Cybercrime Newsletter May - June 2016

The following is a compendium of news reports, case law and legislative actions over the latest bi-monthly period that may be of interest to our AG offices that are dealing with cyber-related issues. Neither the National Association of Attorneys General nor the National Attorneys General Training & Research Institute expresses a view as to the accuracy of news accounts, nor as to the position expounded by the authors of the hyperlinked articles.

Cyberspace Law Developments

Cybersecurity Warnings Issued for Legal Sector

The FBI’s cyber division issued two cybersecurity alerts with information that hackers are specifically targeting international law firms to obtain sensitive information as part of an insider trading scheme. The alerts warned of intrusions through ransomware and through a KeySweeper, a device resembling a USB charger with the capability of harvesting keystrokes. The alert recommended the following measures to deter unauthorized access: 1) educate personnel on appropriate preventive and reactive actions to known schemes and threats; 2) scrutinize links contained in email and do not open attachments included in unsolicited emails; and 3) disable macros and beware of pop-ups from attachments requining users to enable them.

European Justice Court Launches App for Access

The European Court of Justice launched an app for smartphones and tablets to give mobile users access to court postings. The CYRIA app includes access to case law, press releases and the calendars of the Court of Justice, the European General Court and the Civil Service Tribunal. There is also a search function to access all case law by case numbers, party names and dates. The app, which also has IOS and Android versions, is free and available in 23 languages.

NY Approves Alternative to Bitcoin

The New York Department of Financial Services approved the Gemini Trust Company’s application to trade ether, an alternative digital currency. Ether is a token or digital asset of the Ethereum platform, and the platform uses ether to execute peer-to-peer contracts automatically. Gemini was founded by Tyler and Cameron Winklevoss.

Ed. Note: As this issue went to publication, hackers moved digital money from the Decentralized Autonomous Organization (DAO), a cryptocurrency backed venture capital fund, sending the price of ether, the virtual currency underlying the project, plunging. The future of ether is unknown at this point.

In the State Courts

Warrantless Searches as Minor’s Probation Conditions

In re P.O., 246 Cal. App. 4th (Apr. 5, 2016).

A California Court of Appeal held in a public intoxication case that a probation condition requiring a minor to submit to warrantless searches of his electronics was reasonably related to future criminality because it enabled officers to review electronic activity for indications that the minor had drugs or was otherwise engaged in activity in violation of his probation. However, the court found that probation conditions requiring the minor to “be of good behavior and perform well” at school was unconstitutionally vague. Conditions affirmed as modified.

Ed. Note: Deputy Attorneys General Donna Provenzano and Hanna Chung represented the People.

Recorded Telephone Calls During Detention

People v. Johnson, 2016 NY Slip Op 02552 (Apr. 5, 2016)

The New York Court of Appeals ruled that Marcellus Johnson’s Sixth Amendment right to counsel was not violated when the People recorded telephone calls Johnson made to family and friends during his detention at a correctional facility because the NYC Department of Correction did not serve as an agent of the State when it recorded the calls it turned over to the DA’s Office. Order affirmed.

Warrantless Monitoring of GPS

State v. Freeman, 2016 La. App. LEXIS 680 (Apr. 13, 2016)

A Louisiana Court of Appeal found that because prior case law appeared to authorize the warrantless installation and monitoring of a GPS tracking device on a vehicle on public roads, the good faith exception under the Fourth Amendment applied. Judgment affirmed.

Probation Conditions for Sex Offender

State v. Cornell, 2016 VT 47 (Apr. 22, 2016). The Vermont Supreme Court ruled that a probation condition prohibiting Owen Cornell, a sex offender, from owning a computer in his home or accessing the Internet without approval of his probation officer was overbroad because Cornell did not actually employ a computer in the commission of the offense, but it was proper to require Cornell, upon reasonable suspicion, to allow his probation officer to monitor his computer and Internet usage. Affirmed in part and remanded.

Warrantless Search and Seizure

Campbell v. State, 2016 Ga. App. LEXIS 246 (Apr. 27, 2016)

A Georgia Court of Appeals found that even if the phone number of Kenyatta Campbell’s phone was acquired as the result of an unlawful search and seizure of the phone, the trial court did not err in denying Campbell’s motion to suppress because any error was harmless since the State presented other properly admitted evidence showing that the contact named “Head” in another phone was Campbell. Judgment affirmed.

Search Warrant Particularity

People v. Victor, 2016 NY Slip Op 03551 (N.Y. App. Div. May 5, 2016).

A New York Supreme Court Appellate Division found the language in the search warrant was sufficiently particular to allow the police to identify a cell phone as an item to be seized pursuant to the warrant, since it qualified as a computer and/or storage device capable of maintaining records pertaining to illicit controlled substance transactions. However, the court found insufficient evidence to support Michael Victor’s conviction for criminal possession of a defaced weapon and reversed and remanded for a new trial.

Pre-Riley Warrantless Search of Cell Phone

Burton v. State, 2016 Fla. App. LEXIS 7714 (May 20, 2016).

A Florida appeals court ruled that under the U.S. Supreme Court’s decision in Riley, which applied retroactively, the police violated Robert Burton’s Fourth Amendment rights in searching his cell phone without a warrant. However, the court also found that the trial court properly denied Burton’s motion to exclude the information recovered from the phone because the Supreme Court had held that searches conducted in objectively reasonable reliance on binding appellate precedent were not subject to the exclusionary rule, and case law at the time of the search had established a bright-line rule allowing for the search of cell phones incident to arrest, which the police were justified in applying. Conviction affirmed.

Ed. Note: Assistant Attorney General Pamela Koller represented the State.

Probable Cause for Search Warrant

State v. Reisner, 2016 R.I. Super. LEXIS 60 (May 13, 2016).

A Rhode Island superior court denied Ralph Reisner’s motion to suppress, holding that the search warrant was not invalid because the issuing magistrate did not view the video depicting child pornography himself where the detective’s description was sufficient. The court further found that the affidavit established probable cause where it stated that the video file was downloaded from a particular IP address which was a member of a peer-to-peer sharing network suspected of containing child pornography; the address was registered to a woman who lived at the residence which was also Reisner’s home; and the nature of the crime reasonably inferred that evidence of the crime was within Reisner’s residence.

Invalid Consent Without Ferrier Warnings

State v. Budd, 2016 Wash. LEXIS 587 (May 19, 2016).

The Washington Supreme Court found that Michael Budd’s consent was invalid because the officers did not give him the Ferrier warnings before making a warrantless, consent-based entry into his home to seize his computer. Affirmed and remanded.

Statements Made During Execution of Search Warrant

State v. Spence, 165 Conn. App. 110 (Apr. 26, 2016).

The Appellate Court of Connecticut affirmed the lower court judgment, finding that the trial court did not err by denying John Spence’s motion to suppress statements which he made to the police when the search warrant was executed at his home because a reasonable person in his position would not have believed that he was under a formal arrest. The court ruled that his subsequent waiver of the right to remain silent was voluntary.

In the Federal Courts

Sentencing Enhancements for Possession of Child Pornography

U.S. v. Scott, 2016 U.S. App. LEXIS 7044 (Apr. 19, 2016).

The Fifth Circuit Court of Appeals found the U.S. District Court for the Western District of Louisiana erred by enhancing Jason Scott’s sentence for possession of child pornography without clearly finding that Scott used a peer-to-peer file sharing program to exchange and distribute child pornography. The court also ruled that the conditions of supervised release imposing absolute lifetime bans on access to any computer capable of Internet access and unsupervised contact with anyone under age 18 were plainly erroneous, as they were not narrowly tailored. Sentence vacated and case remanded.

Admissibility Under Independent Source Exception

U.S. v. Barron-Soto, 2016 U.S. App. LEXIS 7569 (11th Cir. Apr. 26, 2016)

The Eleventh Circuit Court of Appeals ruled that the U.S. District Court for the Northern District of Florida’s order denying Alejandro Barron-Soto’s motion to suppress was proper, as the information in the warrant affidavit supported probable cause to issue a search warrant for Barron-Soto’s cell phones, and the evidence obtained from the execution of the search warrant was admissible under the independent source exception to the exclusionary rule. Judgment affirmed.

Warrantless Seizure of USB Drive During Supervised Release

U.S. v. Makeeff, 2016 U.S. App. LEXIS 7756 (8th Cir. Apr. 29, 2016)

The Eighth Circuit Court of Appeals affirmed the decision of the U.S. District Court for the Southern District of Iowa, holding that probation officers had reasonable suspicion to seize a USB drive found during a supervised release search of David Makeeff’s residence. The court found that factors supporting a finding of reasonable suspicion included Makeeff’s prior conviction for possession of child pornography, a condition prohibiting him from accessing a computer and a tip that Makeeff had bragged about possessing child pornography. The court further held that the officers had reasonable suspicion to search the USB drive without a warrant because before officers searched the drive, Makeeff telephoned them and admitted the drive contained child pornography. Judgment affirmed.

Onsite Preview of Electronic Devices

U.S. v. Townsend, 2016 U.S. App. (3rd Cir. May 16, 2016).

The Third Circuit Court of Appeals affirmed in part the decision of the U.S. District Court for the Eastern District of Pennsylvania, holding that applying the Fourth Amendment’s general protections, the district court did not err in denying Joseph Townsend’s motion to suppress the evidence uncovered during the onsite preview of his electronic data storage devices, as well as his motion to suppress evidence arising from a three-week review of those devices. However, the court found that Townsend’s sentence of 262 months in prison on each of five counts, to run concurrently, clearly exceeded the statutory maximum for distribution and possession of child pornography, but since the sentence was within the statutory maximum for the remaining counts, Townsend’s total sentence did not change. Affirmed in part, vacated in part, and remanded.

Use of Cameras for Surveillance

Spann v. Carter, 2016 FED App. 0270N (6th Cir. May 17, 2016).

The Sixth Circuit Court of Appeals affirmed the judgment of the U.S. District Court for the Middle District of Tennessee, finding that the use of cameras by officers did not transform their surveillance into a search requiring a warrant. Further, the court ruled that William Spann failed to state a plausible claim that the Tennessee Wildlife Resources Agency violated his Fourth Amendment rights by the search of his home for a cell phone pursuant to a warrant issued more than six months earlier.

Scope of Consent to Search

U.S. v. Berger, 2016 U.S. App. LEXIS 9629 (8th Cir. May 26, 2016).

The Eighth Circuit Court of Appeals affirmed the U.S. District Court for the Western District of Arkansas’ denial of Alan Berger’s motion to suppress. The court determined that where probation officers conducted a home visit at Berger’s residence, obtained consent to search and confiscated an external hard drive and other items, and a forensic examination of the confiscated devices revealed child pornography, suppression was not warranted under the Fourth Amendment because it was objectively reasonable to believe that Berger’s consent included consent to forensically examine the hard drive on which the child pornography was discovered. The court ruled that a reasonable person would have understood that consent to search the “premises” for evidence of violations of the conditions of supervised release, including Internet usage, extended to a forensic examination of any devices found in such search.

Legislative News

Louisiana Legislature Oks Electronic Driver’s License. On June 6, 2016, the Louisiana Senate approved HB 481, which would provide for the issuance of a digital driver’s license. The bill would also allow drivers to download a copy of their license through an app to be offered by the Office of Motor Vehicles. The House had previously approved the bill.

California Bill to Fine Impaneled Jurors Who Search Online Passes Assembly. AB 2102 would authorize judges to impose a fine of up to $1,500 on an impaneled juror for any violation of a court order. The bill would establish a five-year pilot program adding the monetary sanctions as an alternative to contempt proceedings. The bill has been forwarded to the Senate Judiciary Committee.

Virginia Becomes First State to Mandate Computer Science Curriculum. On May 16, 2016, Governor Terry McAuliffe signed HB 831 into law, which requires the state board of education to incorporate computer science, computational thinking and computer coding into their Standards of Learning curriculum. The bill was unanimously passed by both bodies of the legislature.

Hawaii Legislature Passes Bill to Tax Airbnb Hosts. On May 5, 2016, the Hawaii Senate passed HB 1850, a bill that would enable transient accommodations brokers, such as Airbnb, to collect and pay taxes on behalf of hosts who list their properties. The bill had previously passed the House and has been forwarded to the governor.

Colorado Legalizes Fantasy Sports. On June 10, 2016, Governor John Hickenlooper signed HB 1404 into law, which legalizes and regulates fantasy sports and is codified as Article 15.5. The legislation requires operators of fantasy sports contests to register and apply for licenses with the Division of Professions and Occupations.

Fantasy Sports to Continue in Missouri Under Regulation. On June 10, 2016, Governor Jay Nixon signed H 1941 into law, which would give the Gaming Commission oversight of fantasy sports operations. Operators would be required to pay an annual operation fee of 11.5 percent of net revenues from state participants, as well as an annual licensing fee of $10,000 or 10 percent of revenue, whichever is lower. Proceeds from the fees will benefit state education efforts. The legislation will become effective on August 28, 2016.

Pennsylvania House Committee Approves Fantasy Sports Bill. On June 15, 2016, the Gaming Oversight Committee passed HR 2150, a bill that would place fantasy sports under the oversight of the Gaming Control Board. It would impose a tax on fantasy sports operators’ gross revenue and require them to exclude minors and keep player information confidential.

New York Legislature to Allow Fantasy Sports Play. On June 17, 2016, the Senate passed S8153, a bill previously passed by the Assembly which would legalize and regulate daily fantasy sports. It would place fantasy sports under the oversight of the state gaming commission.

Louisiana Increases Penalties for Texting While Driving. On June 13, 2016, Governor John Bel Edwards signed SB91 into law, which stiffens the penalties for using social media or texting while driving. First time violators will be fined up to $500, up from $175, with first time violators under the age of 18 receiving a fine of $250, up from $100. The fines for subsequent offenses doubled to $500 from $250, accompanied by a driver’s license suspension of 60 days. In addition, fines for using cell phones in school zones increased to $500 from $175 for the first violation, with a $1000 fine for subsequent violations and a 60-day license suspension. An appropriation of $25 from each fine with benefit the Indigent Defender Fund in the judicial district where the fine was issued.

Cybercrime Initiatives in the Attorney General Community

Arizona Attorney General Mark Brnovich announced that Danny Wallace was indicted on eight felony counts pursuant to an investigation by the Arizona Internet Crimes Against Children Task Force. Wallace is accused of using a fake identity of a girl to solicit sexual images from an underage victim. He also sent the victim pornographic images while soliciting for sex. Assistant Attorney General Todd Lawson is prosecuting the case.

Arkansas Attorney General Leslie Rutledge’s Cyber Crimes Unit arrested Anthony Farisa, a registered sex offender, on three counts of possession of child pornography. Unit agents began an investigation after determining that someone using a computer at Farisa’s address offered to participate in the distribution of child pornography images, and agents assisted Arkansas Community Corrections officers with a home compliance check and seizure of evidence. Farisa has a previous conviction for the same crime.

California Attorney General Kamala Harris filed a lawsuit for illegal gambling against Canadian-based Pong Marketing & Promotions Inc., a sweepstakes gambling software provider, seeking injunctive relief and penalties of $10 million. The company makes software for sweepstakes cafes offering interactive gambling games on computer devices which have been ruled illegal by the state Supreme Court.

Delaware Attorney General Matthew Denn announced that William Burrows was sentenced to 40 years in prison for online solicitation of a minor and rape. Burrows will be required to register as a sex offender and undergo sexual offender counseling. The case was prosecuted by Deputy Attorney General John Downs.

Hawaii Attorney General Doug Chen announced that a grand jury indicted Andrew Patyjewicz on two counts of distribution of child pornography, with each count punishable by up to 10 years in prison. The investigation was conducted by the Hawaii Internet Crimes Against Children unit.

Idaho Attorney General Lawrence Wasden’s Internet Crimes Against Children unit arrested Thomas Sammons for alleged online enticement of a minor after the victim’s mother reported texts from Sammons on her daughter’s cell phone. The Ada County Sheriff’s Office and Prosecutor’s Office, the Kuna Police Department and the U.S. Marshall’s Service assisted in the case.

Illinois Attorney General Lisa Madigan’s investigators arrested Marco Hernandez on eight counts of possession of child pornography, with each count punishable by two to seven years in prison, after evidence was found during a search of his residence. The Yorkville Police Department, DuPage County Sheriff’s Department and the Kendall County State’s Attorney’s Office assisted in the case.

Kentucky Attorney General Andy Beshear’s Cyber Crimes Unit arrested Kelley Shelton on 100 counts of possession and one count of distribution of child pornography. A search warrant was executed at Shelton’s home, and several electronic devices containing child pornography were seized.

Louisiana Attorney General Jeff Landry’s Cyber Crime Unit arrested Alexander Witt on three counts of possession of child pornography. The arrest resulted from an investigation by the Unit and the New Orleans Police Department.

Massachusetts Attorney General Maura Healey announced that a statewide grand jury indicted Thomas Sheehan for allegedly creating multiple fake online profiles of women on an adult website and for soliciting kidnapping, rape and assault. Sheehan was investigated and arrested by State Police assigned to Attorney General Healey’s Office assisted by Groveland Police. Quincy Police and the Attorney General’s Digital Evidence Lab assisted in the investigation. The case will be prosecuted by Assistant Attorney General Allyson Portney with assistance from Victim Witness Advocate Amber Anderson.

Michigan Attorney General Bill Schuette charged Matthew Parsons, a law enforcement officer now on administrative leave, with five counts of possession of child pornography, five counts of using a computer to commit a crime and three counts of illegally recording an individual. The investigation stemmed from a National Center for Missing and Exploited Children tip. The Farmington Hills Police Department assisted with the case.

Missouri Attorney General Chris Koster’s Office obtained a judgment against Richard Sims and his computer repair company, Phoenix Technologies of the Future, Inc., for advertising a flat rate for computer repairs and then demanding additional payment. If customers refused to pay, he destroyed or disposed of their computers. Sims also misrepresented his company as having 1,600 technicians when he was the sole employee. Sims was ordered to return computers in his possession and pay $6,000 in restitution, $500 in civil penalties and $600 to the Merchandising Practices Revolving Fund for consumer education. The judgment also prohibits Sims from operating a computer repair business.

Acting New Jersey Attorney General Robert Lougy announced that Nil Choudbury was sentenced to four years in prison for possession and distribution of child pornography. He was arrested during “Operation Ever Vigilant,” a child pornography sweep by the State Police, the Division of Criminal Justice, the state Internet Crimes Against Children Task Force and federal partners. Deputy Attorney General Joseph Remy represented the State at sentencing, and Deputy Attorney General Robert Shah presented the case to the grand jury.

New York Attorney General Eric Schneiderman sent letters to StubHub. Vivid Seats, Ticketmaster and TicketNetwork advising them that his office will continue to ensure a fair and transparent ticket market and would crack down on violators.

Pennsylvania Attorney General Kathleen Kane’s Child Predator Section arrested Gregory Towarnicki on 20 counts of possession of child pornography and one count each of distribution of child pornography and criminal use of a communications facility. Section agents and the Philadelphia Police Department had executed a search warrant at Towarnicki’s residence, and a forensic preview revealed multiple video files of suspected child pornography. Deputy Attorney General Rebecca Elo will prosecute the case.

Texas Attorney General Ken Paxton filed a response to DraftKing’s lawsuit that seeks to test the legality of daily fantasy sports. The filing contends that the lawsuit improperly challenges Attorney General Paxton’s opinion regarding its legality. The filing also moves to dismiss the case for lack of jurisdiction or determine its proper venue.

Vermont Attorney General William Sorrell entered into a settlement with Billing Tree, Inc., an Arizona-based electronic payments processor, under which the company will pay $178.000 to resolve claims it processed debits from consumer bank accounts on behalf of online lenders for high-interest, unlicensed Internet loans. Under the settlement terms, Billing Tree will issue credits to consumers’ accounts and will pay $25,000 in civil penalties and costs to the State.


Hedda Litwin is the Editor of the Cybercrime Newsletter and may be reached at 202-326-6022. The Cybercrime Newsletter is a publication of the National Association of Attorneys General. Any use and/or copies of this newsletter in whole or part must include the customary bibliographic citation. NAAG retains copyright and all other intellectual property rights in the material. For content submissions or to contact the editor directly, please e-mail hlitwin@naag.org.

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