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>C O M P U T E R U N D E R G R O U N D<
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*** Volume 1, Issue #1.16 (June 19, 1990) **
** SPECIAL ISSUE: JUDGE BUA'S OPINION ON MOTION TO DISMISS **
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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.
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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
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