Second Circuit finds sentencing enhancement only applicable with proof defendant knowingly placed CP in shared folder

The Second Circuit recently held that a two-level enhancement for distribution of child pornography can only be applied if the defendant "knowingly plac[ed] child pornography files in a peer-to-peer sharing folder." United States v. Reed, No. 11-4820 (2d Cir. 2013).

Under Section 2G2.2(b)(3), the Sentencing Guidelines allow a five-level enhancement for distribution "for the receipt, or expectation of receipt, of a thing of value, but not for pecuniary gain." Otherwise, a two-level enhancement applies. Under Second Circuit law, however, a knowledge requirement exists:

[T]he defendant must know that depositing files into the folder will make the files available to others. Indeed, we observed that the record in Reingold made "plain that [defendant] . . . knew from the start that distribution was a necessary condition of receipt . . . and, with that knowledge, took deliberate and purposeful actions to effect that distribution."

Because the district court did not determine if the defendant shared files knowingly, they vacated the sentence and remanded it for further proceedings.

We acknowledge that there is evidence in the record that Reed was a sophisticated and long-time computer user. While these facts arguably could support an inference that Reed knew he was placing files in a peer-to-peer sharing folder, the district court did not make such a finding, as Reingold requires.

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2nd Cir. vacates CP producer's penis measurement sentencing condition imposed for failing to give notice of move

In 2001, Alabama resident David McLaurin was convicted of producing child pornography and sentenced to ten years in prison. Most of the time was suspended, but he later served more time for failing to notify the state when he moved to a different county. He moved to Vermont in 2011, notified the authorities of the move, but he did not fill out the proper paperwork which violated the Sex Offender Registration and Notification Act.

McLaurin was found "unlikely to reoffend again" but was sentenced to prison and supervised release for the paperwork issue. A part of his supervised release included "plethysmograph examinations." The procedure "involves placing a pressure-sensitive device around a man’s penis, presenting him with an array of sexually stimulating images, and determining his level of sexual attraction by measuring minute changes in his erectile responses." It may or may not first require the subject to masturbate in order to get a baseline. Even better - the test was designed by the Czechoslovakian government "to identify and 'cure' homosexuals."

Before the Second Circuit, McLaurin argued that the test was "unnecessary, invasive, and unrelated to the sentencing factors." The government argued that "the size of the erection is ... of interest to government officials because it ostensibly correlates with the extent to which the subject continues to be aroused by the pornographic images."

The appeals court, noting that "[a] person, even if convicted of a crime, retains his humanity," held that the procedure violates McLaurin's rights, vacated the condition, and remanded the case to district court. Here's an excerpted outline of their reasoning:

• The condition of supervised release at issue is a sufficiently serious invasion of liberty such that it could be justified only if it is narrowly tailored to serve a compelling government interest.... “[[T]]here is a line at which the government must stop. Penile plethysmography testing crosses it."
• In other words, the Government has made no showing that this exceedingly intrusive procedure has any therapeutic benefit, and none is apparent to us.
• The procedure inflicts the obviously substantial humiliation of having the size and rigidity of one’s penis measured and monitored by the government under the threat of reincarceration for a failure to fully cooperate.
• The goal of correctional treatment during supervised release is properly directed at conduct, not at daydreaming.
• The testing could not help to protect the public unless the results were used to justify further detention or more restrictive conditions of release. But that could not occur because McLaurin had already received a fixed term of incarceration followed by a fixed term of supervised release, neither of which could be altered by 2 a poor test score. 
• [W]e also find it odd that, to deter a person from committing sexual crimes, the Government would use a procedure designed to arouse and excite a person with depictions of sexual conduct closely related to the sexual crime of conviction.
• We fail to see any reasonable connection between this defendant, his conviction more than a decade ago, his failure to fill out paperwork, and the government-mandated measurement of his penis.

The case is United States v. McLaurin, No. 12-3514 (2d Cir. 2013).

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2nd Circuit reverses decision to hold defendant jointly and severally liable for child pornography victim's losses

In United States v. Lundquist, No. 11-5379 (2d Cir. 2013), the Second Circuit held that a child pornography possessor could not be held jointly and severally liable for harm to the victim.

Lundquist was convicted of receipt and possession of child pornography. Among the images in his possession was one of the "Amy" series. Amy was victimized by her uncle and has sought for years to obtain restitution from those who continue to download images of her. Her total damages have been calculated at $3,381,159.

Courts have debated many issues regarding restitution under the federal child pornography statutory scheme, including whether proximate cause is required and how the restitution is calculated. Some jurisdictions hold possessors jointly and severally liable (in this case, meaning they can be held liable for the entire amount of damages) while others assess damages at only a fraction of the total (such as dividing it by the total number of defendants convicted for possessing images of the same victim).

In Lundquist, the district court held that the defendant should be ordered to pay the full amount of Amy's losses. The Second Circuit, however, found that the defendant was not the cause of "all of [Amy's] losses" as the $3 million is so high "primarily because there are so many people viewing her images."

The appeals court, however, acknowledged the benefits of joint and several liability, but suggested instead bringing a civil suit rather than seeking mandatory restitution.

We understand, as a policy matter, why joint and several liability is an appealing option in this type of case. Joint and several liability would permit the victims of child pornography to collect their full losses from any well-heeled defendant, rather than require them to pursue defendants who may be, or later become, insolvent. Such an approach would also place the onus on guilty defendants to seek contribution from each other, rather than require the innocent victims to request restitution from each defendant.

We sympathize with these policy arguments and acknowledge that joint and several liability might be appropriate if Amy had brought a civil tort action against those who downloaded images of her abuse.

The Second Circuit also held that several types of losses could not be included in the total calculation. First, "Lundquist cannot be ordered to make restitution for harm that Amy's uncle's conduct proximately caused." Also, because the defendant obtained the images of Amy in 2010, he could not be held liable for therapy costs "incurred in 2009 or earlier."

Read more about restitution for Amy in previous Cybercrime Review posts.

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Second Circuit denies en banc review in CP case; Chief Judge dissents with six arguments for review

Early last month, the Second Circuit denied en banc review in United States v. Broxmeyer (original case, en banc denial). Second Circuit Chief Judge Jacobs had dissented in the original (re-)appeal and also now dissented in the denial of en banc review.

The case involved a high school coach convicted of possessing, producing, and attempting to produce child pornography, and transporting a minor across state lines with the intent to engage in criminal sexual activity. For some time, he harassed one of the students on his hockey team asking for sexually explicit images of the girl. Ultimately, dozens of such images of adolescent females were found on the defendant's computers. The defendant was also accused of raping several of his students.

The chief's arguments are in the least at least interesting to read. I won't belabor the background if for no other reason than the lack of importance of these arguments given the procedural posture.

• The district court piled on enhancements under the United States Sentencing Guidelines ("U.S.S.G." or "Guidelines") that were arguably applicable to this case only in a hyper-technical (almost perverse) way. For example, the sentence was enhanced for use of a minor to produce child pornography because the 17-year old photographed herself. It cannot be procedurally reasonable to apply enhancements when the conduct giving rise to those enhancements does not alter the "evil of the offense." United States v. Broxmeyer (Broxmeyer II), 699 F.3d 265, 300 (2d Cir. 2012) (Jacobs, J., dissenting).

• The majority opinion holds that two instances suffice to form a "pattern" of sexual misconduct, and that one such instance can be the offense of conviction itself. Id. at 285. The Guidelines do allow for the pattern to emerge by counting an act that "occurred during the course of the instant offense," U.S.S.G. § 4B1.5 cmt. n.4(B)(ii), but it would seem a step beyond (and a tautology) to discern a "pattern"—with a severe impact on sentencing—based on adding a single instance to the conduct underlying the conviction.

• I dissented because the offense of conviction cannot justify a sentence that exceeds the statutory minimum of 15 years. The majority disagreed: "This is not a case in which a defendant succumbed to temptation on one occasion to use one girl in an attempt to produce one image of child pornography, conduct that would nevertheless have required a 15-year sentence." Broxmeyer II, 699 F.3d at 292. The natural reading of this language is to reserve the mandatory minimum for borderline offenses, and thereby altogether foreclose meaningful review for substantive reasonableness for all but the least culpable instances.

• Compared to cases with similar facts, Broxmeyer's sentence is disproportionately longer. See, e.g., United States v. Puglisi, 458 F. App'x 31 (2d Cir. 2012) (affirming sentence of fifteen years where defendant had sexual relationship with sixteen-year-old girl and solicited lewd pictures of her via text message). Moreover, crimes far worse involving children much younger have resulted in sentences significantly shorter. See United States v. Beardsley, 691 F.3d 252 (2d Cir. 2012) (reducing fifteen year sentence for receiving and possessing child pornography); United States v. Dorvee, 616 F.3d 174 (2d Cir. 2010) (vacating a twenty-year sentence as substantively unreasonable where defendant possessed thousands of images of child pornography and attempted to meet in person with someone he thought was a fourteen-year-old boy); United States v. Pulsifer, 469 F. App'x 41 (2d Cir. 2012) (affirming 121-month sentence for distributing child pornography). Enforcing this punishment would therefore impair the purpose and consistency of sentencing. As my dissent points out, the Guidelines range arrived at in this case yielded the same sentence (life) imposed on Jeffrey Dahmer, who killed people, and ate them. Broxmeyer II, 699 F.3d at 303 (Jacobs, J., dissenting).

• The offense of conviction for which Broxmeyer was sentenced was a single instance of attempted sexting. In explaining its reasoning at the resentencing, the district court did not rely on any specific conduct underlying the convictions at issue here. Instead, the district court leaned on Broxmeyer's "extensive history of sexually abusing children," (Resentencing Tr., 24, Dec. 22, 2010)— conduct for which Broxmeyer was not convicted in this case. Thus the district court and the majority opinion decouple the sentence from the offense of conviction and premise a 30-year sentence on a sort of comprehensive moral accounting. See Broxmeyer II, 699 F.3d at 298 (Jacobs, J., dissenting).

• The majority opinion allows a federal court to inflict punishment overwhelmingly on account of conduct that would be purely state offenses. It is not the role of the federal courts to exact punishment for conduct that has escaped state prosecution or that (it is thought) the state has punished inadequately, and thereby augment federal sentencing policy with a bit of Dexter.

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Second Circuit reverses restitution award in CP case, explains proper formula for calculating the amount

In United States v. Hagerman, No. 11-3421-cr (2d Cir. 2012), the Second Circuit reversed and remanded an award of restitution to "Vicky", a victim of child pornography. The defendant was ordered to pay the remaining balance of Vicky's damages, but the Second Court found that he was only liable for the amount portioned to him after dividing the total damages by the total number of convicted defendants.

The defendant had been convicted of receipt and possession of child pornography and was sentenced to 96 months in prison, a life term of supervised release, and a $200 special assessment. Additionally, finding that the defendant was jointly and severally liable Vicky, the district court ordered him to pay restitution of $975,917.64. On appeal, the defendant make multiple objections with regard to his sentence and the restitution order.

The Second Circuit is one of the majority circuits which holds that a defendant must have proximately caused the harm to the victim in order to be ordered to pay restitution (read more about this issue and the circuit split here). The court found that standard to be met here as:

Vicky had actual knowledge of Hagerman's offense conduct as her representative had informed her of this action, and that her knowledge that Hagerman was among those who had downloaded her picture had caused her actual and ongoing psychological harm, as demonstrated in her victim impact statement and psychological evaluations.

However, where the Second disagreed with the trial court was in the amount of the damages. The total harm alleged to have been caused to Vicky is $1,224,697.04. A total of $248,779.40 has been collected from other defendants, "leaving $975,917.65 unpaid and recoverable." The district court found the defendant liable for the entire amount of the remaining damages despite precedent holding that joint and several liability should not apply in this situation.

The correct calculation, the Second Circuit determined, was to divide the entire amount of damages by the number of defendants who have been "successfully prosecuted" for possessing the images of Vicky. Thus, the defendant should have been ordered to pay restitution in the amount of $8,388.31 (which is $1,224,697.04 divided by 146 (the number of convicted defendants)).

Of course, the difficulty in imposing such a formula is that there is no way to know how many defendants there will be when the first case is decided. Thus, the calculation plays out in a weird way throughout the process. The first defendant would be liable for the entire amount, the second for $612,348.52, and the third for $408,232.35. Suppose 500 defendants are ultimately convicted - number 500 will only be liable for $2,449.39. However, victims cannot recover more than 100% of their injuries. Thus, if the first defendant is able to pay the entire amount, no future defendant would be ordered to pay any money.

To you non-lawyer folks, do know that an award of restitution is not to be considered a punishment for committing a crime; rather, the amount is intended to "make them whole" - that is to provide the financial resources necessary to put the victim in the same position as if the injury had not happened, similar to a tort lawsuit after a car wreck.

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Hushmail provides unencrypted e-mails to feds; practice raises interesting legal questions

In a Second Circuit case (United States v. Gonzalez, 686 F.3d 122 (2d Cir. 2012)) released earlier this year, evidence was presented at trial that had been e-mailed through Hushmail, a secure e-mail service used by "millions of people and thousands of businesses." Hushmail's website claims that they "encrypt your message automatically before it is sent, and then restore it back to its original form when the recipient reads it."

The issue that immediately came to my mind was the fact that Hushmail provided not only the communications but they were able to unencrypt them first. Here's the court's description of the evidence:

The government also introduced into evidence numerous emails sent from the address "biotechresearch@hush.com" — which Gonzalez admitted was his — through "Hushmail," an encrypted email service provider that encoded email messages, permitting them to be accessed and read only by someone who had the encryption key. The emails introduced at trial by the government, decoded by Hushmail, included the following..."

This isn't the first time Hushmail has done this. In 2007, Threat Level explained the security issues and how Hushmail is able to provide an unencrypted copy of a user's e-mails.

In recent years, several courts have evaluated whether the government can force an individual to provide an encryption key for electronic files. Courts have ruled on both sides of this popular Fifth Amendment issue. Perhaps an interesting extension of that debate is whether a person's agent (that word choice may be a stretch) - their e-mail provider - can be forced to provide an unencrypted copy of e-mails or whether they may only provide the scrambled versions. Another interesting issue is how we would define communications required to be disclosed under provisions of the Stored Communications Act.

Hush Communications' CEO, Ben Cutler, responded to my inquiry about their disclosure policy:

Our policy is to only release user information if we receive an order enforceable in British Columbia Canada requiring that we do so. British Columbia, Canada is the jurisdiction where our servers and operations are located. The order must be for a specific user account. In the case where authorities in the US are seeking information on one of our users they would have to make an MLAT request to the Canadian Department of Justice, which if successful would result in an enforceable order being issued here in Canada.

As may be obvious, I don't really claim to have answers to these issues, but I feel they are interesting to think about. Please feel free to comment below with your thoughts.

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Second circuit vacates CP conviction after officers violate terms of search warrant

In United States v. Voustianiouk, 2012 U.S. App. LEXIS 14317 (2d Cir. 2012), the Second Circuit reversed a motion to suppress and vacated the conviction and sentence after law enforcement searched the defendant's home in violation of the Fourth Amendment.

The agents obtained a search warrant to search a first floor apartment listed as the contact for an ISP, but when they arrived, they learned that the person listed on the account actually lived on the second floor. When they found the defendant, they showed him the search warrant and proceeded up the stairs to conduct the search. Thousands of images of child pornography were found in the apartment, and the defendant was subsequently found guilty of receipt and possession of child pornography.

On appeal, the defendant argued that the search violated the Fourth Amendment. The Second Circuit held that the search was a constitutional violation - no name was specified in the warrant - only an address, and thus no other location could properly have been searched without obtaining a new warrant. Officers had the defendant's name but intentionally concealed it from the magistrate because it was the location they were interested in searching.

Further, because the officers could have detained the defendant outside his home until a new warrant could be obtained but did not do so, the court ordered suppression of the evidence. 

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2nd Circuit holds theft of computer code not covered under National Stolen Property Act

The Second Circuit has joined a list of courts in finding that the National Stolen Property Act does not criminalize the theft of "purely intangible property." United States v. Aleynikov, 2012 U.S. App. LEXIS 7439 (2d Cir. 2012).

Aleynikov encrypted and uploaded 500,000 lines of code to a server on his last day of work before beginning a new job. He later downloaded the source code onto his home computer, was arrested nearly a month later, and was charged with violations of the CFAA and NSPA. The CFAA charge was dismissed because he "was authorized to access the Goldman computer and did not exceed the scope of his authorization."

The NSPA criminalizes when a person "transports, transmits, or transfers in interstate or foreign commerce any goods, wares, merchandise, securities or money, of the value of $5,000 or more, knowing the same to have been stolen, converted or taken by fraud." The statute does not define the terms, and the Second Circuit determined that requiring "the taking of a physical thing 'comports with the common-sense meaning of the statutory language.'" The conviction was reversed as the code is intangible and the theft did not "deprive its owner of its use."

The Tenth Circuit (finding that "purely intellectual property is not within the category" of the NSPA (United States v. Brown, 925 F.2d 1301, 1309 (10th Cir. 1991)), Seventh Circuit (codes are "information" and not "goods" (United States v. Stafford, 136 F.3d 1109 (7th Cir. 1998)), and the First Circuit (United States v. Martin, 228 F.3d 1 (1st Cir. 2000)) have held similarly that intangible property is not covered.

All of the circuits addressing the NSPA have dealt with intellectual property. In finding that property is essentially either physical or intellectual, the courts appear to have ignored the possibility of virtual property. Though the concept of property in virtual worlds hasn't become a hot topic in American courts, many European courts have recognized such rights (see, for example, this article detailing a Dutch conviction for theft of a virtual  world amulet and shield).

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Ban of adult pornography struck down by 2nd Circuit

One of the most common conditions of supervised release to be vacated on appeal is one related to a ban of pornography - adult or child. In United States v. Magner, 455 Fed. Appx. 131 (2nd Cir. 2012), the Second Circuit vacated and remanded a condition that prevented access to "any 'website depicting images of nude adults or minors.'" Noting that this could forbid access to, for example, "art museum websites," the appeals court found it too vague.

In a Sixth Circuit case (discussed here in a previous post), the court struck down a ban on any material that "depicts or alludes to sexual activity." The court found this ban could prevent access to advertising, certain parts of the Bible, music, and soap operas.

Courts have held, however, that it is proper to restrict access to adult pornography - especially in the context of child pornography convictions.

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Court awards nominal restitution under § 2259

In United States v. Aumais, 656 F.3d 147 (2d Cir. 2011), the Second Circuit reversed restitution in a child pornography possession case. Aumais had no connection to the victim, "Amy", in the pornography nor did she know of his existence. Amy's impact statement made no mention of Aumais and was written before he was arrested. The court held that "where the Victim Impact Statement and the psychological evaluation were drafted before the defendant was even arrested--or might as well have been-- ... the victim's loss was not proximately caused by a defendant's possession."

The same photos arose in a recent Ohio case, United States v. Klein, 2011 U.S. Dist. LEXIS 129761 (S.D. Ohio 2011). Like in Aumais, the 2008 Victim Impact Statement was presented although Klein was arrested in 2010. Here, the government argued that these "images are being found almost on a daily basis and it would be unreasonable for the victims to have to update their request for restitution daily." While the court reasoned that there was no probable cause to show calculable damages caused by Klein, the court awarded $5,000 in nominal damages which "are designed to vindicate legal rights 'without proof of actual injury.'"

The Klein court is not alone in finding that 18 U.S.C. § 2259 requires a nominal damage award were proximate cause does not exist. See United States v. Church, 701 F.Supp.2d 814 (W.D. Va. 2010). Read Aumais to better understand the § 2259 circuit split on whether proximate cause is required or whether general causation is allowed in issuing restitution.

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