Public Corruption Meets Semantic Magic

Okay, so there’s a crime called extortion, and there’s also one called conspiracy to commit extortion, but here’s the question.

Can the government convict you of both extorting people and conspiring with those same people to extort themselves?

In a divided opinion this month, the U.S. Supreme Court said yes.

The case involved a police officer who participated in a kickback scheme with an auto-repair shop. When the officer would arrive at the scene of a car accident, he’d persuade people to tow their cars to the repair shop, and the owners would pay him $150 to $300 each time.

The scheme worked like a charm. It revived the repair shop’s fortunes, and it grew to enlist as many as sixty other officers in the police department.

It ended, however, when the officer, the owners, and nine other cops were indicted for extortion under a federal racketeering statute known as the Hobbs Act. The statute defines extortion to include the obtaining of property from another with his consent but under color of official right. In a prior case, the Supreme Court had described this type of extortion as roughly equivalent to taking a bribe, which seemed to fit the bill here. Everyone ended up pleading guilty except the officer.

But curiously, the government charged the officer with both extortion and conspiring with the shop owners to commit extortion, even though the owners were the ones paying up. It’s unclear why the government decided to pursue this theory of conspiracy rather than one in which the officer conspired with other officers to take bribes. At trial, the officer argued that he couldn’t be guilty of a conspiracy to commit extortion unless he conspired against someone outside the alleged conspiracy. He asked for a jury instruction to that effect, but the court denied his motion and refused his instruction. A jury convicted him on all counts.

On appeal, the officer didn’t challenge his conviction for extortion, but he argued that he couldn’t be guilty of the conspiracy count because the crime didn’t involve taking property from anyone outside the conspiracy itself.

But a razor-thin majority of the Court said yes, he could, thus giving federal prosecutors another way to charge bribery cases involving state or local officials.

We’re Not Gonna Take It, Anymore!

You may want to tell your boss to take your job and shove it, but if you’re thinking of logging on one last time to wreak some havoc or raid the company’s trade secrets then think again.

Over the summer, a federal court of appeals interpreted California law in a way that makes it a crime for you to access your employer’s computer systems and take, copy, or use the data without permission. Although the federal court’s interpretation doesn’t bind the state’s courts, it may influence them until the state’s supreme court says otherwise.

The appeal was brought by six defendants after their convictions for racketeering and illegal wiretapping. The defendants were convicted of running, working for, or doing business with a private-investigations agency that provided illegal services. The agency bribed local police officers to access confidential law-enforcement databases, and it bribed phone-company employees to illegally wiretap people and record their calls. The government called it a criminal enterprise under the Racketeer Influenced and Corrupt Organizations (“RICO”) statute, and the jury agreed. See 18 U.S.C. §§ 1961-68.

The defendants lost most of their arguments on appeal, but one stuck.

The defendants argued that some of their convictions couldn’t stand because they were based on violations of a federal anti-hacking statute, and the defendants hadn’t hacked into any computers. See 18 U.S.C. § 1030.

That part was true. Three years ago, the same court that heard their appeal had construed section 1030 to punish unauthorized access to information (like hacking into a computer) but not unauthorized use of that information by someone who had authorized access. In that case, the court reversed the conviction of a man who raided his employer’s data in order to start a competing business. See United States v. Nosal, 676 F.3d 854 (9th Cir. 2012) (en banc). He may have been guilty of other charges, the court had held, but he couldn’t be guilty of violating section 1030. So here, too, the court reversed those convictions.

Other convictions, however, were based on violations of state law, and that was different. See Cal. Pen. Code § 502. The court held that section 502 doesn’t just punish people for hacking into or harming computers, networks, or data. It also punishes knowingly accessing such systems and then taking, copying, or using data without permission. See id. § 502(c)(2). So the focus is not just hacking but theft or misappropriation as well.

The court noted that California law was not settled on that point. Compare Chrisman v. City of L.A. (2007) 155 Cal. App. 4th 29, 34-37 (finding that section 502 was primarily an anti-hacking statute) with Gilbert v. City of Sunnyvale (2005) 130 Cal. App. 4th 1264, 1281 (interpreting section 502(c)(2) to restrict use and not just access) and People v. Hawkins (2002) 98 Cal. App. 4th 1428, 1440-43 (same).

But until the California Supreme Court decides otherwise, California prosecutors may well charge you criminally for misusing your computer access at work.

So don’t get it twisted, sister. But more on that next week.

A Primer on California Asset Forfeiture

California’s asset-forfeiture laws mainly concern two things: drugs and organized crime.

It’s more complicated than that because the organized-crime statute covers a laundry list of 33 crimes (including drug trafficking), any one of which may be deemed “criminal profiteering activity” if it is committed for financial gain or advantage, and just two such incidents may qualify as a “pattern of criminal profiteering activity” that exposes you to forfeiture under the statute. See Pen. Code §§ 186.2.

But outside of organized crime, the state’s forfeiture laws are mainly about drugs, and they blend aspects of civil and criminal law. See Health & Safety Code §§ 11469-11495. Also, these drug forfeiture statutes are patterned after their federal counterparts in some ways, so California courts may regard federal cases on asset forfeiture as persuasive authority. People v. $497,590 in U.S. Currency (1997) 58 Cal. App. 4th 145, 151-52.

Here’s how it all works.

If a law-enforcement agency seizes money or other personal property worth $25,000 or less, the government can use a streamlined process called administrative (or non-judicial) forfeiture. Prosecutors must attempt to notify all potential claimants to the property either in person or by mail and by publication in a newspaper of general circulation. Any potential claimants must then file a verified claim with the court stating the nature of their interest in the property. Health & Safety Code § 11488.4(c). Generally, there is a strict deadline of 30 days within which to do that, and if no claim is filed, the government may simply declare the property forfeited and take legal ownership of it. See id. §§ 11488.4(j) & 11488.5(a)(1). If a claim is filed then prosecutors must file a formal, judicial-forfeiture petition and take the case to court. Id.

On the other hand, to win forfeiture of real property or of personal property worth more than $25,000, the government must always take the case to court, and if the forfeiture is contested, a jury trial is required unless it is waived by both sides. Id. § 11488.5(c)(2). The trial will resemble a standard civil case in most respects, including pretrial discovery, and be governed by the Code of Civil Procedure. Id. § 11488.5(e); People v. Real Property Located at 25651 Minoa Drive (1992) 2 Cal. App. 4th 787, 790-91. At least three-fourths of the jurors must agree on a verdict. See People v. Washington (1990) 220 Cal. App. 3d 912, 916-17.

The government then bears the burden of proving that the property is subject to forfeiture and that the claimant had actual knowledge of the facts that made it so. Health & Safety Code § 11488.5(d)(1)-(2). To be subject to forfeiture, property must have been either used (or intended to be used) to facilitate drug trafficking; furnished (or intended to be furnished) in exchange for drugs; or derived from proceeds traceable to an exchange for drugs. See generally id. § 11470.

The government’s burden is proof beyond a reasonable doubt if the property is cash less than $40,000 or if it’s a vehicle or real estate no matter the value. Id. § 11488.4(i)(1) & (2).

Also, in such cases, the court cannot order the forfeiture unless and until someone—though not necessarily the claimant—is convicted in an underlying or related criminal case on facts that happened within five years of the seizure or notice of intent to seek forfeiture. Id. § 11488.4(i)(3). The forfeiture case must then be tried before the same judge or jury that reached the guilty verdict. Id.

If the property is cash or its equivalents worth $40,000 or more, the government’s burden is lower: proof by clear and convincing evidence, and there’s no requirement that someone be convicted of a crime. Id. § 11488.4(i)(4).

For all other personal property—including raw materials or equipment for making the drugs; containers used to store or move them (besides planes, boats, other vehicles, or real property); or the books and records of these activities—the government’s burden is lower still: proof by a preponderance of the evidence, which means the judge or jury thinks the government’s case is more likely than not. People v. Nazem (1996) 51 Cal. App. 4th 1225, 1232 n.7. The drugs themselves are contraband that may be seized and summarily forfeited without any process at all. Health & Safety Code § 11475.

So where does the money go? First it goes to pay off any bona fide, innocent purchasers or secured creditors. Then it goes to offset any costs incurred to store, repair, transport, or sell the property. Finally, the balance is distributed to state or local government as follows: nearly two-thirds of it (65%) goes to the law-enforcement agencies that participated in the seizure in proportion to their individual contributions (but with 15% of it going to fund special programs to prevent drug abuse or gang activity); another ten percent goes to the prosecuting agency that processed the forfeiture; another 24% goes to the state’s General Fund, where up to $10 million of it is supposed to be earmarked for school safety and security; and last but not least, one percent of it goes to a private nonprofit organization composed of local prosecutors who must use the funds exclusively to train law enforcement in the proper use and ethics of the asset-forfeiture laws. See generally id. § 11489.

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