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20 ALSO PRESENT
NONE
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22 Pursuant to Section 753 Title 28 United States Code,
the following transcript is certified to be an accurate
23 record as taken stenographically in the above-entitled
proceedings.
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s\ RALPH F. FLORIO
25 Official Court Reporter
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22 Stevenson is present.
8 suppression.
12 the defense and we'll engage in the more traditional back and
14 argument.
16 care and thought that went into the briefs. You have made it
21 that the Court could provide and the briefing was really
22 quite terrific. I also thank you the amicus brief. Are the
10 will takeover with respect to the wire fraud and even with a
16 Court, counsel.
21 when you sit down and you think about, how do I broach the
22 Court with oral argument and simply not regurgitated what the
21 in a secondary market.
23 never prosecute that and that's not what this case is about.
24 This case is about liars. They made that point I think seven
6 to hear if the government can come forward and say, you know,
7 there are other criminal cases that have been brought because
19 your Honor, this case is gone. Judge Wu, I think in the Drew
23 criminal act.
3 government will split up the 1030 and the 1343 wire fraud
13 the wire fraud statute. Well, your Honor, we know that there
17 Ticketsnow.
25 of those sites.
7 mean, they are joined at the hip if you will. If the CFAA
11 here. And the best example of that is, if the on-line ticket
8 creative indictment.
13 but they had to stretch it. But they're creative, they are
3 motion to dismiss.
6 used fancy buzz terms. I like them and some of them were
12 the indictment and their pleadings. But they turn around and
20 didn't know what that was and a lot of folks whom I'm talking
21 about this case asked about that squiggly line word. And
15 web page and they all had a credit card and they went and
16 they bought, they typed it in, and they got those tickets and
23 C-A-P-T-C-H-A.
24 Go ahead.
25 MR. RUSH: So, your Honor, our point really is, now
7 all comes back to the difficulty here. And the view of the
16 than it's even alleged that our clients made. But that's the
24 yet. And then ask them if they can proceed with this
3 move forward.
9 to ask you, but don't answer now is, they have a quote where
11 the word hack is used and broke is used, which are either,
22 participate as well.
13 Go ahead.
21 they lied, they lied, and they lied. And when they were
22 caught they lied some more. They talked about lying and they
2 identities. Each and every step of the way they lied. They
3 spoke of back doors and they lied about their identity when
9 It's that traditional fraud, your Honor. And each every step
10 of the way, it's the same thing that we see in court every
11 day.
15 and what did the code do, and how effective was this code,
19 Judge Wu decided the Drew case after the whole case came in
1 answer is no. Every day the United States brings cases that
4 reason that they spent all their briefs trying to get away
12 about that.
17 that's why we don't have questions about 1030 and that it's
24 that said, you can't buy tickets more than this many at a
25 time and they just had terms of service. That didn't work.
2 work. After they went from the phone systems to the computer
11 and they say you don't know what CAPTCHA is without terms of
13 you could get access. The fact of the matter is that you
14 don't need the term of service to know. You simply can't get
21 like Wu. I'm sorry, Drew, decided by Judge Wu. And Drew is
1 and we've put some of this in the indictment are very clear.
6 these restrictions.
8 they aren't present here. But Drew, your Honor, isn't the
13 terms of use.
17 well.
22 question right now. No, we will not concede that if you don't
4 judges in the civil context. And they too have said that you
6 contract-based restrictions.
13 you then put up a gate, barbed wire, a lock and use all of
14 that to keep people out, well when you break and enter that
15 gate and you take down barb wire and you get threw that, all
20 that system.
2 And as I said, you can even with contract there's been cases
7 Liebermann.
8 Mr. Kosto.
10 morning.
14 plus years that the fraud statute has been around, things
24 that this isn't a case about the purchases. It's a case about
2 something that the victims in this case would never have sold
11 Court cases that have addressed the fact that rights can be
20 rights.
8 you will, but were given those right. A hallmark of the right
11 valuable right that the court likely sees brought and it's
14 mall. Somebody else comes along, buys cookies and sells them
7 just like ETS did in the Alfrodieity case, the binding Third
22 value they could have turned them over and handed them to Mr.
5 concert. Well, I'm here for this concert, but I might come
19 huge football fan but it was a big game at the time. National
25 And people won't come back and they won't generate that
7 can make sure, they went to the venue entities, the artists
8 and the promoters. RAM can make sure that the tickets get in
19 But simply the right to decide who you sell to and who you do
8 but it's got the same deceit and lies put together with the
12 Let's delve down, now that we kind of know what we're talking
17 begin with the question that I asked you and find that
24 by OCR.
4 and no dots.
6 Honor.
13 that's not done here. The indictment doesn't allege that was
14 done here.
16 use in CAPTCHA, but that wasn't done here. What was done
17 here was a simple, almost like the kids memory game of match
18 what you saw before that turnover game; the computer program
11 earlier.
22 Not hack to get to the buy page. But as the computer acted
25 to order tickets.
7 it.
9 hear about lying and, etc. But also, you know, one of the
19 the name of the case that involved a trademark action and the
22 court said in that case, you may not like the fact that there
4 jury. And until Congress frames the issue of, and they
12 is way out in front of the law on this, your Honor. And our
16 to define it.
21 said point blank that, if the CFAA falls then the wire fraud
3 helix feeling about the two statutes and you've made the
6 would be dismissed.
8 about.
12 up or down. And the problem with they way that the drafted
14 because of the way the charges have been framed by the grand
21 into the wire fraud statutes in the sense that, you know, Mr.
24 get great media play, but the wire fraud statute doesn't stop
16 Honor. And since we're talking about the tickets again, they
2 and who knows what all else. If this were an RMG R-M-G case
16 There are other points at which the same argument can be made
8 through CAPTCHA, if you answer its correctly you get the buy
14 trial and the jury has struggled with some of the issues that
16 don't know what form the indictment would even look at that
19 Let's assume that in all candor the government was not able
20 to see its way clear to allege a flat out hack. And instead
11 your Alma Mater, won't know when the FBI may come knocking at
12 his door and so on. Because you have to have this confluence
8 to the law says, you know, you may not like that course of
4 And that your client's found a way to foil the efforts by the
11 the CFAA?
19 the struggle that I assume that all of us had here is, the
3 Or has it in fact modernized what may have been the way this
9 very phrases that we're discussing now, not applying the rule
12 papers and I'm not going to dwell on it. But the Supreme
17 you've seen cases that we've cited too. Some courts have done
18 it and said that the Rule of Lenity will apply in the civil
20 level.
25 here. And that is, I think one of the best illustrations of,
3 circular nature.
7 can't do that.
11 has come down and said that you can't buy tickets in bulk and
1 nutshell.
10 your Honor.
21 lawyers than are seated at counsel table now and there are
23 little note book with Power Point things and it would all be
7 three, I would get one from each side plus an expert that was
8 jointly chosen. Or I would get one from each side plus that
10 this in a day and then we would start talking about the law.
12 its too fat for words, when I'm thinking to myself where were
18 your larger article say, that the government has not alleged
22 all the other lying and deceit that you're saying is window
23 dressing.
7 hacking, right?
13 your Honor.
15 win my heart and then I say to him, well, what about this
16 wire fraud stuff? Supposing I throw out all the wire fraud
4 can't remember the case and that's why I have Andy who is a
5 lot smarter than I am. But there was one set of terms of
11 you don't even know what's there. But that's boiled down to
20 (RECESS TAKEN).
25 server, any anything that can store data on it and that falls
22 address that.
24 how I would suggest that our indictment does not charge that.
2 restrictions, yes.
16 The FBI does it. All police officers do it. He was allowed
5 unauthorized access.
12 whatever.
17 the reviewing court or the district court didn't toss out one
18 of the counts?
21 elements and ask whether those elements were met. They look
7 cases stand for the fact that courts have upheld prosecutions
3 end product. And they are both there and screaming at each
5 he or she is right.
7 criminal indictment?
10 and then your use was incorrect. The issue here is actually
11 the access itself. I would say that John and Salum are
13 cases but they are beyond that. We're not suggesting, your
18 scalping is legal.
12 hacking. The first word on the third line. " Wiseguys used
24 others, Wiseguys and its owners made more than $25 million in
1 events nationwide.".
13 hackers, their good guy hackers and the bad guy hackers, they
17 an example.
20 unauthorized access?
12 yes.
17 correct?
21 Honor.
5 products. Here, click on this link and this link and this
6 link. Please come use our products. That's what they want.
8 and your password you will get to also see your actual bank
22 you are committing breaking and entering and you are not
23 authorized to be there.
18 things. I was on trial just this last week and somebody was
9 individual case?
11 They told us when you can and can't access a computer. And
13 to be done to a computer.
18 in hand is authorized?
21 access itself is discussed, there has not been one case, not
22 one case that has said that a code based restriction beating
23 that doesn't fall under 1030. Not one case has held that
8 here.
17 challenges.
21 will have proofs that OCR was part of the technology that is
24 correct?
6 ways. Hack through the side of the bot. And they absolutely
10 address blocks.
15 about two ways which you can get around. You can figure out
19 its systems. The true kind of zeros and ones and you're
21 get through. Or you can put in the user name and you know
23 like that user name, your Honor. And then you start guessing
1 word and then another word. Maybe he uses his Dad's name or
2 his Mom's name or his dog's name and you just guess. And
14 would certainly not agree that just because they didn't drill
15 in through the side of the vault but they guess the vault
17 violation.
22 And they don't have any code-based. And it's only, you know,
24 service say, please don't buy more than four. I think then
6 about.
16 I'm assuming you're not talking about source code. You are
22 the contract.
25 know made you put in your DNA to check your age or put in a
1 lie detector test checking whether you were telling the truth
13 that computer.
18 holder names and addresses across the United States, for use
20 paragraph 31--
5 out. That you can't use the same card, for example, more than
12 who they are selling to and who they are not selling to that
17 correct?
3 complicit?
5 charged is the deception and the access. The access and the
8 this, right?
22 to given cards.
25 just get down and understand the scope of this. And to the
11 that they set up. Because these are the ones who set up the
13 directed.
19 you say that the way that the secondary market operates in
5 activities.
8 simply say, well, we can't charge the fraudsters who use the
18 going. But it's bigger than just Wiseguys, it's the market
19 isn't it?
18 not to just simply lie and take your way through the
22 It is not a criminalization--
24 to be--
1 five years.
19 and Yahoos of the world, Face Books of the world they use
9 quarter of one. Let's take our lunch break. And I will take
20 Chase Bank. And when you get on Chase's website and you
21 click on the accounts and you want to hack in, Chase doesn't
23 Assuming that you can read it you just type it in. So it's
1 devise--
4 computer. But my whole point was that they give you the
8 Honor.
11 the way in which they obtained and we allege this and we talk
12 about this was through trickery and sneakery they got that.
19 Honor.
21 (RECESS TAKEN).
23 seated.
24 Mr. Stanton.
6 third-party servers.
7 warrants and the seizures that took place here in this case.
16 that's in play here, other than what you would typically get
24 response in the case law that they cite, because here I think
11 of privacy such that you are aggrieved or else you don't have
16 proposition.
18 from the Ninth Circuit. That's the case United States v SDI
6 the Court what the test is or even apply it. But there is a
12 considerations.
21 put Ken Lowson in jail for what Wiseguys did. But Ken
3 And when you get into the case law and you look at how courts
7 building.
15 given what the indictment says. But what the case law makes
4 dispute. And the case law doesn't say that there is. It's a
8 dealing with three issues, two issues. The first issue is,
11 standard. And they make a big deal in their brief about the
12 fact that, well, these district court cases that hold that
1 entire accounts because you got the warrant under the FCA.
2 No case has held that. There simply is no case that has held
3 that.
7 McDara say the all records exception applies in this case and
19 activity.
22 do it-- no, Mr. Liebermann will do it. And he says, no, no,
23 no, don't worry about it. We've got this affidavit and it's
11 search warrant was still upheld; isn't that what you provide
25 let's be clear.
5 particularity requirements?
7 Honor. Because as one court has said, it's not really so much
17 have the warrant and the affidavit from those two cases. The
4 sending this email and that email. Well, what the government
7 application did.
11 the affidavit. But at the end of the day the rule is that if
23 scope of what was sought is much, much greater than the scope
2 cured? Are you saying that when they made their application,
12 the first search warrant here, it's 16 times and 14 pages the
2 applies, which it doesn't, the same thing. They say the all
8 That's it.
18 the extent that we're dealing with them, did not have
20 talk about some of the email accounts that were seized. For
7 Mr. Lowson and Mr. Kirsch had some of that, but Mr. Stevenson
8 did not.
11 they wanted to talk about our burden and what we've set
20 privacy.
21 Not only did they not, but I would suggest that the
7 is.
17 a standing.
6 Brian, people who are not defendants here. But they're also
7 servers at issue here. And these are not servers that have
14 out of Bulgaria.
6 here but he saw it fit to never come back or has not come
10 and--
14 first served on them. And they have not raised the issue of
15 standing until now. And that they did have-- when at the
17 subpoenas, right?
10 could have raised it. Your Honor, we suggest that one of the
11 reasons that they didn't raise it, is just like with respect
19 privacy.
22 that here that that wouldn't save this. Because these search
5 And let's talk about what the old system has and what the new
6 system has. Under the old system, which was used in this
12 that's going to have all this new material. And then we get
20 email account.
22 was?
3 that.
4 The new way. The search warrants now under the new
16 same. And there's the reason for that. And this goes to why
7 search for it. And of course I've got to lay forth the
8 probable cause.
13 crime with Hayden that you never knew about and you stumbled
15 know, warrant?
22 with-- not to grips, but has been adding the doctrine that
6 they just en banc reversed that theme. And said the Fourth
22 everything.
25 liked having warrants that said that the search warrant sent
11 detail about why this is the only way out. And then you get
12 it and then you minimize and you do whatever you want to.
15 intrusion.
12 Fourth Amendment is protected the old way and the new way--
13 how?
23 MAC (ph), we want every email account that Kenneth Lowson has
3 particularity.
24 record exceptions.
4 fact that it's on a server and the fact you've got this
6 Who should not be your agent. And yet there's no way to get
12 this.
16 they could sit at AOL and start rummaging through AOL, for
18 it will shut down AOL. I think that they get 20, 30, 50
20 there for five days per search warrant, per email account,
21 trying to figure out what the right emails are, would shut
22 down AOL. And that's why the compulsory process was put in
23 place.
7 all you know is that I made a call that day, you don't-- to
8 so and so. You don't know what we're talking about. You've
10 said, right?
14 conversation, right?
17 Amendment?
6 gotten all of that then that's a lot more-- all broader. But
7 we've said no, no, no, there's probable cause to believe that
12 email, then that would be one thing. But they give us the
18 we don't use the term, all records in there, and we don't set
19 fourth every single fact. And the courts have been very
11 The Third Circuit has now recognizing it. They didn't find in
22 I'm sorry. The AUSA has reviewed it and they say in their
23 reply brief DAs and AUSAs always review ones. It's not true.
4 And how in fact, before you got the material you had
18 tickets uses this. And the domain that they were using for
19 this was the exact domain that we were searching. And that's
24 believe that this is next one using this domain. And so that
10 information.
21 that.
1 it's complicated for the jury. But this is the digital under
3 mechanisms that are set forth and that are out there and how
8 this point we've also used an email by PS, by the way, that's
12 security mechanisms.
15 to AOL.
21 and that continues into the final one, in which we laid out
23 search of Apple.
5 criminal investigation.
7 Liebermann.
17 when you first got served with these you were supposed to
18 squawk. Was that the point you were making, Mr. Liebermann?
23 emails.
13 over and over again, that defendants Lowson and the other
11 that they've done that they didn't do. And when Mr.
12 Liebermann talks about old way new way and says, these were
13 done under the old way, no, they weren't. These were done in
16 that it was a typo. But the fact of the matter is that these
18 do it.
4 seize.
8 it. When they get the account they're getting a box. They
9 don't then offer the box into evidence. What they do and
10 what they did here is they crashed searched terms. They get
12 evidence they want. Now, are they looking for. They have
13 search terms. All of the things that they are looking for
14 they are particular. The fact that they tell the service
15 provider to give them the entire account does not mean that
20 into a building, for example, and search for a box and get
22 open the box you have to have probable cause to look in the
9 can.
15 are acceptable. But let's not pretend that the only option
20 say anything more than they did-- they tried to. They tried
7 brief and have a footnote that says, we'll cite more if the
9 weekly asserts that that's not true when it is-- it's Third
10 Circuit law for sure. And then they cite to these FCA cases
12 not.
15 McDara, the Court will find that what the judge in McDara
18 of the records.
6 back on October 12th at 10:30. And rather than have any more
7 give and take, I think this was a more discrete issue that
9 me; I will let you go. Thank you for your hard work today.
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