Federal Criminal Defense Blog : Georgia Federal Criminal Defense Lawyer & Attorney : Gillen Withers & Lake Law Firm : White Collar Crime, RICO, Trial : Atlanta, Savannah, GA

In an interesting factual landscape arising out of a child pornography investigation, the Eleventh Circuit reversed a contempt sanction yesterday holding that the “decryption and production” of the content on computer hard drives “would trigger Fifth Amendment protection because it would be testimonial, and that such protection would extend to the government’s use of the drives’ contents.”

In April 2011 a subpoena was issued to John Doe requiring him to appear before the grand jury in the Northern District of Florida and produce unencrypted contents located on hard drives of Doe’s laptop computers and external hard drives. Doe invoked his Fifth Amendment privilege against self incrimination. The U.S. Attorney took Doe before the district court and granted Doe “immunity for the act of production of the unencrypted drives” but not the derivative use of the decrypted contents in a criminal prosecution against him.

Doe was then taken back before the grand jury and he still refused to decrypt the hard drives. The government moved to hold Doe in contempt and after a hearing Doe was adjudged to be in civil contempt and ordered taken into custody where he stayed until oral argument in December.

In a broad discussion of the familiar legal principles from Fisher, Hubbell and Kastigar, Judge Tjoflat in an opinion joined in by Judges Martin and Hill, found that the decryption and production would be tantamount to testimony of Doe’s knowledge of the existence, location, possession, control and access of the encrypted files. Therefore, the Fifth Amendment protected Doe’s refusal to decrypt and produce the files.

The Court also noted that the government had tried to improperly split the baby with regard to the statutory immunity afforded under 18 U.S.C. 6002 and 6003. The government’s immunity letter stated that the act of production would be protected, but not the derivative use of the contents of the files. The court noted that the immunity contemplated by 6002 is immunity that requires both use and derivative use immunity.

This case is noteworthy in several respects because this is no doubt an issue commonly encountered in today’s society and the Eleventh Circuit in reaching its holding distinguished several recent district court cases to the contrary.

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Last Thursday, Federal Bureau of Investigation agents searched the dormitory room of Georgia Tech freshman student Zhiwei Chen as part of "Operation Payback," an investigation into cyber attacks launched on companies which cut off sponsorship to the website Wikileaks, including PayPal, Mastercard, Visa and Bank of America, according to Midtown Patch. A group called "Anonymous" has claimed responsibility for the attacks. Agents seized many electronic devices from Chen's dormitory. Chen denied any involvement in the attacks in statements to the media.

Operation Payback has resulted in the issuance of more than 40 search warrants.

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On Friday, Max Ray Butler, also known as the "Iceman" on the internet and by various other aliases, was sentenced to 13 years' imprisonment in the U.S. District Court for the Western District of Pennsylvania, according to a Department of Justice press release. The Court also ordered Butler to pay $27.5 million in restitution.

Butler was charged with engaging in computer hacking and identity theft on a massive scale, including hacking into financial institutions and credit card processing centers to steal customers' information. Butler would provide the victims' financial information to an accomplice, Christopher Aragon, who would use the information to purchase merchandise, or would sell information on the internet. Butler nd Aragon also created a website called "Cardersmarket," to acquire, use and sell credit card information Butler and Aragon recruited approximately 4,500 people through the site.

The Secret Service arrested in San Francisco Butler back on September 5, 2007 in San Francisco. A search of his computer revealed more than 1.8 million stolen credit card account numbers. Visa, MasterCard, American Express and Discover have reported that the amount of fraudulent charges on the cards totaled approximately $86.4 million.

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The Fulton County Daily Report's "The Snark" has illustrated, in a tounge-in-cheek manner, what has indisputably been the biggest change in the practice of law--including criminal law--over the decade just passed--technology. We have noted on this blog before that the technology boom of the last ten and more years has also presented inventive new avenues for crime and has created unusual challenges to the impartiality and sanctity of jury trials.

To be sure, e-mail had become widespread in the legal community by the late 1990s. However, as the comment notes, during the 2000s attorneys truly came into the full realization of the potential for e-mail as a more reliable and permanent way to document interactions between parties. The other edge of the sword is, of course, e-mail's evidentiary potential which can come back to haunt clients in various unpleasant ways. Few indeed are the defense attorneys who have not had at least one case where a client's computer was seized and imaged by the government, only to have e-mails alleged to be incriminating returned as highlights in government reciprocal discovery. While the positive side of e-mail is that it has made communication easy and easily preserved, the negative side of e-mail is... that it has made communication easy and easily preserved. E-mail is forever, and savvy 21st century lawyers would do well to counsel clients to be mindful not only of what they say, but of what they type and (increasingly in the decade ahead) of what they "text."

The comment also notes the changes in practice wrought by two other trends which began in the 90s: the continued spread of computer-assisted legal research and the growth of electronic filing. The need to page through compendious reporter volumes and indexes, or to spend hours at the local law library, has become an increasing rarity. Likewise, attorneys are increasingly relieved of the pressure to race to the courthouse before the clerk's office closes in order to file with the adoption of electronic case filing by more and more courts. The Blog notes that Case Management/Electronic Case Filing "CM/ECF," "PACER", a veritable blessing to both Federal courts and attorneys practicing in them, was first implemented by the Northern District of Ohio in 1996, and today is used by all Federal courts, a development which has heroically saved numerous acres of trees, millions in postage and reliance on the vagaries of the mails for reciept of notice of filings.

We close, fittingly, with a reminder of the challenges that the growth of technology will continue to pose for law and criminal enforcement. Ashby Jones at the Wall Street Journal Law Blog reports that the Los Angeles firm of Gibson Hoffman & Pancione has alleged that a cyber-attack originating in the People's Republic of China. The firm has alleged that its software code has been stolen by malicious e-mails which appeared to be sent by other members of the firm, and which contained a "Trojan" code enabling the takeover of the firm's computers. The firm coincidentally represents the California-based company CYBERsitter in a $2.2 billion lawsuit against China, alleging that filtering programs used by China contain over 3,000 lines of code illegally taken from content filtering software produced by CYBERsitter. The FBI is investigating the attack.

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Once again demonstrating the massive potential for crime created by our digital age, 28 year-old Albert Gonzalez pled guilty to two counts of conspiracy to gain unauthorized access to payment card networks last week in the U.S. District Court for the District of New Jersey according to a DOJ press release. Gonzalez was charged with hacking into the computer networks of major financial and retail organizations and stealing data on tens of millions of credit cards and debit cards, in one of the largest data breaches in U.S. history. He gained unauthorized access to the payment card networks of New Jersey-based, Heartland Payment Systems; Texas-based convenience store chain 7-Eleven; and Hannaford Brothers Co. Inc., a Maine-based supermarket chain. He was indicted in New Jersey in August 2009. In September 2009, Gonzalez also pled guilty in the U.S. Distric Court for the District of Massachusetts to 19 counts of conspiracy, computer fraud, wire fraud, access device fraud and aggravated identity theft for hacking into retailers including TJX Companies, BJ’s Wholesale Club, OfficeMax, Boston Market, Barnes & Noble and Sports Authority. In the same month, he pled guilty to a count of conspiracy to commit wire fraud for hacking into the system of Dave and Buster's, a restaurant chain, in the U.S. District Court for the Eastern District of New York.

Gonzalez had several servers, or "hacking platforms," and would give access to the servers to other hackers. Gonzalez and others would use the platforms to store malicious software, or "malware," in launching attacks on their victims. Gonzalez's plea agreement states that it was forseeable that Gonzalez and his co-conspirators would have used the malware to steal tens of millions of credit and debit card numbers, affecting more than 250 financial institutions.

Gonzalez tested malware by running multiple anti-virus programs in an attempt to ascertain if the programs detected the malware. According to information in the plea agreement, it was foreseeable to Gonzalez that his co-conspirators would use malware to Gonzalez was indicted in New Jersey in August 2009 for this criminal conduct. His plea agreement provides for a sentence of imprisonment between 17 and 25 years. He is scheduled to be sentenced in the Massachusetts, New York and New Jersey cases in March.

The charges against Gonzalez are staggering in their scope. They also demonstrate that would-be cybercriminals should consider their online aliases carefully, as they may resurface in a Federal indictment, as in the case of Albert Gonzalez a/k/a "j4guar17" a/k/a "soupnazi," etc.

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On Friday, the online classified ad forum Craigslist announced that it will pull its controversial "erotic services" section. Craiglist had come under scrutiny by the national newsmedia and various state Attorneys General surrounding the crimes committed by the "Craigslist Killer," Philip Markoff, including the brutal murder of Julissa Brisman in Boston. The announcement, which was made by several state attorneys offices, including those of Connecticut, Illinois and Missouri, and was accompanied by a statement from Craigslist, stated that Craigslist would replace the erotic services category with an adult section which would be monitored by Craigslist employees. The category will be removed in seven days.

Craigslist had been threatened with criminal prosecution in several jurisdictions over its erotic services section, including by Henry McMaster, Attorney General for South Carolina. Tom Dart, Sheriff of Cook County, Illinois, has called the site the largest source of prostitution in America, and Illinois Attorney General Lisa Madigan has referred to the site as "an Internet brothel." Sheriff Dart has filed a lawsuit against Craiglist to take down the erotic services section. AG Cuomo issued a statement following the announcement criticizing Craiglist's decision to act unilaterally instead of working with his office to prevent further abuses, and revealed that his office had informed Craigslist several weeks ago of an impending case which implicated the website.

Craigslist criticized what it viewed as sensationalist coverage in its statement, claimining that its classifieds were associated with far lower rates of violent crime than print classifieds. The site has also garnered media attention recently from a number of other incidents. In February, it was discovered that a Virginia man was running a prostitution ring involving 400 women across the country. Last month, a man and his mother in Tacoma, Washington, responded to a Craigslist ad for a car, only to be attacked by the seller with a hammer. And earlier this month, Margie Tannanbaum of Hauppage, New York, put a sexual advertisement on the site with the name and telephone number of a 9 year old girl, who was a rival of her daughter at their elementary school.

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Spam e-mail is nearly universally despised. However, recipients of spam may not fully appreciate the inventiveness and intricateness of some spammers' methods, however dubious or illegal, before considering the charges against Missouri residents Amir Ahmad Shah, age 28, and Osmaan Ahmad Shah, age 25, who operated a company I2O. As reported by IDG News Service, the brothers, along with Paul Zucker of New Jersey and Liu Guang Ming, a citizen of China, were indicted today by a federal grand jury for an e-mail spamming scheme which targeted more than 2,000 U.S. colleges and universities and sold more than $4.1 million worth of products to students. The scheme involved e-mail extracting programs which illegally harvested more than 8 million student e-mail addresses. The defendants then sent targeted spam e-mails to students in at least 31 campaign selling a variety of products and services, including digital cameras, MP3 players, teeth whiteners, pepper spray, magazine subscriptions and spring break travel offers. They developed programs to falsify header information and rotate URLs, subject lines, content, reply addresses and other information to avoid spam filters. The defendants would include false and misleading information in the e-mails suggesting an association with the college or university, using fictitious names, claiming to be "campus representatives," and that the businesses selling the products were "alumni owned." They also created dozens of identical websites for each e-mail campaign to conceal the source of the e-mails and to keep the e-mails from being blocked by spam filters, and initially set up the hosting for the websites in China. The defendants made money through referral fees for sending spam for products and services sold by others, and by buying products in bulk and reselling them. They also offered "offshore hosting" services for other spammers.

Federal investigators began investigating the Shah brothers in 2005, after University of Missouri officials identified them as the source of the spamming. The brothers proceeded to remove all Missouri students' e-mails from their lists, but continued to spam other colleges and universities. The defendants are charged in the indictment with 26 counts of aiding and abetting each other to access a protected computer without authorization and transmit commercial e-mails with the intent to deceive or mislead the recipients about the origin of the messages, and the indictment seeks $4.1 million in forfeiture and other property. Colleges and universities have spent large amounts repairing the damage from the hacking and spamming and in implementing protective measures.

Spamming is regulated by the CAN-SPAM Act of 2003, codified at 15 U.S.C. s 7704, which prohibits false, misleading or deceptive information in spam, as well as for sexually explicit spam without sufficient warnings, and carries a maximum sentence of 5 years imprisonment. Some sources estimate that spam now comprises 95% of the e-mails in the world.

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The suspected “Craigslist Killer,” Philip Markoff, a second year medical student at Boston University, appeared on Wednesday in Boston Municipal Court where he was ordered held without on charges of murder, armed robbery and kidnapping. Markoff is charged with the brutal murder of Julissa Brisman, a masseuse from New York City who was found dead in a Boston hotel on April 14 and who met Markoff on the online site Craigslist which features free classifieds ads. Markoff is also charged with robbing a woman at gunpoint at another Boston hotel on April 10 whom he had also contacted through Craigslist, and is suspected in the attempted robbery of an exotic dancer in Rhode Island who had posted an ad on Craigslist. Markoff is believed to have substantial gambling debts, as suggested by the fact that a Connecticut casino has confirmed that is cooperating in the criminal investigation.

Craigslist maintains an “erotic services” category, and Brisman’s murder has prompted a number of groups to call for Craigslist to shut down this portion of its site. Craigslist has been referred to as the largest source of prostitution in the United States. The service, which was started by Craig Newmark in 1995 as a series of emails to friends about events in the San Francisco area, today has over 42 million visitors. Last month, the Sheriff of Cook County Illinois filed suit against Craigslist, claiming that the site permitted solicitation of prostitution. Last November, Craigslist entered into an agreement with several States attorneys general to crack down on solicitations for prostitution on its site, and agreed to provide information on users to law enforcement if subpoenaed. However, some attorney generals are still not happy that Craigslist continues to permit the advertising of “exotic services,” and seek to have the site shut down the category. A spokesperson for Craigslist told the media that criminals who use the site are virtually guaranteed to get caught because they leave electronic trails which are easily traced, and that the risks to users on Craigslist are very low.

A search reveals that Craigslist has been cited in over a dozen reported criminal decisions in California, New Jersey, Nebraska and Minnesota to date, and has been used by criminals to facilitate child molestation, prostitution, pimping and pandering, robbery, theft and receiving stolen property, and assault. The Markoff case is certainly unwelcome news for Craiglist and the vast majority of its users who use the site for lawful purposes, and the end result will likely be elimination of any “exotic services” and stricter policing of users. 

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On Friday, Jared Robert Wheat, Stephen Douglas Smith, Tomasz Holda, Sergio Oliveira and their company, Hi-Tech Pharmaceuticals, Inc., pled guilty in the United States District Court for the Northern District of Georgia pled guilty to conspiring to import and distribute adulterated, mislabeled and unapproved drugs and to commit mail fraud and wire fraud, according to the website for the Office of the United States Attorney for the Northern District of Georgia.

The defendants were alleged to have set up an off-shore pharmaceutical manufacturing facility, a small four-room facility in Belize. At the facility, the defendants produced generic versions of popular drugs such as Xanax, Valium, Ambien, Vioxx, Zoloft, Viagra, and Cialis. The production is alleged to have not authorized by the Food and Drug Administration ("FDA") and in violation of FDA regulations as well as the patents for the drugs, and to have been in unsanitary conditions. The defendants then marketed and sold the drugs to individuals without prescriptions, primarily over the internet. The defendants are alleged to have realized millions from the scheme. The FDA Office of Criminal Investigations participated in the investigation of the case. 

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