riggs_~1.txt

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and Bell South, in part because the wrong that was alleged was not
a violation of an intangible right.\68\ The opinion noted that a wire
fraud charge based solely upon the deprivation of an intangible
right would not stand, even if a fiduciary relationship could be
demonstrated.\69\ However, the court found, "valuable, confidential
information is 'property,' the deprivation of which can form the
basis of a wire fraud charge under  1343."\70\ Since all of the
rights in and value of a piece of proprietary information arise
from its confidentiality, and  Riggs' and Neidorf's activities had
indisputably deprived Bell South of that confidentiality, their
actions presumably constituted deprivation.\71\

     In a final blow, the Court rejected Neidorf's contention that
his role was like that of an innocent tippee. They did this on the
grounds that Neidorf had been completely aware of Riggs'
activities from their inception, and had agreed to help conceal
the theft. This concealment, if effective, would have made the
fraud complete.\72\ In order to qualify himself as an innocent
tippee, Neidorf would have had to acquire the information legally.
Since his activities constitute participation in the "theft," he
was held not to have done so.\73\

B.	The National Stolen Property Act

     The prosecution's application of the National Stolen Property
Act to Neidorf's activities led the court further into uncharted
waters. Neidorf contended, among other things, that the
government's interpretation of section 2314 was faulty because
electronic impulses, which were all that he had actually caused to
cross state lines, did not fit within the definition of "goods,
wares, or merchandise" as set forth in the statute.\74\ Relying on an
analogy to the wire transfer of illegally obtained money, the
court rejected this argument.\75\ Several cases, notably United
States v. Gilboe,\76\ have held that section 2314 applies to the
electronic transfer of stolen money, since the "[e]lectronic
signals in this context are the means by which funds are
transported. The beginning of the transaction is money in one
account and the ending is money in another."\77\ Similarly, "the
information in the E911 text file was accessible at Neidorf's
computer terminal in Missouri before he transferred it, and the
information was also accessible at the Lockport, Illinois computer
bulletin board after Neidorf transferred it."\78\ The manner in which
the transmission occurred does not affect the result.

     The more important question, according to the court, is whether
or not the information is a "good, ware, or merchandise" for
purposes of the statute.\79\ Citing several cases holding that
information fixed in a tangible medium can constitute a "good" for
section 2314 purposes,\80\ the court reasoned that if the information
had been contained on a floppy disk, or was printed out by
Neidorf, and the disk or printout had been transported to another
state, the NSPA would apply because the disk or paper would
clearly be "good."\81\ There was no reason to hold differently, they
concluded, merely because in this case the information stayed
inside the computer.\82\

     The Riggs court continued by specifically declining to hold
that tangibility was a requirement of the "goods, wares, or
merchandise" language in the National Stolen Property Act.\83\ As an
alternative, they found that a text file would be sufficiently
tangible to meet such a requirement if it were imposed, since this
kind of information is easily accessible to anyone who "simply
presse[s] the right buttons on their computer."\84\

     An additional barrier to applying the NSPA against Craig
Neidorf is the Act's requirement that the transferred goods have
in fact been stolen. Relying on Dowling v. United States,\85\ Neidorf
argued that the thing he had transferred, like an illegal
recording, was nothing more than an image of the thing to which
the ownership attached, and not that thing itself. The necessary
conclusion is that Neidorf had merely infringed upon the owners
rights to control the reproduction of the information, which is
not the same thing as theft or conversion.\86\

     The court rejected the metaphysical subtleties of this
argument, distinguishing the instant case from Dowling on the
grounds that "[t]he owner of confidential, proprietary business
information, in contrast [to the holder of a copyright], possesses
something which has clearly been recognized as an item of
property."\87\ Although Congress has specifically legislated on the
subject of copyrights, and thereby precluded the application of
section 2314 to copyright infringement, there has been no similar
ruling regarding proprietary information. Therefore, they
conclude, section 2314 may properly be applied.\88\

C.	The Computer Fraud and Abuse Act

     "In his final gasp,"\89\ Neidorf attempted to argue that the
Computer Fraud and Abuse Act, like the Copyright Act in Dowling,
precludes the application of other statutes against actions that
fall under its jurisdiction.\90\ The rationale for this is that the
Congress, by passing the CFAA, has indicated its intent to fully
address computer-related crime.  Based on its inability to find
support for this contention in the legislative record, and
Neidorf's failure to provide any, the court dismissed this
argument as well.\91\

IV.	EVALUATION

     The court's analysis of the issues raised by Riggs, although in
many respects quite astute, contains several questionable
assertions. Chiefly these are attributable to the court's failure
to adequately understand the dimensions of the computerized world
in which Riggs and Neidorf were acting, and the ways in which the
computerization mattered. Other problems resulted from their
failure to consider how relatively minor variations in the facts
might have caused them to come to a radically different
conclusion. It is not surprising in a case like Riggs, which was
one of first impression, and involved a number of dramatic and
emotionally charged issues, that there are areas in which the
arguments (especially those from analogy) are weaker than one
might like. The discussion below will attempt to address these
concerns, again in the order in which they were addressed by the
court.

A.	Wire Fraud

     It is difficult to find fault with the court's reasoning with
respect to the wire fraud charge. Given the broad scope of
offenses to which the statute has been held to apply,\92\ the court
had precedent on its side when it held that Neidorf's efforts in
furtherance of the publication of the E911 document were
sufficient to constitute the elements of the fraud part of the
offense.\93\ Neidorf's most favorable argument on this issue focused
on the fact that Bell South not only suffered no monetary loss,
but was at no point deprived of the use or possession of any of
its property.\94\ The contents of Bell South's computer storage
system were exactly the same after Riggs' unauthorized entry and
"theft" as they had been before he got in.\95\ This is why the phone
company did not detect the "theft" on their own: their use of the
information was in no way impaired by the fact that it had been
copied by Riggs.

     Unfortunately for Neidorf, no less an authority than the
Supreme Court has held that this line of argument must fail. In
Carpenter v. United States,\96\ a reporter for the Wall Street
Journal's influential "Heard on the Street" column entered into a
scheme with several stockbrokers in which he would provide them
with information that was scheduled for publication in the column
prior to the date it appeared in print.\97\ This sharing of pre-
publication information was a violation of the newspaper's
official policy and practice.\98\ When they received these "insider
tips," the brokers would buy and sell stocks in such a way that
they were able to (and did) profit from the effects that the
column had on the stock market.\99\ These profits were shared with
the reporter.\100\

     R. Foster Winans (the reporter) was convicted of wire fraud,
and appealed the conviction on the grounds that neither he nor his
cohorts had obtained money or property from the journal.\101\ Winans
further argued that his activities had not interfered with the
Journal's use of its property (the information).\102\ The Supreme
Court ruled against him, holding that the conviction withstood
these objections since the fraud part of the statute required only
a "wronging [of] one in his property right[s]."\103\ The violation of
the confidentiality of The Journal's information met this
standard.\104\

     Although this decision would seem to lend support to the
court's conclusion in the Riggs case, the situations are
distinguishable in at least one important respect. While the
"theft" of information at issue in Carpenter resulted in no
financial loss to the Wall Street Journal, it did result in gain
to the takers.\105\ This contrasts dramatically with Riggs, in which
there was not only no identifiable loss, there was no identifiable
gain, to any party.\106\ There is, consequently, some difficulty with
using the precedents the court cites to support the contention
that Neidorf's and Riggs' actions constituted fraud.\107\ Since this
difficulty lies with ambiguities in the definition of "fraud," it
is not possible to say with any degree of certainty that the court
was either right or wrong: the ambiguity remains unresolved.
However, it would seem to be prudent in such a situation for
court's to err on the side of caution, restricting their
interpretation of ambiguous terminology to its clear and
undisputed meaning and allowing the legislature the opportunity to
expand these definitions by statute if they so desire.

B.	National Stolen Property Act

     The greatest tension in the court's reasoning arose from the
application of the NSPA to the electronic transfer of the E911
text file between Neidorf and Riggs. Although there is significant
authority for the contention that the transfer of stolen or
fraudulently obtained funds by wire does not avoid the strictures
of section 2314 on the grounds that only "electronic impulses" had
been transferred,\108\ it is not entirely clear that the analogy
between the transfer of funds and the transfer of a document will
withstand scrutiny. In the first place, money, whether transferred
electronically or physically, can be in only one place at a time.
That this was not the case in Riggs was precisely the point: the
E911 document, after having been "transferred" from Georgia to
Indiana, still existed in Georgia in precisely the same manner it
did before the "transfer" took place.\109\ Because the transfer in
Riggs was different from the transfer of stolen funds, the analogy
to other cases that have addressed the "electronic impulses" issue
tends to be misleading. Unlike stolen funds, the E911 document was
accessible from virtually any place in the world. This was true
even when copies existed only on Bell South's computer. Riggs'
ability to acquire a copy without leaving his home\110\ proves this
point.

     Because the document, in every case, remained intact in the
place it was "transferred" from, there was nothing actually moved
across state lines. The arguments accepted in the money cases
(that although nothing was physical moved, the result was the
same) do not apply to Riggs. When the court speaks of a transfer
in this situation, what it is actually discussing is the creation
of a copy in a distant place (somewhat like a fax). The difficulty
which the court has in discussing this has to do with the ability
of computer files to be infinitely and perfectly reproduced. This
fundamental difference between computer files and the sorts of
property to which the NSPA has previously been held to apply has
caused a significant strain in the court's reasoning.\111\

     A further difficulty with the analogy to money transfers is the
fact that Riggs concerned the theft of a document rather than
funds. The electronic impulses involved in the money transfers
were relatively unimportant because they were nothing more than a
means for getting the money from one place to another  they
represented something (the money) which was both tangible and
valuable. In Riggs, electronic impulses (whether stored on a
magnetic disk or transmitted over the telephone wires) are the
"thing" that is alleged to have been stolen.\112\ The impulses were,
therefore, much more than a mode of transportation: they were the
very essence of the thing that was transported. The issue,
contrary to what the court says, is precisely "whether electronic
impulses are 'goods, wares, or merchandise' within the meaning of
 2314."\113\

     The court's lack of clarity on this point was especially
evident in its discussion of the tangibility requirement.\114\ In an
effort to make a connection between Riggs and prior cases
involving the theft of trade secrets,\115\ the court argued that "if
the information in Bell South's E911 text file had been affixed to
a floppy disk, or printed out on a computer printer, then
Neidorf's transfer of that information across state lines would
clearly constitute the transfer of 'goods, wares, or merchandise'
within the meaning of 2314."\116\ For support of this assertion the
court quotes (among other similar cases) United States v.
Bottone,\117\ which held that the intermediate use of a photocopy
machine between the theft and the interstate transportation would
not be sufficient to escape the statute.\118\ The court assumes away
the important question, however, when they posit the affixation of
the E911 file to a floppy disk or paper printout. If the computer
file, without having been affixed to a disk or paper, was
sufficiently tangible for it to be the sort of property to which
the NSPA would be applicable,\119\ there is no reason why it should
not have been considered sufficiently tangible for purposes of the
statute when it was transported interstate in that form.\120\ The
question that remains unaddressed, of course, is whether or not
the file is tangible. The fact that there are tangible mediums to
which the file could have been affixed is not relevant to this
inquiry.

     Perhaps in recognition of this confusion between medium and
message, the court reached a tentative holding that tangibility
was not required by the NSPA.\121\ An imperceptible, but valuable, gas
was used as an example to bolster the argument.\122\ Unfortunately,
the example served primarily to illustrate the court's
misapprehension of the word "tangible." Tangible is defined as
"corporeal[;] capable of being exactly comprehended[;] real,
concrete."\123\ This is not synonymous with perceptible, which means
"discernible by the senses or mind."\124\ The gas in the court's
example may very well be imperceptible to human senses; it does
not follow that it is intangible. The perceptibility of the gas is
absolutely irrelevant for purposes of determining its tangibility:
a gas, discernible or not, is real and concrete, and section 2314
would prohibit the theft and interstate transportation of a
tangible item whether it required tangibility or not. There is,
additionally, strong support for the proposition that tangibility
is required: the plain meaning of the term "goods, wares, or
merchandise" demands it.\125\

C.	Computer Fraud and Abuse Act

     The court's brisk dismissal of Neidorf's contention that the
Computer Fraud and Abuse Act precluded his prosecution under other
statutes\126\ is somewhat puzzling. There is no particular reason to
believe that absence of an explicit mention in the record that the
legislature intended to preclude prosecutions under other statutes
should lead to the opposite conclusion. A more forceful argument
against the court's conclusion is the lack of applicability of
other statutes to Neidorf's actions. Neidorf was likely correct in
his claim that the CFAA was the only act under which he could
legitimately have been prosecuted: it is the only statute with
which he had been charged that explicitly mentions computer