673 lines
45 KiB
Plaintext
673 lines
45 KiB
Plaintext
|
|
|
|
****************************************************************************
|
|
>C O M P U T E R U N D E R G R O U N D<
|
|
>D I G E S T<
|
|
*** Volume 1, Issue #1.16 (June 19, 1990) **
|
|
** SPECIAL ISSUE: JUDGE BUA'S OPINION ON MOTION TO DISMISS **
|
|
****************************************************************************
|
|
|
|
MODERATORS: Jim Thomas / Gordon Meyer
|
|
REPLY TO: TK0JUT2@NIU.bitnet
|
|
|
|
COMPUTER UNDERGROUND DIGEST is an open forum dedicated to sharing
|
|
information among computerists and to the presentation and debate of
|
|
diverse views.
|
|
--------------------------------------------------------------------
|
|
DISCLAIMER: The views represented herein do not necessarily represent the
|
|
views of the moderators. Contributors assume all responsibility
|
|
for assuring that articles submitted do not violate copyright
|
|
protections.
|
|
--------------------------------------------------------------------
|
|
|
|
|
|
The defense in Craig Neidorf's case filed several motions on his
|
|
behalf, but all were dismissed by the presiding judge, Nicholas Bua.
|
|
Emmanuel Goldstein of 2600 MAGAZINE provided the following
|
|
transcript of the opinion.
|
|
----------------------------------
|
|
|
|
UNITED STATES DISTRICT COURT
|
|
NORTHERN DISTRICT OF ILLINOIS
|
|
EASTERN DIVISION
|
|
|
|
UNITED STATES OF AMERICA, )
|
|
)
|
|
Plaintiff, )
|
|
) No. 90 CR 0070
|
|
v. ) Hon. Nicholas J. Bua,
|
|
) Presiding
|
|
ROBERT J. RIGGS, also )
|
|
known as Robert Johnson, )
|
|
CRAIG NEIDORF, also known )
|
|
as Knight Lightning, )
|
|
)
|
|
Defendants. )
|
|
|
|
MEMORANDUM ORDER
|
|
Over the course of the past decade, advances in technology and growing
|
|
respect and acceptance for the powers of computers have created a true
|
|
explosion in the computer industry. Quite naturally, the growth of computer
|
|
availability and application has spawned a host of new legal issues. This
|
|
case requires the court to wrestle with some of these novel legal issues
|
|
which are a product of the marriage between law and computers.
|
|
The indictment charges that defendants Robert J. Riggs and Craig
|
|
Neidorf, through the use of computers, violated the federal wire fraud
|
|
statute, 18 U.S.C. 1343, and the federal statute prohibiting interstate
|
|
transportation of stolen property, 18 U.S.C. 2314. Neidorf argues that the
|
|
wire fraud statute and the statute prohibiting interstate transportation of
|
|
stolen property do not apply to the conduct with which he is charged.
|
|
Therefore, he has moved to dismiss the charges against him, as set forth in
|
|
Counts II-IV of the indictment, which are based on those statutes. {The
|
|
current indictment also contains three counts -- V, VI, and VII -- which
|
|
set forth charges against Neidorf for violations of 1030(a)(6)(A) of the
|
|
Computer Fraud and Abuse Act of 1986, 18 U.S.C. 1030(a)(6)(A). Although
|
|
Neidorf also moves to dismiss those counts, the government has indicated
|
|
that it is in the process of drafting a superseding indictment which may
|
|
not contain any charges under the Computer Fraud and Abuse Act of 1986.
|
|
Therefore, the court will reserve its ruling on Neidorf's motion to dismiss
|
|
Counts V, VI, and VII until the superseding indictment is filed. The court
|
|
will also reserve its ruling on Neidorf's motion for a bill of particulars,
|
|
which by its terms pertains only to Counts V, VI, and VII.} Neidorf has
|
|
also filed various other pretrial motions. For the reasons stated herein,
|
|
Neidorf's motions are denied.
|
|
I. THE INDICTMENT
|
|
A. Factual Allegations
|
|
In about September 1988, Neidorf and Riggs devised and began
|
|
implementing a scheme to defraud Bell South Telephone Company ("Bell
|
|
South"), which provides telephone services to a nine-state region including
|
|
Alabama, Georgia, Mississippi, Tennessee, Kentucky, Louisiana, North
|
|
Carolina, South Carolina, and Florida. The objective of the fraud scheme
|
|
was to steal Bell South's computer text file {A "computer text file" is a
|
|
collection of stored data which, when retrieved from a disk or other
|
|
computer storing device, presents typed English characters on a computer
|
|
monitor, a printer, or other medium compatible with the computer storing
|
|
the data.} which contained information regarding its enhanced 911 (E911)
|
|
system for handling emergency calls to policy <sic>, fire, ambulance, and
|
|
other emergency services in municipalities. The text file which Riggs and
|
|
Neidorf planned to steal specifically details the procedures for
|
|
installation, operation, and maintenance of E911 services in the region in
|
|
which Bell South operates. Bell South considered this file to contain
|
|
valuable proprietary information and, therefore, closely guarded the
|
|
information from being disclosed outside of Bell South and its
|
|
subsidiaries. Riggs and Neidorf wanted to obtain the E911 text file so it
|
|
could be printed in a computer newsletter known as "PHRACK" which Neidorf
|
|
edited and published.
|
|
In about December 1988, Riggs began the execution of the fraud scheme
|
|
by using his home computer in Decatur, Georgia, to gain unlawful access to
|
|
Bell South's computer system located at its corporate headquarters in
|
|
Atlanta, Georgia. After gaining access to Bell South's system, Riggs
|
|
"downloaded" {"Downloading" is the process of transferring files, programs,
|
|
or other computer-stored information from a remote computer to one's own
|
|
computer. See Note, COMPUTER BULLETIN BOARD OPERATOR LIABILITY FOR USER
|
|
MISUSE, 54 Fordham L. Rev. 439, 439 n.2 (1988). "Uploading" is the reverse
|
|
process, i.e., transferring computer-stored data from one's own computer to
|
|
a remote computer. Id.} the text file, which described in detail the
|
|
operation of the E911 system in Bell South's operating region. Riggs then
|
|
disguised and concealed his unauthorized access to the Bell South system by
|
|
using account codes of persons with legitimate access to the E911 text
|
|
file.
|
|
Pursuant to the scheme he had devised with Neidorf, Riggs then
|
|
transferred the stolen computer text file to Neidorf by way of an
|
|
interstate computer data network. Riggs stored the stolen text file on a
|
|
computer bulletin board system {A computer bulletin board system is a
|
|
computer program that simulates an actual bulletin board by allowing
|
|
computer users who access a particular computer to post messages, read
|
|
existing messages, and delete messages. The messages exchanged may contain
|
|
a wide variety of information, including stolen credit card numbers,
|
|
confidential business information, and information about local community
|
|
events. See Note, COMPUTER BULLETIN BOARD OPERATOR LIABILITY FOR USER
|
|
MISUSE, 54 Fordham L. Rev. 439, 439-41 & nn.1-11 (1988); see also Jensen,
|
|
AN ELECTRONIC SOAP BOX: COMPUTER BULLETIN BOARDS AND THE FIRST AMENDMENT,
|
|
39 Fed. Com. L.J. 217 (1987); Morrison, ELECTRONIC BULLETIN BOARD SYSTEM
|
|
PROYER BBS, 13 Legal Econ. 44 (1987); Soma, Smith, & Sprague, LEGAL
|
|
ANALYSIS OF ELECTRONIC BULLETIN BOARD ACTIVITIES, 7 W. New Engl. L.Rev. 571
|
|
(1985).} located in Lockport, Illinois, so as to make the file available to
|
|
Neidorf. The Lockport bulletin board system was used by computer "hackers"
|
|
{For a discussion of the definition of "hackers," see Part II, Subpart C,
|
|
infra.} as a location for exchanging and developing software tools and
|
|
other information which could be used for unauthorized intrusion into
|
|
computer systems. Neidorf, a twenty-year-old student at the University of
|
|
Missouri in Columbia, Missouri, used a computer located at his school to
|
|
access the Lockport computer bulletin board and thereby receive the Bell
|
|
South E911 text file from Riggs. At the request of Riggs, Neidorf then
|
|
edited and retyped the E911 text file in order to conceal the fact that it
|
|
had been stolen from Bell South. Neidorf then "uploaded" {See supra note
|
|
2.} his revised version of the stolen file back onto the Lockport bulletin
|
|
board system for Riggs' review. To complete the scheme, in February 1989,
|
|
Neidorf published his edited edition of Bell South's E911 text file in his
|
|
PHRACK newsletter.
|
|
B. Charges
|
|
The current indictment asserts seven counts. Count I charges that
|
|
Riggs committed wire fraud in violation of 18 U.S.C. 1343 by transferring
|
|
the E911 text file from his home computer in Decatur, Georgia to the
|
|
computer bulletin board system in Lockport, Illinois. Count II charges both
|
|
Riggs and Neidorf with violating 1343 by causing the edited E911 file to be
|
|
transferred from a computer operated by Neidorf in Columbia, Missouri, to
|
|
the computer bulletin board system in Lockport, Illinois. Counts III and IV
|
|
assert that by transferring the E911 text file via an interstate computer
|
|
network, Riggs and Neidorf violated the National Stolen Property Act, 18
|
|
U.S.C. 2314, which prohibits interstate transfer of stolen property.
|
|
Finally, Counts V-VII charge Riggs and Neidorf with violating 1030(a)(6)(A)
|
|
of the Computer Fraud and Abuse Act of 1986, 18 U.S.C. 1030(a)(6)(A), which
|
|
prohibits knowingly, and with intent to defraud, trafficking in information
|
|
through which a computer may be accessed without authorization.
|
|
II. DISCUSSION
|
|
A. Motion to Dismiss Count II
|
|
Neidorf claims that Count II of the indictment is defective because it
|
|
fails to allege a scheme to defraud, one of the necessary elements for a
|
|
wire fraud claim under 18 U.S.C. 1343. See LOMBARDO V. UNITED STATES, 865
|
|
F.2d 155, 157 (7th Cir.) (holding that the two elements of a wire fraud
|
|
claim under 1343 are a scheme to defraud and the use of wire communications
|
|
in furtherance of the scheme), CERT. DENIED, 109 S.Ct. 3186 (1989). All
|
|
Count II charges, says Neidorf, is that he received and then transferred a
|
|
computer text file, not that he participated in any scheme to defraud.
|
|
Unsurprisingly, Neidorf's reading of the indictment is self-servingly
|
|
narrow. The indictment plainly and clearly charges that Neidorf and Riggs
|
|
concocted a fraud scheme, the object of which was to steal the E911 text
|
|
file from Bell South and to distribute it to others via the PHRACK
|
|
newsletter. The indictment also clearly alleges that both Riggs and Neidorf
|
|
took action in furtherance of the fraud scheme. Riggs allegedly used
|
|
fraudulent means to access Bell South's computer system and then disguised
|
|
his unauthorized entry. Neidorf allegedly furthered the scheme by redacting
|
|
from the E911 text file references to Bell South and other information
|
|
which would reveal the source of the E911 file, transmitting the redacted
|
|
file back to the Lockport bulletin board for Riggs review, and publishing
|
|
the redacted text file in the PHRACK newsletter for others' use. Moreover,
|
|
both Neidorf and Riggs allegedly used coded language, code names, and other
|
|
deceptive means to avoid the detection of their fraud by law enforcement
|
|
officials. These allegations sufficiently set forth the existence of a
|
|
scheme to defraud, as well as Neidorf's participation in the scheme. See
|
|
MCNALLY V. UNITED STATES, 483 U.S. 350, 358 (1987) (where the Court,
|
|
quoting HAMMERSCHMIDT V. UNITED STATES, 265 U.S. 182, 188 (1924), held that
|
|
"to defraud" as used in the mail fraud statute simply means "wronging one
|
|
in his property rights by dishonest methods or schemes" usually by "the
|
|
deprivation of something of value by trick, deceit, chicane, or
|
|
overreaching"); see also CARPENTER V. UNITED STATES, 108 S.Ct. 316, 320-21
|
|
(1987) (applying MCNALLY to the wire fraud statute, the Court held that a
|
|
Wall Street Journal columnist participated in a scheme to defraud
|
|
chargeable under 1343 where he executed a plan under which he disclosed
|
|
confidential financial information to an investor in exchange for a share
|
|
of the investor's profits from that information).
|
|
Neidorf also argues that Count II is deficient because it fails to
|
|
allege that he had a fiduciary relationship with Bell South. To support
|
|
this position, Neidorf relies on cases such as UNITED STATES V. RICHTER,
|
|
610 F. Supp. 480 (N.D. Ill. 1985), and UNITED STATES V. DORFMAN, 532
|
|
F.Supp. 1118 (1981). In each of those cases, as well as other similar cases
|
|
cited by Neidorf, the court held that where a wire fraud charge is based on
|
|
the deprivation of an intangible right, such as the right to honest and
|
|
fair government or the right to the loyal service of an employee, the
|
|
government must allege the existence of a fiduciary relationship between
|
|
the defendant and the alleged victim to state a charge under 1343.
|
|
In the instant case, however, the wire fraud charge is not based on
|
|
the deprivation of an intangible right. The government charges Riggs and
|
|
Neidorf with scheming to defraud Bell South out of PROPERTY -- the
|
|
confidential information contained in the E911 text file. The indictment
|
|
specifically alleges that the object of defendants' scheme was the E911
|
|
text file, which Bell South considered to be valuable, proprietary,
|
|
information. The law is clear that such valuable, confidential information
|
|
is "property," the deprivation of which can form the basis of a wire fraud
|
|
charge under 1343. See CARPENTER, 108 S.Ct. at 320; see also KEANE V.
|
|
UNITED STATES, 852 F.2d 199, 205 (7th Cir.), CERT. DENIED, 109 S.Ct. 2109
|
|
(1989). Therefore, Neidorf's argument misconstrues the wire fraud charge
|
|
against him. Cases such as RICHTER and DORFMAN are wholly inapposite.
|
|
{Moreover, to the extent that prior case law such as DORFMAN and RICHTER
|
|
held that a mail fraud or a wire fraud charge can be based on the
|
|
deprivation of intangible rights so long as a fiduciary relationship exists
|
|
between the victim and the defendant, those cases are no longer good law.
|
|
The Supreme Court expressly rejected the notion that such a charge can be
|
|
based on the deprivation of an intangible right -- fiduciary relationship
|
|
or not -- in MCNALLY V. UNITED STATES, 483 U.S. 350 (1987). See CARPENTER
|
|
V. UNITED STATES, 108 S.Ct. 316, 320 (1987). The MCNALLY Court ruled that a
|
|
mail fraud charge must be based on the deprivation of PROPERTY. Id.
|
|
However, the property which forms the basis for a wire fraud or mail fraud
|
|
charge can be "intangible" property. See BATEMAN V. UNITED STATES, 875 F.2d
|
|
1304, 1306 & n.2 (7th Cir. 1989); see also UNITED STATES V. BARBER, 881
|
|
F.2d 345, 348 (7th Cir. 1989), CERT. DENIED, 109 L.Ed. 318 (1990). This
|
|
distinction between intangible property and intangible rights has somewhat
|
|
muddled the ruling in MCNALLY. Id.}
|
|
As further support for his argument that fiduciary relationship
|
|
between himself and Bell South must be alleged to state a wire fraud charge
|
|
against him, Neidorf analogizes his role in the alleged scheme to that of
|
|
an "innocent tippee" in the securities context, such as the defendants in
|
|
DIRKS V. SECURITIES EXCHANGE COMMISSION, 463 U.S. 646 (1983), and CHIARELLA
|
|
V. UNITED STATES, 445 U.S. 222 (1980). This analogy, however, is
|
|
fallacious. Those cases involved individuals who come upon information
|
|
LAWFULLY; the question in each of those cases was whether, once possessing
|
|
that information, the individual had a duty to disclose it. In the instant
|
|
case, in contrast, Neidorf is alleged to have planned and participated in
|
|
the scheme to defraud Bell South. Although Riggs allegedly was the one who
|
|
actually stole the E911 text file from Bell South's computer system, the
|
|
government alleges that Neidorf was completely aware of Riggs' activities
|
|
and agreed to help Riggs conceal the theft to make the fraud complete.
|
|
Therefore, in no way can Neidorf be construed as being in a similar
|
|
situation to the innocent tippees in DIRKS and CHIARELLA. {Similarly, the
|
|
case of UNITED STATES V. CHESTERMAN, No. 89-1276 (2d Cir. May 2, 1990),
|
|
which Neidorf submitted to the court in a supplemental brief, does not lend
|
|
any support to Neidorf's position.} As a result, the court rejects his
|
|
argument that Count II is defective for failing to allege a fiduciary duty
|
|
between himself and Bell South. Neidorf's motion to dismiss Count II is
|
|
accordingly denied.
|
|
B. Motion to Dismiss Counts III and IV
|
|
Counts III and IV charge Riggs and Neidorf with violating 18 U.S.C.
|
|
2314, which provides, in relevant part: "Whoever transports, transmits, or
|
|
transfers in interstate or foreign commerce any goods, wares, merchandise,
|
|
securities or money, of the value of $5000 or more, knowing the same to
|
|
have been stolen, converted or taken by fraud . . . [s]hall be fined not
|
|
more than $10,000 or imprisoned not more than ten years, or both." The
|
|
government concedes that charging Neidorf under 2314 plots a course on
|
|
uncharted waters. No court has ever held that the electronic transfer of
|
|
confidential, proprietary business information from one computer to another
|
|
across state lines constitutes a violation of 2314. However, no court has
|
|
addressed the issue. Surprisingly, despite the prevalence of
|
|
computer-related crime, this is a case of first impression. The government
|
|
argues that reading 2314 as covering Neidorf's conduct in this case is a
|
|
natural adaptation of the statute to modern society. Conversely, Neidorf
|
|
contends that his conduct does not fall within the purview of 2314 and that
|
|
the government is seeking an unreasonable expansion of the statute. He
|
|
urges the court to dismiss the charge on two grounds.
|
|
Neidorf's first argument is that the government cannot sustain a 2314
|
|
charge in this case because the only thing which he allegedly caused to be
|
|
transferred across state lines was "electronic impulses." Neidorf maintains
|
|
that under the plain language of the statute, this conduct does not come
|
|
within the scope of 2314 since electronic impulses do not constitute
|
|
"goods, wares, or merchandise."
|
|
The court is unpersuaded by Neidorf's disingenuous argument that he
|
|
merely transferred electronic impulses across state lines. Several courts
|
|
have upheld 2314 charges based on the wire transfer of fraudulently
|
|
obtained money, rejecting the arguments of the defendants in those cases
|
|
that only electronic impulses, not actual money, crossed state lines. For
|
|
example, in UNITED STATES V. GILBOE, 684 F.2d 235 (2d Cir. 1982), CERT.
|
|
DENIED, 459 U.S. 1201 (1983), the court held, in affirming a 2314
|
|
conviction based on the wire transfer of funds: "The question whether
|
|
[2314] covers electronic transfers of funds appears to be one of first
|
|
impression, but we do not regard it as a difficult one. Electronic signals
|
|
in this context are the means by which funds are transported. The beginning
|
|
of the transaction is money in one account and the ending is money in
|
|
another. The manner in which the funds were moved does not affect the
|
|
ability to obtain tangible paper dollars or a bank check from the receiving
|
|
account. If anything, the means of transfer here were essential to the
|
|
fraudulent scheme." Id. at 238. Other circuits have followed the reasoning
|
|
in GILBOE. See UNITED STATES V. KROH, 896 F.2d 1524, 1528-29 (8th Cir.
|
|
1990); UNITED STATES V. GOLDBERG, 830 F.2d 459, 466-67 (3d Cir. 1987);
|
|
UNITED STATES V. WRIGHT, 791 F.2d 133, 135-37 (10th Cir. 1986); see also
|
|
UNITED STATES V. KENNGOTT, 840 F.2d 375, 380 (7th Cir. 1987) (citing GILBOE
|
|
with approval). In all of these cases, the courts held that money was
|
|
transferred across state lines within the meaning of 2314 because funds
|
|
were actually accessible in one account prior to the transfer, and those
|
|
funds were actually accessible in an out-of-state account after the
|
|
transfer. The courts refused to accept the superficial characterization of
|
|
the transfers as the mere transmittal of electronic impulses.
|
|
Similarly, in the instant case, Neidorf's conduct is not properly
|
|
characterized as the mere transmission of electronic impulses. Through the
|
|
use of his computer, Neidorf allegedly transferred proprietary business
|
|
information -- Bell South's E911 text file. Like the money in the case
|
|
dealing with wire transfers of funds, the information in the E911 text file
|
|
was accessible at Neidorf's computer terminal in Missouri before he
|
|
transferred it, and the information was also accessible at the Lockport,
|
|
Illinois computer bulletin board after Neidorf transferred it. Therefore,
|
|
under GILBOE, KROH, WRIGHT, and GOLDBERG, the mere fact that the
|
|
information actually crossed state lines via computer-generated electronic
|
|
impulses does not defeat a charge under 2314.
|
|
The question this case presents, then, is not whether electronic
|
|
impulses are "goods, wares, or merchandise" within the meaning of 2314, but
|
|
whether the proprietary information contained in Bell South's E911 text
|
|
file constitutes a "good, ware, or merchandise" within the purview of the
|
|
statute. This court answers that question affirmatively. It is well-settled
|
|
that when proprietary business information is affixed to some tangible
|
|
medium, such as a piece of paper, it constitutes "goods, wares, or
|
|
merchandise" within the meaning of 2314. See UNITED STATES V. GREENWALD,
|
|
479 F.2d 320, 322 (6th Cir.) (documents containing valuable chemical
|
|
formulae are "goods, wares, or merchandise" under 2314), CERT. DENIED, 414
|
|
U.S. 854 (1973); UNITED STATES V. BOTTONE, 365 F.2d 389, 393 (2d Cir.)
|
|
(copies of documents describing a manufacturing process of patented drugs
|
|
constitute a "good" under 2314), CERT. DENIED, 385 U.S. 974 (1966); UNITED
|
|
STATES V. LESTER, 282 F.2d 750, 754-55 (3d Cir. 1960) (copies of
|
|
geophysical maps identifying oil deposits come within the purview of 2314),
|
|
CERT. DENIED, 364 U.S. 937 (1961); UNITED STATES V. SEAGRAVES, 265 F.2d 876
|
|
(3d Cir. 1959) (same facts as in LESTER).
|
|
Therefore, in the instant case, if the information in Bell South's
|
|
E911 text file had been affixed to a floppy disk, or printed out on a
|
|
computer printer, then Neidorf's transfer of that information across state
|
|
lines would clearly constitute the transfer of "goods, wares, or
|
|
merchandise" within the meaning of 2314. This court sees no reason to hold
|
|
differently simply because Neidorf stored the information inside computers
|
|
instead of printing it out on paper. In either case, the information is in
|
|
a transferrable, accessible, even salable form.
|
|
Neidorf argues in his brief that a 2314 charge cannot survive when the
|
|
"thing" actually transferred never takes tangible form. A few courts have
|
|
apparently adopted this position. {Although, contrary to Neidorf's
|
|
arguments, neither the Supreme Court's decision in UNITED STATES V.
|
|
DOWLING, 473 U.S. 207 (1985), nor the Seventh Circuit's decision in UNITED
|
|
STATES V. KENNGOTT, 840 F.2d 375 (7th Cir. 1987), stand for the proposition
|
|
that only tangible objects fall within the definition of "goods, wares, or
|
|
merchandise" under 2314. The definition of the term "goods, wares, or
|
|
merchandise" was not even at issue in either of those cases.} For example,
|
|
in UNITED STATES V. SMITH, 686 F.2d 234 (5th Cir. 1982), the court held
|
|
that a copyright does not fit within the definition of "goods, wares, or
|
|
merchandise" under 2314. The court ruled that in order to come within that
|
|
definition, "[t]he 'thing' or 'item' must have some sort of tangible
|
|
existence; it must be in the nature of 'personal property or chattels.'"
|
|
Id. at 241. Similarly, in BOTTONE, supra, where the court held that copies
|
|
of documents describing a manufacturing process for a patented drug
|
|
constitute "goods, wares, or merchandise" under 2314, the court opined: "To
|
|
be sure, where no tangible objects were ever taken or transported, a court
|
|
would be hard pressed to conclude that 'goods' had been stolen and
|
|
transported within the meaning of 2314; the statute would presumably not
|
|
extend to the case where a carefully guarded secret was memorized, carried
|
|
away in the recesses of a thievish mind and placed in writing only after a
|
|
[state] boundary had been crossed." 365 F.2d at 393.
|
|
Nevertheless, this court is not entirely convinced that tangibility is
|
|
an absolute requirement of "goods, wares, or merchandise" under 2314.
|
|
Congress enacted 2314 to extend the National Motor Vehicle Theft Act to
|
|
cover all stolen property over a certain value ($5000) which is knowingly
|
|
transported across state lines. See UNITED STATES V. DOWLING, 473 U.S. 207,
|
|
218-20 (1985). In line with this broad congressional intent, courts have
|
|
liberally construed the term "goods, wares, or merchandise" as "a general
|
|
and comprehensive designation of such personal property and chattels as are
|
|
ordinarily the subject of commerce." See UNITED STATES V. WHALEY, 788 F.2d
|
|
581, 582 (9th Cir.) (quoting SEAGRAVES, 265 F.2d at 880), CERT. DENIED, 479
|
|
U.S. 962 (1986). Reading a tangibility requirement into the definition of
|
|
"goods, wares, or merchandise" might unduly restrict the scope of 2314,
|
|
especially in this modern technological age. For instance, suppose the
|
|
existence of a valuable gas, used as an anesthetic, which is colorless,
|
|
odorless, and tasteless -- totally imperceptible to the human senses. If
|
|
this gas is stored in a tank in Indiana, and a trucker hooks up to the
|
|
tank, releases the valuable gas into a storage tank on his truck, and then
|
|
takes the gas to Illinois to sell it for a profit, is there no violation of
|
|
2314 simply because the gas is not technically tangible? This court is
|
|
reluctant to believe that any court would construe 2314 so narrowly.
|
|
In any event, this court need not decide that issue to resolve this
|
|
case, for even if tangibility is a requirement of "goods, wares or
|
|
merchandise" under 2314, in this court's opinion the computer-stored
|
|
business information in this case satisfies that requirement. Although not
|
|
printed out on paper, a more conventional form of tangibility, the
|
|
information in Bell South's E911 text file was allegedly stored on
|
|
computer. Thus, by simply pressing a few buttons, Neidorf could recall that
|
|
information from computer storage and view it on his computer terminal. The
|
|
information was also accessible to others in the same fashion if they
|
|
simply pressed the right buttons on their computer. This ability to access
|
|
the information in viewable form from a reliable storage place
|
|
differentiates this case from the mere memorization of a formula and makes
|
|
this case more similar to cases like GREENWALD, BOTTONE, SEAGRAVES, and
|
|
LESTER, where proprietary information was also stored, but in a more
|
|
traditional manner -- on paper. The accessibility of the information in
|
|
readable form from a particular storage place also makes the information
|
|
tangible, transferable, salable and, in this court's opinion, brings it
|
|
within the definition of "goods, wares, or merchandise" under 2314.
|
|
In order to sustain a charge against Neidorf under 2314, however, the
|
|
government cannot simply allege that Neidorf transferred "goods, wares, or
|
|
merchandise" across state boundaries; the government must also allege that
|
|
Neidorf executed the transfer knowing the goods were "stolen, converted or
|
|
taken by fraud." This requirement forms the basis for Neidorf's second
|
|
challenge to Counts III and IV. Relying on UNITED STATES V. DOWLING, 473
|
|
U.S. 207 (1985), Neidorf maintains that the 2314 charges should be
|
|
dismissed because the "things" he allegedly transferred are not the type of
|
|
property which is capable of being "stolen, converted or taken by fraud."
|
|
In DOWLING, the government charged the defendant with violating 2314
|
|
by shipping "bootleg" and "pirated" {A "bootleg" phonorecord is an
|
|
unauthorized copy of a commercially unreleased performance. A "pirated"
|
|
phonorecord is an unauthorized copy of a performance already commercially
|
|
released. DOWLING, 473 U.S. at 205-06 n.2.} phonorecords across state
|
|
lines. Id. at 212. The government argued that the shipments came within
|
|
2314 because the phonorecords embodied performances of copyrighted musical
|
|
compositions which the defendant had no right to distribute. Id. at 214-15.
|
|
The Court framed the issue in the case as follows: "Dowling does not
|
|
contest that he caused the shipment of goods in interstate commerce, or
|
|
that the shipments had sufficient value to meet the monetary requirement.
|
|
He argues, instead, that the goods shipped were not 'stolen, converted or
|
|
taken by fraud.'" "We must determine, therefore, whether phonorecords that
|
|
include the performance of copyrighted musical compositions for the use of
|
|
which no authorization has been sought or royalties paid are consequently
|
|
'stolen, converted or taken by fraud' for purposes of 2314." Id. at 214-16.
|
|
The Court ruled that while the holder of a copyright possesses certain
|
|
property rights which are protectible and enforceable under copyright law,
|
|
he does not own the type of possessory interest in an item of property
|
|
which may be "stolen, converted or taken by fraud." Id. at 216-18. Thus,
|
|
the Court held that 2314 does not apply to interstate shipments of
|
|
"bootleg" and "pirated" phonorecords whose unauthorized distribution
|
|
infringes on valid copyrights. Id. at 228-29.
|
|
Neidorf also cites UNITED STATES V. SMITH, 686 F.2d 234 (5th Cir.
|
|
1982), to support his argument. Like DOWLING, SMITH held that copyright
|
|
infringement is not the equivalent of theft or conversion under 2314. Id.
|
|
at 241. The instant case, however, is distinguishable from DOWLING and
|
|
SMITH. This case involves the transfer of confidential, proprietary
|
|
business information, not copyrights. As DOWLING and SMITH recognized, the
|
|
copyright holder owns only a bundle of intangible rights which can be
|
|
infringed, but not stolen or converted. The owner of confidential,
|
|
proprietary business information, in contrast, possesses something which
|
|
has clearly been recognized as an item of PROPERTY. CARPENTER, 108 S.Ct. at
|
|
320; KEANE, 852 F.2d at 205. As such, it is certainly capable of being
|
|
misappropriated, which, according to the indictment, is exactly what
|
|
happened to the information in Bell South's E911 text file.
|
|
In his final gasp, Neidorf points out that in DOWLING, the Court based
|
|
its ruling partly on the fact that Congress passed the Copyright Act to
|
|
deal exclusively with copyright infringements. The Court reasoned that
|
|
applying 2314 to the infringement of copyrights would result in an
|
|
unnecessary and unwarranted intrusion into an area already governed by the
|
|
Copyright Act. 473 U.S. at 221-26. Neidorf makes a similar argument in this
|
|
case. He notes that Congress has enacted a statute -- the Computer Fraud
|
|
and Abuse Act ("CFAA"), 18 U.S.C. 1030 -- which is specifically designed to
|
|
address computer-related crimes, such as unauthorized computer access.
|
|
Neidorf claims that the enactment of the CFAA precludes a finding that 2314
|
|
reaches his alleged conduct in this case.
|
|
The problem with Neidorf's argument, however, is that he does not
|
|
cite, and this court is unable to find, anything in the legislative history
|
|
of the CFAA which suggests that the statute was intended to be the
|
|
exclusive law governing computer-related crimes, or that its enactment
|
|
precludes the application of other criminal statutes to computer-related
|
|
conduct. Therefore, the court rejects Neidorf's claim that applying 2314 to
|
|
the instant case would undermine the Congressional intent behind the CFAA.
|
|
Similarly, the court rejects Neidorf's bald assertion that the legislative
|
|
history behind 2314 supports his argument. Nothing in the legislative
|
|
history of 2314 prevents the court from finding that the information in
|
|
Bell South's E911 text file was "stolen, converted or taken by fraud" as
|
|
that term is used in 2314. Accordingly, Neidorf's motion to dismiss Counts
|
|
III and IV is denied.
|
|
C. Motion to Strike Surplusage and Prejudicial Material
|
|
Pursuant to Rule 7(d) of the Federal Rules of Criminal Procedure,
|
|
Neidorf moves to strike certain words and phrases from the indictment which
|
|
he claims are unnecessary and prejudicial. He first argues that the terms
|
|
"hackers" and "computer hackers" should be stricken because those terms are
|
|
likely to cause confusion and prejudice. He contends that the government
|
|
uses those terms in the indictment to lure the jury into predetermining his
|
|
character and motives.
|
|
The court, however, is not convinced that the government's use of the
|
|
term "hacker" in this case is unduly prejudicial. The government has
|
|
specifically defined "hackers" in the indictment as "individuals involved
|
|
with the unauthorized access of computer systems by various means." This
|
|
definition is consistent with WEBSTER'S II NEW RIVERSIDE UNIVERSITY
|
|
DICTIONARY (1984), which defines hacker as follows: "SLANG. One who gains
|
|
unauthorized, usu[ally] non-fraudulent access to another's computer
|
|
system." Id. at 557. The term "hackers" has also been understood to
|
|
encompass both those who obtain unauthorized access to computer systems and
|
|
those who simply enjoy using computers and experimenting with their
|
|
capabilities as "innocent" hobbyists. See Staff of the Subcomm. on
|
|
Transportation, Aviation & Materials of the House Comm. on Science &
|
|
Technology, 98th Cong., 2d Sess., Report on Computer & Communications
|
|
Security & Privacy 17 (Comm. Print 1984) (citing the testimony of Donn B.
|
|
Parker, Senior Management Systems Consultant, SRI International, Computer
|
|
Research Institute, wherein he stated, "Computer hackers are hobbyists with
|
|
intense interest in exploring the capabilities of computers and
|
|
communications and causing these systems to perform to their limits. . . .
|
|
Hackers exhibit a spectrum of behavior from benign to malicious."); see
|
|
also C. Stoll, THE CUCKOO'S EGG, at 10 (1989) ("The word hacker has two
|
|
very different meanings. The people I knew who called themselves hackers
|
|
were software wizards who . . . knew all the nooks and crannies of the
|
|
operating system. . . . But in common usage, a hacker is someone who breaks
|
|
into computers"). However, as pointed out in THE CUCKOO'S EGG, and as is
|
|
evident from a review of the modern articles using the term, the definition
|
|
set forth in the indictment is the one most commonly employed.
|
|
The court finds that the use of the term "hackers" in the indictment
|
|
does not unduly prejudice Neidorf; it is simply a succinct method of
|
|
describing the alleged activities of the persons with whom Neidorf was
|
|
associated during the time period charged in the indictment. The term is
|
|
both relevant and material, and, contrary to Neidorf's claim that it will
|
|
cause confusion, the term is likely to be somewhat helpful to the jury in
|
|
understanding the charges in this case. Thus, the court refuses to strike
|
|
the term "hackers" from the indictment. See UNITED STATES V.
|
|
CHAVERRA-CARDONA, 667 F. Supp. 609, 611 (N.D. Ill. 1987) (information
|
|
relevant to the charges and helpful to the jury's understanding of those
|
|
charges should not be stricken from an indictment).
|
|
Neidorf also claims that references to the "Legion of Doom," a
|
|
computer hacker group, should be deleted from the indictment. Neidorf,
|
|
however, allegedly had close ties to the Legion of Doom and disseminated
|
|
the E911 text file to some of its members. Therefore, references to the
|
|
Legion of Doom are highly relevant to the charges in this case. Neidorf
|
|
claims the name "Legion of Doom" "invites images of cult worshippers,
|
|
satanism, terrorism or black magic," but this is a gross exaggeration of
|
|
the potential effect of the term. The indictment clearly sets forth the
|
|
purposes and activities of the group, none of which include the slightest
|
|
reference to any type of satanism or the like. Thus, there is no reason to
|
|
strike references to the "Legion of Doom."
|
|
Neidorf further contends that the court should strike the following
|
|
portions of the indictment: (1) the second sentence of paragraph 8, which
|
|
reads: "The Lockport [computer bulletin board system] was also used by
|
|
computer hackers as a location for exchanging and developing software tools
|
|
for computer intrusion, and for receiving and distributing hacker tutorials
|
|
and other information." (2) the underlined <capitalized here> words in
|
|
paragraph 21, which reads: "It was further part of the scheme that the
|
|
defendants Riggs and Neidorf would publish information to other computer
|
|
HACKERS WHICH COULD BE USED TO GAIN UNAUTHORIZED ACCESS TO EMERGENCY 911
|
|
COMPUTER SYSTEMS IN THE UNITED STATES AND THEREBY DISRUPT OR HALT 911
|
|
SERVICE IN PORTIONS OF THE UNITED STATES." and (3) the underlined
|
|
<capitalized here> parts of paragraph 3, which reads in part: "The E911
|
|
Practice was a HIGHLY proprietary AND CLOSELY HELD computerized text file
|
|
belonging to the Bell South Telephone Company and stored on the company's
|
|
AIMSX computer in Atlanta, Georgia. The E911 Practice described the
|
|
computerized control and maintenance of the E911 system and CARRIED WARNING
|
|
NOTICES THAT IT WAS NOT TO BE DISCLOSED OUTSIDE BELL SOUTH OR ANY OF ITS
|
|
SUBSIDIARIES EXCEPT UNDER WRITTEN AGREEMENT." Each of these allegations,
|
|
however, are directly relevant to Neidorf's knowledge of the proprietary,
|
|
confidential nature of the information in Bell South's E911 file and to
|
|
Neidorf's motive and ability to aid in the misappropriation of that
|
|
information. Therefore, those allegations are pertinent to the elements of
|
|
the offenses charged and are not properly stricken. Neidorf's motion to
|
|
strike is accordingly denied.
|
|
D. Motion For A Santiago Hearing
|
|
In order to offer the statements of a defendant's alleged
|
|
co-conspirators into evidence against the defendant pursuant to Fed. R.
|
|
Evid. 801(d)(2)(E), the government must make a preliminary showing, by a
|
|
preponderance of the evidence, that: (1) a conspiracy existed; (2) the
|
|
defendant and the declarant were members of the conspiracy when the
|
|
statements were made; and (3) the statements were made during the course of
|
|
and in furtherance of the conspiracy. BOURJAILY V. UNITED STATES, 483 U.S.
|
|
171 (1989); UNITED STATES V. SANTIAGO, 582 F.2d 1128, 1135 (7th Cir. 1978).
|
|
Neidorf has moved for an order requiring the government to file a statement
|
|
setting forth its evidence in support of each of the above factors. The
|
|
government, however, filed a SANTIAGO proffer subsequent to Neidorf's
|
|
motion. Therefore, Neidorf's motion for a SANTIAGO proffer is denied as
|
|
moot. Moreover, after reviewing the government's case as detailed in its
|
|
proffer, the court finds that the government has set forth sufficient
|
|
evidence to support a preliminary finding of the admissibility of the
|
|
statements of Neidorf's alleged co-conspirators. Therefore, this court will
|
|
conditionally admit those statements, offered pursuant to Rule
|
|
801(d)(2)(E), subject to proof by a preponderance of the evidence at trial
|
|
that the SANTIAGO factors are satisfied.
|
|
E. Motion For Discovery and Disclosure
|
|
In this motion, Neidorf asks the court to issue an order requiring the
|
|
government to comply with seven specific discovery requests, which Neidorf
|
|
labels A-G. In large part, Neidorf's motion is moot. The government
|
|
responds that it has already complied with each of Neidorf's requests, or
|
|
will soon turn over the information sought, with only one exception -- the
|
|
government objects to request "F." In that request, Neidorf seeks evidence
|
|
of specific instances of misconduct which the government plans to offer for
|
|
impeachment purposes.
|
|
The court finds that the government's refusal to comply with request
|
|
"F" is justified, since the government has no obligation to turn over the
|
|
impeachment evidence sought in that request. See UNITED STATES V. BRAXTON,
|
|
877 F.2d 556, 560 (7th Cir. 1989). Accordingly, Neidorf's motion for
|
|
discovery and disclosure is denied.
|
|
F. Motion For Immediate Disclosure of Favorable Evidence
|
|
Pursuant to BRADY V. MARYLAND, 373 U.S. 83 (1963), and GIGLIO V.
|
|
UNITED STATES, 405 U.S. 150 (1972), Neidorf moves for an order requiring
|
|
the government to disclose all evidence of which the government is aware
|
|
that is favorable to him. Neidorf has made specific BRADY and GIGLIO
|
|
requests, which he has numbered 1-11.
|
|
The government responds that it has complied and will continue to
|
|
comply with its obligation to turn over exculpatory evidence pursuant to
|
|
BRADY. However, the government has objected to Neidorf's Request No. 1,
|
|
which seeks any information the government has regarding "any person whose
|
|
testimony would be favorable to defendant in any way." The court agrees
|
|
with the government that this request is too overbroad to fall within the
|
|
scope of BRADY. See UNITED STATES V. ROBINSON, 585 P.2d 274, 281 (7th Cir.
|
|
1978), CERT. DENIED, 441 U.S. 947 (1979). Therefore, the government's
|
|
objection to that request is valid.
|
|
Neidorf acknowledges that the remainder of his requests seek material
|
|
pursuant to GIGLIO. In Request No. 2, Neidorf seeks the statements of
|
|
individuals which would contradict the testimony of any government
|
|
witnesses, regardless of whether the government intends to call the
|
|
individuals as witnesses. To the extent such information is not within the
|
|
scope of BRADY, however, it is not discoverable. See UNITED STATES V.
|
|
MARQUEZ, 686 F.Supp. 1354, 1358 (N.D. Ill. 1988); see also UNITED STATES V.
|
|
COLE, 453 F.2d 902, 904 (8th Cir.), CERT. DENIED, 406 U.S. 922 (1972).
|
|
Therefore, the government's objection to Request No. 2 is justified.
|
|
In Request No. 3, Neidorf seeks immediate disclosure of any
|
|
documentary evidence which contradicts or is inconsistent with the expected
|
|
testimony of any government witness. The government has objected to this
|
|
request only to the extent that it demands such information immediately.
|
|
This objection is clearly reasonable, since there is no requirement that
|
|
GIGLIO material be produced well in advance of trial. See UNITED STATES V.
|
|
WILLIAMS, 738 F.2d 172, 178 (7th Cir. 1984).
|
|
Requests Nos. 4 and 5 seek "the name, address, and statement . . . of
|
|
any individual who has been interviewed by the government who had knowledge
|
|
of the activity alleged in the indictment" and "any and all books, papers,
|
|
records, or documents which contain evidence favorable to defendant."
|
|
Request 11 seeks "any illegal or unauthorized activity engaged in by
|
|
government agents in connection with this indictment or related activity."
|
|
The court agrees with the government that these requests are too vague and
|
|
overbroad to fall within BRADY or GIGLIO. See ROBINSON, 585 F.2d at 281.
|
|
Finally, the government objects to Requests 6-10 only to the extent
|
|
that Neidorf seeks the material set forth in those requests immediately. As
|
|
noted above, nothing requires the government to turn over GIGLIO evidence
|
|
well in advance of trial. Accordingly, Neidorf's motion for immediate
|
|
disclosure of favorable evidence is denied.
|
|
G. Motion For Pretrial Production of Jencks Material
|
|
Neidorf's final motion requests the court to order the government to
|
|
produce material pursuant to the Jencks Act, 18 U.S.C. 3500, thirty or
|
|
sixty days prior to trial. {Curiously, the first sentence of Neidorf's
|
|
motion asks for production thirty days prior to trial, while the last
|
|
sentence of the motion asks for production sixty days prior to trial.} By
|
|
its express terms, the Jencks Act generally does not provide the defendant
|
|
with an opportunity to obtain the statements of a government witness until
|
|
after the witness has testified on direct examination. 18 U.S.C. 3500(a).
|
|
Neidorf, however, claims that he will not be able to adequately use the
|
|
Jencks material unless it is provided to him in advance of trial.
|
|
Therefore, he maintains that pretrial production of the Jencks material is
|
|
required in order to afford him his rights to due process of law and to
|
|
effective assistance of counsel.
|
|
In some cases, courts have held that pretrial production of Jencks
|
|
materials is required in order to avoid long delays during trial and to
|
|
provide the defendant with ample opportunity to review the material and
|
|
make appropriate use of it. See, e.g., UNITED STATES V. HOLMES, 722 F.2d
|
|
37, 40-41 (4th Cir. 1983); UNITED STATES V. NARCISCO, 446 F.Supp. 252, 271
|
|
(E.D. Mich. 1976). Those cases, however, are rare. They generally involve
|
|
an overwhelming volume of Jencks material of a particularly complex nature.
|
|
There is no indication that this case involves that type of complexity or
|
|
volume. The court will assure that Neidorf's counsel has sufficient
|
|
opportunity to review the Jencks material to be able to make substantive
|
|
use of it, and the court is confident that providing Neidorf's counsel with
|
|
that opportunity will not produce inordinate delays during trial.
|
|
Therefore, Neidorf's constitutional rights to due process and effective
|
|
assistance of counsel will not be implicated by the government's production
|
|
of Jencks material at trial. Neidorf's motion for early production of that
|
|
material is accordingly denied.
|
|
CONCLUSION
|
|
For the foregoing reasons, Neidorf's pretrial motions are denied,
|
|
except for his motion to dismiss Counts V-VII and his motion for a bill of
|
|
particulars, which are held in abeyance pending the filing of the
|
|
superseding indictment.
|
|
IT IS SO ORDERED.
|
|
|
|
___________________________________
|
|
Nicholas J. Bua
|
|
Judge, United States District Court
|
|
|
|
Dated: June 5, 1990
|
|
|
|
|
|
|
|
=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+
|
|
+ END THIS FILE +
|
|
+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+===+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=+=
|
|
! |