In the Courts

The CFAA prohibits “knowingly and with intent to defraud, access[ing] a protected computer without authorization, or exceed[ing] authorized access, and by means of such conduct further[ing] the intended fraud and obtain[ing] anything of value.” 18 U.S.C. '1030(a)(4). “Exceed[ing] authorized access” is defined as “to access a computer with authorization and to use such access to obtain or alter information in the computer that the accesser is not entitled so to obtain or alter.” 18 U.S.C. ' 1030(e)(6). While other circuits have found that this provision of the CFAA can apply to misuse of data and other violations of private computer use restrictions, the Ninth Circuit stated that it found these decisions to be unpersuasive and, instead, urged its sister circuits to reconsider their decisions. Id. at *6-7; Cf. United States v. Rodriguez, 628 F.3d 1258(11th Cir.2010); United States v. John, 597 F.3d 263 (5th Cir.2010); Int'l Airport Ctrs., LLC v. Citrin, 440 F.3d 418 (7th Cir.2006).

Acknowledging that the CFAA is “susceptible” to broader interpretation, Judge Kozinski supported the Ninth Circuit's narrow reading by highlighting a parade of absurd circumstances that could be criminalized under the broader application. Nosal, WL 2012 WL 1176119 at *3. For instance, the opinion points out that private computer-use policies routinely prohibit games, shopping and e-chatting with friends, which, under a broader reading of the CFAA, would become federal crimes. Id. at *4. The opinion goes on to note that “behavior that wasn't criminal yesterday can become criminal today without an act of Congress, and without any notice whatsoever,” merely by virtue of modification of corporate computer-use prohibitions or terms of service for services like Match.com or YouTube. Id. at *6. In particular, the court cautions that, adopting the broader reading of the CFAA,
“[e]mployers wanting to rid themselves of troublesome employees without following proper procedures could threaten to report them to the FBI unless they quit.” Id. at *4. Ultimately, citing several recent like-minded district court decisions, the Ninth Circuit held that the phrase “'exceeds authorized access' in the CFAA is limited to violations of restrictions on access to information, and not restrictions on its use.” Id. at *8.

Fourth Circuit Affirms Bribery Convictions of
Former Louisiana Congressman

On March 26, 2012, the United States District Court for the Fourth Circuit rejected former Louisiana Congressman William Jefferson's arguments that jury instructions given in his trial for various bribery-related offenses were inadequate. However, the court vacated his conviction with respect to one count of wire fraud, agreeing that the venue was improper. United States v. Jefferson, —F.3d—, 2012 WL 990234 (4th Cir. March 26, 2012). In August 2009, Jefferson was convicted of 11 counts of corrupt behavior, including wire fraud, bribery, money laundering and racketeering. Id. at *1. The charges were related to several schemes in which Jefferson allegedly used his official position and resources, particularly his position as co-chair of the Africa Trade and Investment Caucus and the Congressional Caucus on Nigeria, to benefit private parties in exchange for favors, business opportunities and cash for himself and his family. In the notorious conclusion to the FBI's investigation into his schemes, a search of Jefferson's home revealed $90,000 in marked cash hidden in frozen food boxes in the freezer. Id. at *9.

On appeal, Jefferson challenged a jury instruction that defined an “official act,” for the purposes of the bribery statute, 18 U.S.C. ' 201(b), as “include[ing] those activities that have been clearly established by settled practice as part [of] a public official's position.” This instruction was based on a century-old Supreme Court decision in which the Court explained that “in numerous instances, duties not completely defined by written rules are clearly established by settled practice, and action taken in the course of their performance must be regarded as within the provisions of the [] statutes against bribery.” United States v. Birdsall, 233 U.S. 223, 230-31, 34 S.Ct. 512, 58 L.Ed. 930 (1914).
Jefferson argued that a more recent decision, United States v. Sun-Diamond Growers, 526 U.S. 398, 119 S.Ct. 1402, 143 L.Ed.2d 576 (1999), overruled the prior opinion with respect to application of the bribery statute to acts considered to be “official” by “settled practice.” 2012 WL 990234 at *16. However, the Fourth Circuit found that Sun-Diamond applied narrowly to prevent the “absurd” result that gifts given merely because of status or to garner general goodwill would violate the gratuities statute, 18 U.S.C. '201(c), and did not foreclose a settled practice jury instruction in a bribery prosecution. Id.

Jefferson also challenged the district court's instruction that the quid pro quo requirement of the bribery statue would be satisfied by proof that Jefferson agreed to perform official acts on an “as-needed basis” in exchange for things of value. Id. at *21. Again citing Sun-Diamond, Jefferson argued that the statute requires proof that bribes are connected to specific official acts. Id. The Fourth Circuit again noted the distinction between the bribery and gratuity statutes, explaining that “[t]he quid pro quo requirement is satisfied so long as the evidence shows a course of conduct of favors and gifts flowing to a public official in exchange for a pattern of official actions favorable to the donor.” Id. (citing United States v. Quinn,359 F.3d 666, 673 (4th Cir.2004)).

Jefferson also argued that his convictions for honest services fraud under 18 U.S.C. ' 1346 and conspiracy to commit honest service fraud were foreclosed by Skilling v. United States, ”' U.S. ””, 130 S.Ct. 2896, 177 L.Ed.2d 619 (2010). While the government conceded that the jury instruction was flawed, as it included self-dealing as a possible theory of liability, it argued that the error was harmless and the court agreed, holding that Jefferson's convictions under various other bribery-related counts clearly demonstrated the jury's determination that Jefferson had engaged in honest services fraud in the form of bribery and acceptance of kickbacks. Id. at *23.

Finally, the Fourth Circuit vacated Jefferson's conviction for wire fraud, agreeing that the Eastern District of Virginia was not the proper venue, as the wire transmission at issue was a telephone call between Louisville, KY, and Ghana. Id. at *27. The court disagreed with the government's contention that venue was appropriate because the scheme to defraud took place in Virginia, holding that the scheme to defraud is an intent element of wire fraud and that it is the wire transmission itself that constitutes “the essential conduct element of wire (or mail) fraud” upon which venue is based. Id. at *29-31.

In the Courts and Business Crimes Hotline were written by Associate Editors Jamie Schafer and Matthew J. Alexander, respectively. Both are associates at Kirkland & Ellis LLP, Washington, DC.

Ninth Circuit Champions Narrow Reading of CFAA

On April 10, 2012, in United States v. Nosal, —F.3d.—, WL 2012 WL 1176119 (9th Cir. April 10, 2012), the United States District Court for the Ninth Circuit held that the Computer Fraud and Abuse Act (CFAA), 18 U.S.C. ' 1030, must be construed narrowly to avoid criminalizing routine violations of private computer use policies. In a humorous opinion authored by Judge Alex Kozinski, the Ninth Circuit held that the statute could not be applied to prohibit misuse of information or services by authorized users. According to Judge Kozinski, a broader reading of the statute would have the undesirable result that “posting for sale an item prohibited by Craigslist's policy, or describing yourself as 'tall, dark and handsome,' when you're actually short and homely, will earn you a handsome orange jumpsuit.” Nosal, WL 2012 WL 1176119 at *5.

The case involved a former employee who convinced colleagues still working for his erstwhile employer to access and provide to him confidential information on the company's database to help him start a competing business. Id. at *1. While the employees had authorized access to the database, company policy prohibited disclosure of the information. Mr. Nosal was indicted on 20 counts, including theft of trade secrets, mail fraud, conspiracy and violation of the CFAA. Id.

The CFAA prohibits “knowingly and with intent to defraud, access[ing] a protected computer without authorization, or exceed[ing] authorized access, and by means of such conduct further[ing] the intended fraud and obtain[ing] anything of value.” 18 U.S.C. '1030(a)(4). “Exceed[ing] authorized access” is defined as “to access a computer with authorization and to use such access to obtain or alter information in the computer that the accesser is not entitled so to obtain or alter.” 18 U.S.C. ' 1030(e)(6). While other circuits have found that this provision of the CFAA can apply to misuse of data and other violations of private computer use restrictions, the Ninth Circuit stated that it found these decisions to be unpersuasive and, instead, urged its sister circuits to reconsider their decisions. Id. at *6-7; Cf. United States v. Rodriguez , 628 F.3d 1258(11th Cir.2010); United States v. John , 597 F.3d 263 (5th Cir.2010); Int'l Airport Ctrs., LLC v. Citrin , 440 F.3d 418 (7th Cir.2006).

Acknowledging that the CFAA is “susceptible” to broader interpretation, Judge Kozinski supported the Ninth Circuit's narrow reading by highlighting a parade of absurd circumstances that could be criminalized under the broader application. Nosal, WL 2012 WL 1176119 at *3. For instance, the opinion points out that private computer-use policies routinely prohibit games, shopping and e-chatting with friends, which, under a broader reading of the CFAA, would become federal crimes. Id. at *4. The opinion goes on to note that “behavior that wasn't criminal yesterday can become criminal today without an act of Congress, and without any notice whatsoever,” merely by virtue of modification of corporate computer-use prohibitions or terms of service for services like Match.com or YouTube. Id. at *6. In particular, the court cautions that, adopting the broader reading of the CFAA,
“[e]mployers wanting to rid themselves of troublesome employees without following proper procedures could threaten to report them to the FBI unless they quit.” Id. at *4. Ultimately, citing several recent like-minded district court decisions, the Ninth Circuit held that the phrase “'exceeds authorized access' in the CFAA is limited to violations of restrictions on access to information, and not restrictions on its use.” Id. at *8.

Fourth Circuit Affirms Bribery Convictions of
Former Louisiana Congressman

On March 26, 2012, the United States District Court for the Fourth Circuit rejected former Louisiana Congressman William Jefferson's arguments that jury instructions given in his trial for various bribery-related offenses were inadequate. However, the court vacated his conviction with respect to one count of wire fraud, agreeing that the venue was improper. United States v. Jefferson, —F.3d—, 2012 WL 990234 (4th Cir. March 26, 2012). In August 2009, Jefferson was convicted of 11 counts of corrupt behavior, including wire fraud, bribery, money laundering and racketeering. Id. at *1. The charges were related to several schemes in which Jefferson allegedly used his official position and resources, particularly his position as co-chair of the Africa Trade and Investment Caucus and the Congressional Caucus on Nigeria, to benefit private parties in exchange for favors, business opportunities and cash for himself and his family. In the notorious conclusion to the FBI's investigation into his schemes, a search of Jefferson's home revealed $90,000 in marked cash hidden in frozen food boxes in the freezer. Id. at *9.

On appeal, Jefferson challenged a jury instruction that defined an “official act,” for the purposes of the bribery statute, 18 U.S.C. ' 201(b), as “include[ing] those activities that have been clearly established by settled practice as part [of] a public official's position.” This instruction was based on a century-old Supreme Court decision in which the Court explained that “in numerous instances, duties not completely defined by written rules are clearly established by settled practice, and action taken in the course of their performance must be regarded as within the provisions of the [] statutes against bribery.” United States v. Birdsall , 233 U.S. 223, 230-31, 34 S.Ct. 512, 58 L.Ed. 930 (1914).
Jefferson argued that a more recent decision, United States v. Sun-Diamond Growers , 526 U.S. 398, 119 S.Ct. 1402, 143 L.Ed.2d 576 (1999), overruled the prior opinion with respect to application of the bribery statute to acts considered to be “official” by “settled practice.” 2012 WL 990234 at *16. However, the Fourth Circuit found that Sun-Diamond applied narrowly to prevent the “absurd” result that gifts given merely because of status or to garner general goodwill would violate the gratuities statute, 18 U.S.C. '201(c), and did not foreclose a settled practice jury instruction in a bribery prosecution. Id.

Jefferson also challenged the district court's instruction that the quid pro quo requirement of the bribery statue would be satisfied by proof that Jefferson agreed to perform official acts on an “as-needed basis” in exchange for things of value. Id. at *21. Again citing Sun-Diamond, Jefferson argued that the statute requires proof that bribes are connected to specific official acts. Id. The Fourth Circuit again noted the distinction between the bribery and gratuity statutes, explaining that “[t]he quid pro quo requirement is satisfied so long as the evidence shows a course of conduct of favors and gifts flowing to a public official in exchange for a pattern of official actions favorable to the donor.” Id. (citing United States v. Quinn,359 F.3d 666, 673 (4th Cir.2004)).

Jefferson also argued that his convictions for honest services fraud under 18 U.S.C. ' 1346 and conspiracy to commit honest service fraud were foreclosed by Skilling v. United States, ”' U.S. ””, 130 S.Ct. 2896, 177 L.Ed.2d 619 (2010). While the government conceded that the jury instruction was flawed, as it included self-dealing as a possible theory of liability, it argued that the error was harmless and the court agreed, holding that Jefferson's convictions under various other bribery-related counts clearly demonstrated the jury's determination that Jefferson had engaged in honest services fraud in the form of bribery and acceptance of kickbacks. Id. at *23.

Finally, the Fourth Circuit vacated Jefferson's conviction for wire fraud, agreeing that the Eastern District of Virginia was not the proper venue, as the wire transmission at issue was a telephone call between Louisville, KY, and Ghana. Id. at *27. The court disagreed with the government's contention that venue was appropriate because the scheme to defraud took place in Virginia, holding that the scheme to defraud is an intent element of wire fraud and that it is the wire transmission itself that constitutes “the essential conduct element of wire (or mail) fraud” upon which venue is based. Id. at *29-31.

In the Courts and Business Crimes Hotline were written by Associate Editors Jamie Schafer and Matthew J. Alexander, respectively. Both are associates at Kirkland & Ellis LLP, Washington, DC.