| WorldCom Announces
Accounting Fraud |
6/25. WorldCom stated
in a release
that "it intends to restate its financial statements for
2001 and the first quarter of 2002. As a result of an internal
audit of the company's capital expenditure accounting, it was
determined that certain transfers from line cost expenses to
capital accounts during this period were not made in
accordance with generally accepted accounting principles (GAAP).
The amount of these transfers was $3.055 billion for 2001 and
$797 million for first quarter 2002."
WorldCom further stated that Andersen LLP "audited the
company's financial statements for 2001 and reviewed such
statements for first quarter 2002".
WorldCom stated that it "has terminated Scott Sullivan as
chief financial officer and secretary" and "accepted
the resignation of David Myers as senior vice president and
controller." WorldCom also stated that it has
"notified" the Securities
and Exchange Commission (SEC). |
|
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| BSA Survey Shows IT
Professionals Expect Cyber Attack on Government |
6/25. The Business Software
Alliance (BSA) released the results of a survey
[PPS] of information technology professionals regarding their
beliefs about government cyber security. The survey found,
among other things, that 59 percent think a major cyber attack
against the government is likely in the next year.
The survey also found that 86 percent agree that as much or
more time and resources should be invested to protect against
cyber attacks than was devoted to Y2K. Ispos Public Affairs
surveyed online 395 private sector IT professionals between
June 5 and June 7.
BSA P/CEO Robert Holleyman stated in a release
that "There is a true sense of urgency here. It is
critical that the Bush Administration and Congress move
quickly on their commitments -- both financial and
philosophical -- to secure this nation and its critical
infrastructure". |
|
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| Senate Committee Holds
Hearing on Department of Homeland Security |
6/25. The Senate
Judiciary Committee's Subcommittee on Technology,
Terrorism, and Government Information held a hearing on
President Bush's proposal for reorganizing homeland defense
infrastructure.
James Gilmore, a former Governor of Virginia, provided testimony.
He is Chairman of the Advisory Panel to
Assess Domestic Response Capabilities for Terrorism Involving
Weapons of Mass Destruction, which is also known as the
"Gilmore Commission". It has produced three annual
reports that have addressed, among other issues, cyber
security.
Gov. Gilmore testified that his panel has offered the
following recommendations: "Include private and State and
local representatives on the interagency critical
infrastructure advisory panel"; "Create a commission
to assess and make recommendations on programs for cyber
security"; Establish a government funded, not for profit
entity for cyber detection, alert, and warning
functions"; "Convene a ``summit´´ to address
Federal statutory changes that would enhance cyber
assurance"; "Create a special ``Cyber Court´´
patterned after the court established in FISA"; and
"Develop and implement a comprehensive plan for cyber
security research, development, test, and evaluation".
David Walker, Comptroller General of the U.S., submitted testimony
[PDF] titled "Proposal for Cabinet Agency Has Merit, But
Implementation Will be Pivotal to Success".
He wrote that "There is likely to be considerable benefit
over time from restructuring some of the homeland security
functions, including reducing risk and improving the economy,
efficiency and effectiveness of these consolidated agencies
and programs. Realistically, however, in the short term, the
magnitude of the challenges that the new department faces will
clearly require substantial time and effort, and will take
additional resources to make it fully effective. Numerous
complicated issues will need to be resolved in the short term,
including a harmonization of information technology systems
..."
He also wrote that "Within this framework, the Congress
will likely need to make trade off decisions between concerns
over access and utility of information and the concerns that
some Americans may have about civil rights issues associated
with any larger consolidation of domestically oriented
intelligence operations. It is also important to note that
while certain cyber/ critical infrastructure protection
functions are proposed for transfer into DHS, a significant
number of federal organizations involved in this effort will
remain in their existing locations, including the Critical
Infrastructure Protection Board, the Joint Task Force for
Computer Network Operations, and the Computer Investigations
and Operations Section of the FBI."
See also, prepared testimony of Paul
Light (Brookings), Ivo
Daalder (Brookings), and Ivan
Eland (Cato Institute). |
|
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| House Judiciary Committee
Holds Hearing on Identity Theft |
6/25. The House
Judiciary Committee's Subcommittees on Immigration, Border
Security, and Claims, and Crime, Terrorism, and Homeland
Security, held a joint oversight hearing titled "The Risk
to Homeland Security From Identity Fraud and Identity
Theft".
Paul McNulty, U.S. Attorney for the Eastern District of
Virginia, wrote in his prepared
testimony that "Seven of the September 11th hijackers
-- none of whom actually lived in the Commonwealth -- had
obtained Virginia driver's licenses by submitting false proof
of Virginia residency."
Richard Stana of the General
Accounting Office (GAO) provided testimony
[PDF] titled "Identity Fraud: Prevalence and Links to
Alien Illegal Activities". He wrote that "Federal
investigations have shown that some aliens use fraudulent
documents in connection with more serious illegal activities,
such as narcotics trafficking and terrorism." He also
wrote that "Opportunities for identity theft related
criminal activities have been enhanced by growth of the
Internet, which increases the availability and accessibility
of personal identifying information."
See also, prepared testimony of James
Huse (Inspector General of the Social Security
Administration) and James
Mierzwinski (USPIRG). |
|
|
| House Commerce Committee
Holds Hearing on Department of Homeland Security |
6/25. The House
Commerce Committee's Subcommittee on Oversight and
Investigations held a hearing on the administration's proposal
to create a Department of Homeland Security.
See, prepared
testimony of Tom
Ridge, Director of the President's Office of Homeland
Security. See also, prepared testimony of Claude
Allen (Department of Health and Human Services), General
John Gordon (National Nuclear Security Administration), Jan
Heinrich (General Accounting Office), Harry
Vantine (Lawrence Livermore National Laboratory), David
Nokes (Sandia National Laboratories), Donald
Cobb (Los Alamos National Laboratory), Lew
Stringer (North Carolina Department of Crime Control and
Public Safety), Edward
Plaugher (Arlington County Fire Department), Philip
Anderson (Center for Strategic and International Studies),
Ronald
Atlas (American Society for Microbiology), and Tara
O'Toole (Center for Civilian Biodefense Studies). |
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| NTIA Director Addresses
Critical Infrastructure Protection |
6/25. National
Telecommunications and Information Administration (NTIA)
Director Nancy
Victory gave a speech
to the United Telecom Council in Washington DC.
She stated that "NTIA is the Government's lead agency for
ensuring that the critical communications networks within the
communications and information sector continue to function in
the face of a cyber or physical attack."
She also stated that President Bush's plan to create a new
Department of Homeland Security provides that
"infrastructure protection would be placed under a new
undersecretary for information analysis and infrastructure
protection ... Under the President's proposal, the
Department's Critical
Infrastructure Assurance Office and NIST's Computer Security Division
will become part of the Department of Homeland Security and
contribute to this new information analysis and infrastructure
protection function."
Most of her address focused on NTIA and FCC management of
spectrum. |
|
|
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| House Passes Bill Regarding
Computer Generated Images |
6/25. The House passed HR 4623,
the Child Obscenity and Pormography Prevention Act of
2002, by a vote of 413-8. See, Roll
Call No. 256. The House Judiciary
Committee approved the bill on June 18, and voted to
report the bill on June 19.
This bill is a reaction to the Supreme Court's April 16, 2002,
opinion
[PDF] in Ashcroft v. Free Speech Coalition, in which the Court
held unconstitutional on First Amendment and overbreadth
grounds provisions of the Child Pormography Prevention Act of
1996 (CPPA) banning computer generated images depicting minors
engaging in sezually explicit conduct.
Rep. Lamar Smith
(R-TX), the sponsor of the bill, issued a release
that states that the bill "reaffirms the ban on child
pormography in a manner that can withstand constitutional
review."
Attorney General John Ashcroft
stated in a release
that "I am pleased that the House of Representatives
passed the Child Obscenity and Pormography Prevention Act, a
bill that will strengthen the ability of law enforcement to
protect children from abuse and exploitation. I urge the
Senate to bring this important legislation to the floor as
soon as possible."
He added that "The Department of Justice remains solid in
its commitment to identify, investigate, and prosecute those
who sezually exploit children. I look forward to working with
Congress to see to it that this legislation becomes law, so
that we may continue in our efforts to eliminate child
pormography and prosecute offenders."
The 1996 CPPA expanded the federal prohibition on child
pormography to encompass new technologies. 18
U.S.C. § 2256, the section containing definitions, was
amended to provide that child pormography means "any
visual depiction, including any photograph, film, video,
picture, or computer or computer- generated image or picture,
whether made or produced by electronic, mechanical, or other
means, of sezually explicit conduct, where (A) the production
of such visual depiction involves the use of a minor engaging
in sezually explicit conduct; (B) such visual depiction is, or
appears to be, of a minor engaging in sezually explicit
conduct; (C) such visual depiction has been created, adapted,
or modified to appear that an identifiable minor is engaging
in sezually explicit conduct; or (D) such visual depiction is
advertised, promoted, presented, described, or distributed in
such a manner that conveys the impression that the material is
or contains a visual depiction of a minor engaging in sezually
explicit conduct;"
Justice Anthony Kennedy, who wrote the opinion of the Court in
Ashcroft v. FSC in April, concluded that the CPPA, to the
extent that it extends the federal prohibition against child
pormography to sezually explicit images that appear to depict
minors but were produced without using any real children, is
substantially overbroad and violates the First Amendment.
He elaborated that the prohibited conduct is not obscene under
the standard announced in Miller
v. California, 413 U.S. 15 (1973), and it is not child
pormography under the standard announced in New
York v. Ferber, 458 U.S. 747 (1982).
Supporters of HR 4623 have argued that the Supreme Court's
ruling leaves prosecutors unable to prosecute child
pormography that involves the use of children, because it is
nearly impossible to prove that a photograph is not computer
generated. That is, a defense attorney can defeat a criminal
prosecution simply by arguing that images of child pormography
might have been computer generated, because the prosecution
cannot prove the contrary.
HR 4623 amends § 2256(8)(B) to read "such visual
depiction is a computer image or computer- generated image
that is, or is nearly indistinguishable ... from, that of a
minor engaging in sezually explicit conduct". In
addition, the bill also provide that "it shall be an
affirmative defense to a charge of violating this section that
the alleged offense did not involve the use of a minor or an
attempt or conspiracy to commit an offense under this section
involving such use."
This language shifts the burden of proving that an image is
computer generated to the defendant. Opponents of the bill, a
small group of Democrats on the Judiciary Committee, have
argued that this burden shifting is unconstitutional. In
rebuttal, supporters of the bill have argued that burden
shifting is permissible when it is the the defendant who is in
possession of the relevant facts.
In addition, supporters of the bill have relied upon the
concurring opinion of Justice Clarence Thomas in Ashcroft v.
FSC. Thomas wrote in April that "technology may evolve to
the point where it becomes impossible to enforce actual child
pornography laws because the Government cannot prove that
certain pornographic images are of real children. In the event
this occurs, the Government should not be foreclosed from
enacting a regulation of virtual child pornography that
contains an appropriate affirmative defense or some other
narrowly drawn restriction. ... The Court does leave open the
possibility that a more complete affirmative defense could
save a statute's constitutionality ..."
Editor's Note. TLJ Daily E-Mail Alert is delivered by
e-mail. Some subscribers receive their copies via e-mail
servers that run e-mail filtering software that blocks the TLJ
Daily E-Mail Alert if it contains certain words. TLJ
intentionally misspells certain words, such as pormography, to
circumvent this blocking. |
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| Securities News |
6/25. The Dallas, Texas law firm of Gardere Wynne Sewell agreed
to pay $1.2 Million for violating a court order in a pending Securities and Exchange Commission
(SEC) civil lawsuit against one of the firm's former clients.
See, SEC
release.
6/24. The Securities and
Exchange Commission (SEC) instituted an administrative
proceeding against one Benjamin Snyder, a 17 year old
investor. He purchased shares in a thinly traded stock through
an online brokerage account that his father had just opened
for him. He then posted a bogus Bloomberg news story in
Internet message boards about that stock. Other investors did
not act upon his postings. The price did not rise. However,
the SEC took notice. It concluded that he violated Section
10(b) of the Exchange Act and Rule 10b-5 thereunder. And, his
father closed his account. See, SEC
order instituting proceedings. |
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| More News |
6/24. The Supreme
Court denied certiorari in Fin Control Systems v.
Surfco Hawaii, No. 01-863, a patent infringement case.
See, Order
List [PDF] at page 2.
6/24. The Supreme
Court denied certiorari in Jazz Photo v. USITC, No.
01-1158, and Fuji Photo Film v. Jazz Photo, No.
01-1376. See, Order
List [PDF] at page 8.
6/25. The Customs Service published a notice
in the Federal Register describing its interim rule regarding
electronic access to passenger name records (PNR). The interim
rule requires air carriers to provide Customs with electronic
access to requested PNR information contained in the carrier's
automated reservation system and/or departure control system.
The notice also request public comments, which must be
received by August 26, 2002. See, Federal Register: June 25,
2002, Vol. 67, No. 122, at Pages 42710 - 42713.
6/17. Ihsan Elashyi, aka Sammy Elashi, plead guilty in U.S.
District Court (NDTex) to exporting computer equipment to
Saudi Arabia in violation of a Department of Commerce
Temporary Denial Order. Elashyi plead guilty to violation of
50 U.S.C. § 1701, et seq. and accompanying sections of Title
15 of the Code of Federal Regulations, for shipping in
violation of a Temporary Denial Order. He also plead guilty to
access device fraud, money laundering, and wire fraud. See, USAO
release and BIS
release. |
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| Publication Schedule |
| The Tech Law Journal Daily E-Mail Alert will not be
published on July 3, 4, or 5, because of the Independence Day
holiday. |
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| About Tech Law Journal |
Tech Law Journal publishes a free access web site and
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information page.
Contact: 202-364-8882; E-mail.
P.O. Box 4851, Washington DC, 20008.
Privacy
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Notices
& Disclaimers
Copyright 1998 - 2002 David Carney, dba Tech Law Journal. All
rights reserved. |
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| Wednesday, June 26 |
The House will meet at 10:00 AM for legislative business.
The Supreme Court is on recess until Thursday, June 27.
8:30 AM - 2:00 PM. The Progressive
Policy Institute (PPI) will host a conference on President
Bush's proposal to establish a Department of Homeland
Security, including how technology and private sector
entrepreneurial talents can be tapped to help break down the
bureaucratic barriers to sharing information and assessing
threats. The scheduled speakers include Sen. Joe Lieberman
(D-CT), Rep. Ellen
Tauscher (D-CA), Rep.
James Moran (D-VA), Rob Atkinson (PPI's Technology &
New Economy Project), John Cohen (PPI), and Thomas Siebel
(Ch/CEO of Siebel Systems). See, PPI
notice. Location: The Hotel Washington, 515 15th Street,
NW.
9:30 AM. The Senate
Governmental Affairs Committee will hold a hearing to
examine the relationship between a Department of Homeland
Security and the intelligence community. Location: Room
342, Dirksen Building.
10:00 AM. The Senate
Judiciary Committee will hold a hearing to examine the
President's proposal for reorganizing homeland defense
infrastructure. See, notice.
Press contact: Mimi Devlin at 202 224-9437. Location: Room
226, Dirksen Building.
10:00 AM. The House
Commerce Committee's Subcommittee on Telecommunications
and the Internet will hold a hearing titled Area Code
Exhaustion: What are the Solutions? Webcast. Press
contact: Ken Johnson or Jon Tripp at 202 225-5735. Location:
Room 2322, Rayburn Building.
10:00 AM. The House
Commerce Committee's Subcommittee on Commerce, Trade, and
Consumer Protection will hold a hearing on HR __, the Financial
Accounting Standards Board Act. Webcast. Press contact:
Ken Johnson or Jon Tripp at 202 225-5735. Location: Room 2123,
Rayburn Building.
10:15 AM. The House
International Relations Committee will hold a hearing and
markup of HR __, the Homeland Security Act of 2002.
Webcast. Location: Room 2172 Rayburn Building.
10:15 AM. Federal Trade
Commission (FTC) Chairman Timothy Muris, Rep. Frank Wolf (R-VA),
and others will hold a roundtable discussion to discuss online
gambling directed toward children. See, FTC notice.
Location: Room H-309, The Capitol.
10:30 AM. The House Armed
Services Committee will hold a hearing on the President's
proposal to create a new Department of Homeland Security
and its impact on the Department of Defense. Location: Room
2118, Rayburn Building.
11:30 AM. The American
Electronics Association (AeA) will hold a press briefing
to release a study titled Cyberstates 2002: A State by
State Overview of the High Technology Industry. Lunch will
be served. See, AeA
release. Location: AeA, 601 Pennsylvania Ave, NW, North
Building, Suite 600.
12:00 NOON - 1:30 PM. The Congressional Economic Leadership
Institute and the National
Venture Capital Association will host a luncheon briefing
to release a study of the economic impact of venture capital
investment in the United States. Rep. Anna Eshoo (D-CA)
will speak. For an invitation, contact Emily Mendell at
610 359-9609. Location: Room B340, Rayburn Building.
2:00 PM. The House
Judiciary Committee will hold a legislative hearing on the
proposal to create a Department of Homeland Security. Tom
Ridge, Director of the Office of Homeland Security, will
testify. Webcast. Press contact: Jeff Lungren or Terry Shawn
at 202 225-2492. Location: Room 2141, Rayburn Building.
6:30 - 8:30 PM. The FCBA's
Young Lawyers Committee and Georgetown University Law Center (GULC)
will hold a CLE seminar titled Accounting Issues for
Telecommunications Lawyers. For more information, contact
the GULC at 202 662-9890 or cle@law.georgetown.edu.
Location: Piper Marbury
Rudnick & Wolfe, 1200 19th Street, NW. |
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| Thursday, June 27 |
The House will meet at 10:00 AM for legislative business.
The Supreme Court will return from recess.
9:00 AM - 4:30 PM. The Agriculture Department's Rural Utilities
Service (RUS) will hold a meeting to receive public input
on "the challenges of deploying broadband services to
rural America, the successes, the role of competition in
providing access to rural areas". See, notice
in Federal Register. Location: Room 0348, South Building, U.S.
Department of Agriculture, 1400 Independence Ave., SW.
10:00 AM. The House
Judiciary Committee will hold a hearing titled Revisions
to the Attorney General's Investigative Guidelines.
Attorney General John Ashcroft
will testify. Webcast. Press contact: Jeff Lungren or Terry
Shawn at 202 225-2492. Location: Room 2141, Rayburn Building.
10:00 AM. The Senate
Judiciary Committee will hold an executive business
meeting. The agenda includes consideration of S
2395, an untitled bill to prevent and punish
counterfeiting and copyright piracy, and the nominations of Lavenski
Smith (to be a Judge of the U.S. Court of Appeals for the
8th Circuit) and John Rogers (to be a Judge of the U.S.
Court of Appeals for the 6th Circuit). See, notice.
Press contact: Mimi Devlin at 202 224-9437. Location: Room
226, Dirksen Building.
10:00 AM. The Senate
Finance Committee will hold a hearing on the nomination of
Charlotte Lane to be a member of the USITC.
Location: Room 215, Dirksen Building.
12:00 NOON - 1:30 PM. The FTC's Bureau of
Competition will hold a public workshop on merger
investigation best practices. This is the sixth workshop
of a seven part, five city, series. See, FTC release.
Location: FTC, Room 332, 600 Pennsylvania Avenue NW.
12:00 NOON. The Cato Institute
will host a panel discussion titled Antitrust Flies High:
Is the Orbitz Investigation Good News for Consumers? The
scheduled speakers are Gary Doernhoefer (Orbitz), James DeLong
(Competitive Enterprise
Institute), Andrew Steinberg (formerly with
Travelocity.com), Thomas Lenard (Progress
and Freedom Foundation), and Robert Atkinson (Progressive Policy Institute).
Lunch will follow. Webcast. See, notice.
Location: Cato, 1000 Massachusetts Ave., NW.
1:00 PM. The Senate
Governmental Affairs Committee will continue its hearing
to examine the relationship between a Department of Homeland
Security and the intelligence community. Location: Room 342,
Dirksen Building.
2:00 PM. The Senate
Judiciary Committee will hold a hearing on several pending
judicial nominations, including Dennis Shedd (to be a
Judge of the U.S. Court of Appeals for the 4th Circuit). See, notice.
Press contact: Mimi Devlin at 202 224-9437. Location: Room
226, Dirksen Building.
2:00 PM. The House
Judiciary Committee's Subcommittee on Courts, the Internet
and Intellectual Property will hold a hearing titled Unpublished
Judicial Opinions. Webcast. Press contact: Jeff Lungren or
Terry Shawn at 202 225-2492. Location: Room 2141, Rayburn
Building. |
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| Friday, June 28 |
The House will meet at 9:00 AM for legislative business.
8:30 - 11:00 AM. The Alliance
for Public Technology (APT) and the High Tech Broadband
Coalition (HTBC) will host a breakfast briefing titled From
Debate to Deployment: Changing the Broadband Reality. The
participants include FCC Commissioner Kathleen
Abernathy, who is scheduled to speak at 9:05 AM. Other
participants include Debbie Goldman (Communications Workers of
America), Allen Hammond (University
of Santa Clara School of Law), Edie Herman (Communications Daily),
Edward Neaf (Cambridge
Strategic Management Group), Paul Schroeder (APT), and
Gary Shapiro (Consumer
Electronics Association and HTBC). See, agenda. Press contact:
Matt Bennett at 202 263-2972 or mbennett @apt.org.
Location: Lowe's L'Enfant Plaza Hotel, 480 L'Enfant Plaza.
9:30 AM. The Senate
Governmental Affairs Committee will hold a hearing to
examine how the proposed Department of Homeland Security
should address weapons of mass destruction, and relevant
science and technology, research and development, and public
health issues. Location: Room 342, Dirksen Building.
10:00 AM. The House
Judiciary Committee's Subcommittee on Commercial and
Administrative Law will hold an oversight hearing titled Administrative
Law, Adjudicatory Issues, and Privacy Ramifications of
Creating a Department of Homeland Security. Audio webcast.
Press contact: Jeff Lungren or Terry Shawn at 202 225-2492.
Location: Room 2141, Rayburn Building.
Deadline to submit comments to the FTC
in response to its Notice of Proposed Rulemaking to amend its Telemarketing
Sales Rule. The new rule would impose user fees on
telemarketers, and their seller or telemarketer clients, for
their access to the national do not call registry, if
one is implemented. See, notice
in Federal Register. |
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| Monday, July 1 |
Neither the House nor the Senate will meet Monday July 1
through Friday July 5, due to the Independence Day work
period.
9:30 AM - 12:00 NOON. The Department of State's International
Telecommunication Advisory Committee (ITAC) will hold a
meeting to address preparations for the CITEL Assembly. For
more information, and security requirements, see notice
in the Federal Register.
Extended deadline to submit reply comments to the FCC in response
to its Notice of Proposed Rulemaking titled "In the
Matter of Appropriate Framework for Broadband Access to the
Internet over Wireline Facilities". See, May 29 notice
[PDF] extending deadline from June 3 to July 1. See also, Order
[PDF] extending deadline from May 14 to June 3, and original
notice in Federal Register.
Deadline to submit nominations to the NIST
for appointment to the Advanced
Technology Program Advisory Committee. See, notice
in Federal Register.
Deadline to submit nominations to the NIST
for appointment to the Visiting Committee
on Advanced Technology. See, notice
in Federal Register. |
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