
Write Gambling Software, Go to Prison - cyphersanctus
http://www.wired.com/threatlevel/2013/01/coder-charged-for-gambling-software/
======
carbocation
> He says the New York district attorney’s office tried to strong-arm him into
> a plea agreement that would have had him hacking into the systems of his
> software clients in order to obtain the usernames and passwords of gamblers
> and their bookmakers to help authorities gather evidence of illegal
> gambling.

If the premise of Harvey Silverglate's book, "Three Felonies A Day: How the
Feds Target the Innocent,"[0] is correct, then this is quite plausible. A key
message from Silverglate's book is that because it is impossible to know if
one's behavior is lawful[1], it is impossible to be sure that one operates
within the contours of the law at all times. Thus, if you would be convenient
to nail not because of anything in particular that you've done but _because
you can probably be convinced to testify against someone higher up in their
chain_ , beware.

From my recollection of this book, this was a tactic more typically used at
the federal level, so either the tactic is spreading or my recollection of its
state-level use is just dim.

 _EDIT_ : In response to all of the other comments pointing out other absurd
choices the authorities could make (they could prosecute Pepsi since they sell
soda to these operations, etc), Silverglate's book provides a nice framework
for why this programmer would be targeted and not Pepsi. He's not the fodder,
but he does have meaningful access to the fodder (whereas Pepsi surely does
not).

[0] = [http://www.amazon.com/Three-Felonies-Day-Target-
Innocent/dp/...](http://www.amazon.com/Three-Felonies-Day-Target-
Innocent/dp/1594035229)

[1] = In contrast, it's often quite possible to know when one's behavior is
unlawful.

~~~
n3rdy
My ears are burning.

~~~
carbocation
For clarification, I agree with your implication that the authorities could
make these absurd choices, not that I think your comment was absurd.

~~~
n3rdy
I understand and agree with the point you were making. Last comment was for
funsies.

~~~
carbocation
If we're going for funsies, I wonder if /dev/urandom could be considered
gambling software, given the right circumstances? Only kind of kidding.

~~~
jlgreco
I can see it now: a bunch of grizzly old men huddled together in the back room
of a local bar, a single bare light-bulb burning above them. Every few seconds
they yell in anguish or delight and throw down more cash, words
incomprehensible to any outsider. In the middle sits a pasty nerd, slowly
typing out `echo $RANDOM` into a computer over and over again.

~~~
jrogers65
Now let's not go too far with this hypothetical computer-aided gambling
scenario. Everyone knows that Bash keeps a history of commands and that our
pasty friend simply needs to press the up arrow followed by return after the
first roll of the digital die.

~~~
carbocation
Up followed by return is too much work. Let's lighten the load:

    
    
        while true; do echo $RANDOM; read -p "Press [ENTER] to continue gambling."; done;
    

Actually, our pasty friend doesn't really need a job:

    
    
        while true; do echo $RANDOM; sleep 10; done;

~~~
n3rdy
Attention! carbocation did not type this code. His account was hacked and a
programmer working for the internet mafia released this code using his stolen
account to make him the unwitting fall guy.

carbolocation was with me all afternoon, we were at church working in the soup
kitchen, feeding the poor. We did so anonymously because we believe people who
take credit for charity work are ego-maniacal monsters.

------
Bud
The degree of militarization of, and breathtaking overreach by law enforcement
depicted here is stunning. 30 camouflaged SWAT officers? To arrest a coder
because someone else was using his software illegally? Really?

 _The case began in February 2011, when Stuart says he and his wife got the
Kim Dotcom treatment after about 30 local Arizona law enforcement agents
wearing SWAT gear and camouflage dress — some of them with bushes attached to
their shoulders to blend into the woods around his house — descended on his
home and threatened to send him and his wife to prison for 35 years if he
didn’t cooperate.

The search warrant used in the raid said Stuart and his wife were engaged in
money laundering, operating an illegal enterprise and engaging in the
promotion of gambling. Stuart has tried to obtain a copy of the affidavit used
to get the search warrant, but it’s currently sealed.

The conversation for the plea agreement occurred the day after the raid, when
Stuart says he was still traumatized by the experience and had only rent-a-
lawyers, hired quickly over the internet, to represent him. The lawyers urged
him to cooperate and agree to the terms._

And then once they arrested him, this:

 _Stuart showed Wired a plea agreement (.pdf) signed by former Manhattan
Assistant District Attorney James Meadows, which stated that he would plead
guilty to second- and fourth-degree money laundering charges and assist the
DA’s investigations by, among other things, “aiding in the design of software
used to obtain records, usernames, passwords, and other information stored on
websites using” his company’s software.

Stuart says authorities specifically told him that they would not use the
backdoor themselves but that he would be expected to access the servers of
online casinos and others who used his software overseas in order to retrieve
the information of gamblers and bookmakers on their behalf.

“They made it clear that they would do nothing. I was expected to do
everything, to modify the system to allow myself to get in to get the
information they wanted,” he says. “Their whole intention was for me to
retrieve information from those databases that were located in foreign
countries…. They were going to use me to get to the clients…. But I’m not a
hacker, I’m a software developer.”_

So in other words, these guys are too lazy to do any of the hard things
associated with their job: not investigating, not establishing proof, not
getting a valid search warrant that passes the laugh test. So they've decided
to find ways around doing their job, and get the accused to do their job for
them, via SWAT teams and threats.

~~~
rhizome
_The conversation for the plea agreement occurred the day after the raid, when
Stuart says he was still traumatized by the experience and had only rent-a-
lawyers, hired quickly over the internet, to represent him. The lawyers urged
him to cooperate and agree to the terms._

As an aside, this is why you first hire lawyers only to _get you out of jail_
, after which you hire your real lawyers.

~~~
maratd
> after which you hire your real lawyers

Even after you do that, you still need to use your head. Frequently, what's in
the best interest of the lawyer is not in yours.

Your lawyer will prefer a plea bargain, since he'll count that as a "win" and
will still get paid. Even if there will likely be a dismissal of charges. A
plea bargain is a certainty.

~~~
rprasad
In no universe does a competent lawyer consider a plea bargain as a win,
especially if that is not what his client wants.

A win is a win is a win. Criminal defense lawyers are some of the most
competitive, antagonistic people on the planet. If there is any possibility of
winning your case, or even not losing, they will fight for it. If their client
wants to fight the charges, the lawyer will fight them.

~~~
electromagnetic
Given the overwhelming number of people in jail because of plea bargains,
which up to 95% (depending on sources, but all tend to be >85%) of the US
prison population made. It seems like in the US you can simply avoid jail by
_not_ making a plea bargain. Seriously, with those rates I bet prosecutors
just bail the second the plea bargain isn't signed. They put more pressure on
weak cases to try and get the plea bargain through, if they get guaranteed
evidence they withdraw the plea because the prosecutors want the highest
conviction at trial rate they can.

The best way to deal with police is say nothing until you see a lawyer. Cops
are allowed to trick people, so until you have a defence lawyer sat next to
you, you say nothing because you don't want to give them anything usable
against you.

The whole point of judicial system is that if you get people fighting for both
sides, you should get a socially appropriate punishment for what _really_
happened. This doesn't happen with plea bargains _any_ time. Innocent people
make pleas from fear of getting nailed with something worse, guilty people
make pleas before prosecution can get enough evidence to push for a full
sentence or to get it dropped from felony or not to count as three-strikes.

~~~
tptacek
I think you have to be a little bit careful with plea bargaining statistics.
Yes, their incidence is overwhelming, but it's also easy to intuit that the
majority of engagements between citizens and prosecutors come from
circumstances where guilt isn't seriously in doubt. It will bother the hell
out of most HN'ers to consider this, but most people charged with crimes are
guilty of those crimes (that does _not_ mean that anyone charged with a crime
is guilty, or that bad-faith charges don't happen).

If you were caught red handed with someone else's purse, or (even more likely)
pulled out of your house drunk at 2AM after your battered wife was taken by
ambulance to the hospital, chances are you're going to jump at whatever the
prosecutor offers.

~~~
euroclydon
I hear you on the prevalence of spousal abuse. There was a report of it at an
apartment complex we were living at. Police came knocking hard at the back
door which we never used and which had bikes leaned against it from inside. I
couldn't get the door open all the way, and my wife was barely visible back
behind me. The cops became very aggressively agitated and unbelieving when I
told them it wasn't us that they were looking for. They only left after we got
the door open, and I agreed to let them talk to her in a different room from
me.

~~~
tptacek
I brought domestic abuse up because a plurality of the people incarcerated at
Cook County are there on domestic abuse charges; it is an extremely common
charge.

------
rograndom
The NY State government has a huge hang up about gambling. I've had multiple
discussions with NY State liquor control and the AG's office about what they
consider "Gambling instruments", which you cannot possess in a establishment
that serves alcohol.

Not Gambling instruments:

Darts Chessboard & Chess Pieces (including checker pieces) Bowling Balls (and
Bowling in general) Pool cues (and Pool tables & balls)

Gambling Instruments (possession of any of these items is a Class A
misdemeanor punishable by up to 1 year in jail):

Deck of cards Dice

That makes the following games illegal:

Any card game (Poker, Blackjack, Rummy, Go Fish, Solitare) Yahtzee / Boggle
Trivial Pursuit (just having the cards are OK for some reason) Candy Land
(!!!)

Just to further the point, you can shoot pool, for money, and it's not
gambling. But if you carry a child's boardgame into a bar, you've violated NY
State gambling laws.

~~~
rprasad
Gambling is generally waging money on an outcome determined by (a) chance or
(b) the actions of others.

Chess, bowling, pool, and darts are games of skill; all events in the games
proceed directly from the player's actions. Players can play these games for
money _themselves_ but generally cross into gambling if they place wagers on
games in which they are not participating.

Boggle, Yahtzee, and Candyland (among other board games) are largely or
entirely based on chance (i.e,. the dice rolls). Similarly, the card games
enumerated are also games of chance (because skill is not a meaningful
determinant until you reach the upper echelons of players).

NY appears to have gone pretty far overboard with their enforcement of the
gambling laws, but the actual laws themselves (i.e., the distinction between
gambling and non-gambling) is pretty uniform across the states (excepting NJ
and NV).

~~~
jlgreco
In terms of potential harm to society, is there really any difference between
playing pool for money, and playing poker?

I can understand banning slot machines but poker? Is anybody really addicted
to sitting in a bar and playing poker until they run broke? Moreso than pool?

~~~
rprasad
It depends on your POV. Arguably, playing pool for money is acceptable because
it is a competition of skills, whereas poker is not acceptable because it is a
competition of chance.

As for poker addicts...yes, there are very many of them. during the first
online poker crazy of the early 00's, many fellow classmates got put on
academic probation b/c they couldn't keep their poker habit under control.

~~~
jlgreco
Online poker, sure. Any sort of electronic gaming that can be done solo is
going to become an issue. But poker in a bar with other people? You're limited
by how much cash you can carry with you, not by your credit limit, and by how
many people in the immediate area want to play with you.

I'm sure some people still manage to get a dangerous addiction to 'meatspace'
poker in bars, but I am going to guess the vast majority of people who would
play poker in bars are doing it mostly socially.

------
jorgeleo
In other news, people are still looking for the inventor of the hammer to
charge him with multiple accounts of manslaughter, consequence of every death
in which his invention was used. People with sore thumbs are waiting for a
verdict before presenting their griefs.

Faraday commented: "I am not guilty of the use of electricity in Guantanamo"

~~~
suby
This is not a fair comparison. A hammer has multiple purposes. In general, it
is not an instrument intended to cause harm. Even a gun can be used for a
purpose other than causing harm to others -- it can be argued that it serves
as a deterrent to violence.

What other purpose could gambling software be used for? It's irrelevant
whether it was sold to overseas countries since, given the nature of the
internet, New Yorkers would have access to those sites.

I'm not saying that I think what is happening is right, I just think your
comparison is unfair.

~~~
betterunix
"What other purpose could gambling software be used for?"

Not all gambling is illegal. New York State itself has a gambling operation,
it is called the lottery and it serves as a way to extract money from poor
people. There are casinos in New York State, on reservations.

"It's irrelevant whether it was sold to overseas countries since, given the
nature of the internet, New Yorkers would have access to those sites."

That is a slippery slope. Hacker News does not censor its comments; that would
make HN illegal in China. Do you really want to say that one jurisdiction's
laws should apply elsewhere, just because of the Internet?

The Internet is a communication system. If New Yorkers cannot gamble in a
country where it is legal by communicating their bets over the Internet, New
York is engaged in censorship; arresting someone who wrote software that was
used by New Yorkers who ignored that censorship is something I would have
expected from China or Iran.

~~~
hef19898
Comletely agree. Following this logic, the internet and all web services could
be regulated using the most most severe laws on this planet due to the global
nature of the internet.

What this shows is, at least for me, frightening trend to ignore the
souverenity of foreign states when you consider them less powerfull than
yourself. Germany is doing it with Switzerland for example too.

------
sheraz
This is alarming. Gambling laws in the US are antiquated and intellectually
dishonest. It is unfortunate the Wire Act of 1961 was written more to stop
organized crime than it was to actually help regulate gambling. The language
in this piece of legislation is so broad and poorly defined that states often
reach conflicting conclusions.

One hopes this guy can afford suitable counsel and get out of this without too
much trouble. I sincerely hope a future victory will set a more business-
friendly precedent.

~~~
wissler
Most laws are intellectually dishonest. Creating a legal code that is so big
that it's impossible to know what it is and thus, to be able follow it, is
intellectually dishonest. Really, the fundamental basis of our legal system is
intellectually dishonest.

~~~
eriksank
Look. It is our own fault, since we are not doing anything about it. They will
never, ever respect us, unless they seriously fear us.

~~~
jacquesm
Who are 'they'?

~~~
eriksank
Who else but the politicians and their servants? We can let them erode our
position further and further and further, or we could also finally start
putting a stop to that. As all of us know, respect is ultimately based on the
fear for reprisals. Where is the respect?

~~~
angersock
Fucking hell, folks--these aren't some mystical cabal of people that go up to
the country club and swirl scotch and pee on the poors. These people come home
the same way we do, to families, dogs, etc. Don't try to treat them--and don't
give them the credit--as being some mysterious malignant body.

~~~
pyre
As it is, the thing most politicians fear is losing re-election. That fear
comes less from people scrutinizing their actions while in office, and more
about getting funding for the campaign so they can churn out sound-bites that
the general populous can digest and (falsely) feel like they are participating
in the political process.

------
Hawkee
> _At the time of the raid, Stuart had about 20 clients, all of them outside
> the U.S. in Costa Rica, Panama, Australia, Jamaica, the UK, the Dominican
> Republic and elsewhere. Now he’s down to 10 clients._

Maybe this was the goal all along. Simply targeting this individual is enough
to permanently damage his business. It might even cause others to have second
thoughts about developing gambling software. Even if this doesn't end in a
conviction the landscape of online gambling software will be altered.

------
jcromartie
$2.3M in cash and money orders? Isn't that a MASSIVE red flag that you are
dealing with unscrupulous people? That's textbook money laundering.

It's alarming on the surface, but he HAD to know he was dealing with criminals
with that volume of untraceable payments. I certainly don't think he should be
facing criminal charges, but I can't imagine he's actually surprised.

Also, their website: <http://www.extensionsoft.com/index.htm>

Apparently designed in MS Word, minimal information, no product details (why
not?), can't keep their own tagline straight (is it "International Software
Systems" or "International Sportsbook Systems"?).

I hope it's not delving into ad hominem territory, but it's a shady website no
doubt.

~~~
powertower
"Stuart had about 20 clients, all of them outside the U.S. in Costa Rica,
Panama, Australia, Jamaica, the UK, the Dominican Republic and elsewhere."

Sending Cashier's Checks by mail is pretty much what you'd want to do in the
above cases. Visa and MasterCard 6K-40K transactions aren't really going to
work out for you too well coming into your PayPal account, especially from the
above Countries.

You've removed all fees, all bullshit, and most of the fraud by accepting
legitimate bank checks.

> That's textbook money laundering.

Money laundering is the process of concealing the source of money obtained by
illicit means.

I don't think he concealed anything, nor was the money obtained illicitly. He
licensed a software product.

~~~
rprasad
I think the original post was saying that he (the sportsbook) was the launder
for illicit money obtained by his customers. In other words: they were using
him (knowingly or unknowingly) to "clean" their money.

~~~
beedogs
He wasn't a sportsbook, though. He's a software engineer.

------
inetsee
It seems to me that this Assistant DA was trying to coerce this guy into
breaking international law. I would think that some of these foreign countries
have laws about hacking (installing back doors, secretly extracting user
information, etc.). It could be argued that this Assistant DA could be charged
with an attempted conspiracy to violate said international laws. I can imagine
a scenario where he goes on vacation outside the US and discovers that there's
an international warrant for his arrest.

~~~
sleazebreeze
No way would any country on that list dare cross the US. An international
warrant for a US government employee? That shit would get canned faster than
you can say State Department.

~~~
hef19898
Italy did it back the day with some CIA guys. Never want came out of it, so.

------
revelation
The irony of this is that unless you have solved the halting problem, how do
you want to prove that a given piece of software does _not_ do something
illegal like facilitate gambling? They are called "general purpose computers"
for a reason.

------
unabridged
Your identity is becoming more of a liability than an asset. In the next
iteration, guys like this and Kim Dotcom will only be known by pseudonymous
online handles and accept payment in bitcoin.

~~~
gknoy
What's the point of an anonymous receiving identity if there's a trail of
where the bitcoins came from is visible as soon as you go to use it to pay for
house/car/rent/colocation? I must be missing something about Bitcoin's
usability for nefarious purposes.

~~~
jrogers65
You exchange your bitcoins for traditional currency using an exchange then pay
by cash.

You can even buy bitcoins with cash -
[http://bitcoin.stackexchange.com/questions/4616/how-can-
one-...](http://bitcoin.stackexchange.com/questions/4616/how-can-one-be-truly-
anonymous-without-mining)

Meaning that no transaction ever touches anything related to your identity.

~~~
krichman
The solution appears to be sending cash in the mail. That's a bit less than
ideal.

~~~
jrogers65
It's also possible to do it in person, from what I gather. Definitely less
than ideal but anonymity is almost guaranteed.

------
vaadu
Is the DA going after Cisco, Dell, Microsoft and NY ISPs? The software runs on
or through those systems. They are part of the conspiracy.

------
hef19898
Seriously, if it wasn't illegal gambling where these people gambled I don't
see a problem.

Let them find proof for the charges. Sad thing is that it actually hurt an
otherwise legal business.

This and the whole megaupload story show very much the problem of law
enforcement and the de-facto borderless nature of the internet.

~~~
objclxt
> _Seriously, if it wasn't illegal gambling where these people gambled I don't
> see a problem_

That's not the case. What appears to have happened is the guy's software was
sub-licensed or resold to a company that took bets from people living in the
US (which is, until the US legalizes online gambling, illegal).

However, if you go by the Wired article then the Manhattan DA doesn't actually
have any proof that the developer of this software knew this was going on. You
can only be an accessory to a crime if you have knowledge of it: selling your
gambling software to a company that you _knew_ was running an illegal
operation would be a crime. Selling it to a company that subsequently resells
it to an illegal operation and doesn't tell you would not.

If you go by the Wired article what seems to have happened is the developer in
question had no knowledge of this, but received some terrible legal advice
advising him to sign the plea bargain.

------
n3rdy
Do those casino's sell their gamblers coca-cola? Better go after them, or
maybe even pepsi!

Those drinks are being sold to gamblers and these soft drink companies are
benefiting directly from gambling proceeds!

------
frere
This guy made the critical mistake of treating his customers with respect. I
would have turned state's witness, installed the backdoor, and kept cashing
the checks. Don Aronow would approve.

~~~
techtalsky
And STILL be prosecuted for 2nd and 4th degree money laundering, and STILL
need to extract dirt on all your clients (which your other clients would
possibly find out and help you accidentally die in a plane crash).

------
therandomguy
In cases like this I have always wondered if you could ask the judge/jury if
they would also shut down Dell, Microsoft, Apple etc. as the wares from these
companies are also used?

------
MaysonL
There's a really striking contrast between the treatment this guy gets, and
the treatment HSBC got for knowingly laundering billions of dollars.

------
16s
TCP packets facilitate online gambling too.

------
nacker
"Under plea agreement discussions that were never finalized by a judge, and
that occurred in February 2011 before Stuart was charged with any crime,
Stuart says New York authorities pressed him to install a backdoor in his
software and distribute it to clients so the data of gamblers and bookmakers
could be retrieved."

I hope the Bitcoin community is paying attention to this.

~~~
codesuela
Serious question, whats there to backdoor short of bundling a trojan with the
official client? All transactions are out in the open in real time. Edit, went
on to Google and found this: [http://nerdr.com/shutting-down-bitcoin-really-
taking-down-th...](http://nerdr.com/shutting-down-bitcoin-really-taking-down-
the-bitcoin-network/)

------
eriksank
When balancing my dislike for furthering the practice of gambling with my
dislike for the increasingly excessive use of force by the politicians and
their servants, I think I should still side with the software developer. Since
the politicians and their servants seem to be trying to intimidate our side, I
would be for a solution in which we start intimidating back. Otherwise, our
own position will keep eroding until nothing's left.

------
venomsnake
Do the machines the software ran also had windows or linux ... and the sites
were listed in google. i see a lot of fat amicus briefs flooding the courts.

------
maeon3
if gambling were legal, then corporations would be fairer than the government
run lotteries on every street corner's store. it's not about legal or illegal
gambling. it's about protecting their income streams.

------
eriksank
Even though I am not particularly interested in interfering with how the
politicians and their servants are taking the general populace for a ride --
since they may have indeed asked for it -- the politicians and their servants
should know their limits and they should know when to stop. If we do not show
the courage and the good sense to retaliate, they will simply extend their
intolerable excesses over our profession too.

------
JohnLBevan
It's nice to know that those who are happy to ignore the law and gamble
illegally still pay their licensing fees.

~~~
pc86
Did you read the article? All of his clients operate in countries where
gambling is legal. Most of his clients don't even operate casinos themselves.

