Blotter

12.05.13

Inside the ‘PayPal 14’ Trial

A long and secretive legal battle against a group of activists accused of attacking the e-commerce site in the name of WikiLeaks has finally neared its end.

A group of men and women with the collective Anonymous have pled guilty to charges of conspiring to disrupt access to the payment website PayPa in response to what they termed extra-legal censorship of WikiLeaks, most likely avoiding felonies.

The deal for the group, known as the PayPal 14, brings to a public conclusion a year of gagged settlement conferences. The July 2011 indictment of the 13 men and women (one case was handled separately) by the U.S. Department of Justice under the draconian Computer Fraud and Abuse Act for a four day online “sit-in” in December 2010 has been cited by activist and lawyers as a litmus test for civil rights in the digital age. The case has also been cited by the Obama administration to justify increasing appropriations to the FBI for cyber-security prosecutions.

The protest by Anonymous, dubbed “Operation Payback,” was in response to PayPal’s suspension of service to WikiLeaks, an online publisher of censored and suppressed material, which had then begun publishing diplomatic cables disclosed by a young Army intelligence analyst named Chelsea (then Bradley) Manning. Manning was recently convicted to 35 years in prison for 20 offenses, including one conviction under the Computer Fraud and Abuse for disclosing 116 diplomatic cables.

Under the deal announced Thursday, 11 of the thirteen defendants allocuted to a felony count under the Computer Fraud and Abuse Act or CFAA for an overt act of either “intentional damage to a protected computer” (normally punishable by a maximum of ten years in prison and a $250,000 fine) or “conspiracy” (normally punishable by a maximum penalty of five years in prison and a $250,000 fine).

Those eleven then acknowledged that their conduct caused more than $5,000 of damage to a protected computer network, outlet, or system. The eleven defendants then pled to an additional lesser-included misdemeanor of accessing or adversely affecting a computer system. The other two defendants only pled to the misdemeanor offense.

The case is adjourned and all thirteen defendants are due back in court in one year. The court will then hold the eleven felony allocutions in abeyance. If the defendants do not engage in new criminal conduct of consequence or renounce their pleas, the government will not oppose the application to withdraw the felony counts, leaving in place a single misdemeanor with no objection from the judge. The prosecution will then recommend a sentence of no more than one to three years probation for the misdemeanor and $5,600 restitution to PayPal for each of the defendants: a total of roughly $80,000.

The government and the court would then convert the pretrial conditions as conditional release. Essentially, the eleven would then walk free outside of damages. The remaining two defendants who only pled to a misdemeanor will serve up to 90 days in jail.

How much damage the group actually inflicted on PayPal is still very much in question.

On May 31, 2012, after The New York Times published a review of Parmy Olsen’s book The Secret Lives of Dangerous Hackers: ‘We Are Anonymous’, PayPal responded to the author’s characterization of events. In a post script, dated the same day, it reads “After this article was published, PayPal contacted The Times to take issue with the statements in the book that say the hackers shut down its Web site. Jennifer Hakes, a senior manager in corporate communications, said that as a result of the attacks in December 2010, ‘PayPal was never down.’”

Anuj Nayar, a spokesperson for PayPal, said ten days after the PayPal 14 indictment was unsealed that, “The attack on Paypal site last December slowed down the company’s system, but to such a small extent that it would have been imperceptible to customers.” he said. “At no point,” Nayar added, “was the Web site shut down.“

Yet, according to court records, eBay and PayPal lawyers indicated damages of as great as $5.5 million.

A former vice president at PayPal, Osama Bedier, said on December 8, 2010 that PayPal’s decision to suspend service to WikiLeaks was the result a November 27, 2010 letter from the State Department’s former legal adviser Harold Koh to WikiLeaks editor and chief, Julian Assange. Beider described the letter as stating that, “WikiLeaks activities were deemed illegal in the United States.” (The language that Koh actually used in his letter to Assange was that the diplomatic cables “were provided in violation of U.S. law.”) Koh’s letter also states, “As long as WikiLeaks holds such material, the violation of the law is ongoing.”

Attorney General Eric Holder described what he termed as “informal conversations about the WikiLeaks matter” with PayPal, Visa, and Mastercard, the latter two having similarly suspended service to WikiLeaks.

As the first major cyber security case in the “post-WikiLeaks” world, former FBI director Robert Mueller used the indictment and Anonymous’s support of WikiLeaks to justify-increased budgets for cyber-security prosecutions. Muller told the House of Representatives Appropriations Committee in March 2012, “the Anonymous group referred to the DDOS attacks as Operation Avenge Assange and allegedly conducted the attacks in support of Wikileaks founder Julian Assange. The defendants are charged with various counts of conspiracy and intentional damage to a protected computer.”

Typically when a defendant pleads or allocutes to a felony the conditions of pretrial get worse. That is not the case here. The conditions cannot enlarge or worsen in any way.

If any of the defendants renounce their plea, however, the government can move to withdraw and the court can accept.

Stanley Cohen, counsel to Mercedes Rene Haefer, one of the defendants, said, “The PayPal 14 are like civil rights fighters or the freedom riders of the 1960’s. They are saying, ‘I did what I did with open eyes, knowing that I could get prosecuted. It happened. I knew what the consequences were, and the consequences came. I stand behind what I did. I did not cooperate with the government, and I did not roll over. I did this so that others could understand how corporations control the dialogue and the debate.”