Felony CFAA Conviction for Accessing Former Employer’s Data via Backdoor Upheld on Appeal

former employee = current data thiefAn employee, after leaving a company, is no longer authorized to continue accessing its data–regardless of what steps the company took. This is, and always has been, a no-no. But, not everyone seems to realize it.

The United States Court of Appeals for the Fourth Circuit recently affirmed a Computer Fraud and Abuse Act conviction for a man who used a backdoor into his former employer’s computer system to continue accessing data after he went to a competitor. The fact that his former employer had not changed his password did not dissuade the court.

The district court proceeding

The United States Court of Appeals for the Fourth Circuit, on Christmas Eve 2014, handed down the unpublished opinion United States v. Steele, 2014 WL 7331679 (4th Cir. Dec. 24, 2014). In Steele, the Court upheld the jury conviction for two misdemeanor and twelve felony counts for violating the unauthorized access prong of the Computer Fraud and Abuse Act (CFAA), 18 U.S.C. § 1030(a)(2)(C).

Steele, while not establishing new law, does illustrates an important distinction in employee computer and data misuse cases: misuse by current employees versus former employees. The notorious Circuit Split involves misuse by current employees but, when it comes to former employees, the law is clear. When the employment relationship terminates, so too does the now-former employee’s authorization to access the computer system and data.

Robert Steele worked as vice president of business development and also the backup systems administrator for Platinum Solutions, Inc. His role as a systems administrator gave him access to the company’s server, which allowed him to monitor email accounts and employee passwords. Platinum was eventually sold and became SRA and Steele resigned to go work for a competitor who also provided contract IT services to government defense agencies.

For nine months after his resignation from SRA, Steele continued to log in to the company’s computer server using a “backdoor” account he had used during his employment. Using this, he accessed the server almost 80,000 times during which he proceeded to access and download documents and emails related to the company’s contract bids–bids that were competitive to his new employer and, therefore, confidential trade secrets.

A jury convicted Steele for fourteen violations of the CFAA; he received a 48 month prison sentence and was ordered to pay $50,000 in fines, $1,200 in fees, and $335,977.68 in restitution. Steele appealed.

The court of appeals opinion

Of his grounds for appeal, the most relevant is Steele’s argument that his post-termination accesses of the servers were not “without authorization.” Steele argued that because the company did not change the password to this “backdoor” account following his resignation, he continued to have authorization to use the account to access the servers. He based this argument on the Fourth Circuit’s opinion in WEC Carolina Energy Solutions LLC v. Miller, 687 F.3d 199 (4th Cir. 2012).

In WEC Carolina, the Court dealt with the Circuit Split issue of a current employee using his employer’s computer system to obtain information that he then used for improper purposes and whether such use is in “excess of authorization” under § 1030(a)(2). The WEC Carolina Court adopted the narrow view which holds that § 1030(a)(2) prohibits a current employee from unlawfully accessing a protected computer but not from misusing information that he obtained while lawfully accessing the computer.

The Steele Court explained how this distinction applies to this case:

Importantly, this split focuses on employees who are authorized to access their employer’s computers but use the information they retrieve for an improper purpose. Steele’s case is distinguishable for one obvious reason: he was not an employee of SRA at the time the indictment alleges he improperly accessed the company’s server. In WEC Carolina, authorization did not hinge on employment status because that issue was not in dispute. Here, by contrast, the fact that Steele no longer worked for SRA when he accessed its server logically suggests that the authorization he enjoyed during his employment no longer existed.

* * *

Common sense aside, the evidence provides ample support for the jury’s verdict. SRA took steps to revoke Steele’s access to company information, including collecting Steele’s company-issued laptop, denying him physical access to the company’s offices, and generally terminating his main system access. And Steele himself recognized that his resignation effectively terminated any authority he had to access SRA’s server, promising in his resignation letter that he would not attempt to access the system thereafter. Just because SRA neglected to change a password on Steele’s backdoor account does not mean SRA intended for Steele to have continued access to its information.

As the Steele Court hinted, common sense or basic ethics, however one looks at it, should have been enough to tell Steele that after leaving SRA, he was no longer authorized to continue accessing its data. It wasn’t enough. Now he has 48 months to think about where he went wrong as well as how he is going to come up with nearly $400,000.


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Shawn Tuma is a cybersecurity lawyer business leaders trust to help solve problems with cutting-edge issues involving computer fraud, cybersecurity, privacy and intellectual property law. He is a partner at Scheef & Stone, LLP, a full service commercial law firm in Texas that represents businesses of all sizes across the United States.

 

Podcast: #DtR Episode on Lines in the Sand on “Security Research”

You really need to hear this podcast where we draw lines in the sand staking out what is — and what is not — security research

The #DtR Gang [Rafal Los (@Wh1t3Rabbit), James Jardine (@JardineSoftware), and Michael Santarcangelo (@Catalyst)] invited me to tag along for another episode of the Down the Security Rabbit Hole podcast.

Also joining us for this episode were Chris John Riley (@ChrisJohnRiley) and Kevin Johnson (@SecureIdeasllc).

You can click here to see a list of the topics we covered in this episode or just jump straight into the podcast.

Let us know what you think by tagging your comments with #DtR on Twitter!

Podcast: DtR NewsCast of Hot Cyber Security Topics

I had the pleasure of joining the DtR Gang for another podcast on Down the Security Rabbit Hole and, as usual with this bunch, it was more fun than anything — but I learned a lot as well. Let me just tell you, these guys are the best around at what they do and they’re really great people on top of that!

This episode had the usual suspects of Rafal Los (@Wh1t3Rabbit), James Jardine (@JardineSoftware), and Michael Santarcangelo (@Catalyst), though James was riding passenger in a car and could only participate through IM. Also joining as a guest along with me was was  Philip Beyer (@pjbeyer).

Go check out the podcast and let us know what you think — use hashtag #DtR on Twitter!

Thank you Raf, James, Michael and Phil — this was a lot of fun!

Podcast: CFAA, Shellshock and Cyber Security Research — What the Heck Do We Want?

Today I had a blast doing a podcast on the CFAA, Shellshock, and cyber security research with Rafal Los (@Wh1t3Rabbit), James Jardine (@JardineSoftware), and Michael Santarcangelo (@Catalyst) — in fact, we had so much fun that I suspect Raf had quite a time trying to edit it!

The starting point for our discussion was a recent article written by security researcher and blogger Robert Graham (@ErrataRob) titled Do shellshock scans violate CFAA?

As I mentioned on the show, when I first saw Robert’s article, I viewed it with skepticism. However, after actually reading it (yeah, I know — makes sense, right?), I found the article to be very well written, sound on the principles and issues of the CFAA — in my view, Robert did a great job of framing some key issues in the debate that definitely needs to happen.

From the article, our discussion expanded to a general discussion of the Computer Fraud and Abuse Act, its confusion as to application to “security research,” and whether it is even possible for Congress to “fix” the CFAA.

I do not think Congress is able to “fix” the CFAA right now for many reasons. However, I believe we pointed out some additional issues that must be taken into consideration during the public debate in determining what we as a society really value and want on these issues. Until “we the people” can figure that out, I see no way for Congress to “fix” this law which means the Common Law method is what we are left with.

Anyway, this post is just skimming the surface — Raf turned this into a really nice podcast so check it out: Down the Security Rabbithole.

Thank you Raf, James and Michael — this was a lot of fun!

No, the CFAA Does Not Require Taking Actions to Prevent the Hacking of Others

For all of the things the CFAA may (or may not) require, it does not require taking actions to prevent the hacking of others. We are not (yet) the guardians of the hacking universe!

In a factually interesting case that offers a great read on attorney professionalism, the United States Court of Appeals for the Seventh Circuit has confirmed that the Computer Fraud and Abuse Act (CFAA), 18 USC § 1030, does not require taking actions to prevent others from hacking into websites — even when the allegation is being made of internet service providers (ISP) that allegedly failed to take actions to prevent the hacking of their users websites.

In Lightspeed Media Corp. v. Smith, 761 F.3d 699 (7th Cir. 2014), the court addressed an appeal brought after the district court granted a motion to dismiss all claims, including the Computer Fraud and Abuse Act claim, which the court said was frivolous:

Lightspeed’s suit against the ISPs was premised on the notion that because the ISPs challenged appellants’ subpoena of the personally identifiable information of Smith’s 6,600 “co-conspirators,” they somehow became part of a purported plot to steal Lightspeed’s content. If there was any conceivable merit in that theory, then perhaps fees would have been inappropriate. But there was not.

Count I alleged that the ISPs violated the Computer Fraud and Abuse Act (CFAA), 18 U.S.C. §§ 1030 and 1030(g), by failing to prevent hacking. The only alleged assistance to hackers, however, was the challenge to the subpoena. As expansive as the CFAA is, see Orin S. Kerr, Vagueness Challenges to the Computer Fraud and Abuse Act, 94 MINN. L. REV. 1561, 1563-65 (2010), this is a frivolous charge.

The Plaintiff’s original allegations are set forth below:

We are not guardians of the hacking universe!

We are not guardians of the hacking universe!

(link to Lightspeed’s full First Amended Complaint)

For all of the criticism of the expansiveness and unpredictability of the CFAA, and much of it is well deserved, we can now be confident that it does not impose a duty to take steps to prevent the hacking of others — and thank God!

Uncle Sam doesn’t have a clue on data privacy, cyber crime laws, and neither do we!

©2011 Braydon Fuller

©2011 Braydon Fuller

The point of the article that is the source of the quote below is exactly right: there is no consistency, cohesiveness, or harmony with the cyber crime and data privacy laws. I believe there are several reasons but these are the two that are most prominent:

  • The cyber crime and data privacy laws are a patchwork collection of laws that have been enacted based upon reactionary fears over a vast amount of time, each in response to a particular “concern of the day” without taking into account the other laws or the possible evolution of the issues and technology they seek to redress. Imagine trying to paint a painting after blindfolding yourself and then only using “dot by dot” with the tip of the brush to make the painting — no strokes (seriously, try it).
  • We, as a society, do not yet know what we really value.
    • On one hand, we want to protect our own information when it is in the custody of others yet, on the other hand, also disclose much of our own information through public channels yet keep others from using that information for purposes we do not like.
    • On one hand, we want to protect other people’s information yet, on the other hand, we want to freely exercise our perceived rights to free access to information (even when it may legally belong to others).
    • On one hand, we want to have a secure information system that allows for vibrant eCommerce that is protected by laws prohibiting people from “hacking” that information, yet on the other hand, we want to protect the rights of the good “hackers” who do security testing and are necessary to ensure that information system is secure.
    • On one hand, we want to punish those who have our information, try to protect it, yet have others hack them and steal it while, on the other hand, support those who are hacking to steal such information, while, on yet another hand (or foot), freely give our information to others and then punish them for using it in ways we do not like.
    • … and the list could go on … (for more, see Hunter Moore or Aaron Swartz: Do we hate the CFAA? Do we love the CFAA? Do we even have a clue?)

Anyway, here is the article that got me thinking about this at 4:00 in the morning:

Uncle Sam has gotten his wires crossed on internet data privacy. A hacker went to prison for exposing private customer information that AT&T failed to protect from online access. Now U.S. prosecutors are defending their right to do essentially the same thing in the Silk Road drug-website case. Anti-hacking laws are tough to take seriously when even enforcers can’t decide what’s allowed.

via Uncle Sam gets wires crossed on data privacy.

Here is a “Computer Fraud” Case that is NOT Covered by the Computer Fraud and Abuse Act!

What is a CFAA "access"?

©2011 Braydon Fuller

Believe it or not, there really can be a case of “computer fraud” that is NOT covered by the Computer Fraud and Abuse Act (CFAA).

Surprised?

Let me explain.

The CFAA is an “access” crime that requires there to be an unlawful “access” to a computer by either accessing a computer “without authorization” or “exceed[ing] authorized access.” An access in this context is limited to accessing the computer in its informational capacity such as logging in or viewing information stored on the computer, not a physical access opening up the box with a screwdriver and removing its processor or hard drive. (see p. 172) Now, if the hard drive is physically removed but the information stored on the hard drive is later examined, the latter could very well be a CFAA violation but the former is not.

Got it?

There is a good example of this from the recent news. A federal court jury in Houston recently convicted a man of conspiracy to defraud Hewlett-Packard of roughly $14 million. The way he did it was by fraudulently using an HP equipment discount reserved for large-volume purchasers to purchase computers for others and divert them for resale.

This was a literal case of “computer fraud” and he deserved everything he got — but it was not a violation of the CFAA because there was no unlawful informational access to a computer even though the computers themselves were fraudulently obtained and resold.

Make sense?

Now think about this scenario:

  • The case was brought in Houston, Texas, which is in the Fifth Circuit — so let’s assume Fifth Circuit CFAA jurisprudence applies.
  • What if he was an employee or contractor of HP, using his HP login credentials and access to the HP computer system?
  • What if HP had a policy (that he had signed) that expressly limited his authorization to use HP’s computer system and information therein for activities that were in the furtherance of HP’s legitimate business interests and prohibited him from using it for activities that were detrimental to its business interests?
  • What if he used his access to HP’s computer system to orchestrate this fraud?
  • What if he used his access to HP’s computer system to obtain the information he used in order to orchestrate this fraud?
  • What if HP spent more than $5,000 to investigate or remediate his activities?

What do you think now? Would HP have a CFAA civil case against him?

If you want a hint, read this post: Employment Agreement Restrictions Determined Whether Employees Exceeded Authorized Access Under Computer Fraud and Abuse Act

Read more about the underlying case involving HP: Man Convicted In HP Computer Fraud Sales Scheme « CBS Houston.

 


About the author

Shawn Tuma is a lawyer who is experienced in advising clients on digital business risk which includes complex digital information law and intellectual property issues. This includes things such as trade secrets litigation and misappropriation of trade secrets (under common law and the Texas Uniform Trade Secrets Act), unfair competition, and cyber crimes such as the Computer Fraud and Abuse Act; helping companies with data security issues from assessing their data security strengths and vulnerabilities, helping them implement policies and procedures for better securing their data, preparing data breach incident response plans, leading them through responses to a data breach, and litigating disputes that have arisen from data breaches. Shawn is a partner at BrittonTuma, a boutique business law firm with offices near the border of Frisco and Plano, Texas which is located minutes from the District Courts of Collin County, Texas and the Plano Court of the United States District Court, Eastern District of Texas. He represents clients in lawsuits across the Dallas / Fort Worth Metroplex including state and federal courts in Collin County, Denton County, Dallas County, and Tarrant County, which are all courts in which he regularly handles cases (as well as throughout the nation pro hac vice). Tuma regularly serves as a consultant to other lawyers on issues within his area of expertise and also serves as local counsel for attorneys with cases in the District Courts of Collin County, Texas, the United States District Court, Eastern District of Texas, and the United States District Court, Northern District of Texas.