> He says the New York district attorney’s office tried to strong-arm him into a plea agreement that would have had him hacking into the systems of his software clients in order to obtain the usernames and passwords of gamblers and their bookmakers to help authorities gather evidence of illegal gambling.
If the premise of Harvey Silverglate's book, "Three Felonies A Day: How the Feds Target the Innocent,"[0] is correct, then this is quite plausible. A key message from Silverglate's book is that because it is impossible to know if one's behavior is lawful[1], it is impossible to be sure that one operates within the contours of the law at all times. Thus, if you would be convenient to nail not because of anything in particular that you've done but because you can probably be convinced to testify against someone higher up in their chain, beware.
From my recollection of this book, this was a tactic more typically used at the federal level, so either the tactic is spreading or my recollection of its state-level use is just dim.
EDIT: In response to all of the other comments pointing out other absurd choices the authorities could make (they could prosecute Pepsi since they sell soda to these operations, etc), Silverglate's book provides a nice framework for why this programmer would be targeted and not Pepsi. He's not the fodder, but he does have meaningful access to the fodder (whereas Pepsi surely does not).
I would look this up to refresh my memory, but I've loaned out the book. As I recall, states have a higher burden of proof than the federal government. It had to do with most states being bound by English common law tradition, whereas the feds have exempted themselves. So, a writ of habeas corpus, for example, is further undermined at the federal level [1].
I can see it now: a bunch of grizzly old men huddled together in the back room of a local bar, a single bare light-bulb burning above them. Every few seconds they yell in anguish or delight and throw down more cash, words incomprehensible to any outsider. In the middle sits a pasty nerd, slowly typing out `echo $RANDOM` into a computer over and over again.
Now let's not go too far with this hypothetical computer-aided gambling scenario. Everyone knows that Bash keeps a history of commands and that our pasty friend simply needs to press the up arrow followed by return after the first roll of the digital die.
Attention! carbocation did not type this code. His account was hacked and a programmer working for the internet mafia released this code using his stolen account to make him the unwitting fall guy.
carbolocation was with me all afternoon, we were at church working in the soup kitchen, feeding the poor. We did so anonymously because we believe people who take credit for charity work are ego-maniacal monsters.
The degree of militarization of, and breathtaking overreach by law enforcement depicted here is stunning. 30 camouflaged SWAT officers? To arrest a coder because someone else was using his software illegally? Really?
The case began in February 2011, when Stuart says he and his wife got the Kim Dotcom treatment after about 30 local Arizona law enforcement agents wearing SWAT gear and camouflage dress — some of them with bushes attached to their shoulders to blend into the woods around his house — descended on his home and threatened to send him and his wife to prison for 35 years if he didn’t cooperate.
The search warrant used in the raid said Stuart and his wife were engaged in money laundering, operating an illegal enterprise and engaging in the promotion of gambling. Stuart has tried to obtain a copy of the affidavit used to get the search warrant, but it’s currently sealed.
The conversation for the plea agreement occurred the day after the raid, when Stuart says he was still traumatized by the experience and had only rent-a-lawyers, hired quickly over the internet, to represent him. The lawyers urged him to cooperate and agree to the terms.
And then once they arrested him, this:
Stuart showed Wired a plea agreement (.pdf) signed by former Manhattan Assistant District Attorney James Meadows, which stated that he would plead guilty to second- and fourth-degree money laundering charges and assist the DA’s investigations by, among other things, “aiding in the design of software used to obtain records, usernames, passwords, and other information stored on websites using” his company’s software.
Stuart says authorities specifically told him that they would not use the backdoor themselves but that he would be expected to access the servers of online casinos and others who used his software overseas in order to retrieve the information of gamblers and bookmakers on their behalf.
“They made it clear that they would do nothing. I was expected to do everything, to modify the system to allow myself to get in to get the information they wanted,” he says. “Their whole intention was for me to retrieve information from those databases that were located in foreign countries…. They were going to use me to get to the clients…. But I’m not a hacker, I’m a software developer.”
So in other words, these guys are too lazy to do any of the hard things associated with their job: not investigating, not establishing proof, not getting a valid search warrant that passes the laugh test. So they've decided to find ways around doing their job, and get the accused to do their job for them, via SWAT teams and threats.
The conversation for the plea agreement occurred the day after the raid, when Stuart says he was still traumatized by the experience and had only rent-a-lawyers, hired quickly over the internet, to represent him. The lawyers urged him to cooperate and agree to the terms.
As an aside, this is why you first hire lawyers only to get you out of jail, after which you hire your real lawyers.
Even after you do that, you still need to use your head. Frequently, what's in the best interest of the lawyer is not in yours.
Your lawyer will prefer a plea bargain, since he'll count that as a "win" and will still get paid. Even if there will likely be a dismissal of charges. A plea bargain is a certainty.
In no universe does a competent lawyer consider a plea bargain as a win, especially if that is not what his client wants.
A win is a win is a win. Criminal defense lawyers are some of the most competitive, antagonistic people on the planet. If there is any possibility of winning your case, or even not losing, they will fight for it. If their client wants to fight the charges, the lawyer will fight them.
Given the overwhelming number of people in jail because of plea bargains, which up to 95% (depending on sources, but all tend to be >85%) of the US prison population made. It seems like in the US you can simply avoid jail by not making a plea bargain. Seriously, with those rates I bet prosecutors just bail the second the plea bargain isn't signed. They put more pressure on weak cases to try and get the plea bargain through, if they get guaranteed evidence they withdraw the plea because the prosecutors want the highest conviction at trial rate they can.
The best way to deal with police is say nothing until you see a lawyer. Cops are allowed to trick people, so until you have a defence lawyer sat next to you, you say nothing because you don't want to give them anything usable against you.
The whole point of judicial system is that if you get people fighting for both sides, you should get a socially appropriate punishment for what really happened. This doesn't happen with plea bargains any time. Innocent people make pleas from fear of getting nailed with something worse, guilty people make pleas before prosecution can get enough evidence to push for a full sentence or to get it dropped from felony or not to count as three-strikes.
I think you have to be a little bit careful with plea bargaining statistics. Yes, their incidence is overwhelming, but it's also easy to intuit that the majority of engagements between citizens and prosecutors come from circumstances where guilt isn't seriously in doubt. It will bother the hell out of most HN'ers to consider this, but most people charged with crimes are guilty of those crimes (that does not mean that anyone charged with a crime is guilty, or that bad-faith charges don't happen).
If you were caught red handed with someone else's purse, or (even more likely) pulled out of your house drunk at 2AM after your battered wife was taken by ambulance to the hospital, chances are you're going to jump at whatever the prosecutor offers.
I hear you on the prevalence of spousal abuse. There was a report of it at an apartment complex we were living at. Police came knocking hard at the back door which we never used and which had bikes leaned against it from inside. I couldn't get the door open all the way, and my wife was barely visible back behind me. The cops became very aggressively agitated and unbelieving when I told them it wasn't us that they were looking for. They only left after we got the door open, and I agreed to let them talk to her in a different room from me.
I brought domestic abuse up because a plurality of the people incarcerated at Cook County are there on domestic abuse charges; it is an extremely common charge.
Plea bargains are voluntary. People enter into plea bargains most frequently because they are actually guilty. They're not looking to avoid jail or prison; they're merely hoping to minimize the time they do have to spend locked up.
It seems like in the US you can simply avoid jail by not making a plea bargain. Seriously, with those rates I bet prosecutors just bail the second the plea bargain isn't signed.
Well, yes. That's actually a strategy that many criminal defense attorneys use. I was lucky enough to be working for a public defender's office when they used it against the local d.a.'s office, after the D.A. decided his reelection chances would be improved if he was even harsher on defendants than he already was. Long story short: for a brief period of time, the waiting period for courtrooms shot up to 2-3 years for criminal cases and 10 years for civil cases. Nothing can happen in court, so everything hits the fan, and the prosecution side of the criminal system breaks down. (The defense side is mostly unaffected.)
The whole point of judicial system is that if you get people fighting for both sides, you should get a socially appropriate punishment for what really happened. This doesn't happen with plea bargains any time.
No, that's not it at all. The point of having opposing parties is that a vigorous presentation of the facts by opposing parties tends to reveal (in theory) most of the facts necessary to discern what happened (or as close as you can get without actually being there).
Innocent people make pleas from fear of getting nailed with something worse
No, they don't. This is a fiction created by media. Innocent people fight like hell. They mortgage their homes, raid their retirement funds, max out their credit cards. The risk of insolvency is worth if if you're innocent, since pleading guilty can be an economic death sentence if they plead to felony-level crimes.
Additionally, contingent fees are banned for most criminal attorneys in the US [1]. This means that their pay is hourly, and thus when they go to court they get paid more. It's really in their best interest to fight the charges.
The NY State government has a huge hang up about gambling. I've had multiple discussions with NY State liquor control and the AG's office about what they consider "Gambling instruments", which you cannot possess in a establishment that serves alcohol.
Not Gambling instruments:
Darts
Chessboard & Chess Pieces (including checker pieces)
Bowling Balls (and Bowling in general)
Pool cues (and Pool tables & balls)
Gambling Instruments (possession of any of these items is a Class A misdemeanor punishable by up to 1 year in jail):
Deck of cards
Dice
That makes the following games illegal:
Any card game (Poker, Blackjack, Rummy, Go Fish, Solitare)
Yahtzee / Boggle
Trivial Pursuit (just having the cards are OK for some reason)
Candy Land (!!!)
Just to further the point, you can shoot pool, for money, and it's not gambling. But if you carry a child's boardgame into a bar, you've violated NY State gambling laws.
Thanks for the heads up. Sometimes I carry around a deck of cards for entertainment (solitaire or 500 rummy if multiple players are available) -- it's tiny, light and doesn't depend on electronics being available.
Knowing I could be arrested for this in NY makes me really not want to visit that state.
And their unconstitutional stance on gun control, but I digress.
no wait.... in the NY State you can't own a deck of cards? Did I get this right? Is this for real? Because if so this is the most crazy thing I ever read..
The grandparent stated that you cannot possess these items "in a establishment that serves alcohol." So, I would think that having a deck of cards elsewhere is fine.
Gambling is generally waging money on an outcome determined by (a) chance or (b) the actions of others.
Chess, bowling, pool, and darts are games of skill; all events in the games proceed directly from the player's actions. Players can play these games for money themselves but generally cross into gambling if they place wagers on games in which they are not participating.
Boggle, Yahtzee, and Candyland (among other board games) are largely or entirely based on chance (i.e,. the dice rolls). Similarly, the card games enumerated are also games of chance (because skill is not a meaningful determinant until you reach the upper echelons of players).
NY appears to have gone pretty far overboard with their enforcement of the gambling laws, but the actual laws themselves (i.e., the distinction between gambling and non-gambling) is pretty uniform across the states (excepting NJ and NV).
In terms of potential harm to society, is there really any difference between playing pool for money, and playing poker?
I can understand banning slot machines but poker? Is anybody really addicted to sitting in a bar and playing poker until they run broke? Moreso than pool?
It depends on your POV. Arguably, playing pool for money is acceptable because it is a competition of skills, whereas poker is not acceptable because it is a competition of chance.
As for poker addicts...yes, there are very many of them. during the first online poker crazy of the early 00's, many fellow classmates got put on academic probation b/c they couldn't keep their poker habit under control.
Online poker, sure. Any sort of electronic gaming that can be done solo is going to become an issue. But poker in a bar with other people? You're limited by how much cash you can carry with you, not by your credit limit, and by how many people in the immediate area want to play with you.
I'm sure some people still manage to get a dangerous addiction to 'meatspace' poker in bars, but I am going to guess the vast majority of people who would play poker in bars are doing it mostly socially.
I think you greatly overestimate the value of chance in poker, blackjack, rummy, and Boggle. Skill is absolutely a meaningful determinant at basically all levels of play.
In other news, people are still looking for the inventor of the hammer to charge him with multiple accounts of manslaughter, consequence of every death in which his invention was used. People with sore thumbs are waiting for a verdict before presenting their griefs.
Faraday commented: "I am not guilty of the use of electricity in Guantanamo"
This is not a fair comparison. A hammer has multiple purposes. In general, it is not an instrument intended to cause harm. Even a gun can be used for a purpose other than causing harm to others -- it can be argued that it serves as a deterrent to violence.
What other purpose could gambling software be used for? It's irrelevant whether it was sold to overseas countries since, given the nature of the internet, New Yorkers would have access to those sites.
I'm not saying that I think what is happening is right, I just think your comparison is unfair.
"What other purpose could gambling software be used for?"
Not all gambling is illegal. New York State itself has a gambling operation, it is called the lottery and it serves as a way to extract money from poor people. There are casinos in New York State, on reservations.
"It's irrelevant whether it was sold to overseas countries since, given the nature of the internet, New Yorkers would have access to those sites."
That is a slippery slope. Hacker News does not censor its comments; that would make HN illegal in China. Do you really want to say that one jurisdiction's laws should apply elsewhere, just because of the Internet?
The Internet is a communication system. If New Yorkers cannot gamble in a country where it is legal by communicating their bets over the Internet, New York is engaged in censorship; arresting someone who wrote software that was used by New Yorkers who ignored that censorship is something I would have expected from China or Iran.
Comletely agree.
Following this logic, the internet and all web services could be regulated using the most most severe laws on this planet due to the global nature of the internet.
What this shows is, at least for me, frightening trend to ignore the souverenity of foreign states when you consider them less powerfull than yourself. Germany is doing it with Switzerland for example too.
Basic misunderstanding of international law on your part.
A "service", website, or software program is considered to take place where the user is located, not where the website is located. This standard was set decades ago (in relation to services) and extends quite well to websites.
Thus, the gambling in your example would be treated by international law as occuring in NY. Moreover, by choosing to do business with NY residents (unless such business is minor or incidental), the gambling websites would be subjecting themselves to the jurisdiction of NY for criminal law purposes).
>What other purpose could gambling software be used for?
It could be lawfully used for gambling in OTHER countries. But actually this question is absurd. Writing gambling software is not illegal in New York. The burden of establishing a lawful motive is not on the defendant; instead the prosecution must prove that the activity he conducted was directly in support of illegal activity. That is a big difference.
> What other purpose could gambling software be used for? It's irrelevant whether it was sold to overseas countries since, given the nature of the internet, New Yorkers would have access to those sites.
That's absolutely relevant. There are US companies that make slot machines. Most places in the country their products are illegal, just like the activities that this gambling software allows for. If an underground casino gets busted and is found to have slot machines, it's not the maker of the slot machines that is in trouble (unless there is evidence they were sold illegally).
The legality or lack of it really is irrelevant to Jack Daniels. If someone brings the jack back into the county, then sells it, that is not Jack Daniels problem.
You raise an interesting point about boundaries in the internet age. The comparison is unfair, but I do think it's perfectly relevant that it went overseas as it's not up to the software developer to also make sure that the sites are prohibiting American users, he's simply making a tool that's been using for the purpose it wasn't sold for.
I believe that the comparison is fair because "he's simply making a tool that's been using for the purpose it wasn't sold for".
All the tools in the comparison are used in a manner that was not intended by the creator. The point is that it is unfair to charge the creator for the misuse of the tool. The problem is that in our society some "legal-oriented" people think of themselves as very smart because they believe to have attacked the root of the problem; this is under the rationale of "if we eliminate the source, we eliminate all its misuse" (as a side bar, the same rationale is used by the entertainment industry). The problem with this rational is that it destroy the good uses of the tool. And it has a double domino effect, one of chilling some creators (in this case some developers), and one of the thrill of the power on legally hurting someone (I got him! how smart and powerful I am).
In reality it hurts the very thing that they claim to defend: the land of the free.
Well, it may not even matter. As you can see they are very heavy-handed. That means they do not fear any reprisals for this. That is obviously where the problem is. Ultimately, respect is always based on the fear for reprisals.
The programmer in question wasn't selling gambling services to consumers, he was selling gambling software to "retailers and wholesalers" who in turn served gambling consumers.
Is selling gambling software illegal in the state though?
It might seem like a pedantic question, but laws can be very narrow in scope or vague in meaning. "Gambling" and "Selling gambling software" are legally two different things.
Oh, that is a very very good question. And it borders on extremely stupid to be making something that is illegal to use in your jurisdiction without first consulting a very good lawyer.
Maybe his actions were, indeed, perfectly legal, and this is entirely a prosecutor abusing his power. But we have to be able to see a distinction between him selling something like a hammer, which isn't illegal to use in his jurisdiction, and gambling software, which probably is illegal to use in his jurisdiction.
Covering your eyes and not figuring out if your actions are legal or not is a pretty crappy defense.
> extremely stupid to be making something that is
> illegal to use in your jurisdiction
He was making it in the jurisdiction, but selling out outside of the jurisdiction. He was making gambling software and selling it to businesses in locales where gambling is legal.
If he was making slot machines and selling them to legal casinos (e.g. in Las Vegas), do you think that he would have been busted like this? Highly doubtful.
This happened because his customers were crossing the line with the product, but -- to carry the analogy -- I doubt a slot machine maker would be held accountable if Caesar's Palace decided to open up an illegal gambling operation with the slot machines. The issue here is that the main offenders (foreign casinos) are outside of the state's jurisdiction, so they are going after the only person that they do have in their jurisdiction.
I suspect people who manufacture slot machines have retained legal counsel that tell them what they need to do to follow the local law.
If he were growing marijuana and selling it to people where marijuana is legal, no one would have trouble understanding this concept: hire a lawyer very early on. He only got a lawyer after the cops descended on him, and then only crappy ones he found on the Internet.
I don't know the specifics of the law, and you don't either.
(I shouldn't have to say this, again, but I'm not saying there wasn't prosecutorial abuse here. Neither does this guy, because he hoped he could ignore the question.)
Drugs are a bad analogy as production and mere possession are illegal.
A better analogy:
- Drugs are legal to possess, but the act of buying them is illegal
(in the US).
- This guy makes an e-commerce software package designed specifically
for selling drugs.
- This guy only sells the software to companies in Amsterdam.
- He's arrested because one of the companies in Amsterdam is selling
illegally to US citizens.
- The government puts a gun to his head and tells him to hack into
his customers' websites in a scene straight out of Operation
Swordfish
I doubt that a lawyer would have helped him with this though. Unless I read the article wrong, he was being prosecuted/threatened in New York state, but was operating in the state of Arizona. He may be in accordance with all local (Arizona) laws, but was arrested and shipped off to New York state for some reason.
Gambling, like drugs, is heavily regulated. Maybe it shouldn't be, but it is, and this is well known by every American. You also wouldn't start a firearm company or a brewery or a boutique cigar manufacturing without hiring a lawyer.
I don't know the law, and neither do you, and neither did this guy. If he had spent a few thousand of that $2.3 million on a lawyer he would be better informed and had someone on retainer.
Maybe he would have found out some simple way to comply.
Maybe he would have found out there was no way to comply.
Maybe he would have found out that he was already completely complying and this is just your "Operation Swordfish" scenario.
But, since Operation Swordfish has been brought up, I'm out.
I do agree that this guy should have had a lawyer, even just as a go-to person for stuff relating to the law. He was running a business, and not consulting a lawyer from time to time is probably a bad idea. For example, if he was ever sued, he would want to have a lawyer on speed-dial, rather than flipping through the Yellowpages trying to find a lawyer while under stress.
My general thought is that it's quite possible that his lawyer would not have foreseen this turn of events. His lawyer probably would have referenced local, state, and Federal law on this, but could have easily not seen that another state would try to prosecute him for his clients offering online gambling to residents of that state.
(I think it goes without saying that a lawyer probably would not have foreseen the government offering him a plea bargain to commit a Federal -- and international -- crime in order to plead guilty to a lesser charge)
It is illegal to do certain things with marijuana. Possession is one of those things. Growing, distributing, selling, processing, all fall under the category of possession.
It is not illegal to write about marijuana, sing songs about it, paint pictures of it, talk about it, or trade photographs of it.
"Gambling" is not illegal.
It is illegal to gamble in certain ways. One of those ways is when a gambling participant wins anything of tangible value greater than what they paid to play the game. This is why some children's arcades that give tickets for games of luck are legal, and some carnival games are legal. Your winnings are required by law be worth less than what you paid to play.
Playing poker is not illegal, playing bingo is not illegal, playing slots is not illegal, playing blackjack is not illegal, guessing who will win the presidential election is not illegal, and guessing how much rain will fall next Tuesday is not illegal. Just don't gamble for tangible value while you do these things!
Probably the NY AG was after someone elses ass and just decided that he could get all the information need way more easily from the programmer than using his own means? And when he realised that his strongarming didn't work, it was decided to actually put th programmer to trial. Just my theory...
Unless (a) the sale of fireworks is prohibited, (b) fireworks are wrong in and of themselves and therefore can have no moral or lawful use, or (c) the owner is not just selling fireworks but advocating their unlawful use, I see no issue with selling fireworks in a county where setting them off is prohibited.
but he sold them to people outside the country, where using fireworks is legal, right? it was those people that sold them back to where it is illegal... (if i understand correctly).
> "He sold a Bugatti Veyron in a state where driving over 75mph was illegal."
With gambling software, the only thing you can do is illegal gambling. With a Bugatti Veyron, well as long as its speed is not locked at 75mph+, you can drive it all your life without doing anything illegal.
"Gambling is illegal where it is illegal" is a bit of a tautology don't you think? Unless you are saying gambling is never legal anywhere, in which case you are wrong.
> "Gambling is illegal where it is illegal" is a bit of a tautology don't you think?
Absolutely. And that appears to be the context in which Laurent was using it. carbocation compared selling a sports car in a jurisdiction with a low speed limit to selling gambling software in a jurisdiction where gambling is illegal. Laurent replied that drivers of the sports car could still obey the law, while users of the gambling software would always be disobeying that jurisdiction's laws.
I'm not sure I find the argument all that compelling, but it seems to me that people are arguing with a premise that is tautologically true.
> while users of the gambling software would always be disobeying that jurisdiction's laws
(1) Only if they are gambling with the gambling software. They could be using it for non-illegal gaming purposes (such as free online poker where no money is involved), for research, for education, etc. Gambling is illegal in this hypothetical jurisdiction, not software that allows one to gamble.
(2) Just as the Veyron can be produced in one jurisdiction and used elsewhere, gambling software can be produced in one jurisdiction and sold to people who then use it elsewhere. From the article, this is, indeed, what the software author claims to have done.
In other words, software that can be used for behavior that is illegal in one jurisdiction can quite possibly be used for legal purposes in that same jurisdiction (1) or for the same purpose in a jurisdiction where such behavior is legal (2).
Saying that you can't gamble in a place where gambling is illegal doesn't advance the discussion because nobody has yet disagreed with that explicitly or tacitly, as far as I can tell.
This is alarming. Gambling laws in the US are antiquated and intellectually dishonest. It is unfortunate the Wire Act of 1961 was written more to stop organized crime than it was to actually help regulate gambling. The language in this piece of legislation is so broad and poorly defined that states often reach conflicting conclusions.
One hopes this guy can afford suitable counsel and get out of this without too much trouble. I sincerely hope a future victory will set a more business-friendly precedent.
Many states are also running gambling monopolies, in the form of lotteries. As with the liquor monopolies that many of these same states run, competition isn't desired. Asking a politician to give up a revenue stream is a difficult task, though not impossible.
Most laws are intellectually dishonest. Creating a legal code that is so big that it's impossible to know what it is and thus, to be able follow it, is intellectually dishonest. Really, the fundamental basis of our legal system is intellectually dishonest.
Who else but the politicians and their servants? We can let them erode our position further and further and further, or we could also finally start putting a stop to that. As all of us know, respect is ultimately based on the fear for reprisals. Where is the respect?
Fucking hell, folks--these aren't some mystical cabal of people that go up to the country club and swirl scotch and pee on the poors. These people come home the same way we do, to families, dogs, etc. Don't try to treat them--and don't give them the credit--as being some mysterious malignant body.
As it is, the thing most politicians fear is losing re-election. That fear comes less from people scrutinizing their actions while in office, and more about getting funding for the campaign so they can churn out sound-bites that the general populous can digest and (falsely) feel like they are participating in the political process.
Yes they have families and dogs. But it's pretty much one group of people who are on corporate boards, in high-level appointed government positions, and working as lobbyists. Each person may rotate among all these areas, and most of them came up through the same prep schools and Ivy Leagues. These people have a lot of political influence.
For details, see the famous book Who Rules America, written by a sociologist who did a census of the people in all these positions and analyzed the results. Five or six editions have come out by now as he's continued his research and updated the results.
(Most elected politicians, meanwhile, just want to stay out of trouble and get reelected with minimum fuss, whatever that takes. Fortunately that gives grassroots organizations a way to pressure them.)
Politicians are the servants. Not of the general public, of course, but of the new aristocracy that has arisen in this country. Politicians now serve the interests of the ruling class, with the exception of minor parties.
Has it ever been different? At the moment that the US was founded, it was ruled by and for the landed aristocracy.
I'm pretty sure that if any of the "minor parties" that you mentioned got near having a share of power, they would by that point be similarly-corrupted, beyond repair.
When are people going to realize that Alex Jones is not crazy, and was shouting about all of this 15 years ago? It is sheer snobbery that has prevented a lot of people from understanding him.
> At the time of the raid, Stuart had about 20 clients, all of them outside the U.S. in Costa Rica, Panama, Australia, Jamaica, the UK, the Dominican Republic and elsewhere. Now he’s down to 10 clients.
Maybe this was the goal all along. Simply targeting this individual is enough to permanently damage his business. It might even cause others to have second thoughts about developing gambling software. Even if this doesn't end in a conviction the landscape of online gambling software will be altered.
$2.3M in cash and money orders? Isn't that a MASSIVE red flag that you are dealing with unscrupulous people? That's textbook money laundering.
It's alarming on the surface, but he HAD to know he was dealing with criminals with that volume of untraceable payments. I certainly don't think he should be facing criminal charges, but I can't imagine he's actually surprised.
Apparently designed in MS Word, minimal information, no product details (why not?), can't keep their own tagline straight (is it "International Software Systems" or "International Sportsbook Systems"?).
I hope it's not delving into ad hominem territory, but it's a shady website no doubt.
"Stuart had about 20 clients, all of them outside the U.S. in Costa Rica, Panama, Australia, Jamaica, the UK, the Dominican Republic and elsewhere."
Sending Cashier's Checks by mail is pretty much what you'd want to do in the above cases. Visa and MasterCard 6K-40K transactions aren't really going to work out for you too well coming into your PayPal account, especially from the above Countries.
You've removed all fees, all bullshit, and most of the fraud by accepting legitimate bank checks.
> That's textbook money laundering.
Money laundering is the process of concealing the source of money obtained by illicit means.
I don't think he concealed anything, nor was the money obtained illicitly. He licensed a software product.
I think the original post was saying that he (the sportsbook) was the launder for illicit money obtained by his customers. In other words: they were using him (knowingly or unknowingly) to "clean" their money.
"Isn't that a MASSIVE red flag that you are dealing with unscrupulous people?"
I used to think so, but there are legitimate and perfectly legal businesses that only accept cash or teller's checks. I recently dealt with a car shipping service that demanded cash (I was suspicious too, but my car is fine and the service was prompt). Some people don't trust banks; some come from countries where banks cannot be trusted.
There is no upper bound on legal cash transactions. We have cash for a reason, and people who pay in cash (even large sums of money) should not be assumed to be criminals (despite what tyrannical forces like the DEA tell you).
There are limitations on how much you can carry/fly/drive over the border without declaring. The limit is 10k. When you do declare it the IRS gets involved and they're going to question you about it.
First I would point out that the people he would be working with are businessmen like anyone; they don't twist their mustaches and have maniacal laughs.
If he was working with companies in Costa Rica then he was working with companies that are open to US citizens, which he knew because everyone does. That's why the gambling company scene in Costa Rica is so strong, it's like we like it in the US, but at a safe distance.
The idea that a supplier can be held accountable for the actions of the company they are supplying to though... well he would have to have been very closely embedded into the company for him to have had dealings with the payment processing for this to stand a real chance.
In the eyes of the law a wire transfer is considered cash, money orders are negotiable instruments. Probably copy and pasted from a court filing somewhere without realizing what it actually meant.
Maybe we're reading it wrong, but "cash" doesn't have to be hard bills, just in money that he actually received. If they had received wire transfers into a checking account it would be accurate to describe that as "cash".
Maybe I misread the article but I didn't get the sense that the $2.3M was in the last year. If the company has been operating for just over a dozen years that could be total revenue which given the type of software really isn't all that alarming.
If the company has been operating for over a dozen years, I'd expect to see product info on their website. Why is it practically empty? Kinda weird if you ask me.
A friend of mine works for a large private investment firm. He runs their very large Oracle databases. The webpage is a picture of a sailboat with the only text being the postal and email addresses to their various offices. That is their entire web presence.
Most non-web companies don't have a large web presence. Nothing weird about that.
You'd be surprised. I have dealt with a large number of specialized software vendors and very few have websites of any usefulness.
There are a lot of small shops out there selling one of a few packages that everyone in the industry (whatever industry it is) uses and they have been doing it for 20 years. It's a different world. They are frequently making millions selling desktop software that's not very effective and without any marketing budget.
It's hard since so many don't have websites, but think about blue collar service industris (mechanics, plumbers, car washes, etc). Here's a company that kills it selling web based software to auto glass replacement facilities. It looks like it is out of 1995:
When you work business-to-business in an industry with few players and mostly fixed relationships, you pretty much never get new clients through your website. Especially for service providers in this industry it's much more about your reputation and network. So it's not as strange as you would normally think when a company does not have a decent website, although it's clearly something that could be fixed without too much work.
(Also don't forget that any specifics you put out there is potentially new information to your competitors.)
Well, it does look like it was made with a WYSIWYG editor using Trident (MSHTML 8.00.6001.18828) for visual layout. With "what you see is what you get" can sometimes be "what you get is what you don't see".
My favorite is the anchor that contains an anchor that contains an anchor that contains an anchor. This happens twice for reasons that don't seem to exist since no link on the page apparently points to them.
I've known successful software companies with no websites, yet alone bare websites. Sometimes it works better to focus purely on building relationships and not to waste time on hoping potential customers will find you online.
It's prosecutions like this one that make businesses wary of providing too much of a paper trail. There are plenty of cases of unjust indictments of innocent people by ruthless and ambitious federal prosecutors, and it is not suspicious that someone distrubuting this kind of software would want to be careful.
This is aside from the fact that gambling is a victimless crime, and it is only made illegal to allow a government monopoly over it.
Not necessarily; what is a Paypal payment? "Money Order" implies simply a monetary transfer in some circles, similar to a Western Union/moneygram transaction.
It seems to me that this Assistant DA was trying to coerce this guy into breaking international law. I would think that some of these foreign countries have laws about hacking (installing back doors, secretly extracting user information, etc.). It could be argued that this Assistant DA could be charged with an attempted conspiracy to violate said international laws. I can imagine a scenario where he goes on vacation outside the US and discovers that there's an international warrant for his arrest.
No way would any country on that list dare cross the US. An international warrant for a US government employee? That shit would get canned faster than you can say State Department.
The irony of this is that unless you have solved the halting problem, how do you want to prove that a given piece of software does not do something illegal like facilitate gambling? They are called "general purpose computers" for a reason.
Your identity is becoming more of a liability than an asset. In the next iteration, guys like this and Kim Dotcom will only be known by pseudonymous online handles and accept payment in bitcoin.
What's the point of an anonymous receiving identity if there's a trail of where the bitcoins came from is visible as soon as you go to use it to pay for house/car/rent/colocation? I must be missing something about Bitcoin's usability for nefarious purposes.
> Seriously, if it wasn't illegal gambling where these people gambled I don't see a problem
That's not the case. What appears to have happened is the guy's software was sub-licensed or resold to a company that took bets from people living in the US (which is, until the US legalizes online gambling, illegal).
However, if you go by the Wired article then the Manhattan DA doesn't actually have any proof that the developer of this software knew this was going on. You can only be an accessory to a crime if you have knowledge of it: selling your gambling software to a company that you knew was running an illegal operation would be a crime. Selling it to a company that subsequently resells it to an illegal operation and doesn't tell you would not.
If you go by the Wired article what seems to have happened is the developer in question had no knowledge of this, but received some terrible legal advice advising him to sign the plea bargain.
"Seriously, if it wasn't illegal gambling where these people gambled I don't see a problem."
Here's the problem: New York State runs a gambling enterprise, the lottery. The lottery is a source of revenue for the state, and it is a sneaky way to tax the poor (who are the most likely to buy lottery tickets, despite the poor odds). New York State does not want competition; they already have to put up with reservation casinos, the lotteries of neighboring states, Atlantic City, etc. The last thing they want is another gambling operation that is more exciting and has a higher profit potential.
This guy made the critical mistake of treating his customers with respect. I would have turned state's witness, installed the backdoor, and kept cashing the checks. Don Aronow would approve.
And STILL be prosecuted for 2nd and 4th degree money laundering, and STILL need to extract dirt on all your clients (which your other clients would possibly find out and help you accidentally die in a plane crash).
In cases like this I have always wondered if you could ask the judge/jury if they would also shut down Dell, Microsoft, Apple etc. as the wares from these companies are also used?
"Under plea agreement discussions that were never finalized by a judge, and that occurred in February 2011 before Stuart was charged with any crime, Stuart says New York authorities pressed him to install a backdoor in his software and distribute it to clients so the data of gamblers and bookmakers could be retrieved."
I hope the Bitcoin community is paying attention to this.
When balancing my dislike for furthering the practice of gambling with my dislike for the increasingly excessive use of force by the politicians and their servants, I think I should still side with the software developer. Since the politicians and their servants seem to be trying to intimidate our side, I would be for a solution in which we start intimidating back. Otherwise, our own position will keep eroding until nothing's left.
Do the machines the software ran also had windows or linux ... and the sites were listed in google. i see a lot of fat amicus briefs flooding the courts.
if gambling were legal, then corporations would be fairer than the government run lotteries on every street corner's store. it's not about legal or illegal gambling. it's about protecting their income streams.
Even though I am not particularly interested in interfering with how the politicians and their servants are taking the general populace for a ride -- since they may have indeed asked for it -- the politicians and their servants should know their limits and they should know when to stop. If we do not show the courage and the good sense to retaliate, they will simply extend their intolerable excesses over our profession too.
If the premise of Harvey Silverglate's book, "Three Felonies A Day: How the Feds Target the Innocent,"[0] is correct, then this is quite plausible. A key message from Silverglate's book is that because it is impossible to know if one's behavior is lawful[1], it is impossible to be sure that one operates within the contours of the law at all times. Thus, if you would be convenient to nail not because of anything in particular that you've done but because you can probably be convinced to testify against someone higher up in their chain, beware.
From my recollection of this book, this was a tactic more typically used at the federal level, so either the tactic is spreading or my recollection of its state-level use is just dim.
EDIT: In response to all of the other comments pointing out other absurd choices the authorities could make (they could prosecute Pepsi since they sell soda to these operations, etc), Silverglate's book provides a nice framework for why this programmer would be targeted and not Pepsi. He's not the fodder, but he does have meaningful access to the fodder (whereas Pepsi surely does not).
[0] = http://www.amazon.com/Three-Felonies-Day-Target-Innocent/dp/...
[1] = In contrast, it's often quite possible to know when one's behavior is unlawful.