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Article posted Jan 09 2013, 6:10 AM Category: Big Brother/Orwellian Source: Techdirt Print

Developer Of Bookmaking Software Gets Full Kim Dotcom Treatment For 'Promoting Gambling'

by Mike Masnick

The government's war on online gambling is really ridiculous in a variety of ways. Initially, it was driven by a weird mix of moralist groups, backed by offline casinos who didn't want the competition -- all leading to a bill that effectively (through convoluted means) banned online gambling as a part of a law to protect our ports. The casinos are now regretting their initial support for this law, because they want to get into the online gambling world themselves. But the law is in place, and US (both federal and state) law enforcement has supported it and related laws with ridiculous fervor; arresting execs of off-shore gambling sites and even execs of financial institutions that provide payment systems for online gambling sites. As with the over-aggressive enforcement of copyright law, the Justice Department has also seized many websites, sometimes even seizing the wrong websites.

However, this latest story shows just how ridiculous some of these efforts are, and just how far they can go in creating chilling effects. It's the story of the arrest and criminal charges against Robert Stuart, his wife and his brother-in-law for the work they did for their company, Extension Software. The company provides infrastructure to companies that do sports bookmaking, but they were careful to only license the software to companies in countries where such things are legal.

For their troubles they got "the full Kim Dotcom treatment" according to a writeup in Wired:
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.
Yup. They sent in a SWAT team to deal with... a software developer. Because some companies who use his software might possibly have used it to allow gambling in New York (the state that's behind the charges against him). And the warrant itself is sealed, so he doesn't even know why. Then the story gets even worse. In typical law enforcement fashion, they pressured him into doing a plea deal, in which he would have been forced to install backdoor code into his software, and then hack into his own customers to retrieve information on their users any time law enforcement wanted it. He initially agreed to the plea bargain based on bad advice from what he calls "rent-a-lawyers" he found on the internet. However, before it could go before a judge, he wisely backed out.

The NY's DA has defended this effort claiming that it was all perfectly aboveboard and legal to send a SWAT team to threaten a software developer into hacking into his own customers' data for the sake of law enforcement:
Although Daniel R. Alonso, chief assistant in the Manhattan District Attorney’s Office, was reluctant to discuss the terms of the confidential plea agreement or how his office planned to implement them, he insisted there was nothing unlawful about what was proposed.

“The provision you have questioned is perfectly consistent with the obligations of all law enforcement officials to follow state and federal law to secure evidence of criminal conduct,” Alonso said in an e-mail statement. “The staff of the Manhattan District Attorney’s office involved in this case, both prosecutors and investigators, have behaved ethically and consistent with their obligation to seek justice in every case.”
Eighteen months went by... and then last fall he was criminally indicted -- though all of the original charges used in his initial threat had disappeared (because they were bogus) and all the NY DA could come up with was a single charge of "promoting gambling in the first degree." Yes, because he supplies software in places where it's completely legal.

If you think secondary liability issues are important (and I do!), this case should be a major concern. The guy here just developed some useful software and sold it where it was legal to do so. That should not lead to a SWAT team descending on your house, or facing criminal charges and possible jail time. Blame the users of the software if they broke the law, but nothing that these guys did involved "promoting gambling" in areas where it was illegal. It was about providing legal infrastructure (not promotional) software. The whole thing is a shame, and shows how law enforcement's aggressiveness in trying to show themselves as being "tough on crime" can have serious implications.

Stuart notes that he's lost a bunch of his customers since the indictment, which may destroy his business entirely. And this can only lead to greater concern for other software developers as well. If they license software for completely legal purposes, but the software is then used in commission of a crime, are they suddenly (1) going to be threatened at gunpoint to hack into their customers' accounts and (2) then charged on trumped up charges as well?

Robert Stuart Plea Agreement (PDF)

StuartIndictment BillofParticulars (PDF)

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