Government Generously Hands Back Two-Thirds Of The $626,000 It Stole From Two Men Driving Through Missouri
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A case out of Missouri is highlighting yet again the stupidity and vindictiveness that defines civil asset forfeiture. In January 2017, law enforcement seized $626,000 from two men as they passed through the state on their way to California. According to the state highway patrol, the men presented contradictory stories about their origin, destination, and the plans for the money found during the traffic stop.The complaint filed against the money made a lot of claims about the government's suspicions this was money destined for drug purchases. Supposedly evidence was recovered from seized phones suggested the two men were involved in drug trafficking, utilizing a third person's money. Despite all of this evidence, prosecutors never went after the men. They only went after the money.Records searches of both state and federal courts did not identify any criminal charges against Li, Peng or Huang. Even the speeding that predicated the stop (in which a drug dog "alerted" on the rental vehicle that contained no drugs) went unprosecuted.This is where the stupid begins: alleged drug dealers allowed to continue their drug dealing by state and federal agencies more interested in the men's cash.But it gets stupider. This was offered up in the complaint against the seized money as evidence of the men's criminal activities.Authorities noted in the complaint he lived “9 houses” away from the site of a residence where drug transactions were occurring and a contact in his phone was recently the subject of a civil forfeiture action. That's some mighty fine evidence. If you happen to live in the same neighborhood as a known criminal, I guess you're a criminal, too. That's just how society works, ladies and gentlemen. Move to a better neighborhood if you don't want to be lumped in with your worst neighbors.The other part is stupid, too. According to this line of thought, if law enforcement has stolen cash and property from someone in your Contacts list, you must be a criminal. Only criminals would associate with people whose stuff has been taken by the government but have never been convicted of criminal activity.Also apparently suspicious: traveling and not attempting to avoid mandated IRS reporting.Peng had a number of bank transactions the complaint states were “highly unusual” including multiple deposits and wire transactions for about $100,000 each. Financial records also showed three trips between Chicago and California and one from Chicago to New York in a three-month period between November 2016 and January 2017. You just can't win. Keep deposits too low (under $10,000) and the federal government thinks you're engaged in structuring. Keep them well above the mandatory reporting mark and you're probably a drug dealer.It appears the agencies involved in this seizure didn't think they had enough real evidence to follow through on this forfeiture. More than two years after the $626,000 was seized, the government is returning it to its rightful owners. That's where the vindictiveness comes in. The government hasn't won a criminal or civil case against any of the people involved, but it's still going to keep a third of the cash just because.U.S. District Attorney for Western Missouri Tim Garrison, in a settlement agreement dated April 25, wrote the government will return almost $418,000 to claimant Lu Li, of Chicago, and will keep almost $209,000. Even when the government loses, it still wins. One-third of $626,000 remains in the hands of a government that couldn't prove anything it alleged, even in a civil case where the standard of proof is considerably lower.In the end, we have three people short $200,000 and a government that can't competently prosecute people or their money, even when the latter can't defend itself in civil forfeiture litigation. [waves American flag with one blue stripe frantically while humming 'The Ballad of the Green Berets" for some reason]
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posted at: 12:00am on 22-May-2019
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US Magistrate Judge Provides The Template To End Copyright Trolling With Ruling Against Strike 3
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While we've been busily pointing out that the practice of copyright trolling is a plague across the globe, it seems there is something of a backlash beginning to build. For far too long, copyright trolls have bent the court system to their business model, with discovery requests and subpoenas allowing them to unmask internet service account holders on the basis of IP addresses, and then using that information to send settlement/threat letters to avoid trials altogether. Put simply, that is the business model of the copyright troll. The backlash against it has been multi-pronged. Canada has begun restricting what types of threat letters trolls can force ISPs to send to their customers, for instance. Elsewhere, Swedish ISPs have have led something of a legislative crusade against copyright trolls. In the US, some courts are finally realizing how bad IP addresses are as evidence, pushing trolls to get something better.But the key to ending the plague of copyright trolling has probably been best outlined in a recent decision by a US Magistrate Judge against Strike 3 Holdings, in which the judge argues using Strike 3's own statistical analysis that it is abusing the court system to the detriment of innocent people.Judge Orenstein denied motions for expedited discovery in thirteen cases. This means that the adult video company can’t get a subpoena to identify the alleged pirates. While we have incidentally seen similar decisions, the motivation, in this case, is worth highlighting. In his order, the Judge writes that allowing Strike 3 to obtain the identities of the account holders creates a risk.Specifically, it will put Strike 3 “in a position to effectively coerce the identified subscribers into paying thousands of dollars to settle claims that may or may not have merit, so as to avoid either the cost of litigation or the embarrassment of being sued for using unlawful means to view adult material.” In other words, the Judge is noting that Strike 3's copyright troll business model is, by nature, one that should disallow it from the kind of unmasking of account holders it so desperately needs to do to make any of this work. Essentially, granting these motions in favor of Strike 3 would have the court endorsing, if not actively participating in, the systematic extraction of money from people based on fear and embarrassment. Whatever that is, it sure ain't justice.The court doesn't stop there, however. The order continues by noting that granting the discovery of account information would almost certainly not result in Strike 3 actually bringing any cases to trial. Trial proceedings are supposed to be the point of such subpoenas, but Strike 3's own statistics prove it's not after trials at all.Since 2017, Strike 3 has filed 276 cases in the district, but zero have gone to trial.Of the 143 cases that were resolved in the district, 49 resulted in a settlement and 94 were voluntarily dismissed. The latter number includes 50 cases where Strike 3 wasn’t confident that the defendant is the infringer. In other words, people who are likely wrongfully accused. This means that in one-third of the resolved cases, Strike 3 has likely targeted the wrong person. This number is “alarmingly high,” according to the Magistrate Judge. “Strike 3 acknowledges that in many cases, the ‘Doe’ it has sued – that is, the subscriber – will prove to be someone other than the person who engaged in the allegedly unlawful conduct the Complaint describes,” the order reads. “And as it has now revealed in response to my inquiry, the proportion of such unprovable cases is alarmingly high,” Judge Orenstein adds. None of this is surprising to readers here, of course. This is how Strike 3 operates. The entire business model relies on a scattershot approach to threat letters, in which some percentage will comply and pay out of pure fear. The problem is and has always been that too many courts don't actually consider this fact when granting subpoenas to unmask account holders. Here, the court manages to put that thought into its decision.And, as a result of these "alarming" statistics, the judge has denied the motion to unmask the account holders in these cases. It's not exaggerating to say that if all, or even most, courts took the same route as this one, copyright trolling as a business model would completely fall apart.And that would be a very good thing.
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posted at: 12:00am on 22-May-2019
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EU Blocks 'Brexit Beer' Trademark, First As 'Offensive', Then As Non-Distinctive
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Brexit, as most of you will know, is still a full on mess. And, frankly, it's been a mess since the historic vote was taken and the British public rode a wave of nationalism draped in false promises to decide to economically scuttle their own country. In the nearly three years since, the British government has managed to put on an impressive performance piece on dysfunctional government, managing to refuse to agree on how to actually implement the will of their own people.At the same time that all of this has been going on, some opportunistic folks have been attempting to cash in on the Brexit story by trademarking the term, without even having a plan for how to use those marks. As we've pointed out in past posts, this sort of attempt to cash in is fully annoying, but not illegal. Which makes it sort of strange to watch the EU throw everything against the wall just to see what's sticky enough to deny a UK brewer his trademark for Brexit Beer.Upon first reviewing the application, the EU's IPO denied it on the insane grounds that the term "Brexit" is offensive.The European Union Intellectual Property Office (Euipo) denied a trademark for a ‘Brexit’ energy beverage back in 2016 after ruling the term was too ‘offensive’ to put on a can. An official had felt ‘citizens across the EU would be deeply offended’ and it would ‘undermine the weight of an expression denoting a seminal moment in the history of the European Union.’ The two men that owned the brewery were understandably confused when told they couldn't have a trademark because a term thrown around their own country with reckless abandon was too offensive. It sure looked for all the world like the EU simply didn't want to put its stamp of approval on the term "Brexit" due to its own political distaste for it. That sure makes more sense than the odd claim that 'Brexit' is going to offend people if given trademark status.So the brewery appealed... and was denied again. Only this time, the excuse was that the term "Brexit" was not distinctive.This time the Grand Board ruled the word ‘Brexit’ was not ‘distinctive’ enough rather than being offensive, which it rejected. It ruled in its final judgement: ‘The term “Brexit” denotes a sovereign political decision, taken legally and has no negative moral connotations; it is not a provocation or incitement to crime or disorder. But how does this make any more sense? As we've said, it's annoying when corporate interests attempt to cash in on pop and political culture with trademark law, but it's not against trademark law to do so. And a "Brexit Beer" certainly would be distinctive in the alcohol industry. The craft beer industry in particular has made an industry culture out of playfully referencing all sorts of things with their names and labels. I could see all kinds of creative ways for a "Brexit Beer" to be distinctive.Again, this has the look and feel of the EU making these decisions for political reasons outside the purpose of trademark law. While we don't spend much effort around here arguing for more trademarks, it's worth pointing out when government bodies reject those trademarks improperly as well.
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posted at: 12:00am on 21-May-2019
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ICE Tops Its Old Record, Spends Another $820,000 On Cellphone-Cracking Tools
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As consecutive heads of the FBI have whined about the general public's increasing ability to keep their devices and personal data secure with encryption, a number of companies have offered tools that make this a moot point. Grayshift -- the manufacturer of phone-cracking tool GrayKey -- has been selling hundreds of thousands of dollars-worth of devices to other federal agencies not so insistent the only solution is backdoored encryption.ICE is one of these agencies. It led all federal agencies in phone-cracking expenditures in 2018. It spent $384,000 on these tools last year. It wasn't just ICE. Other agencies like the DEA and [checks notes] the Food and Drug Administration have also purchased these devices. But ICE led the pack, most likely because ICE -- along with DHS counterpart CBP -- are engaging in more suspicionless, warrantless device searches than ever.When you don't have a warrant or consent, a third-party tool that can undermine device encryption is the next best thing. ICE must have a lot of phones to search -- or plans on amping up its search count -- because it's more than doubled its spending on GrayKey devices alone. Thomas Brewster of Forbes has more details.The U.S. Immigration and Customs Enforcement (ICE) splurged $820,000 on tech made by Grayshift. The Atlanta-based company makes the GrayKey, previously described as the world's best iPhone hacking tech for police and intelligence agents, allowing them to break passcodes and retrieve information from inside Apple devices.The contract, signed just last week, takes the immigration department's spend with the company to over $1.2 million, following a $384,000 Grayshift deal last year. That's the most spent on the superpowered iPhone hacking service by any government department, local or federal, looking across public records. The deal also marks Grayshift's biggest publicly known contract to date, according to a federal procurement database and state-level records. Its previous biggest, of $484,000, was with the U.S. Secret Service. Maybe ICE just didn't want the Secret Service to top the list of encryption-breaking expenditures for this fiscal year. Or, more likely, it's seizing devices at a record pace and can't keep up with the rising tide of locked phones it's created.The problem with this isn't that the government has access to devices like this. It's that ICE (and CBP) are operating in a super-gray area, legally-speaking. While courts have tended to allow warrantless searches under the border exception, the agencies themselves have only made this worse by refusing to enact meaningful guidelines that would curb abuses and careless handling of peoples' devices and data. They've created a "wild west" atmosphere every place someone could cross a border, which includes a number of inland international airports.Tools that make it easier for the government to access peoples' papers and communications without a warrant isn't good news for anyone. It's a safe bet that if the judicial and political climate doesn't change, 2020 will bring another record ICE expenditure next year.
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posted at: 12:00am on 21-May-2019
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