For the first time in the nation, a federal appellate court holds that the fifth amendment protects the computer owner from assisting law enforcement when they face an encrypted computer hard drive. The opinion from the Atlanta based 11th Circuit is discussed here.
A great ruling for upholding the U.S. Constitution and Bill of Rights.
There is news in the last month that local business HB Gary (whose slogan is “Detecting Tomorrow’s Malware Today”) is in the hot seat for their e mails and contracts with the US Chamber Of commerce; those contracts and e mails are now considered evidence of a federal criminal conspiracy by some respected observers. (See interviews with Richard Clarke, former cyber security czar for the Bush administration who had served in the National Security Council under three presidents, about his views that the US Chamber was plotting “with a group of military contractors to hack into progressive groups.” here. The military contractors he was talking about includes local Sacramento business HB Gary. Here.
The scandal is that the Chamber had agreements with these companies to hack into the computer and social networking systems of certain progressive groups that oppose some of the Chamber’s policies. The companies make a poretty good dollar existing also on US Military contracts. Now members of Congress have issued subpoenas to the Defense Department and the NSA to examine their own contracts with these companies, including local HB Gary.
As for what HB Gary was alleged to have done, Mr. Clark stated ” I think it’s a violation of 10USC. I think it’s a felony, and I think they should go to jail. You call them a large trade association, I call them a large political action group that took foreign money in the last election. But be that as it may, if you in the United States, if any American citizen anywhere in the world, because this is an extraterritorial law, so don’t think you can go to Bermuda and do it, if any American citizen anywhere in the world engages in unauthorized penetration, or identity theft, accessing a number through identity theft purposes, that’s a felony and if the Chamber of Commerce wants to try that, that’s fine with me because the FBI will be on their doorstep in a matter of hours.”
Will grand jury subpoenas follow soon for a possible investigation locally in Sacramento or Washington DC, the headquarters for the Chamber?
Interesting…………
A federal judge has suppressed statements by a key defendant in a Foreign Corrupt Practices Act prosecution who wasn’t warned of his Miranda rights during an FBI raid, but denied motions to dismiss the charges on ground of prosecutorial misconduct. The rulings came on March 29 in a closely watched case in which, the judge said, “the government has been the recipient of tons of motions, maybe a gang rape so to speak.”
U.S. District Judge Howard Matz in Los Angeles later recanted his “gang rape” remark, apologizing to the prominent defense lawyers including former U.S. District Judge Stephen Larson, now at Los Angeles-based Girardi & Keese. He clarified that he believed the government had been “overwhelmed,” given the numerous “flaws and omissions” he found in its court papers.
“I shouldn’t have used that comment,” he said. “There’s no basis to find it is a ganging-up factor.”
Opening statements are scheduled for April 5.
The government has charged the Lindsey Manufacturing Co., which makes emergency power transmission systems; its president, Keith Lindsey; and Lindsey’s vice president and chief financial officer, Steve Lee, with conspiracy to violate the FCPA by paying a sales representative in Mexico to bribe officials of the Comisión Federal de Electricidad, a state-owned utility company. It also charged the sales representative, Enrique Noriega, and Noriega’s wife, Angela Aguilar.
Defense attorneys challenged the government’s conduct during the raid of Lindsey’s offices in Azusa, Calif., and complained the search warrant affidavit makes numerous misstatements — for example, about financial records showing that Lindsey funds were used to buy a yacht and a Ferrari for one of the Mexican officials.
Matz ruled against the government on what he called “one of the key motions at the outset.” He said that Keith Lindsey was not given a Miranda warning when FBI agents raided his corporate office on Nov. 20, 2008. Lindsey’s lawyer, Jan Handzlik, a shareholder in the Los Angeles office of Greenberg Traurig, argued that agents ignored Lindsey when he asked whether he should have an attorney present.
There was a “purposeful and investigative-premised decision to not respond to his clear efforts to get assistance from a lawyer,” Matz said following lengthy testimony that began on March 28. “Just human nature tells you the context was that this witness was not allowed to confer with other people, including his frantic wife.”
Matz denied a similar motion to suppress statements made by Lee and two motions by Aguilar to dismiss the indictment based on prosecutorial misconduct. In one motion, Aguilar alleged that prosecutors illegally recorded telephone conversations she made and read e-mails she wrote while in jail in downtown Los Angeles.
Matz agreed to suppress the e-mails, concluding that prosecutors failed to inform defense counsel that they planned to submit them as evidence. “There was no business in the government prosecutorial team getting this e-mail communication in the first place,” he said.
But he refused to toss the recordings, ruling that she knew her conversations were not private.
Her lawyer, Larson, argued that the conversations were of an “extraordinarily private nature” and weren’t provided to him in a timely fashion. Matz gave Larson the option to renew his motion if he could offer more details about when the government provided the recordings.
In her second motion, Aguilar argued that prosecutors arrested her in Houston before the indictment for the sole purpose of gaining access to her husband, who was in Mexico. “What this is all about from Day One is getting her husband,” Larson told Matz. “She was not a target of the investigation at any point of time up until the time prosecutors realized that this was a way to get Mr. Aguilar.”
Matz denied that motion, concluding that prosecutors could have had enough proof to bring charges against her. “They had something. I think it’s very thin. I think it remains very thin,” he said, adding that he would let a jury decide.
Matz was expected to rule on additional motions, including another motions to dismiss. The criminal trial bar is closely watching that motion because it rests on an emerging defense in FCPA cases: That the “foreign official” who was bribed actually was a company executive, not a government official. That argument has been brought up in a separate case pending in Santa Ana, Calif., against an executive accused of bribing an official of a state-owned company in China.
Matz put off a decision on that point, however, indicating that he would decide it at some future date.
My friend Troy Ellerman was on ESPN today on “Outside the Lines” with TJ quin. 30 minute episode to re air Monday at 12 noon on ESPN.
Troy tells the whole story about his conviction and the background behind what he did.
A 9 minute clip of the ESPN interview is here
His really interesting book “forging Iron” is available
Yep, the 24 hour a day isolation, lights on, stripped naked treatment by the military– prior to the upcoming trial of Private Bradely Manning, a “suspect” not yet tried (so legally he cannot yet be punished)– has caught the emotions of the U.S State Department spokesperson P.J. Crowley. Spokesperson Crowley has been the person at the State Department who has been very vocal about the alleged damage caused American interests by wikileaks. Yet, yesterday, when speaking at MIT he denounced Manning’s treatment in the brig. When asked by a BBC reporter if his comments were “on the record” he stated yes. Story here
On the other end of the spectrum is the pro torture US President. No, dummy, not George Bush. You know who I am talking about. Remember, the guy who won in 2008 and in his election night acceptance speech where we all wept as he spoke in front of the bright lights outdoors in Chicago and declared “We no longer torture people in this country.” That guy. He has not just completely broken his “Gitmo” promise, not only has he not refused to defend the hundreds of lawsuits regarding rendition, but yesterday he heard of Crowley’s statements and said
President Obama told reporters on Friday that he’s been assured by the Pentagon that its treatment of the private charged with giving information to WikiLeaks is “appropriate.”
Obama declined to “go into details” about the detention of Private Bradley Manning but said that he “actually asked the Pentagon whether or not the procedures that have been taken in terms of his confinement are appropriate and are meeting our basic standards.”
“They assured me that they are,” Obama said.
Asked about Crowley’s comments at his press conference, Obama didn’t mention the spokesman. “I can’t go into details about some of their concerns, but some of this has to do with Private Manning’s safety as well,” Obama said.
David House, a spokesman with the Bradley Manning Advocacy Fund, responded in a statement: “Anyone who reads Manning’s attorney’s rebuttal can see that there is no justification for Bradley’s inhumane treatment. I agree with Mr. Crowley that it’s just stupid and unproductive.”
Obama’s tough stance against torture and in depth investigation into the situation of Manning is reported here.
In 2010, I appeared before Judge William Shubb for final sentencing in the case of United States v. Jeff Grubbs. Jeff Grubbs was arrested in 2003, and spent almost 4 months in jail before he was bailed out. We litigated his matter extensively, solely on the search issues. We lost, and were allowed to plead guilty in 2004 with a reservation allowing us to appeal the search issue. He was sentenced to 41 months. He was allowed bail pending appeal.
The appeal went up to the Supreme Court and back down to the Ninth Circuit. We did prevail on a minor issue regarding the confession in the Ninth Circuit, and so we decided to eventually withdraw our prior guilty plea, and then re plead right away again. At sentencing, the major issue was whether Judge Shubb could consider Jeff’s post sentence rehabilitation. Jeff had been excellent since the sentence in 2004. It had been 6 years. Judge Shubb, over the position of probation and the United States, felt that the case law and statutes allowed him to consider the post sentence conduct of Jeff. He sentenced him to straight probation. He was taking a chance on him. Jeff has lived up to that so far.
Today, the United States Supreme Court decided as Judge Shubb did last year. In United States v. Peppers, they held that post sentence conduct is relevant for re sentencing purposes. They over ruled contrary case law. The opinion is available here.
“Sacrificing The Rule Of Law In The Pursuit Of Justice.” Former Attorney General Richard Thornburgh delivers a well reasoned criticism of the expanse of federal criminal law and especially the legislation of serious penalties for crimes that are vague and ambiguous. His very interesting comments are in a written speech delivered to the Heritage Foundation in Washington D.C. and are available here
Recently, in the Eastern District and elsewhere, banks have closed the accounts and sent packing the legal dispensary businesses. Several dispensaries in the Sacramento area, and San Joaquin as well, have had their accounts closed and the money frozen for a 30 day period.
The Press Democrat exposes the situation in the Northern District as well. One wonders what happens in Oakland and San Francisco, also the home of legal dispensaries and the financial and banking center of northern California.
Despite Obama’s proclaimed policy of respecting state marijuana laws, federal regulators are increasing the pressure on banks to crack down on medical marijuana businesses that are legal under state law. One might think that in this time of economic straits, federal regulators would have better things to do. In the words of California NORML, “An example of how the federal war on drugs has become a hydra-headed bureaucratic monster raging out of control.”
Here is the Press Democrat story:
North Coast banks thrust into feds’ war on drugs
By NATHAN HALVERSON
THE PRESS DEMOCRAT
Published: Saturday, February 26, 2011 at 3:00 a.m.
http://www.pressdemocrat.com/article/20110226/ARTICLES/110229593/1334/news?Title=North-Coast-banks-thrust-into-feds-war-on-drugs
Federal regulators are instructing North Coast banks to scrutinize their customers’ financial transactions for signs of money laundering and drug deals, the result of the region’s reputation for marijuana production.
The little-known policy has drawn local banks into the war on drugs, forcing them to spend time and money searching for evidence of illegal activity. To avoid the hassle, some have simply closed the bank accounts of medical marijuana dispensaries, which were authorized by California voters in 1996 but remain illegal in the eyes of the federal government.
Evidence of the policy emerged last month, when the largest bank in Mendocino County notified shareholders that federal banking regulators were requiring it to closely watch its accounts because the North Coast had been designated a high-risk area for money laundering.
Savings Bank of Mendocino County was ordered to more closely monitor deposits, withdrawals and transfers by its customers, said Charles Mannon, chief executive of the Ukiah bank.
“This area in general has been targeted by Washington because the amount of cash that comes out of here,” he said.
Mannon and executives at other North Coast banks said regulators have stepped up their enforcement in the past 12 months.
“They have to be more diligent,” said Bill Grassano, a spokesman for the Financial Crimes Enforcement Network, a division of the U.S. Treasury Department tasked with administering the Bank Secrecy Act. “There is a lot of marijuana grown in the area, and there is a lot of cash.”
Advocates for medical marijuana complain that pressure by regulators has resulted in bankers terminating the accounts of pot dispensaries operating legally under state law.
Mike Johnson, co-founder of a medical marijuana dispensary in Ukiah, said he has been forced to leave two banks since October and is now on his third account.
“It’s a huge problem,” Johnson said. “I operate a legal dispensary and need a bank account to stay in business.”
Wells Fargo closed his account in October, and then Umpqua Bank closed his account in December, he said. Johnson didn’t want the name of his business or current bank mentioned because he was afraid his account would be closed again.
“As far as the federal government is concerned, we are all drug dealers,” he said. “Now most dispensaries are working with their banks on a ‘don’t ask, don’t tell’ policy.”
Some members of Congress have called upon bank regulators to issue a written policy that clearly states how banks should treat the accounts of people operating state-authorized medical marijuana operations.
In a letter sent to U.S. Treasury Secretary Timothy Geithner, 15 members of Congress wrote that they did not want regulators “targeting or pursuing institutions whose account holders are involved in a business ostensibly operating in compliance with a state medical marijuana law.”
The issue has become a top priority of medical marijuana advocates, said Caren Woodson, governmental affairs director at Americans For Safe Access, the nation’s largest medical marijuana advocacy group.
“I just can’t imagine with all the banking problems right now, that eliminating the bank accounts of medical marijuana customers is a top priority for regulators,” she said.
Bankers say that because medical marijuana is not recognized as legal under federal law, they are required under the Bank Secrecy Act to spend costly time and resources monitoring and reporting on businesses involved in the state-authorized medical marijuana industry.
Savings Bank of Mendocino County was the first North Coast bank specifically ordered to improve its compliance with the act, which was established in the early 1970s to detect money laundering and help prosecutors fight organized crime. The law was broadened in the wake of the 9/11 terrorist attacks, giving regulators and law enforcement agencies more access to financial records.
The Federal Deposit Insurance Corporation, which regulates banks, is just making sure that North Coast banks are complying with the law, said Greg Hernandez, a spokesman for the agency. He said he was not aware of any crackdown targeting banks in the region.
“One formal enforcement action does not equate to increased enforcement efforts,” Hernandez said. “The FDIC examines banks to ensure regulatory compliance.”
Across the region, banks are taking extra precautions to ensure they are following federal rules. And that oversight means the banks are closely scrutinizing anyone who is moving large amounts of cash in and out of their accounts.
“State and federal law are in conflict with each other,” said Bill Schrader, president of Exchange Bank. “If there are suspicious activities under federal law, we have to report it.”
Last year, Exchange Bank instituted a policy effectively banning businesses that deal in medical marijuana from opening accounts because the cost of monitoring the business is too expensive and time consuming.
The bank already has three full-time employees who do nothing but monitor for money laundering or other suspicious activities. Mike Leonard, a retired Sonoma County sheriff’s detective who specialized in white-collar crime, is in charge of Exchange Bank’s team.
“We are both a federally designated high-intensity drug area, and a high-intensity financial crime area,” Leonard said. “There is more drug cash circulating in our economy.”
As a result, regulators have pushed North Coast banks to install advanced equipment that allows bankers to closely monitor the transactions of all customers and report any suspicious activity to regulators and law enforcement agencies.
“We are being forced by the regulators to install these very robust anti-laundering systems,” Leonard said. “We can see a lot deeper into people’s transactions now.”
Any suspicious activity, whether noticed by a bank teller or the sophisticated computer equipment, prompts banks and credit unions to file a report with the Financial Crimes Enforcement Network, which maintains a giant database available to law enforcement agencies such as the FBI and the Drug Enforcement Administration.
This month, Savings Bank of Mendocino County agreed to a wide list of changes as part of the enforcement order it received from its regulators, the FDIC and the California Department of Financial Institutions.
The bank is required to increase its monitoring of all customers “with particular emphasis on high-risk operations,” which North Coast bankers read as code for people involved in the marijuana industry.
“Everyone thinks they aren’t affected by these outlaws. But they are,” Mannon said. “It requires all our people to be alert.”
You can reach Staff Writer Nathan Halverson at 703-1577 or nathan.halverson@pressdemocrat.com.
http://www.pressdemocrat.com/article/20110226/ARTICLES/110229593/1334/news?Title=North-Coast-banks-thrust-into-feds-war-on-drugs
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