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/...

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

[1] http://scholar.google.com/scholar_case?case=1359676152299318...

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

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

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.

    watch -n 10 'echo $RANDOM'

  while echo $RANDOM; do sleep 10; done

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.

As an aside, this is why you first hire lawyers only to get you out of jail, 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.

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.

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.

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.

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.

Well, yes. That's actually a strategy that many criminal defense attorneys use. I was lucky enough to be working for a public defender's office when they used it against the local d.a.'s office, after the D.A. decided his reelection chances would be improved if he was even harsher on defendants than he already was. Long story short: for a brief period of time, the waiting period for courtrooms shot up to 2-3 years for criminal cases and 10 years for civil cases. Nothing can happen in court, so everything hits the fan, and the prosecution side of the criminal system breaks down. (The defense side is mostly unaffected.)

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.

No, that's not it at all. The point of having opposing parties is that a vigorous presentation of the facts by opposing parties tends to reveal (in theory) most of the facts necessary to discern what happened (or as close as you can get without actually being there).

Innocent people make pleas from fear of getting nailed with something worse

No, they don't. This is a fiction created by media. Innocent people fight like hell. They mortgage their homes, raid their retirement funds, max out their credit cards. The risk of insolvency is worth if if you're innocent, since pleading guilty can be an economic death sentence if they plead to felony-level crimes.

1. http://en.wikipedia.org/wiki/Contingent_fee#United_States

I would have assumed this wasn't laziness, but a desire to avoid having their fingerprints on potentially illegal activities.

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.

Knowing I could be arrested for this in NY makes me really not want to visit that state.

And their unconstitutional stance on gun control, but I digress.

[1] http://en.wikipedia.org/wiki/Backgammon#Doubling_cube

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).

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?

Yes. Play in some cardrooms for any length of time and you'll see it.

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.

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.

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

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.

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.

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.

A "service", website, or software program is considered to take place where the user is located, not where the website is located. This standard was set decades ago (in relation to services) and extends quite well to websites.

Thus, the gambling in your example would be treated by international law as occuring in NY. Moreover, by choosing to do business with NY residents (unless such business is minor or incidental), the gambling websites would be subjecting themselves to the jurisdiction of NY for criminal law purposes).

It could be lawfully used for gambling in OTHER countries. But actually this question is absurd. Writing gambling software is not illegal in New York. The burden of establishing a lawful motive is not on the defendant; instead the prosecution must prove that the activity he conducted was directly in support of illegal activity. That is a big difference.

That's absolutely relevant. There are US companies that make slot machines. Most places in the country their products are illegal, just like the activities that this gambling software allows for. If an underground casino gets busted and is found to have slot machines, it's not the maker of the slot machines that is in trouble (unless there is evidence they were sold illegally).

All the tools in the comparison are used in a manner that was not intended by the creator. The point is that it is unfair to charge the creator for the misuse of the tool. The problem is that in our society some "legal-oriented" people think of themselves as very smart because they believe to have attacked the root of the problem; this is under the rationale of "if we eliminate the source, we eliminate all its misuse" (as a side bar, the same rationale is used by the entertainment industry). The problem with this rational is that it destroy the good uses of the tool. And it has a double domino effect, one of chilling some creators (in this case some developers), and one of the thrill of the power on legally hurting someone (I got him! how smart and powerful I am).

In reality it hurts the very thing that they claim to defend: the land of the free.

Educational.

Recreational (no money involved).

Research (like to collect gambling data).

To learn how to code and/or how games/strategies work.

He sold gambling software while living in a state where gambling was illegal.

I'm all ears for arguments that gambling shouldn't be illegal or that prosecutors abuse their authority or many other arguments.

Jack Daniels Whiskey is made and sold by a distillery in a county where selling liquor is illegal.

It might seem like a pedantic question, but laws can be very narrow in scope or vague in meaning. "Gambling" and "Selling gambling software" are legally two different things.

Maybe his actions were, indeed, perfectly legal, and this is entirely a prosecutor abusing his power. But we have to be able to see a distinction between him selling something like a hammer, which isn't illegal to use in his jurisdiction, and gambling software, which probably is illegal to use in his jurisdiction.

Covering your eyes and not figuring out if your actions are legal or not is a pretty crappy defense.

  > extremely stupid to be making something that is
  > illegal to use in your jurisdiction

If he was making slot machines and selling them to legal casinos (e.g. in Las Vegas), do you think that he would have been busted like this? Highly doubtful.

This happened because his customers were crossing the line with the product, but -- to carry the analogy -- I doubt a slot machine maker would be held accountable if Caesar's Palace decided to open up an illegal gambling operation with the slot machines. The issue here is that the main offenders (foreign casinos) are outside of the state's jurisdiction, so they are going after the only person that they do have in their jurisdiction.

If he were growing marijuana and selling it to people where marijuana is legal, no one would have trouble understanding this concept: hire a lawyer very early on. He only got a lawyer after the cops descended on him, and then only crappy ones he found on the Internet.

I don't know the specifics of the law, and you don't either.

(I shouldn't have to say this, again, but I'm not saying there wasn't prosecutorial abuse here. Neither does this guy, because he hoped he could ignore the question.)

A better analogy:

  - Drugs are legal to possess, but the act of buying them is illegal
    (in the US).
  - This guy makes an e-commerce software package designed specifically
    for selling drugs.
  - This guy only sells the software to companies in Amsterdam.
  - He's arrested because one of the companies in Amsterdam is selling
    illegally to US citizens.
  - The government puts a gun to his head and tells him to hack into
    his customers' websites in a scene straight out of Operation
    Swordfish

I don't know the law, and neither do you, and neither did this guy. If he had spent a few thousand of that $2.3 million on a lawyer he would be better informed and had someone on retainer.

Maybe he would have found out some simple way to comply.

Maybe he would have found out there was no way to comply.

Maybe he would have found out that he was already completely complying and this is just your "Operation Swordfish" scenario.

But, since Operation Swordfish has been brought up, I'm out.

My general thought is that it's quite possible that his lawyer would not have foreseen this turn of events. His lawyer probably would have referenced local, state, and Federal law on this, but could have easily not seen that another state would try to prosecute him for his clients offering online gambling to residents of that state.

(I think it goes without saying that a lawyer probably would not have foreseen the government offering him a plea bargain to commit a Federal -- and international -- crime in order to plead guilty to a lesser charge)

It is illegal to do certain things with marijuana. Possession is one of those things. Growing, distributing, selling, processing, all fall under the category of possession.

It is not illegal to write about marijuana, sing songs about it, paint pictures of it, talk about it, or trade photographs of it.

"Gambling" is not illegal.

It is illegal to gamble in certain ways. One of those ways is when a gambling participant wins anything of tangible value greater than what they paid to play the game. This is why some children's arcades that give tickets for games of luck are legal, and some carnival games are legal. Your winnings are required by law be worth less than what you paid to play.

Playing poker is not illegal, playing bingo is not illegal, playing slots is not illegal, playing blackjack is not illegal, guessing who will win the presidential election is not illegal, and guessing how much rain will fall next Tuesday is not illegal. Just don't gamble for tangible value while you do these things!

"He sold a Bugatti Veyron in a state where driving over 75mph was illegal."

With gambling software, the only thing you can do is illegal gambling. With a Bugatti Veyron, well as long as its speed is not locked at 75mph+, you can drive it all your life without doing anything illegal.

You can also do legal gambling.

Absolutely. And that appears to be the context in which Laurent was using it. carbocation compared selling a sports car in a jurisdiction with a low speed limit to selling gambling software in a jurisdiction where gambling is illegal. Laurent replied that drivers of the sports car could still obey the law, while users of the gambling software would always be disobeying that jurisdiction's laws.

I'm not sure I find the argument all that compelling, but it seems to me that people are arguing with a premise that is tautologically true.

(1) Only if they are gambling with the gambling software. They could be using it for non-illegal gaming purposes (such as free online poker where no money is involved), for research, for education, etc. Gambling is illegal in this hypothetical jurisdiction, not software that allows one to gamble.

(2) Just as the Veyron can be produced in one jurisdiction and used elsewhere, gambling software can be produced in one jurisdiction and sold to people who then use it elsewhere. From the article, this is, indeed, what the software author claims to have done.

In other words, software that can be used for behavior that is illegal in one jurisdiction can quite possibly be used for legal purposes in that same jurisdiction (1) or for the same purpose in a jurisdiction where such behavior is legal (2).

Saying that you can't gamble in a place where gambling is illegal doesn't advance the discussion because nobody has yet disagreed with that explicitly or tacitly, as far as I can tell.

That's a good part of my point.

> With gambling software, the only thing you can do is illegal gambling.

That's untrue.

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.

For details, see the famous book Who Rules America, written by a sociologist who did a census of the people in all these positions and analyzed the results. Five or six editions have come out by now as he's continued his research and updated the results.

(Most elected politicians, meanwhile, just want to stay out of trouble and get reelected with minimum fuss, whatever that takes. Fortunately that gives grassroots organizations a way to pressure them.)

I'm pretty sure that if any of the "minor parties" that you mentioned got near having a share of power, they would by that point be similarly-corrupted, beyond repair.

...or am I just too cynical for my own good?

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.

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.

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.

I used to think so, but there are legitimate and perfectly legal businesses that only accept cash or teller's checks. I recently dealt with a car shipping service that demanded cash (I was suspicious too, but my car is fine and the service was prompt). Some people don't trust banks; some come from countries where banks cannot be trusted.

There is no upper bound on legal cash transactions. We have cash for a reason, and people who pay in cash (even large sums of money) should not be assumed to be criminals (despite what tyrannical forces like the DEA tell you).

Read here for an interesting story about $247K:

http://en.wikipedia.org/wiki/Unione_Corse

If he was working with companies in Costa Rica then he was working with companies that are open to US citizens, which he knew because everyone does. That's why the gambling company scene in Costa Rica is so strong, it's like we like it in the US, but at a safe distance.

The idea that a supplier can be held accountable for the actions of the company they are supplying to though... well he would have to have been very closely embedded into the company for him to have had dealings with the payment processing for this to stand a real chance.

Most non-web companies don't have a large web presence. Nothing weird about that.

There are a lot of small shops out there selling one of a few packages that everyone in the industry (whatever industry it is) uses and they have been doing it for 20 years. It's a different world. They are frequently making millions selling desktop software that's not very effective and without any marketing budget.

http://www.edirectglass.com/default.htm

That's is about as hip and modern as I have seen.

(Also don't forget that any specifics you put out there is potentially new information to your competitors.)

<p align="center">B</font><font size="4">ERKSHIRE </font><font size="6">H</font><font size=4>ATHAWAY </font>

My favorite is the anchor that contains an anchor that contains an anchor that contains an anchor. This happens twice for reasons that don't seem to exist since no link on the page apparently points to them.

This is aside from the fact that gambling is a victimless crime, and it is only made illegal to allow a government monopoly over it.

You can even buy bitcoins with cash - http://bitcoin.stackexchange.com/questions/4616/how-can-one-...

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

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.

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.

Here's the problem: New York State runs a gambling enterprise, the lottery. The lottery is a source of revenue for the state, and it is a sneaky way to tax the poor (who are the most likely to buy lottery tickets, despite the poor odds). New York State does not want competition; they already have to put up with reservation casinos, the lotteries of neighboring states, Atlantic City, etc. The last thing they want is another gambling operation that is more exciting and has a higher profit potential.

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

I hope the Bitcoin community is paying attention to this.