Child Pornography—Ring Broken

Pornography featuring minors almost always has a transnational component,^[1] and yesterday’s announcement that an “international, Internet-based” child pornography syndicate was broken up is no different.^[2] According to international authorities, a “private Internet ‘chat room’ used worldwide to facilitate the trading of thousands of images of child pornography—including streaming videos of live molestations—was infiltrated in an undercover investigation, resulting in charges against 27 individuals to date in the United States, Canada, Australia and Great Britain.”^[3] 13 of the individuals are Americans, 9 are Canadian, 3 are Australian, and 2 are British.^[4]

The alleged chat-room in question was titled “Kiddypics & Kiddyvids,” and users and administrators of the site used “handles,” or pseudonyms to mask their identities which were nonetheless able to be discovered by investigators.^[5]

The indictments and criminal complaints in the United States have been filed in nine different federal judicial districts in Illinois, Tennessee, Michigan, Nevada, Florida, New York, Arizona, and Hawaii, as well as one in state court in North Carolina.^[6]

One of the ways the investigation was conducted was through a sting operation, with an undercover Immigration and Customs Enforcement [hereinafter ICE] agent taking the role of a chat room participant.^[7] One of the individuals allegedly sent the ICE agent two video images of child pornography.^[8] This is an increasingly common way for law enforcement authorities to investigate allegations of child pornography and child molestation.

The other way the investigation was conducted was through yet another example of the increasing role of public-private partnerships in cyber-investigations. As we mentioned in January and August, Microsoft has been aggressive in providing investigators with tools to track down counterfeiters and virus writers. Now the company can add “tracking down purveyors and customers of child pornography” to its list. A decade ago, Toronto’s sex crime squad “would seize about hundreds of photos a year. Last year, they seized more than 3 million pictures and videos, approximately 90 per cent of them from western nations.”^[9] A Toronto detective “says much of that is thanks to Microsoft chairman Bill Gates, who helped Canada develop a specialized tracking system” by “pumping $4.5 million Cdn into creating the Child Exploitation Tracking System, which was instrumental in dismantling the ring.”^[10] In addition to providing the funding, Microsoft Canada “went to work creating CETS by applying some of its best software engineers to the task.”^[11]

The tracking system “contains data gathered from international sources, allowing authorities to plug in an email address, credit card number or even an Internet nickname and see what information may pop up.”^[12]

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[1] See Child Porn Sites Growing Worldwide, Sky News (via Yahoo!), Mar. 8, 2006 (of more than 6,000 sites known to have illegal content, 40% are from the US, 28% from Russia, 17% from Asia, and 13% from mainland Europe).
[2] See US DOJ, Dozens Charged in International, Internet-Based Child Pornography Investigation, Mar. 15, 2006.
[3] Id. See also, Canadians Among 27 Charged in Web Child-Porn Ring, CTV.ca, Mar. 16, 2006; Australians Charged in Global Child Porn Case, ABC (Australia), Mar. 16, 2006.
[4] US DOJ, supra note 2.
[5] Id.
[6] Id.
[7] Id.
[8] Id.
[9] CTV.ca, supra note 3.
[10] Id.
[11] Tool Thwarts Online Child Predators, Microsoft, Apr. 7, 2005.
[12] CTV.ca, supra note 3.

Transnational Antitrust—Chemical Industry

The US Department of Justice’ Antitrust Division [hereinafter AD] really does seem to be aggressively expanding its prosecution of foreign companies which are suspected of engaging in antitrust behavior. Guilty pleas have been secured against Belgian and Dutch companies for participating in a chemical industry price-fixing conspiracy.^[1]

According to the AD, Solvay S.A., a Belgian company, and Akzo Nobel Chemicals International B.V., a Dutch company, have pleaded guilty and acceded to pay more than US$72 million in criminal fines “for their participation in international price-fixing cartels in the chemicals industry.”^[2] These guilty pleas are the “first charges as a result of the [AD]'s ongoing antitrust investigations into the hydrogen peroxide and sodium perborates industries.”^[3] Akzo Nobel will pay a US$32 million fine for conspiring to fix the prices in the hydrogen peroxide market, while Solvay will pay a US$40.8 million fine for conspiring to fix prices in both the hydrogen peroxide market and the sodium perborates market.^[4] The two companies’ roles “affected nearly [US]$350 million in United States commerce.”^[5]

One of the conspirators’ victims was Proctor & Gamble, and Thomas O. Barnett, Assistant Attorney General in charge of the AD, mentioned that “Protecting consumers from international price-fixing cartels is the Division’s highest priority.”^[6] This statement is potentially very interesting. If he meant exactly what he said, then the AD focuses most of its energy looking abroad, making international price-fixing more important than domestic cartels. This lends greater support to our assertions that the US is undergoing an aggressive expansion of its extraterritorial jurisdiction. (If Mr. Barnett actually meant that price-fixing cartels in general are the highest-priority targets, but just threw “international” into the mix to spice things up, then it’s just business as usual at the AD.) Two weeks ago, we discussed antitrust investigations in the DRAM market.

Hydrogen peroxide is well-known for its wound-cleansing attributes, but it also “has multiple industrial uses, including applications in the electronics, energy production, mining, cosmetics, food processing, textiles and pulp and paper manufacturing industries.”^[7] Sodium perborate is used to bleach, cleanse, and deodorize, primarily being found in detergents, but also in toothpaste, hair care products, and topical antiseptics; it is also used as a reactive agent in chemical processes.^[8]

As part of their guilty plea, the companies have agreed to cooperate in the investigation.^[9]

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[1] AD, Belgian and Dutch Companies Agree to Plead Guilty to Participating in Chemical Industry Price-Fixing Conspiracies, Mar. 14, 2006.
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] Id.
[7] Id.
[8] Id.
[9] Id.

A Changing NATO

Over a week ago, the Secretary General of the North Atlantic Treaty Organization, Jaap de Hoop Scheffer, delivered a speech at the University of Oslo outlining a vision for a “new” NATO.^[1] Though the news is over a week old, it bears mentioning because the vision of a transformed NATO has very stark implications for transnational criminal prosecutions.

Acknowledging that the use of the word “new” can evoke “parallels to washing powder or soft drinks—things that are labeled ‘new’ almost every year—and yet … is still the same old stuff,” he maintains that the use of the term is both legitimate and appropriate^[2] NATO, he says, has undergone a massive transformation of its security outlook and that transformation is still ongoing.^[3]

He lists five dimensions in which change is occurring:

• The first dimension has to do with the way we view security challenges today, and how we use NATO to address them.
• The second relates to how we prepare ourselves militarily, how we need to change heavy metal armies into much more agile forces.
• A third dimension is NATO’s evolving relationship with other major institutions, notably the European Union and the United Nations.
• A fourth dimension is the need to look at nations and regions that used to be well beyond our radar screens.
• And finally, I want to say a few words about the need to reinforce NATO’s role as a political forum, in addition to its role as a military instrument.^[4]

At first blush, these may seem to have little relation to transnational crimes, but what Mr. Scheffer categorizes as security threats do relate to such activity, and the notion that NATO may be casting an eye toward countries beyond its “radar screens” suggests an expansion of its “jurisdiction.”

Noting that the post-Cold War world no longer has a “static security environment,” Mr. Scheffer states that the world faces “a whole range” of new threats: “a lethal breed of terrorism, the proliferation of weapons of mass destruction, failed states spreading instability, and criminal networks trafficking in people, drugs and weapons.”^[5] While Mr. Scheffer maintains that NATO will not turn into “some sort of globocop—ready to deal with emergencies all over the world,” it is this last category that is most remarkable. Heretofore, transnational crimes have been seen largely as crimes which are transborder in nature but do not threaten global stability—unlike international crimes.^[6] All 26 allies of NATO look at the organization “as a very flexible instrument” that can be used “wherever … common security interests demand it,”^[7] and if NATO is willing to elevate trafficking crimes to the level of being a threat to global security, there is a greater likelihood of countries being able to prosecute such crimes wherever they may occur under the universality principle of extraterritorial jurisdiction.

The other striking aspect of the “new” NATO is its political transformation. Whereas NATO was originally envisioned as a mutual defense pact against the possibility of Soviet intrusion into Western Europe, Mr. Scheffer now envisions a NATO which consults on wide range of political topics, such as failed states and energy security.^[8]

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[1] Jaap de Hoop Scheffer, Speech: A New NATO, NATO.int, Mar. 3, 2006.
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] See, e.g., Philip Reichl, Introduction, in Handbook of Transnational Crime and Justice xiv (Philip Reichl ed., 2005).
[7] Scheffer, supra note 1.
[8] Id.

McNabb in the News (3-13-06) (2)

Senior Principal Douglas McNabb and C J Dresden have had their article, Suitable Degrees of Separation, published in the February edition of the The European Lawyer. You can read the article here.

McNabb in the News (3-13-06)

Senior Principal Douglas McNabb and Matthew McNabb have had their article, Of Bugs, The President, and The NSA, published in the March edition of the The Champion. You can read the article here.

Human Trafficking for Sexual Activity—Trial Begins

Two people who are accused of “orchestrating and running sex-trade businesses in Rockford, [Illinois,] begin[] trial today in federal court.”^[1] Kenneth Lee and Young Ja Hwang are facing conspiracy and money-laundering charges related to the alleged operation of “massage parlors that were fronts for prostitution.”^[2] Prosecutors are alleging that Mr. Lee and Ms. Hwang “recruited girls from Asia to work and possibly live at the parlors where they allegedly provided customers with sexual favors in exchange for cash.”^[3] Such allegation make it confusing, then, why neither individual has been charged under any number of statutes that cover human trafficking for sexual activity, which would allow prosecutors to potentially secure higher sentences; instead the indictment states that the two individuals “conspired ... to use facilities in interstate commerce with intent to promote, manage, establish, carry on and to facilitate the promotion, management, establishment and carrying on, of illegal prostitution activities.”^[4]

A third defendant, Mi Ran Park, has already pleaded guilty to the same charges, and has agreed to testify against Mr. Lee and Ms. Hwang.^[5] In the plea, Ms. Park said “she worked for [Ms.] Hwang in early 2003 as a prostitute at the Paradise Health Spa and would split her earnings with Hwang 50/50. [Ms.] Park said she left and then returned to the Paradise as a manager of the business in November 2003 until February 2005.”^[6]

Two pre-trial motions, which were denied, bear some mentioning. The first was Ms. Hwang’s attempt to have her trial severed from that of Mr. Lee’s, and the second was Ms. Hwang’s attempt to have her nickname, “Coco,” stricken from the record because it “suggests she is a prostitute.”^[7]

The first motion is based on Rule 14 of the Federal Rules of Criminal Procedure [hereinafter FRCrP], which states that “if the joinder of … defendants in an indictment, an information, or a consolidation for trial appears to prejudice a defendant … the court may … sever the defendants' trials, or provide any other relief that justice requires.^[8] A court should grant a severance under Rule 14 “only if ‘there is a serious risk that a joint trial would compromise a specific trial right of one of the defendants, or prevent the jury from making a reliable judgment about guilt or innocence.’ A defendant is not entitled to a separate trial simply because he might have a better chance of acquittal if tried alone. A serious risk that may warrant severance occurs, for example, when a co-defendant's exculpatory testimony is unavailable to a defendant if tried with that co-defendant, or when a defendant cannot adequately cross-examine a hearsay declarant. However, mutually antagonistic theories of defense do not per se pose a risk of unfair prejudice that requires severance. This is because many times potential prejudice to a defendant may be neutralized by a limiting instruction to the jury, thereby avoiding the need for severance.”^[9]

The other motion, concerning Ms. Hwang’s name, is covered by Rule 403 of the Federal Rules of Evidence (hereinafter FRE). Under this rule, “evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury.”^[10] Of course, all relevant evidence is “’prejudicial’ in the sense that it may prejudice the party against whom it is admitted. Rule 403, however, is concerned only with ‘unfair’ prejudice. That is, the possibility that the evidence will excite the jury to make a decision on the basis of a factor unrelated to the issues properly before it.”^[11]

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[1] Mike Wiser, Human-Trafficking Trial Begins Today, Rockford Register Star, Mar. 13, 2006.
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] Id.
[7] Id.
[8] FRCrP 14(a).
[9] United States v. Taylor, 293 F. Supp. 2d 884, 891 (N.D. Ind. 2003) (internal citations omitted).
[10] FRE 403.
[11] United States v. Bennafield, 387 F.3d 320, 324 (4th Cir. 2002).

McNabb in the News (3-12-06)

Senior Principal Douglas McNabb has been quoted in a Baltimore Sun article about a suspect, Joel Nunez Valles, who has apparently fled to northern Mexico.

Between 1980 and 1994, Mexico returned eight suspects to the United States, a leading extradition expert said, although the pace has picked up in recent years.

"Mexico has had a reputation for years of not extraditing people to the United States, and when they do, they move incredibly slow," said Douglas McNabb, a Washington attorney who specializes in international criminal defense. "That's been true up until a year ago, and it wasn't until recently that they would extradite someone facing life in prison. Mexico equated that to death."
…
Before beginning the extradition process, McNabb said, detectives should first request a "red notice" through the Washington bureau of Interpol, the International Criminal Police Organization. The notice alerts Interpol's 184 member countries that Valles is wanted in the United States, effectively keeping him in Mexico.

"If he attempts to leave Mexico and enter another country, security at that port of entry will run his name, the notice will pop up, and he will be arrested," said McNabb, who frequently represents people facing extradition.

The next step is the formal extradition process. County detectives must complete multiple forms and include enough compelling evidence for the packet to win approval from Maryland, the U.S. State Department and Mexican diplomats, who review the materials to determine compliance with the treaty. McNabb said that the Department of Justice will play a role assisting Howard police.
…
McNabb said that detectives must be careful - even have the packet translated into Spanish by a certified translator - or the materials will get kicked back to them repeatedly for omissions or errors. He also said that the fact that Valles and Gonzalez are Mexican citizens will not matter, nor will direct contact with local authorities in the state of Chihuahua, where county police believe Valles is hiding.

"Howard County police want this guy back as quickly as possible, and if they are thinking six months or so, that's not going to happen," McNabb said. "It could be years, depending on whether the suspect has money to engage quality counsel or appeal. It could be a long time."^[1]

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[1] Melissa Harris, Suspect in 2005 Homicide Flees to Northern Mexico, Baltimore Sun, Mar. 12, 2006.

McNabb in the News (3-11-06)

Senior Principal Douglas McNabb has been quoted in a Czech News Agency article about the on-going extradition hearing concerning Viktor Kozeny.

Kozeny's major argument rests in that the U.S. anti-corruption law (FCPA) did not apply to him at the time he allegedly committed the offence, Douglas McNabb, U.S. expert in extraditions abroad, says.

The Bahamian state prosecutor however has now attempted to propose evidence of something that has not been part of the indictment by the USA, namely that Kozeny continued bribing Azerbaijani representatives after 1998 as well, McNabb said.^[1]

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[1] Turn In Kozeny Case, Allegedly New Accusations, Czech News Agency, Mar. 11, 2006.