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United States v. Hammond

February 21, 2013

UNITED STATES OF AMERICA,
v.
JEREMY HAMMOND, DEFENDANT.



The opinion of the court was delivered by: Loretta A. Preska, Chief United States District Judge

MEMORANDUM & ORDER

Defendant Jeremy Hammond ("Defendant" or "Hammond") has moved under 28 U.S.C. § 455 to disqualify this Court from presiding in this action [dkt. no. 30]. Defendant claims that an appearance of partiality and an appearance of financial interest are too strong to be disregarded because (1) online postings purport to show that Thomas J. Kavaler, this Court's husband, is an alleged victim of some of the charged offense conduct, and (2) Mr. Kavaler's law firm represents, in unrelated matters, "other prominent victims" of some of the charged offense conduct. For the reasons that follow, the motion is DENIED.

I. BACKGROUND

Defendant is charged in a superseding indictment [dkt. no. 9] with participating in a series of computer break-ins and data thefts from computer networks operated by various governmental and business entities as part of the "LulzSec" and "AntiSec" computer hacking groups, which were loosely affiliated with the online group "Anonymous." (See Indictment, S1 12 Crim. 185 (LAP) ("Indictment") [dkt. no. 9].) Specifically, Count Two of the superseding indictment charges Defendant with conspiring to commit computer hacking, in violation of 18 U.S.C. § 1030(b), in connection with a cyber attack in June 2011 on computer systems used by the Arizona Department of Public Safety, a state law enforcement organization. (Id. ¶¶ 17-26, 26(f)-29.) Counts Three, Four, Five, and Six charge Defendant with another count of conspiracy to commit computer hacking, in violation of 18 U.S.C. § 1030(b) (Id. ¶¶ 30-39); substantive computer hacking, in violation of 18 U.S.C. § 1030(a)(5)(A), 1030(b), 1030(c)(4)(B)(i), and (2) (Id. ¶¶ 40-41); conspiracy to commit access devise fraud, in violation of 18 U.S.C. § 1029(b)(2) (Id. ¶¶ 42-47); and aggravated identity theft, in violation of 18 U.S.C. § 1028(A) and (2) (Id. ¶¶ 48-49). Counts Three through Six are all charged in connection with Defendant's alleged participation in the "Stratfor Hack," a hack of the computer systems of a private, subscription-based provider of information analysis services, Strategic Forecasting, Inc., known as Stratfor. (See generally id. ¶¶ 36-49.)

In connection with the Stratfor Hack, and insofar as the instant motion is concerned, Defendant and his co-conspirators are alleged to have, among other things:

i. stole[n] confidential information . . . including approximately 60,000 credit card numbers and associated data belonging to clients of Stratfor, including the cardholders' names and addresses, as well as the cards' security codes and expiration dates; records for approximately 860,000 Stratfor clients, including individual user IDs, usernames, encrypted passwords, and email addresses; . . . and internal Stratfor corporate documents;

ii. used some of the stolen credit card data to make at least $700,000 worth of unauthorized charges; . . . v. publicly disclosed confidential data that had been stolen from Stratfor's computer servers, including, . . . names, addresses, credit card numbers, usernames, and email addresses for thousands of Stratfor clients . . . ; and vi. uploaded data stolen from Stratfor onto a server located in the Southern District of New York. (Indictment, at 28-29.)*fn1

On January 20, 2012, a class action lawsuit was filed in the U.S. District Court for the Eastern District of New York against Stratfor on behalf of "all persons, corporations, or entities whose financial and/or personal information was obtained by third-parties due to the [Stratfor Hack]." See Am. Compl. ¶ 31, Sterling v. Strategic Forecasting, Inc., No. 12 Civ. 297-DRH-ARL (E.D.N.Y. Feb. 8, 2012), dkt. no. 3. The suit settled on November 15, 2012. See Am. Final Order and J. Regarding Class Action Settlement, Sterling, No. 12 Civ. 297-DRH-ARL (Nov. 15, 2012), dkt. no. 29 ("Stratfor Class Action Settlement Order"). In the Stratfor Class Action Settlement Order, the Court certified the class action on behalf "of those who are current or former subscribers to the Stratfor Service on December 24, 2011, whose credit card information Stratfor had on file on December 24, 2011, and whose credit card information was obtained by third-parties due to the breach of Stratfor's computer storage systems." See Stratfor Class Action Settlement Order ¶ 3. The class action member list included approximately 882,137 records. See Decl. of Andrew Beckord ¶ 3, Sterling, No. 12 Civ. 297-DRH-ARL (Sept. 10, 2012), dkt. no. 24-3.

On November 28, 2012, Elizabeth Fink, counsel for Defendant notified the Court during a telephone conference that on or about November 22 or 23, 2012, she had received from a reporter an email containing a link to an "anonymous" website purportedly listing all of the victims of the Stratfor Hack (the "Dazzlepod list").*fn2 (Transcript of Telephone Conf., at 2 (Nov. 28, 2012) ("Transcript") [dkt. no. 35].) Ms. Fink then informed the court that among those listed as a Stratfor subscriber on the anonymous website was Thomas J. Kavaler, husband of this Court, along with Mr. Kavaler's email address at Cahill Gordon & Reindel LLP ("Cahill Gordon"), the law firm at which he is a partner. (See id. at 2-3; see also Def.'s Br., at 2-3; Gov't Br., at 5-6.) The next day, Ms. Fink provided this Court and the Government with the following printouts reflecting the information she relayed to the Court: (1) the email she received from the reporter, (2) the article to which that email linked (which appeared on the website #FreeAnons, Anonymous Solidarity Network, http://freeanons.org), (3) a webpage to which a link in the article directs readers, which is a screenshot of the part of the Dazzlepod list containing Mr. Kavaler's email address, and (4) a webpage to which another link in the article directs readers, which is a screenshot of Mr. Kavaler's profile page from Cahill Gordon's website.*fn3 Although Ms. Fink noted during the telephone conference that she believed Mr. Kavaler's credit card information may have been disseminated as a result of the hack, a review of the copies submitted to this Court immediately dispels any such concerns.*fn4

On December 6, 2012, Defendant moved this Court for disqualification (see [dkt. nos. 30, 32].) In addition to recounting most of the information noted above, Defendant's Brief also provided information to suggest the breadth to which the Stratfor Hack affected clients of Cahill Gordon and, thus, the financial interests of Mr. Kavaler. (See Def.'s Br., at 1-3.) Specifically, Defendant notes that Mr. Kavaler has been a partner at Cahill Gordon since 1980 and is one of six members of the law firm's management committee. (Id. at 3.) Additionally, Defendant states that Merill Lynch and AIG are major clients of Cahill Gordon and alleges that these entities were also victims of the Stratfor Hack.

According to Defendant, Merrill Lynch appears to have been particularly impacted by the hack; over 800 accounts associated with Merrill Lynch email addresses were compromised. Cahill Gordon has overseen hundreds of millions of dollars in investment banking arrangements for Merrill Lynch. In 2006, Cahill Gordon acted as special counsel to Merrill Lynch, in their capacity as Administrative Agent, on an investment banking arrangement with another Stratfor client, AES Corporation, brokering a $600,000,000 credit agreement between the two companies. According to a news release dated November 27, 2012[,] on the Cahill Gordon website, the firm recently represented Merrill Lynch in another investment banking deal involving an offering of $350,000,000. (Id.) Defendant further alleges, "[u]pon information and belief, [that] more than twenty Cahill Gordon clients were victims of the Stratfor hack."*fn5 (Id.)

Upon filing Defendant's motion for disqualification and the associated brief in support, Ms. Fink also filed an affirmation of her own in support of Defendant's motion. (See Fink Aff.) Attached to the Fink Affirmation is a compilation of twenty-three printouts from websites offering their versions of the information Ms. Fink relayed to the Court on November 28th (see id. Ex. B) and a copy of this Court's written submission to the Senate Judiciary Committee provided during the confirmation process in 1992 for the purposes of affirming its commitment to following the Code of Conduct with regards to recusal (see id. Ex. C).

The Government responded to Defendant's motion on December 21, 2012, and therein informed this Court that [a]gents of the Federal Bureau of Investigation have investigated the defendant's claims regarding the theft of Mr. Kavaler's personal data as a result of the Stratfor Hack, including reviewing the data that the Government alleges the defendant stole from Stratfor and then passed to a cooperating witness (which was produced to the defendant in discovery, and confirming that information with Stratfor. Based on this investigation, the FBI has determined that the only personal identifying information related to Mr. Kavaler that was "stolen" or disclosed as a result of the hack was Mr. Kavaler's publicly available law firm email address; Stratfor's data did not contain any credit card information associated with Mr. Kavaler. Stratfor's data does contain one record of a subscription associated with Mr. Kavavler's Cahill Gordon email address for the period between March 18, 2008[,] and April 1, 2008, but, as set out [in Mr. Kavaler's sworn affirmation], Mr. Kavaler has no recollection of that two-week subscription in 2008. (Gov't Br., at 7.)

Attached to the Government's Brief is a sworn affirmation from Mr. Kavaler. (See Affirmation, Dec. 21, 2012, Gov't Br. Ex. A. ("Kavaler Aff.") [dkt. no. 34-1].) In his affirmation, Mr. Kavaler states that he "regularly receive[s] unsolicited emails from businesses and other organizations . . . [and] receive[s] from Stratfor from time to time emails that contain, among other ...


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