
Feds Threatened to Fine Yahoo $250K Daily for Not Complying with NSA's PRISM - suprgeek
http://www.wired.com/2014/09/feds-yahoo-fine-prism/
======
xnull
This is nothing compared to what allegedly happened to QWest. When the US
Government was forcing telecom by telecom to install taps into their
business's core routing hubs Joseph Nacchio, the CEO at the time, dug his
heels in demanding legal avenues to avoid turning his back on QWest's
customers. The US threatened to pull out large contracts that made up a large
part of QWest's business.

Furthermore, having been served a National Security Letter, Nacchio was not
able to speak to his company or shareholders about the situation.

Nacchio continued to insist on legal avenues and Uncle Sam did exactly what it
threatened. Nacchio warned major stakeholders that all of the major QWest
contracts were about to go belly up.

The US government threw Nacchio in prison for insider trading.

Oh and then QWest went bankrupt and was bought by competitor CenturyLink (who
presumably had fewer difficulties complying).

Sometimes the market has more than one invisible hand.

Edit: A good point by a fellow commentor - no independent investigation has
been performed into the QWest story. I looked but could not find FOIA
information online.

~~~
tptacek
Reprising a comment from a long time ago:

Nacchio was convicted of running a pump-and-dump insider trading scam that
netted him ~$100MM at the expense of common public shareholders. If there's an
award for "most obnoxious implication of NSA's wrongdoing", it should go to
the attempted rehabilitation of people like Nacchio.

Here's the indictment. It's quite straightforward.

[http://extras.mnginteractive.com/live/media/site36/2007/0307...](http://extras.mnginteractive.com/live/media/site36/2007/0307/20070307_030947_nacchio_indictment.pdf)

Here's the cliff notes:

"No later than December 4, 2000, through and including September 10, 2001,
NACCHIO was aware of material, non-public information about Qwest’s business,
including, but not limited to" [litany of distressing concerns about Qwest's
bottom line which ultimately proved dispositive in valuing Qwest].

Note the date.

Now, look at this table of Nacchio's stock sales:

[http://oi60.tinypic.com/2n1tgr6.jpg](http://oi60.tinypic.com/2n1tgr6.jpg)

Nacchio claims to have believed that secret national security government
contracts were going to rescue Qwest from their financial problems (note the
implicit concession that Qwest had problems from which its financials needed
to be rescued). One tie-in between Nacchio and NSA is the notion that by
refusing requests from NSA, Nacchio lost those contracts. Stipulate that this
is true; it's a plausible complaint. Nacchio still took the money and ran.

~~~
dredmorbius
As has been noted below: an _indictment_ is not a legal finding of fact. It's
the worst possible case that the prosecution can make against the defense (in
a criminal case). In a civil case, this would be the circumstance of the
opening briefs of either side.

An indictment will read very clearly, _because that 's how it's written_.

What it _fails_ to do is take into account _any exculpatory evidence or
claims_.

This _isn 't_ proof against Nacchio. You've mistaken a court finding for a
lawyer's filing.

~~~
eli
But wasn't he found guilty?

~~~
dmix
Presenting an indictment as fact is dangerous and highly questionable, whether
or not the person got convicted.

That doesn't mean the indictment is accurate, it is written at a point where
it hasn't been scrutinized by the courts. They are pretty much always written
as the very extreme position of what could have happened. They always present
the offender as having clear intentions of breaking the law, when reality is
much more complex. For example, they always throw in extra charges. In this
case:

> Nacchio was convicted in 2007 of 19 counts of insider trading and acquitted
> on 23 counts. [1]

Prosecutors have to prove it's plausible the guy did it, they don't have an
obligation to present an accurate or realistic scenarios in their original
pre-trial arguments in order to win. Even the judgement by the courts can be
inaccurate, this is why appeals courts are super important:

> The 10th U.S. Circuit Court of Appeals ruled Friday that the trial judge
> overstated the amount of Nacchio's alleged financial gain.

[1]
[http://abcnews.go.com/Business/story?id=8226761](http://abcnews.go.com/Business/story?id=8226761)

~~~
eli
OK, fair enough. But, uh, he is guilty of insider trading right?

~~~
dmix
Yes he was on 19 counts. But to the OP's point he is also notable for this:

> Joseph P. Nacchio was the only head of a communications company to demand a
> court order, or approval under the Foreign Intelligence Surveillance Act, in
> order to turn over communications records to the NSA.

His conviction doesn't disprove he lost government contracts for fighting back
against the NSA, only that he attempted to financially benefit from his unique
knowledge of it. As even tptacek admits, it's a very plausible complaint. And
one now effectively derailed.

~~~
tptacek
I do not think the complaint is plausible. I think that even if you stipulate
that it is, the case is strong on its own merits. There's a difference between
stipulating a point and conceding it.

------
joshavant
Weren't these requests, which Yahoo objected to, intended to stay secret, by
the wishes of the government?

Consider if Yahoo refused to honor the requests, and began accruing the fines.
Presumably, if they didn't pay the huge bill for their fines, what would
happen?

Surely, $250k/day would rack up fast... As I see it, eventually Yahoo would
rack up such a bill that they couldn't afford it, and any collection of the
fee by the government would force Yahoo to close its doors. At that point,
surely they'd have to reveal something to the general public about said
requests, and the fines, and everything else going on behind the scenes...

~~~
benologist
I was thinking about that because it seemed like a cost they could just afford
to ignore ($91m/yr), this was probably not the limit of the penalties they
could have faced.

~~~
ams6110
At some point people would have started being thrown in jail and that's when
resistance usually ends.

~~~
skue
Right, but what would that look like? Would the FISA court jail a citizen
without a trial, and can you imagine a FISA judge wanting to make that call,
knowing that their decision will soon become public? Because once someone is
prosecuted the U.S. govt would really have difficulty enforcing silence. It's
one thing to force a company to be silent about surveillance, it's quite
another to force individuals to be silent about being jailed. I'd like to
think we haven't gone so far off the tracks that the first amendment wouldn't
ultimately triumph in that case.

~~~
amirmc
In an era of 'parallel construction', you build a separate case and use that
as leverage.

[http://en.wikipedia.org/wiki/Parallel_construction](http://en.wikipedia.org/wiki/Parallel_construction)

~~~
mattmanser
That's simply blackmail, not 'parallel construction'.

~~~
dijit
Just as 'Post-Traumatic Stress Disorder' is simply 'Shell Shock'

Language changes depending on how you want the person to feel about a subject.

if you want people to hate and revile someone for doing something you do call
it something strong and fierce (blackmail) if you want to do something
yourself make it sound lawful (IE; parallel construction).

------
rdtsc
$250K/day -- someone had to come up with that number.

Was it some high level official? An intern?

I can imagine this dialogue taking place:

\----

(Two bureaucrat monkeys. They just got back from lunch from cafeteria at Ft.
Meade. Their tummies are bit heavy with greasy hamburgers. Settling in to
finish their day before 2pm. One last thing needs to be done -- deciding on
this PRISM non-compliance issue)

M0: What if they don't comply?

M1: We'll punish them!

M0: How?

M1: Well...we'll make them pay.

M0: How much?

M1: [Puts pinkie finger to the corner of his mouth] Two hundred and fifty
thousand dollars a day!

M0: Great idea, M1

(They wrap up before clock hits 2pm. Get in their cars. One goes to pick up
kids from soccer practice. Other drives straight home, to his bachelor-pad
apartment in College Park, MD).

\----

Wonder what and how the people who generated and viewed this documents feel
about them being on the front page of news sites. I can only hope they feel a
tiny bit violated and betrayed. Kind of like when someone breaks in and steals
your things. Or violates your privacy.

~~~
quarterwave
Tony: Umm... Control?

Control: Yes, Tony?

Tony: If I may ask, how did you determine this sum of a 150,000 pounds a day?

Control: A very good question, Tony. You see, I simply took the figure that
our American cousins have calculated using a supercomputer, and converted the
currency.

Tony: That's very clever of you, Control.

Control: Thank you, Tony. It proves that what we lack by way of resources we
make up for with good old British ingenuity.

~~~
Watabou
Tony and Control. I can't believe someone even remembers this! Now I'm
depressed thinking about how Control had to fire Tony :(

------
legutierr
Hmm...if they hadn't complied, in three months more than $20 million would
have accrued.

Would that have been material enough to require disclosure in Yahoo's public
filings? If so, how would it have been described? It seems as if by complying
with SEC regulations, Yahoo would have been forced to violate secrecy rules
with regards to the origin of the fine.

That would have been an interesting conundrum.

~~~
adventured
It certainly would have been material within a short amount of time. One could
debate exactly how many quarters that line is hit at, but at $45m to $90m it
starts to become very stupid to hide from shareholders from a legal
standpoint.

Not reporting the exact details of a $90m acquisition is not a huge deal (for
Yahoo). Not reporting on-going government fines that have amounted to $90m in
a year, would be a huge deal. One is in theory the acquisition of value and
enhances the business, the other is just a black hole of cash destruction.

Further, beyond the money, intentionally doing something against the US
Government such that you're getting fined per day, is a big issue for
shareholders to know about. Especially given the power the government wields
these days.

------
otakucode
It would have been very interesting if Yahoo had simply said "do it."

A few months later the government would want to demand Yahoo pay them millions
of dollars........ but be entirely incapable of explaining WHY they were owed
this money at all. That would have been a very interesting event.

~~~
tootie
Yahoo would have to take $90M/year charge and either give a reason to the SEC
or just declare it classified which would be as good as saying the NSA is
taking it.

~~~
tjohns
It's unlikely this would stop at just $90M/year.

There's no reason to believe the daily fine wouldn't continuously increase, or
that executives wouldn't eventually be put in jail for contempt.

And keep in mind you can be held in jail indefinitely for contempt of court,
as long as you remain in noncompliance.

~~~
adventured
Not to mention that if they really felt the need to break Yahoo, the Feds have
a vast array of ways to do so. The fine is the most trivial approach in their
arsenal.

And if we wander into nefarious approaches, well, Yahoo was going to comply no
matter what if the Feds felt like they needed it to happen for PRISM to be
effective.

------
kriro
I applaud them for fighting this in some way but at the end of the day they'll
probably comply somehow.

The curious mind in me would like to see a parallel universe in which a major
company responds to these threads by leaving the US entirely (or threatening
to do so) and then running an anti _agency here_ campaign for years to spite
them. Or maybe a big enough company that takes them heads on and crushes
them...well I guess I've been reading too much dystopia fiction recently and
am curious how the megacorps > governments scenario would actually be
kickstarted.

[the situation is too sad for me to think about it in realistic terms, sorry
for the minor derail]

~~~
allegory
The company I worked for a few years ago (I'm not going to disclose who as
I'll get shot) were an EU based insurance org and had a US subsidiary that
they used for selling overseas. They had a 5 man legal team to keep the US
govt off their backs. In the end they said "fuck it" and closed US operations
down one afternoon with no noticed, cancelled everyone's policies and fired
everyone (gave them 4 months pay at the same time).

Everyone was told why including the investors.

Not a _major_ company (<$50M capital) but it stirred the pot big time in a
particular sector of the insurance industry and pissed off a number of large
investors in the US.

------
hadoukenio
Here's a serious question - is the fine secret too? If Yahoo didn't comply and
were slapped with a fine, could Yahoo object and table the fine in a court?

~~~
IvyMike
That would be an awesome item in the quarterly SEC filing: REDACTED $23M

------
jacquesm
So that's the price of having principles.

~~~
enlightenedfool
In general people/entities with principles and morals have a higher price to
pay. For them it's worth it.

~~~
alsetmusic
> In general people/entities with principles and morals have a higher price to
> pay. For them it's worth it.

Or the reality of a destroyed life leads them to suicide as the only way out.
Prison is pretty terrible.

------
lern_too_spel
What sloppy reporting.

"The company disputed the initial order in 2007 because it deemed the bulk
demand for email metadata to be unconstitutionally broad."

That is neither what the government demanded nor the reason Yahoo appealed.
How did the reporter get this so wrong?

------
sharkweek
Let's just say hypothetically Yahoo said "No" and refused to pay the fines.

What happens next? Do the feds forcibly shut down the company?

------
enlightenedfool
"But today’s [document] release only underscores the need for basic structural
reforms to bring transparency to the NSA’s surveillance activities" and how
would those reforms come when majority of population and hence politicians are
okay with such surveillance? that's a dream. makes good hacker news debate and
nothing beyond that.

------
quackerhacker
Just seeing the dates that the companies complied (or were forced to comply)
is disappointing. A full year after Steve Jobs passes and stepped down as CEO,
then Apple is added to that list.

Way to go Yahoo for sticking it our then.

------
idlewords
A smarter company would have treated the $250K as a marketing expense. It's
peanuts compared to what Yahoo earns, and imagine the reaction when people
figured out that Yahoo had gone to the mat for its users.

~~~
alaaibrahim
you understand that in order for this to be marketing it needs to be public
information.

~~~
idlewords
That's what the multi-million dollar charge marked REDACTED on your quarterly
earnings report is for.

------
known
Never do anything against conscience even if the state demands it.

------
nathancahill
Happened in 2008, revealed today.

~~~
AJ007
Imagine what kind of secret programs are being pushed today that we will hear
about in 2020, or longer. I have some guesses but they are so absurd I would
be laughed off hn.

~~~
crusso
Yet we keep electing the same politicians that went along with all this. We
deserve the tyranny.

~~~
adventured
So many people I talk to think the expanding tyranny primarily comes from
politicians or bankers or corporations (the blame targets). When it actually
comes from their fellow citizens, effectively voting away rights election
after election for decades.

~~~
sfjailbird
The problem is that the system from the beginning was rigged against major
change with the two-party system and the way state vs. federal authority is
set up.

Most of the rights that we pride ourselves on today were gained by citizen
action (strikes, demonstrations) that were more often than not violently
oppressed by the authorities, until the pressure threatened to undermine the
stability of the system, in which case they threw some bones and progress was
made.

One could fear that the advanced state of surveillance, mass media
brainwashing, and militarization of police forces has all but closed this
avenue for change.

~~~
crusso
_Most of the rights that we pride ourselves on today were gained by citizen
action_

Most of the rights were gained by those outside of the entrenched power
structures, whether it was a handful of founding fathers at the Constitutional
Convention, Martin Luther King in the streets of Alabama, or newly-minted
labor unions in the early 20th century factories.

Over time, all of these institutions developed and ossified, creating a ruling
class that sought to preserve their own power rather than pursue their
original missions that were meaningful and beneficial.

 _has all but closed this avenue for change_

I feel like we've definitely passed a point of no return. We've lost the
cohesion of purpose in this country to accomplish important things because the
ruling class keeps us divided while they remain united, at least for the
purpose of amassing power.

The only thing we have going for us is that most of the rest of the world
suffers from the same set of problems, so relatively speaking, we're not that
bad. The USA was something new for a while where the amassing of money was
okay, but citizens recognized the evil of amassed power.

------
chris_wot
Yeah? I'd just refuse to pay, what are they going to do - publicize it?

~~~
TeMPOraL
Dig up that tax report 5 years ago you accidentally did wrong. Unofficially
point the MAFIAA towards the fact that your kid pirated few songs and a movie
last month. Or find something else entirely. You'll end up in jail or with no
money for reasons (on the surface) completely unrelated to the case.

------
psykovsky
They fought it, but they're complying...

------
dmritard96
might be worth it actually. if it doesn't increase, and if they can market
with it. haha

------
jbverschoor
Dear Yahoo, move to europe

------
DominikR
A militarized police state, the state subjugating private businesses according
to its needs, state intrusions into the most private spheres of its citizens,
executions of US citizens without trial, kidnappings - it all looks like we
are moving straight into fascism.

And I'm seeing the same pattern in the EU where I live since it basically
copies whatever the US does.

"Fascist governments encouraged the pursuit of private profit and offered many
benefits to large businesses, but they demanded in return that all economic
activity should serve the national interest."

[http://en.wikipedia.org/wiki/Economics_of_fascism](http://en.wikipedia.org/wiki/Economics_of_fascism)

~~~
jdimov
The US and Israel now have what the Nazis could only dream about.

~~~
idlewords
Decent jet engines!

Seriously, you typed this statement and thought what? "Now we'll finally have
a fruitful discussion on the hacker site"?

~~~
jdimov
Frankly, I am appalled by the LACK of discussion of these topics on this
hacker site. Why is there a taboo on politics? Why is it out of reach?

400 innocent children were killed indiscriminately in the span of 6 weeks in
Gaza. But your vim configuration is more worthy of discussion here? Idk...

~~~
krapp
People don't approach politics rationally.

For instance: >400 innocent children were killed indiscriminately in the span
of 6 weeks in Gaza

The bias implicit in this suggests that you consider that either someone
agrees with your point of view, or else they support the slaughter of innocent
children. Which further suggests that what you're looking for is not
_discussion_ , but pro-Palestinian advocacy, as there is no room for
discussion in your framing. And of course it's impossible for me to suggest
the nature of your bias without expressing my own bias.

Which is fine, if that's what you want there are other forums for such things,
but that's not what most people come to Hacker News for. One-sided political
discussions are not very interesting, and never fruitful.

~~~
zo1
_" The bias implicit in this suggests that you consider that either someone
agrees with your point of view, or else they support the slaughter of innocent
children."_

There is no bias. Either he is lying, or he is not. You can sugar-coat the
discussion any way you want to wiggle out of it, but facts and lies are what
count.

And yeah, you're right. There is only one side, and that's the side of "the
best available truth". Not that people understand any of that jazz with all
the "bias" being thrown back and forth in the media. Your post included.

Honestly, I don't even know enough about this recent Gaza/Israel thing. Just
commenting on your "bias" retort to the parent's assertion that 400 children
were killed.

~~~
krapp
You are right, I don't understand the situation well enough to have an
unbiased or objective opinion about it.

------
comrade1
I wish there was a way to post anon here. I create a new id every now and then
and post but no one sees the posting because it's new...

I wish more people would be outraged by where the u.s. Is going and just
leave. If you're educated, have desirable skills, you can just come to Europe.
If you think you can change what's happening in the u.s. I do not agree with
you. You will lose to the political class. They have 100% of their time to
focus on restraining you while you have to focus on building your business.

The u.s. has become a force for evil in the world. It has been at war for
almost the entire time of its existence. In the past Americans were protected
from that reality but now the u.s. seems to be even at war with its citizens
and businesses.

If you don't like what's happening in the u.s. you can quit your company
you're building and become a politician, or you can just take your skills and
knowledge to someplace different. But don't forget to continue filing your
u.s. taxes.

~~~
idlewords
Some of us are outraged by where the U.S. is going but stay to try to fix it.
Otherwise you get adverse selection effects, like when all the non-crazies
left New Hampshire.

Plus have you ever _had_ a European burrito? It's not pretty.

~~~
rsync
Well, at least there is _finally_ passable sushi being made in Zurich. That's
a very, very new thing.

All kidding aside - the euro countries are no better than the US in these
areas. They have different code-names and the agencies are different, but
they're all going the same direction.

~~~
comrade1
You're just plain wrong. Not about the sushi. Europe doesn't have the means
nor the corporate-government cooperation that the u.s. has for spying. It
happens in Europe, even Switzerland, but for good, not evil. For example,
Switzerland reoprting to the Red Cross the CIA rendition flights that it
learned through its satellite communications monitoring program.

There's decent Mexican inn Basel. A Mexican and 1/2 Mexican Swiss have a
restaurant.

~~~
idlewords
Europe's a big place. My corner of it had a secret CIA prison.

Also there's a Vietnamese restaurant here called "Hong Kong Lounge". The
crimes don't end at the US border.

~~~
comrade1
Poland? Wasn't there political fallout from that?

~~~
idlewords
About as much as in the US.

~~~
jwr
By which he means, not nearly anything close to what could even remotely be
considered enough.

We in the EU like to smugly look at the USA with an air of superiority. But
we're not much different — there is a small group that is outraged, and most
people simply don't care.

------
bengrunfeld
Anyone who believes that America champions freedom of speech and expression
only has to go as far as the closest newspaper to discover that it's a bull-
faced lie.

~~~
dredmorbius
NB: usually given as "bald-faced lie".

~~~
bengrunfeld
Since I am bald and respect my own hairlessness, I prefer the term "bull-faced
lie", since I have much less respect for bulls. ;)

------
notastartup
This is like being shaken down by the Mafia.

You are not gonna do what we like? It's gonna cost ya. Next we are gonna break
Marissa's legs.

~~~
idlewords
That's how courts enforce court orders. You can get philosophical and say that
the state is just like the mafia, man, except legal. But surely you understand
the need for some mechanism to force compliance from people who just say "I
don't want to do that" to a court ruling.

~~~
pkinsky
Note that this argument applies equally well to enforcing the edicts of
England's Star Chamber.

~~~
idlewords
Yes. It has no moral content; it's the mechanism by which the state works.

------
icantthinkofone
When the terrorists stop using the internet, the government will stop
searching for them with PRISM. Sound fair?

------
_pmf_
> Feds Threatened to Fine Yahoo $250K Daily for Not Complying with NSA's PRISM

Luckily, they realized that nothing of worth is on Yahoo.

------
korzun
Ironically, half of HN is circle jerking DuckDuckGo as some sort of privacy
king pin every other week.

They are either in bed with NSA or will be very soon. I laugh how gullible
some people are.

"But they owner told me that they will stand up to US government with 3M seed
round guys!"

