suggest that Mr. Snowden's resignation was not voluntary.  A former colleague says:

"During that time period he did quit the CIA, so I knew that he was having a crisis of conscience of sorts," Anderson said in the TV interview. "But I am still surprised, even shocked. He never gave me any indication that he would reveal anything that was top secret."

Mr. Snowden had returned home by March 2009, probably moving back in with his mother while renewing his acquaintance with his girlfriend, Lindsay Mills.  One of his final comments on Ars Technica before obtaining his position at Dell and flying to Japan was also a derogatory remark on the economic policies of the administration:

"It seems like the USD and GBP are both likely to go the way of the zimbabwe dollar," he suggested in March 2009. "Especially with that cockbag bernanke deciding to magically print 1.2T more dollars."

Meaning, there was more money on the market, more money to invest, driving the stock market even higher and making any losses increase hand over fist if Snowden was still holding any shares.  Or, possibly as bad for Snowden, he would not have been able to quickly regain his losses as he attempted to in October 2008. 

Update:  Snowden had requested a script for downloading files, 2 per week from a windows based program, August 2007, only 5 months after being on station in Geneva.  Mr. Snowden claimed that he had information he could have released in 2008, but held back because he wanted to see what President Obama would do with his policies.  President Obama was sworn into office January 20, 2009. 

Update: Per Luke Harding's book "Snowden Files", Snowden claimed that his altercation with the manager who wrote the derogatory report was because Snowden had attempted to show a weakness in the online personnel file system by inserting a few lines of code in the program.  He claims that the project was approved by his supervisor, but that the lead manager became irate and told him that he was not allowed to be making those changes or in those files.  Snowden was a "Communications Officer" at this time.  His main responsibilities were setting up and maintaining secure communication lines, not programming. 

Snowden attempted to get a program and devices to create "a machine within a machine" February 14, 2009, only four weeks after President Obama was sworn into office.

He went on to Dell, Inc in Japan, working as a contractor on a military base, on of the significant intelligence "listening posts" : 

Snowden downloaded information while employed by Dell about eavesdropping programs run by the NSA and Britain's Government Communications Headquarters, and left an electronic footprint indicating when he accessed the documents, said the sources, speaking on condition of anonymity.

The first and most prolific releases of information pertained to the interaction of major tech companies, such as Microsoft, Google and beyond, that cooperated with US intelligence, possibly damaging their long term investment.  As of this writing, Google currently has 61.6 million "short shares" outstanding and Microsoft has 3.1 million "short shares" outstanding.  As of this writing, both Google and Microsoft shares have only increased in value. 

 

Read Also:

Code Name "VERAX": Snowden Uncovered (the movie-esque quality of Snowden Spy Craft)

Idiot Wind: A Compendium of Snowden, WikiLeaks, Greenwald, Poitras and Appelbaum Topics

Ed v. Ed or How to Think About the Snowden Operation

Russian Intelligence is Behind the Snowden Show: German Intelligence

On Snowden and Coincidences

The End of the Snowden Operation

Acknowledgements:
JB Gregoire and associated twitter group for assisting with the research and development of this story.  This video is for you.