Articles Posted in Law and Technology

The United States Attorney’s Offices for the Southern District of New York and the Northern District of Georgia recently announced three indictments charging several defendants with, among other things, computer hacking, theft and fraud.  [US v. Shalon, No. 15-cr-00333 (S.D.N.Y.); US v. Murgio, No. 15-cr-00769 (S.D.N.Y.); and US v. Shalon, No. 15-cr-00393 (N.D.Ga.)]  More specifically, the grand juries hearing these cases charged the defendants with computer hacking, securities and wire fraud, identity theft, illegal internet gambling, conspiracy to commit money laundering, and operating an unlicensed money transmitter.  These cases are noteworthy not only because of the sheer magnitude of the enterprise described by federal prosecutors, but also because of the manner in which they highlight the increasingly aggressive posture that the Justice Department continues to take toward cybercrime.

According to the US Attorney, the defendants hacked into the computer systems of several large financial services companies and financial news publishers.  Federal prosecutors did not identify the companies involved, but other news sources identified at least some of them as JPMorgan Chase, ETrade, Scottrade, TDAmeritrade, Fidelity Investments, and Dow Jones.  The defendants allegedly stole personal information for more than 100 million people and used it to, among other things, market securities in a deceptive manner by arranging to have prospective purchasers cold-called.

The defendants’ other activities allegedly included operating illegal online casinos, payment processing for criminals, operating an illegal bitcoin exchange, and laundering money through up to 75 shell companies and accounts around the world.  In the course of doing so, the defendants purportedly procured and used over 200 false identification documents which included over 30 false passports issued by almost 20 different countries, as well as servers located in Egypt, the Czech Republic, South Africa, Brazil and other countries.  The US Attorney believes the defendants generated hundreds of millions of dollars in illegal proceeds.  Many of the charged offenses carry federal prison terms of 20 years. Continue reading ›

A federal statute (18 U.S.C. Sec. 875(c)) makes it a crime to transmit in interstate commerce communications containing threats to injure someone.  Anthony Elonis, who was an active Facebook user, placed posts on his Facebook page that purportedly threatened patrons and employees of the park where he worked, his ex-wife, police officers, and school-age children.  His online activities were eventually brought to the attention of the FBI.  An agent created a Facebook account to just to monitor Elonis’ online activities.  The agent later visited his home, after which Elonis posted material on his page threatening her.  A grand jury charged Elonis with five counts of violating the above-referenced statute.  He went to trial and lost, was sentenced to a custodial term of almost four years with three years of supervised release, and the Third Circuit Court of Appeals affirmed.

At this point, some legal background is unfortunately necessary.  Every crime consists broadly of two parts – a physical act or acts and a particular mental state.  The act or acts have to be accomplished with the required mental state in order to constitute a crime.  Some criminal statutes will say specifically which mental state is required in order to make out that particular offense (e.g., purposely, knowingly, recklessly, intentionally).  But not every criminal statute defines the required mental state.  The statute that Elonis violated did not include a particular mental state, and the question before the Court was which mental state was required to support the conviction and whether or not Elonis’ jury was properly instructed on this issue.  The Court ultimately found that the jury instruction was defective, reversed the Third Circuit’s decision, and remanded the case for further proceedings.

The Court’s decision contains a terrific analysis of the interplay between mental states and potentially criminal conduct, and how to ascribe a particular mental state to a set of potentially criminal acts when the statute in question is silent on this issue.  All of that will certainly be of great interest to lawyers and judges but, given the prominent role social networking sites play in our daily lives, what does this case mean for the average user of these electronic media? Continue reading ›

The United States Supreme Court decided Grady v. North Carolina on March 30, 2015.  After completing his prison term for sex offenses, the State determined that Grady was a recidivist sex offender, and wanted to place him on satellite-based monitoring.  Grady argued that the monitoring program, which required him to wear a monitoring device at all times, violated his Fourth Amendment right to be free from unreasonable searches and seizures.  Grady’s argument was based on U.S. v. Jones, where the Supreme Court held that installing a GPS tracking device on a suspect’s car was a “search” within the meaning of the Fourth Amendment.  The State courts rejected Grady’s argument, finding that the monitoring program at issues was not a Fourth Amendment search.  This conclusion was based, apparently in large part, upon the view that the proceeding giving rise to the monitoring was civil in nature, whereas Jones was a criminal case, which entailed different (higher) legal standards.

The Supreme Court rejected the reasoning of the State courts.  First, the monitoring program was a “search” because it enabled the State to “physically intrude on a constitutionally protected area … [A] State conducts a search when it attaches a device to a person’s body, without consent, for the purpose of tracking that individual’s movements.”  The fact that the monitoring program was civil in nature was rendered meaningless by settled law establishing “that the Fourth Amendment’s protection extends beyond the sphere of criminal investigations [] and the government’s purpose in collecting information does not control whether the method of collection constitutes a search.”

Ultimately, however, the Court observed that the Fourth Amendment protects only against unreasonable searches and seizures.  Thus, it remanded the matter to the North Carolina courts to determine whether the monitoring program was reasonable when viewed as a search. Continue reading ›

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