former employee = current data thief

Fifth Circuit Upholds CFAA Conviction for Former Employee’s Misuse Causing Damage Based on Circumstantial Evidence

In United States v. Anastasio N. Laoutaris, 2018 WL 614943 (5th Cir. Jan. 29, 2018), the United States Fifth Circuit Court of Appeals affirmed a jury verdict finding Laoutaris guilty of two counts of computer intrusion causing damage, in violation of 18 U.S.C. § 1030(a)(5)(A) and (c)(4)(B)(i) of the Computer Fraud and Abuse Act.

Laoutaris had been an IT engineer for Locke Lord LLP; following the termination of his employment, he accessed to the firm’s computer network and issued instructions and commands that caused significant damage to the network, including deleting or disabling hundreds of user accounts, desktop and laptop accounts, and user e-mail accounts. This post-termination access was without authorization. He was ordered to pay restitution in the amount of $1,697,800 and sentenced to 115 months’ imprisonment.

On appeal, Laoutaris argued that “the evidence at trial was insufficient to support the jury’s verdict for both counts of conviction because there was no proof he was the person who accessed Locke’s network and caused the damage that occurred on the relevant dates.” Further, Laoutaris had an expert testify that the attacks came from China.

The Fifth Circuit disagreed and found “[t]he evidence at trial shows a rational jury could have found each essential element for the § 1030(a)(5)(A) offenses charged against Laoutaris, who elected to testify. Contrary to his assertions, there was ample circumstantial evidence identifying him as the perpetrator of these offenses.”

The government’s brief indicates that the following evidence was admitted on this issue, beginning at page 6:

At trial, the government presented a substantial volume of circumstantial evidence identifying Laoutaris as the intruder. Logs created by the servers on the Locke Lord network showed that the intruder on December 1 and December 5 connected to the network using LogMeIn, which was installed on the HOBK01 backup server in Houston, and accessed the network using the credentials of a Windows “master services account” called svc_gn and its associated password. (ROA.1463-1515, 2835-47.) The IP address of the intruder on December 1 and December 5 was (ROA.2768, 2835.)
That IP address was assigned to The Planet. (ROA.1077-79.) Laoutaris was an employee of The Planet at the time. (ROA.1068-70; see also ROA.2635-83.) Kelly Hurst, Laoutaris’s supervisor at The Planet, testified that the IP address was The Planet’s public wireless network at the Houston corporate office, which employees would be able to use while working out of The Planet’s corporate office. (ROA.1077-78.)
*7 Laoutaris was also associated with the LogMeIn software running on the Houston backup server. The software program was installed by a person who identified his email address as “” (ROA.1304-07, 2848.) Records from Microsoft established that the account was created by “A.N. Laoutaris.” (ROA.2587.) Further, several Locke Lord employees testified that “” was an email address they knew to be associated with Laoutaris. (ROA.1306.) Additionally, Laoutaris’s personnel file included his resume, where he used the email address, and an email he sent on his last day providing as his forwarding email address. (ROA.2550.) Even after he quit, Laoutaris used that email address to send a message to a former colleague at Locke Lord making disparaging comments about the firm and his former supervisor. (ROA.2559-60.) Laoutaris continued using the email address as recently as July 2014, after he was indicted. (ROA.2681.)
The government also presented evidence establishing that Laoutaris had the password for the “svc_gn” account. The “svc_gn” account was the “master of all masters” account that had “no limits” on what it could do within the Locke Lord network. (ROA.1147.) IT engineers at Locke Lord explained that all of the engineers would from time to time use the “svc_gn” account when performing various tasks on the network and that all the *8 engineers had the password. (ROA.1147.) The jury heard evidence that Laoutaris asked for, and received, the password for the “svc_gn” account shortly before quitting the law firm. On August 10, 2011, a few days before Laoutaris quit, he requested the password from Michael Ger and Stan Guzic, two of the other IT engineers at Locke Lord. (ROA.2556-57.) Guzic testified that Laoutaris “constantly asked us for the password” and thus “to help him remember it, we used his name within the password itself” – specifically, “4nick8.” (ROA.1151.)
Not only was Laoutaris specifically tied to the December 1 and December 5 attacks, the government presented evidence tying him to at least 12 unauthorized intrusions into the Locke Lord network through LogMeIn. (ROA.2703-16, 2746, 2756, 2758, 2760, 2762, 2764, 2766, 2768, 2835, 2849.) Each of those intrusions originated from an IP address that was tied back to Laoutaris – either his home or his place of employment. (ROA.2703-16.)
The government’s brief also provides an excellent example of how to calculate a loss in a case such as this, beginning at page 12.


Shawn Tuma (@shawnetuma) is an attorney with an internationally recognized reputation in cybersecurity, computer fraud, and data privacy law. He is a Cybersecurity & Data Privacy Attorney at Scheef & Stone, LLP, a full-service commercial law firm in Texas that represents businesses of all sizes throughout the United States and, through its Mackrell International network, around the world.

Former Cardinals exec sentenced to prison for hacking Astros

HOUSTON (AP) — A federal judge sentenced the former scouting director of the St. Louis Cardinals to nearly four years in prison Monday for hacking the Houston Astros’ player personnel database and email system in an unusual case of high-tech cheating involving two Major League Baseball clubs.

Source: Former Cardinals exec sentenced to prison for hacking Astros

Law360 (paywall required) article: Ex-Cardinals Director Gets 46 Months For Astros Hacking

Can a Company Remotely Wipe an Ex-Employee’s Device?

Note: this article was previously posted on Norse’s DarkMatters.

One of my favorite sayings about cyber risk is “an ounce of prevention is cheaper than the very first day of litigation.” A recent case provides a nice example of exactly what I mean. In this case, an effective BYOD policy could have saved this company tens of thousands of dollars, at least. Continue reading “Can a Company Remotely Wipe an Ex-Employee’s Device?”

Departing Employee Taking Data from “Restricted” but Unsecured Folder Doesn’t Violate CFAA

TAKEAWAYS: If your company intends to limit its employees access to certain information on the company network, (1) make sure appropriate technological restrictions are in place and are working; and (2) make sure there are appropriate policies or other documentation in place to show the employees subjectively knew it was off limits.

When an employer intends to keep a network folder restricted from employees, but fails to (1) objectively communicate this intention or (2) secure the folder from general access, an employee who accesses the folder and takes data from it does not violate the Computer Fraud and Abuse Act (CFAA), even if he does so for an improper purpose.

Why policies are critical–explained HERE Continue reading “Departing Employee Taking Data from “Restricted” but Unsecured Folder Doesn’t Violate CFAA”

Be Careful of Commentary on 7th Cir.’s Fidlar Tech CFAA “Intent to Defraud”Case

I have read several blog posts that are stating, as a blanket proposition, that you must prove intent to defraud for CFAA claims. This, they say, comes from the recent Seventh Circuit Court of Appeals case, Fidlar Technologies v. LPS Real Estate Data Solutions, Inc., 2016 WL 258632 (7th Cir. Jan. 21, 2016) (opinion).

This is reading too much into the court’s opinion. Continue reading “Be Careful of Commentary on 7th Cir.’s Fidlar Tech CFAA “Intent to Defraud”Case”

Court Order Provides CFAA Authorization to Access Computer, Even if Later Overturned

A party who accesses a computer pursuant to a court order authorizing him to seize and access the computer will not be found in violation of the Computer Fraud and Abuse Act if such order is later overturned.

“An essential element of a CFAA claim under 10 U.S.C. § 1030 is that the [defendant] accesses a computer ‘without authorization or exceeds authorized access.’ Hunn v. Dan Wilson Homes, Inc., 789 F.3d 573, 583-84 (5th Cir. 2015) (holding that ‘because [the defendant] did not exceed authorized access, he did not violate the Computer Fraud and Abuse Act’). Here, the state-court turnover orders authorized Shor to access the computers. Even though those orders were ultimately overturned, because Shor had authorization at the time pursuant to a court order to access the computers, Black does not state a claim under the CFAA. See id. (discussing CFAA claim, reasoning that the defendant accessed the computer while still employed at the plaintiff’s company). Land and Bay Gauging, L.L.C. v. Shor, 2015 WL 4978993 (5th Cir. Aug. 21, 2015).

See earlier post.

The CFAA Requires Access of a Computer — Not Just Access to Information

To have a valid CFAA claim, there must be an access to a computer.

The Computer Fraud and Abuse Act is often referred to as an “access crime” because the act that is prohibited is accessing a computer. Misusing information that someone else obtained from a computer is not accessing a computer. Doing so may be wrong for other reasons, but it is not a CFAA violation because it does not entail accessing a computer.

The court in New Show Studios LLC v. Needle, 2014 WL 2988271 (C.D. Cal. June 30, 2014) addressed this issue where a former employee continued to use his former employer’s information after his employment terminated by having people who still worked for the company access information and supply it to him. The court dismissed the CFAA claim because the plaintiff did not plead any access to a computer:

To prevail on a CFAA claim, plaintiffs must establish, among other things, that defendants “intentionally accessed a computer.” LVRC Holdings LLC, 581 F.3d at 1132. But the FAC is devoid of any allegation that the defendants accessed any computer. Instead, the FAC only alleges that Needle “gained access to confidential and sensitive information.” FAC ¶ 37. Accessing plaintiffs’ information, however, is not the same thing as accessing plaintiffs’ computer systems, even if that information was at some point stored on those computers. The Ninth Circuit has specifically cautioned against reading the CFAA as an “expansive misappropriation statute.” Nosal, 676 F.3d at 857; see also id. at 863 (explaining that the “general purpose” of the CFAA “is to punish hacking—the circumvention of technological access barriers—not misappropriation of trade secrets”). If plaintiffs wish to assert a claim under the CFAA, they must plainly allege that defendants’ accessed their computer systems, and explain the basis for those allegations.

Using Single Individual Password to Access News Site to Share Info With Others is Not CFAA Interruption of Service

A person’s use of his single individual use password to access a news site to access content that he then shared with over 100 other people did not cause any impairment to the integrity or availability of data or loss due to interruption of service as required to bring a civil claim under the Computer Fraud and Abuse Act.

Capitol Audio Access, Inc. v. Umemoto, 980 F. Supp.2d 1154 (E.D. Cal. 2013).

Employers Receive Friendly Computer-Fraud-And-Abuse-Act Ruling From Louisiana Court

The U.S. Eastern District of Louisiana recently sided with employers in the on-going judicial debate over interpreting the Computer Fraud and Abuse Act “CFAA”. See Associated Pump & Supply Co., LLC v. Dupre, et al., No. 14-0009 E.D. La.. Associated Pump sued its former employee Kevin Dupre for violating CFAA during his alleged scheme to steal Associated Pump’s trade secrets. The complaint sets forth a now familiar scenario: shortly before resigning, Dupre used his work computer to violate a confidentiality agreement and known company policies by improperly accessing and obtaining Associated Pump’s confidential information to use while employed by Associated Pump’s competitor. These allegations, the Court held, state a viable CFAA claim.

via Employers Receive Friendly Computer-Fraud-And-Abuse-Act Ruling From Louisiana Court | Silicon Bayou News.

US v. Nosal Court Orders Restitution of $827,983.25

On April 24, 2013, a jury convicted Defendant David Nosal of three counts of computer fraud in violation of the Computer Fraud and Abuse Act “CFAA”, 18 U.S.C. § 1030a4, two counts of unauthorized downloading, copying, and duplicating of trade secrets without authorization, in violation of the Economic Espionage Act “EEA”, 18 U.S.C. § 1832a2, and one count of conspiring to violate the EEA. During sentencing, the Court ordered Defendant to pay restitution to his victim and indicated that the amount of restitution would be determined at a subsequent hearing. Having considered the parties arguments, the Court orders that Defendant pay $827,983.25 in restitution to Korn/Ferry.

via US v. Nosal, Dist. Court, ND California 2014.