|TLJ News from July 26-31, 2008|
Senate Approves Section 1030 Bill
7/31. The Senate amended and passed HR 5938 [LOC | WW], the "Former Vice President Protection Act of 2008", a bill to provide Secret Service protection to former Vice Presidents. However, the Senate added to this bill as Title II an amended version of S 2168 [LOC | WW], the "Identity Theft Enforcement and Restitution Act", which the Senate previously passed as a stand alone bill.
While the additional language does contain provisions related to identity theft, its primary function is to revise 18 U.S.C. § 1030, the computer hacking statute. Moreover, while its backers often use the term "cyber crime" in connection with this bill, it would affect both civil litigation, and criminal prosecutions, under Section 1030.
Sen. Patrick Leahy (D-VT) and Sen. Arlen Specter (R-PA) introduced S 2168 on October 16, 2007. On November 16, 2007, the Senate passed S 2168.
On May 14, 2008, Rep. Adam Schiff (D-CA) and other introduced HR 6060 [LOC | WW], the "Identity Theft Enforcement and Restitution Act of 2008", which is substantially identical to S 2168, as enacted by the Senate on November 16, 2007.
The House passed HR 5938 (former Vice Presidents' bill) on June 9, 2008, but without S 2168 or HR 6060, or any other provisions related to Section 1030. Neither the House, nor the House Judiciary Committee, have taken any action on Rep. Schiff's HR 6060.
Sen. Leahy stated in the Senate that "The key anti-cyber crime provisions that are included in this legislation will close existing gaps in our criminal law to keep up with the cunning and ingenuity of today's identity thieves." See, Congressional Record, July 31, 2008, at S7885-6.
Bill Summary. The "Identity Theft Enforcement and Restitution Act" as approved by the Senate on July 31 contains nine sections.
Section 201 only contains the title.
Section 202 provides for restitution to identity theft victims.
Section 203 deletes from Subsection 1030(a)(2)(C) the "interstate or foreign communication" requirement. Hence, this subsection would then provide that "(a) Whoever ... (2) intentionally accesses a computer without authorization or exceeds authorized access, and thereby obtains ... (C) information from any protected computer ... shall be punished".
Section 207 amends the definition of "protected computer", at Subsection 1030(e)(2)(B) so that it would provide that it be "used in or affecting interstate or foreign commerce". Currently, the words "or affecting" are not in the statute.
Sen. Leahy explained that the bill addresses "the increasing number of computer hacking crimes that involve computers located within the same State".
Section 204 is a long section titled "Malicious Spyware, Hacking and Keyloggers". However, the terms "spyware" and "keyloggers" appear in neither Section 1030 as currently written, nor as it would read after revision by this bill.
Sen. Leahy explained that "this legislation also addresses the growing problem of the malicious use of spyware to steal sensitive personal information, by eliminating the requirement that the loss resulting from the damage to a victim's computer must exceed $5,000 in order to federally prosecute the offense. The bill carefully balances this necessary change with the legitimate need to protect innocent actors from frivolous prosecutions and clarifies that the elimination of the $5,000 threshold applies only to criminal cases."
He added that the bill "addresses the increasing number of cyber attacks on multiple computers by making it a felony to employ spyware or keyloggers to damage 10 or more computers, regardless of the aggregate amount of damage caused."
Currently, subsection 1030(a)(5)(A) lists three types of acts, while subsection 1030(a)(5)(B) enumerates various types of injuries that might be caused by these acts. Currently, there is a criminal violation of subsection 1030(a)(5) only if there is both an act under subsection (A) and an injury listed in subsection (B) that was caused by the act.
This bill would eliminate subsection (B), which includes the current $5,000 threshold. However, the bill would add similar language to the sentencing section of the statute, so that the injury caused by the act would be relevant to the sentence, and hence the offense's classification as either felony or misdemeanor, but would not be an element of the offense.
The three prohibited acts under subsection (a)(5) currently are "knowingly causes the transmission of a program, information, code, or command, and as a result of such conduct, intentionally causes damage without authorization, to a protected computer", "intentionally accesses a protected computer without authorization, and as a result of such conduct, recklessly causes damage" and "intentionally accesses a protected computer without authorization, and as a result of such conduct, causes damage". The bill would, in the third item, replace "damage" with "damage and loss".
The effects of Section 5 of the bill would be to make it easier for prosecutors to bring criminal actions for variety have hacking activities, including use of malicious spyware and keyloggers. It would also make it easier for civil litigants to obtain judicial relief for the same sort of conduct.
It would also sweep within the scope of the statute certain non-malicious conduct that individuals may not understand to be prohibited, for example, in the context of employees accessing the computers of their employers.
Section 205 rewrites the cyber extortion subsection. Currently, subsection 1030(a)(7) provides that "(a) Whoever ... (7) with intent to extort from any person any money or other thing of value, transmits in interstate or foreign commerce any communication containing any threat to cause damage to a protected computer ... shall be punished".
The bill would maintain the clause "threat to cause damage to a protected computer", and add two other acts that would also constitute extortion under this subsection.
First, it would add this: "threat to obtain information from a protected computer without authorization or in excess of authorization or to impair the confidentiality of information obtained from a protected computer without authorization or by exceeding authorized access".
Second, it would add this: "demand or request for money or other thing of value in relation to damage to a protected computer, where such damage was caused to facilitate the extortion".
For example, if a person were to access a computer without authorization, damage the computer, and then demand payment to fix it, that too would be cyber extortion.
Section 206 addresses conspiracy. Currently, subsection 1030(b) provides that "Whoever attempts to commit an offense under subsection (a) ... shall be punished ...".
The just passed bill adds to this whoever "conspires to commit" an offense.
Section 208 adds a new subsection to Section 1030 providing for forfeiture of property used in Section 1030 criminal violations.
Finally, Section 209 gives detailed directives to the U.S. Sentencing Commission.
Robert Holleyman, head of the Business Software Alliance (BSA), praised the Senate's action. He wrote in a release that "For too long, cyber criminals around the world have taken advantage of legal loopholes and an under-resourced law enforcement community to rob consumers of their identities and their financial security. American consumers and businesses are the number one target of global cyber crime."
House and Senate Pass Bill that Addresses P2P Infringement at Colleges
7/31. The House passed the conference report on HR 4137 [LOC | WW], the "College Opportunity and Affordability Act of 2008", by a vote of 380-49. See, Roll Call No. 544. The Senate approved the same conference report, by a vote of 83-8. See, Roll Call No. 194.
Two sections of this conference report [25 MB PDF file, 659 pages] address peer to peer copyright infringement on college campuses. One section requires universities to advise their students about P2P infringement, federal copyright law, and university policy. The other requires universities to have a plan for dealing with unauthorized distribution of copyrighted material.
Section 488 of the conference report amends 20 U.S.C. § 1092(a). This subsection of the statute requires that educational institutions participating in federal student financial assistance programs "shall carry out information dissemination activities for prospective and enrolled students (including those attending or planning to attend less than full time) regarding the institution and all financial assistance". The statute then enumerates many types of information that must be disseminated.
The conference report adds several new items, including one regarding copyright infringement.
The relevant language is as follows:
"(P) institutional policies and sanctions related
to copyright infringement, including--
(i) an annual disclosure that explicitly informs students that unauthorized distribution of copyrighted material, including unauthorized peer-to-peer file sharing, may subject the students to civil and criminal liabilities;
(ii) a summary of the penalties for violation of Federal copyright laws; and
(iii) a description of the institution's policies with respect to unauthorized peer-to-peer file sharing, including disciplinary actions that are taken against students who engage in unauthorized distribution of copyrighted materials using the institution's information technology system;"
Section 493 of the conference report amends 20 U.S.C. § 1094(a) to require that each participating university certifies that it "(A) has developed plans to effectively combat the unauthorized distribution of copyrighted material, including through the use of a variety of technology-based deterrents; and (B) will, to the extent practicable, offer alternatives to illegal downloading or peer-to-peer distribution of intellectual property, as determined by the institution in consultation with the chief technology officer or other designated officer of the institution.".
Patrick Ross, head of the Copyright Alliance, praised the Congess and these provisions in the bill. He wrote in a release that this bill "will educate students, encourage the use of legal alternatives, help campus networks function better, and ultimately help ensure that the high quality, good paying jobs in the creative industries that many college graduates hope to one day attain are more abundantly available."
Mitch Bainwol, head of the Recording Industry Association of America (RIAA), stated in a release that this is a "common-sense provision that will help protect the integrity of taxpayer-funded university networks and encourage college fans to enjoy legal music and movies. "
He added that "universities, as well as commercial ISPs, have an important role to play in deterring the abuse of their networks. The technological tools to protect online networks are available, viable and affordable."
Bush Amends Executive Order 12333
7/31. President Bush signed a document titled "Executive Order: Further Amendments to Executive Order 12333, United States Intelligence Activities".
See also, EO 12333 [40 pages in PDF], as amended, short document titled "Statement by the Press Secretary", and White House news office transcript of news teleconference of undisclosed officials.
Former President Ronald Reagan signed the original EO 12333 in 1981. It has been amended several times since.
This is the fundamental Presidential document for the intelligence agencies. It provides some direction as to their activities and operations. As amended, it remains fundamentally vague on issues relating to intercepting and monitoring communications, including voice communications, accessing stored communications, including e-mail, and use of other new information technologies by intelligence agencies.
See, full story.
People and Appointments
7/31. Sen. Ted Stevens (R-AK) entered a plea of not guilty in U.S. District Court (DC). The Department of Justice (DOJ) has charged him with seven counts of violation of 18 U.S.C. § 1001 in connection with his alleged failure to disclose receipt of things of value on his annual Senate Financial Disclosure Forms (SFDF) for the years 1999 through 2006. The District Court set a trial date of September 24, 2008.
7/31. Luis Aguilar was sworn in as a Commissioner of the Securities and Exchange Commission (SEC). See, SEC release.
7/31. President Bush nominated Anthony Ryan to be an Under Secretary of the Treasury for Domestic Finance. He is currently Assistant Secretary for Financial Markets. If confirmed by the Senate, he would replace Robert Steel, who has resigned.
7/31. President Bush nominated John Tharp to be Judge of the U.S. District Court for the Northern District of Illinois. See, White House release.
7/31. President Bush nominated Thomas Marcelle to be a Judge of the U.S. District Court for the Northern District of New York. See, White House release.
7/31. President Bush nominated Richard Barry to be a Judge of the U.S. District Court for the Southern District of Mississippi. See, White House release.
7/31. Herbert Allison was elected to the Board of Directors of Time Warner. He was Chairman, President and Chief Executive Officer of Teachers Insurance and Annuity Association -- College Retirement Equities Fund (TIAA-CREF) until April of 2008. See, TW release.
7/31. The U.S. District Court (DC) issued a Memorandum Opinion [11 pages in PDF] Nextel Spectrum Acquisition Corporation v. Hispanic Information and Telecommunications Network, Inc. This is a contract dispute involving the Educational Broadband Service (EBS) spectrum usage rights. Previously, the District Court dismissed the complaint. See, story titled "DC Court Rules for HITN and Clearwire in DC Spectrum Case" in TLJ Daily E-Mail Alert No. 1,630, August 29, 2007. Nextel then filed a motion to vacate, alter or amend. The just released item denies that motion. The case is D.C. No. 07-543 (RMC).
7/31. A trial jury of the U.S. District Court (NDGa) returned a verdict of guilty against R. Clay Harris for bribery in connection with the Federal Communications Commission's (FCC) e-rate subsidy program. See, Department of Justice (DOJ) release. The e-rate program was structured by the Congress, and is now administered by the FCC, in a manner that invites wasteful and fraudulent use of the subsidies. Hence, criminal convictions have been numerous.
7/31. The Department of Homeland Security (DHS) released a document [83 pages in PDF] titled "National Emergency Communications Plan".
7/31. The Office of the U.S. Trade Representative (OUSTR) issued a release regarding negotiations in Washington DC on July 29-31, 2008, of an anti-counterfeiting trade agreement (ACTA). The OUSTR release states that the participants, including the US, EU, Japan, Australia, Canada, Korea, Mexico, Morocco, New Zealand, Singapore, and Switzerland, "reaffirmed their goal to combat global infringements of intellectual property rights (IPR), particularly in the context of counterfeiting and piracy, by increasing international cooperation, strengthening the framework of practices that contribute to effective enforcement, and strengthening relevant IPR enforcement measures themselves".
7/31. The National Institute of Standards and Technology's (NIST) Computer Security Division (CSD) released its SP 800-106 [17 pages in PDF] titled "Randomized Hashing for Digital Signatures" (2nd draft). The deadline to submit comments is Friday, September 5, 2008.
7/31. Microsoft filed a patent related complaint with the U.S. International Trade Commission (ITC) against Primax Electronics. See, Microsoft release.
DOJ Violated Federal Law by Political Hiring of Career Employees
7/30. The Department of Justice's (DOJ) Office of the Inspector General (OIG) and Office of Professional Responsibility (OPR) released a report on July 28, 2008, titled "An Investigation of Allegations of Politicized Hiring by Monica Goodling and Other Staff in the Office of the Attorney General".
Goodling worked in the DOJ's Office of the Attorney General (OAG) as the DOJ's White House Liaison.
The report states that "It is not improper to consider political or ideological affiliations in making hiring decisions for political positions. However, both Department policy and federal law prohibit discrimination in hiring for career positions on the basis of political affiliations."
The report found that "Goodling improperly subjected candidates for certain career positions to the same politically based evaluation she used on candidates for political positions, in violation of federal law and Department policy."
This is a huge report that details hiring practices in many different components of the DOJ. However, the report does not identify any illegal or improper practices in any of the components involved in technology related areas of law.
That is, it does not identify any illegal or improper practices in hiring for the Antitrust Division (which reviews communications sector mergers and single firm conduct by technology companies), or the Criminal Division's Computer Crimes and Intellectual Property Section (which prosecutes computer hacking and intellectual property crimes).
One of the persons whose practices are examined by the report is Kyle Sampson. He was DOJ Chief of Staff until he resigned, effective March 12, 2007. Sampson had also served as Chairman of the DOJ's Task Force on Intellectual Property.
The Senate Judiciary Committee (SJC) held a hearing on this topic on July 30, 2008. See, prepared testimony of the Glenn Fine, the DOJ's Inspector General.
Sen. Patrick Leahy (D-VT), Chairman of the SJC, wrote in his opening statement that "These reports confirm what I and others have suspected all along -- that senior officials within the Department of Justice used illegal political and ideological loyalty tests in making hiring decisions for career positions that, by law and the Department’s own rules, are non-partisan. They broke the law. They did so as political partisans and cronies."
He added that "One of the many excuses we heard from the administration’s political allies last year as the truth about the U.S. Attorney firings began to come out was that the firings of U.S. Attorneys did not matter because the real work of law enforcement was carried out by the dedicated, non-partisan career staff. Now we know the truth that we have long suspected and feared -- that even the ranks of professional career prosecutors were being subverted by partisan politics."
Attorney General Michael Mukasey stated in a release that "it is neither permissible nor acceptable to consider political affiliations in the hiring of career Department employees".
The DOJ released the IG's report on illegal political hiring at the DOJ at about the same time that it announced, and gave maximum publicity to, the indictment of Sen. Ted Stevens (R-AK). This lends the appearance that the DOJ used the Stevens story to limit the extent of the news coverage its own illegal activities.
People and Appointments
7/30. Sen. Kay Hutchison (R-TX) was named ranking Republican on the Senate Commerce Committee (SCC). She replaces Sen. Ted Stevens (R-AK), who was indicted on July 29, 2008. See, story titled "DOJ Obtains Indictment of Sen. Stevens in DC" in TLJ Daily E-Mail Alert No. 1,803, July 29, 2008. Sen. Hutchison stated in a release that "I have every expectation that Senator Stevens will return to his role as Ranking Member in the future."
DC Circuit Reverses in FTC v. Whole Foods
7/29. The U.S. Court of Appeals (DCCir) issued its divided opinion [redacted, 58 pages in PDF] in FTC v. Whole Foods, reversing the District Court's order denying the Federal Trade Commission's (FTC) request for a preliminary injunction of the acquisition by Whole Foods of Wild Oats.
The facts of this case are not technology related. It is about retail stores that sell groceries. However, the antitrust principles discussed in this case could impact technology companies. This case involves defining the relevant market for the purpose of analyzing the impact of a merger upon competition.
The U.S. District Court (DC) held in this case, as another District Court held in DOJ v. Oracle, that government antitrust regulators postulated too narrow a market, and therefore erroneously predicted anticompetitive results of a merger. See, story titled "DOJ Loses Oracle Case" in TLJ Daily E-Mail Alert No. 974, September 10, 2006.
Also, this case, and the Federal Communications Commission's (FCC) disposition of its antitrust review of the merger of XM Sirius, reveal the power of federal regulators to block mergers, extend uncertainty, and extend legal proceedings for extraordinarily long periods of time. Both XM and Sirius and Whole Foods and Wild Oats announced their mergers in early 2007. The FCC, after 16 months of delay, finally approved the XM Sirius merger last week. And now, Whole Foods is informed by the Court of Appeals, nearly a year after completing its merger, that the FTC may still seek to enjoin it. These cases demonstrate that the legitimate interests of investors, merging entities and other market participants in prompt resolution of antitrust issues, and finality and certainty, are not always being recognized by regulators and courts.
All three judges, Brown, Tatel, and Kavanaugh wrote long opinions. Brown wrote the opinion of the Court of Appeals, in which Judge Tatel concurred. Tatel also wrote a separate opinion offering additional analysis. Judge Kavanaugh wrote a strenuous dissent.
In the present case, the FTC asserts that the relevant market is operators of premium, natural, and organic supermarkets (PNOS). Moreover, it asserts that based upon this market definition, the merger would give Whole Foods a PNOS monopoly in 18 cities.
The District Court held that there is no distinct PNOS market. Rather, Whole Foods and Wild Oats are just two of many competitors in the grocery store market.
In August of 2007 the District Court issued an order [2 pages in PDF] and a redacted copy of its Memorandum Opinion [95 page PDF scan; 3.5 MB] denying the FTC's request for a preliminary injunction.
The FTC sought an injunction pending appeal, which the Court of Appeals denied. Whole Foods and Wild Oats then consummated their merger in late August.
The FTC nevertheless proceeded with this appeal. See, FTC's January 14, 2008, brief [78 pages in PDF] and February 27, 2008, reply brief [35 pages in PDF].
First, Judge Brown wrote that the appeal is not moot, even though the relief sought, an injunction of merger, cannot be granted, because the merger has been completed.
Then, she opined, out of the blue, that the District Court must be reversed, based upon an analysis of "marginal consumers" and "core consumers".
She offered this summary: "the district court believed the antitrust laws are addressed only to marginal consumers. This was an error of law, because in some situations core consumers, demanding exclusively a particular product or package of products, distinguish a submarket. The FTC described the core PNOS customers, explained how PNOS cater to these customers, and showed these customers provided the bulk of PNOS’s business. The FTC put forward economic evidence -- which the district court ignored -- showing directly how PNOS discriminate on price between their core and marginal customers, thus treating the former as a distinct market. Therefore, we cannot agree with the district court that the FTC would never be able to prove a PNOS submarket."
Judge Kavanaugh wrote in dissent that "the FTC's case is weak and seems a relic of a bygone era when antitrust law was divorced from basic economic principles."
He argued that the District Court properly rejected the FTC's PNOS market assertion. He concluded that "Whole Foods competes in an extraordinarily competitive market that includes all supermarkets, not just so-called organic supermarkets. There is no good legal basis to block further implementation of this merger."
He reasoned that "the FTC commits the basic antitrust mistake of confusing (i) product differentiation (which is how a seller such as Whole Foods competes within a market) and (ii) separate product markets. Discerning the difference in a particular case usually turns on pricing information. Here, the pricing evidence shows that Whole Foods prices did not differ based on the presence or absence of a Wild Oats in the area and that conventional supermarkets constrain Whole Foods prices. The relevant product market therefore is all supermarkets." (Parentheses in original.)
Jeffrey Schmidt, Director of the FTC's Bureau of Competition, stated in a release that "We are pleased by today's decision of the appeals court in the Whole Foods matter and are looking forward to future proceedings before the district court, leading to a full trial on the merits before the Commission."
This case is FTC v. Whole Foods Markets, Inc. et al., U.S. Court of Appeals for the District of Columbia, App. Ct. No. 07-5276, an appeal from the U.S. District Court for the District of Columbia, D.C. No. 07cv01021, Judge Paul Friedman presiding.
WTO Doha Talks Fail Again
7/29. U.S. Trade Representative Susan Schwab stated in a release that "we will not be able to reach a breakthrough at this time". She added that "negotiations deadlocked" on agriculture issues.
The World Trade Organization (WTO) began this latest meeting on July 21, 2008, in Geneva, Switzerland. See also, WTO release announcing the "collapse" of talks.
Sen. Charles Grassley (R-IA) stated in a release that "I'm disappointed but not surprised. The writing was on the wall once these negotiations devolved into India and China trying to roll back their existing WTO commitments. That would have meant increased tariffs on U.S. exports, and there's no way Congress would have supported that."
Sen. Grassley continued that "I'd hoped to see the talks result in new market access opportunities for U.S. farmers, manufacturers, workers, and service providers. But no deal is better than a bad deal."
"If India, China, and other advanced developing countries want the benefits of expanded trade, they have to abandon protectionism and negotiate in good faith. I hope they recommit themselves to pursuing a meaningful trade expansion agenda in the future. WTO members need to realize what's at stake and the opportunity that's been lost, at least for the time being", said Sen. Grassley.
NTIA Seeks Amendment of 1090 MHz Rules
7/29. The National Telecommunications and Information Administration (NTIA) filed a petition for rulemaking [PDF] with the Federal Communications Commission (FCC) requesting that it amend its rules "to allow Aeronautical Utility Mobile Stations to use the 1090 MHz frequency for runway vehicle identification and collision avoidance".
The NTIA explained that its "proposals would allow air traffic control (ATC) to identify service vehicles transiting within the airport movement area, enhance ATC ability to control vehicle movement, and thereby reduce the risk of aircraft colliding with vehicles on the airport surface. Providing ATC with the ability to control service vehicle movement on the airport movement area would significantly reduce the number of incidents occurring there and increase overall safety."
Basically, to track the location of vehicles new airport surface detection equipment (ASDE) would use 1090 MHz vehicle squitters and triangular of signals.
The NTIA asserts that there would be no degrading the performance of existing systems that rely on 1090 MHz.
DOJ Obtains Indictment of Sen. Stevens in DC
7/29. A grand jury of the U.S. District Court (DC) returned an indictment [27 pages in PDF] that charges Sen. Ted Stevens (R-AK) with seven counts of violation of 18 U.S.C. § 1001 in connection with his alleged failure to disclose receipt of things of value on his annual Senate Financial Disclosure Forms (SFDF) for the years 1999 through 2006.
Sen. Stevens (at right) was, until the release of this indictment, the ranking Republican on the Senate Commerce Committee (SCC), which has jurisdiction over communications issues, and exercises oversight over the Federal Communications Commission (FCC), the National Telecommunications and Information Administration (NTIA), and other information technology and communications related agencies.
The indictment alleges that Sen. Stevens failed to disclose "home improvements" to his house in Girdwood, Alaska, performed by others, including a "second-story wraparound deck, new plumbing, new electrical wiring" and other remodeling and additions.
It also alleges that he failed to disclose vehicle exchanges, and receipt of a Viking "gas grill, and a new multi-drawer, stationary tool storage cabinet with new tools".
It alleges that he received these things of value from VECO Corporation, an oil industry services company based in Alaska. It further alleges that Sen. Stevens "did use his official position and his office on behalf of VECO".
§ 1001(a) provides, in part, that "whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully -- (1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact; (2) makes any materially false, fictitious, or fraudulent statement or representation; or (3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry; shall be fined" or "imprisoned ...".
Sen. Stevens responded in a release that "I have proudly served this nation and Alaska for over 50 years. My public service began when I served in World War II. It saddens me to learn that these charges have been brought against me. I have never knowingly submitted a false disclosure form required by law as a U.S. Senator."
He added that "In accordance with Senate Republican Conference rules, I have temporarily relinquished my vice-chairmanship and ranking positions until I am absolved of these charges."
"The impact of these charges on my family disturbs me greatly", said Sen. Stevens. "I am innocent of these charges and intend to prove that."
The indictment does not charge Sen. Stevens with any violations of the Internal Revenue Code.
Nor does the indictment charge Sen. Stevens with any violation of Chapter 11 of the Criminal Code, which pertains to "Bribery, Graft, and Conflicts of Interest". Yet, the indictment alleges facts that would support charges under Chapter 11.
There is a wide disconnection between the facts alleged in the indictment, and the criminal charges brought by the indictment. The indictment does not explain this gap, and government officials who touted this indictment at a news conference on July 29 were evasive about it.
DOJ Forum Shopping. This article posits the hypothesis that the reason that the Department of Justice (DOJ) has brought the lesser charges of non-disclosure in SFDFs, rather than tax or Chapter 11 charges, is that the government is forum shopping for a favorable judge and jury. That is, the DOJ obtained this indictment in the District of Columbia, and seeks to keep this case from being tried in Anchorage, Alaska, where it fears a verdict of acquittal.
The 6th Amendment of the Constitution provides that "In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed."
Federal Rule of Criminal Procedure 18 provides that "Unless a statute or these rules permit otherwise, the government must prosecute an offense in a district where the offense was committed. The court must set the place of trial within the district with due regard for the convenience of the defendant and the witnesses, and the prompt administration of justice."
Stevens' house is in Alaska. The alleged home improvements, and all of the transactions alleged in the indictment, occurred in Alaska. Only the filing of the Senate Financial Disclosure Forms (SFDFs) are alleged to have taken place in District of Columbia. Thus, the §1001/SFDF offense is the only one that the DOJ can assert occurred in the District of Columbia.
Thus, the indictment alleges that Sen. Stevens violated §1001 "in the District of Columbia".
If the DOJ were to charge Sen. Stevens with bribery or tax evasion, then there would be no credible argument that the alleged crime occurred in the District of Columbia, and Sen. Stevens would be entitled to have the case moved to Alaska. Of course, it still remains an open issue whether the alleged §1001/SFDF offense was committed in Alaska. And, Sen. Stevens may soon seek to move the case.
Victor Song, Deputy Chief of the Internal Revenue Service's (IRS) Criminal Investigations Division participated in a news conference on July 29. However, he did not explain the absence of tax charges.
Matthew Friedrich, acting Assistant Attorney General in charge of the DOJ's Criminal Division, also participated in the news conference. He was asked "Why did the Justice Department go after disclosures as opposed to other statutes, the tax statute or gift ban statute?"
He gave a non-responsive answer. First, this is what he said: "I guess the best way to answer that, in terms of would of, could of, should of on other charges, again, as I alluded to, I really need to stick to what's charged here in terms of the indictment. The indictment is pretty detailed. I think, if you take a look at it, it lays out pretty clearly what our basis is for what we brought."
Another reporter persisted, "Why wouldn't that be a tax violation ... ?", while another asked asked "Did he report these on his tax returns; like improvements to a house would be income, wouldn't it?" Friedrich said "I'm not going to comment on the senator's tax returns."
There are many reasons why the DOJ would fear a trial in Anchorage, or anywhere in Alaska. Anchorage is a town with a high proportion of active duty and retired military personnel. Any jury pool would include people who know of Sen. Stevens' distinguished service in WWII and his long history of support for the military and military personnel, particularly as a member of the Senate Appropriations Committee and its Defense Subcommittee, both of which he has chaired. He piloted C-46s and C-47s in the China theater and received the Distinguished Service Cross, which the Department of Defense states is awarded for "extraordinary heroism not justifying the award of a Medal of Honor".
Sen. Stevens also has been one of most successful Senators in influencing appropriations, legislation, and regulatory actions to benefit his state. Any Anchorage jury pool would include people familiar with Sen. Stevens' service to the state.
In addition, many potential jurors in Anchorage possess a high level of distrust for the federal government in Washington DC, which has obtained this indictment. Moreover, it unlikely that any rational and competent prosecutor seeking to maximize his or her career opportunities in the state would willingly or diligently prosecute Sen. Stevens. The DOJ would thus have to send prosecutors from out of state. Some jurors and judges would perceive these prosecutors with suspicion, as outsiders.
Moreover, jury pools in Anchorage contain more highly educated people who hold managerial, engineering, professional and legal jobs than jury pools in the District of Columbia. These people are more capable of dissecting, analyzing, and rejecting complicated government cases.
In sum, were the DOJ to attempt to prosecute Sen. Stevens in Alaska, it would likely face a jury with members unfavorable to the prosecution. In contrast, the DOJ likely could not pick a jury anywhere in the country more biased in its favor in a case against Sen. Stevens than in the District of Columbia.
Thus, the hypothesis advanced here is that, while the DOJ has not admitted so much, it has procured an unusual indictment for the purpose of manipulating the forum in which the case would be tried, and hence, the outcome of the case.
Disclosure. David Carney, author of this story, is an ex-Alaskan who voted for Sen. Stevens in the 1984 Senate election.
People and Appointments
7/29. Margaret Peterlin, Deputy Director of the U.S. Patent and Trademark Office (USPTO) will leave the USPTO in August. See, USPTO release.
7/29. The Department of Justice's (DOJ) Antitrust Division gave an award to Herbert Hovenkamp, a law professor at the University of Iowa law school and author of a leading treatise on antitrust law. See, release.
7/29. William Schulz was named Director of the Securities and Exchange Commission's (SEC) Office of Legislative and Intergovernmental Affairs. He will replace Jonathan Burks, who is leaving the SEC on August 1, 2008. See, SEC release and release.
7/29. Vonage's Board of Directors appointed Marc Lefar Chief Executive Officer. Jeffrey Citron, who had been the interim CEO, will be non-executive Chairman of the Board. See, Vonage release.
7/29. The Federal Communications Commission (FCC) issued a release [6 pages in PDF] that describes the contents of a yet of its order that imposes restrictions upon the XM Sirius. The FCC held up the merger for sixteen months. It has yet to release the order. See also, story titled "FCC Approves XM Sirius Merger" in TLJ Daily E-Mail Alert No. 1,800, July 25, 2008.
7/29. The National Institute of Standards and Technology (NIST) published a notice in the Federal Register that announces its approval of, and sets the effective date (July 29, 2008) for, its Federal Information Processing Standard (FIPS) Publication 198-1, titled "The Keyed-Hash Message Authentication Code". See, Federal Register, July 29, 2008, Vol. 73, No. 146, at Page 43914.
Senate Takes Up Consider Omnibus Bill with Tech Provisions
7/28. The Senate briefly considered S 3297, [LOC | WW], the "Advancing America's Priorities Act", on Monday, July 28, 2008.
This is a huge omnibus bill that incorporates many previously introduced bills. This omnibus bill contains components that address a wide range of unrelated areas of law. However, several components are technology related.
The Senate rejected a cloture motion Monday afternoon by a vote of 52-40. It was a nearly straight party line vote, with Democrats voting yes. See, Roll Call No. 189. A super majority of 60 votes is required to pass a cloture motion in the Senate.
Invoking cloture is the only method for terminating a filibuster. Pursuant to Senate Rule XXII, a cloture motion requires a three fifths majority for passage. See, Senate memorandum [27 pages in PDF] titled "Filibusters and Cloture in the Senate"
S 3297 includes the "Broadband Data Improvement Act", at Sections 5101-5106. The Senate Commerce Committee (SCC) approved this as a stand alone bill, S 1492 [LOC | WW], on July 19, 2007.
See, story titled "Senate Commerce Committee Approves Broadband Data Bill" in TLJ Daily E-Mail Alert No. 1,612, July 19, 2007.
S 3297 also includes the "Enhancing the Effective Prosecution of Child Pornography Act of 2007", at Sections 2501-2503. The House passed a different version of this bill, HR 4136 [LOC | WW], on November 15, 2007.
Sen. David Vitter (R-LA) introduced the Senate version, S 2869 [LOC | WW], on April 16, 2008. See, "More New Bills" in TLJ Daily E-Mail Alert No. 1,755, April 28, 2008. No action has been taken on the Senate version of the bill.
S 3297 also includes the "Providing Resources, Officers, and Technology To Eradicate Cyber Threats to Our Children Act of 2008", or "PROTECT Our Children Act", at Section 2801-2841. It includes numerous provisions related to "internet crimes against children" or "ICAC". It would create a "National Internet Crimes Against Children Task Force Program", a "National Internet Crimes Against Children Data System", and an "ICAC Grant Program".
It would also provide for more "computer forensic capacity to address the current backlog for computer forensics". This would include support for child related investigations, but would not be limited thereto. Hence, this bill, if enacted into law, might also assist the investigation of computer and intellectual property crimes.
It would also makes several changes to substantive pornography laws.
It would also require that the DOJ's "National Institute of Justice shall prepare a report to identify investigative factors that reliably indicate whether a subject of an online child exploitation investigation poses a high risk of harm to children".
The House passed a different bill with the same title (PROTECT Our Children Act), HR 3845 [LOC | WW], on November 14, 2007. See, story titled "House Passes Schultz Internet Crime Bill" in TLJ Daily E-Mail Alert No. 1,676, November 14, 2007.
Sen. Harry Reid (D-NV) and others introduced this omnibus bill on July 22, 2008. His statement on introduction is published in the Congressional Record, July 22, 2008, at Page S7021.
WTO Doha Talks Continue in Geneva
7/28. The World Trade Organization (WTO) hosted the eighth day of its latest Doha round meeting in Geneva, Switzerland. Participants have not publicly stated that this meeting, like many before, is unsuccessful in reaching agreement.
The WTO issued a release on July 26 and a release on July 28 describing activity at the meeting.
Agricultural issues remain a stumbling block. However, a successful conclusion of Doha talks has the potential to benefit information technology and communications.
The U.S. Trade Representative, Susan Schwab, last released a statement [PDF] on July 25. She stated then that "We have a tentative agreement on a path forward. There are a number of significant issues to be resolved, and each one of us have to see how the final modalities package concludes before we can pass judgment on whether to support a final modalities package but I think the biggest concern we have is that a handful of large emerging markets threaten this round for the rest of us and for the other developing countries who are so critically dependant on a successful development outcome of this development round."
"Tomorrow we take a next, vital step in the direction of what we hope will continue to be a successful modalities process, and that is in the services signaling conference. That is another basis on which the United States will assess the success of a modalities package. We look forward to that development tomorrow.
She concluded, "And in the meantime, the United States will continue to play a leadership role that we have played this week. We will work with our trading partners and work with the WTO Secretariat to be a part of the solution. I look forward to seeing you over the weekend and into next week."
President Bush stated in his radio address on Saturday, July 26, 2008, that "America is promoting free trade and open investment. Over the long term, we know that trade and investment are the best ways to fight poverty, and build strong and prosperous societies."
Bush added that "We have put eleven new free trade agreements into effect since 2001. And we're striving to make this the year that the world completes an ambitious Doha Round agreement, so we can tear down barriers to trade and investment around the world."
People and Appointments
7/28. Alcatel-Lucent announced in a release that Non-Executive Chairman Serge Tchuruk "has decided to step down on October 1, 2008", that CEO Pat Russo "has decided to step down no later than the end of the year, and at the Board’s request will continue to run the company until a new CEO is in place", and that the Board of Directors "will commence a search for a new non-executive Chairman and CEO immediately".
to News from July 21-25, 2008.