Bush Signs Bill That Criminalizes Pretexting to Obtain Phone Records

1/12. President Bush signed HR 4709, the "Telephone Records and Privacy Protection Act of 2006". This act criminalizes the practice of pretexting to obtain confidential consumer records from telecommunications carriers and VOIP service providers. It also criminalizes the sale, transfer, or purchase of such confidential records, without the authorization of the consumer. However, the act exempts law enforcement and intelligence agencies.

There are already numerous federal statutes that prohibit various activities that are often associated with pretexting to obtain phone records. See, stories titled "Summary of Existing Federal Laws Related to Pretexting" and "Federal Criminal Statutes Related to Pretexting" in TLJ Daily E-Mail Alert No. 1,463, October 6, 2006, and story in this issue titled "Hewlett Packard Pretexter Pleads Guilty in Federal Court". However, this act now criminalizes pretexting to obtain phone records.

This act adds a new Section 1039 to Title 18, the criminal code. It makes no changes to Title 47, regarding communications. If the bill had amended Title 47, then the House Commerce Committee (HCC) would have also had jurisdiction over the bill. The House Judiciary Committee (HJC), which reported this bill, has jurisdiction over criminal law bills, but not communications bills.

First, this act prohibits the act of pretexting to obtain phone records. It provides that "Whoever, in interstate or foreign commerce, knowingly and intentionally obtains, or attempts to obtain, confidential phone records information of a covered entity, by --
  (1) making false or fraudulent statements or representations to an employee of a covered entity;
  (2) making such false or fraudulent statements or representations to a customer of a covered entity;
  (3) providing a document to a covered entity knowing that such document is false or fraudulent; or
  (4) accessing customer accounts of a covered entity via the Internet, or by means of conduct that violates section 1030 of this title, without prior authorization from the customer to whom such confidential phone records information relates;
  shall be fined under this title, imprisoned for not more than 10 years, or both."

Second, this act prohibits selling or transfering confidential phone records obtained by pretexting. It provides that "Except as otherwise permitted by applicable law, whoever, in interstate or foreign commerce, knowingly and intentionally sells or transfers, or attempts to sell or transfer, confidential phone records information of a covered entity, without prior authorization from the customer to whom such confidential phone records information relates, or knowing or having reason to know such information was obtained fraudulently, shall be fined under this title, imprisoned not more than 10 years, or both."

Third, this act prohibits purchasing or receiving confidential phone records obtained by pretexting. It provides that "Except as otherwise permitted by applicable law, whoever, in interstate or foreign commerce, knowingly and intentionally purchases or receives, or attempts to purchase or receive, confidential phone records information of a covered entity, without prior authorization from the customer to whom such confidential phone records information relates, or knowing or having reason to know such information was obtained fraudulently, shall be fined under this title, imprisoned not more than 10 years, or both"

However, it adds that "the exceptions specified in section 222(d) of the Communications Act of 1934 shall apply for the use of confidential phone records information by any covered entity". See, 47 U.S.C. § 222.

The act defines covered entity to include both "telecommunications carrier", as defined by the Communications Act, and "any provider of IP-enabled voice service".

Finally, it provides that "This section does not prohibit any lawfully authorized investigative, protective, or intelligence activity of a law enforcement agency of the United States, a State, or political subdivision of a State, or of an intelligence agency of the United States."

Rep. Lamar Smith (R-TX) introduced the bill on February 8, 2006. The House Judiciary Committee (HJC) approved it on March 2, 2006. See also, House Report No. 109-395. The House approved it on April 25, 2006, by a vote of 409-0. See, Roll Call No. 101. The Senate approved it by unanimous consent on December 8, 2006.

See also, story titled "Rep. Smith Introduces Bill to Criminalize Pretexting to Obtain Consumer Phone or VOIP Records" in TLJ Daily E-Mail Alert No. 1,308, February 13, 2006.

Hewlett Packard Pretexter Pleads Guilty in Federal Court

1/12. On January 10, 2007, the U.S. Attorney for the Northern District of California charged Bryan C. Wagner by criminal information [PDF] with one count of conspiracy in violation of 18 U.S.C. § 371, and one count of aggravated identity theft in violation of 18 U.S.C. § 1028A and aiding and abetting aggravated identity theft in violation of 18 U.S.C. § 2.

On January 12, 2007, Wagner plead guilty to the two counts charged in the information. The U.S. Attorney's Office (USAO) described this in a release a its "First Conviction" in the Hewlett Packard (HP) pretexting scandal.

Wagner was a minor figure in HP's surveillance operations in 2005 and 2006. He was one of the individuals who engaged in fraudulent conduct to acquire confidential personal information, such as phone records, of HP's targets.

The information suggests that the USAO is also investigating other persons, and may bring further charges. The USAO may be starting at the bottom of the conspiracy, and working its way up. The information discusses other "co-conspirators", "known and unknown", but does not identity who these persons are.

The information states that HP's investigation targeted "numerous individuals, including but not limited to (1) HP board members, employees, and others affiliated with HP: (2) the family members of the HP board members, employees, and others affiliated with HP; (3) reporters of CNET, the Wall Street Journal, the New York Times, and Business Week; and (4) the family members of these reporters."

The information states that HP sought "names; residential and business addresses; residential, business and personal telephone numbers; dates of birth; social security numbers; and confidential telephone records, including call logs, billing records, call registers and subscriber information ..."

It states that "the co-consiprators engaged in fraud and deceit, including but not limited to the misrepresentation of identity to obtain the confidential and personal information belonging to others (sometimes called ``pretexting´´). The co-conspirators also obtained and used the Social Security Numbers" of the targets, without their knowledge or consent. (Parentheses in original.)

The first count to which Wagner plead is conspiracy. 18 U.S.C. § 371 provides, in part, that "If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned not more than five years, or both."

The information states that on or about March 8, 2006, Wagner "established an online account for the local telephone service of Reporter Number One known to the United States, by using the social security number of that reporter. The telephone record information was requested by other co-conspirators."

The information states that the Social Security Number (SSN) was provided to Wagner by unnamed co-conspirators. Then, Wagner "used an e-mail account ... to establish the account for the telephone service of the reporter."

The information continues that Wagner then "accessed the online account of Reporter Number One and obtained the reporter's telephone records", which Wagner then forwarded "to other co-conspirators".

The information identifies the five offenses which Wagner conspired to commit: aggravated identity theft, wire fraud (18 U.S.C. § 1343), unauthorized computer access to information (18 U.S.C. § 1030), falsely representing an assigned social security account number (42 U.S.C. § 408(a)(7)), and disclosing and using a social security number (42 U.S.C. § 408(a)(8)).

The second count to which Wagner plead is aggravated identity theft, and aiding and abetting aggravated identity theft. 18 U.S.C. § 1028A(a) provides, in part, that "Whoever, during and in relation to any felony violation enumerated in subsection (c), knowingly transfers, possesses, or uses, without lawful authority, a means of identification of another person shall, in addition to the punishment provided for such felony, be sentenced to a term of imprisonment of 2 years." Subsection (c) lists wire fraud as well as the SSN crimes covered by 42 U.S.C. § 408.

The USAO release states that Wagner will not be sentenced until June 20, 2007. It does not describe the extent of Wagner's cooperation with investigators and prosecutors.

This case is U.S.A. v. Bryan C. Wagner, U.S. District Court for the Northern District of California, San Jose Division, D.C. No. CR 07 00016 JF, Judge Jeremy Fogel presiding.

See also, stories titled "Summary of Existing Federal Laws Related to Pretexting" and "Federal Criminal Statutes Related to Pretexting" in TLJ Daily E-Mail Alert No. 1,463, October 6, 2006.

Trade Negotiators Say Doha Deal is Doable

1/12. President Bush met with José Barroso, President of the European Commission in Washington DC on January 8, 2007. Bush stated at a joint White House event that "We talked about the importance for Europe and the United States to resolve any differences we have when it comes to the Doha round for trade, so that we can promote international trade." See, transcript.

Barroso said that "the most crucial factor is the successful negotiations for Doha. Doha is not just about trade, it's also about development, it's about having a multilateral approach to trade. There is now the defining moment. We are really at defining moment, and we had a very good exchange, and we gave instructions to all negotiators to come with a solution as soon as possible. And of course it is important to engage also others, because this is a real global agreement that we are trying to build. And this will be a very important signal for the world community if we show that it is possible to have a global approach to trade and development."

Also, Susan Schwab, the U.S. Trade Representative, met with Peter Mandelson, the European Commissioner for Trade, on January 8. Schwab said at a joint news conference that "the United States and the EU are committed to seeking a successful conclusion to the Doha Round." See, transcript [4 pages in PDF].

Mandelson (at right) said that "We came to Washington today looking for new impetus for the Doha negotiations and I believe we found it. The meetings that we’ve had, first of all, on the Hill with Speaker Pelosi and Senate Majority Leader Harry Reed, then with the President and his colleagues, and now between myself and Sue have given us renewed confidence that the Doha deal is doable and that it can be done within the narrow timeframe that has opened up. I strongly welcome the political leadership of President Bush and President Barroso. I think completing this negotiation will depend on that kind of political will."

He added that "Our discussions with President Bush suggest that he wants a successful and early deal in the world trade talks and Europe must work with him to achieve a deal."

On January 12, Schwab traveled to Geneva, Switzerland, to meet with Pascal Lamy, Director General of the World Trade Organization (WTO). She stated at a news conference there that she has also held recent meetings with her counterparts from Japan, the European Union, and Brazil regarding the Doha round. She said that "We've got a long way to go for a breakthrough", but "we're making progress".

She also said that "The United States is going to need an extension of Trade Promotion Authority to implement any Doha Round agreement. ... However, to the extent that we’re making progress in the Doha Round I think you are likely to see Congress and US constituencies much more enthusiastic about moving ahead with an extension of Trade Promotion Authority." See, transcript [6 pages in PDF].

House & Senate Bills Would Temporarily Ban State & Local Taxes that Discriminate Against Mobile Services

1/12. Rep. Mary Bono (R-CA) and Rep. George Radanovich (R-CA) introduced HR 436, the "Cell Phone Tax Moratorium Act of 2007", on January 12, 2007. Sen. John McCain (R-AZ), Sen. Jim DeMint (R-SC), Sen. Gordon Smith (R-OR), and Sen. John Sununu (R-NH) introduced S 166, also titled the "Cell Phone Tax Moratorium Act of 2007", on January 4, 2007. The two bills are substantially identical.

These bills provide that "No State or political subdivision thereof shall impose a new discriminatory tax on or with respect to mobile services, mobile services providers, or mobile services property, during the 3-year period beginning on the date of enactment of this Act".

The phrase "new discriminatory tax" encompasses various taxes that discriminate against wireless services, and that were not "generally imposed and actually enforced prior to the date of enactment of this Act".

The bill exempts state and federal universal service taxes, and taxes for "the support of E-911 communications systems".

Rep. Bono (at right) stated in a release that consumers have "witnessed dramatic increases in cell phone fees as a direct result of discriminatory taxes imposed by cities and states across the nation".

She continued that "Today, the national average sales tax is around six percent on goods and services; but Americans are paying an average of 17% in State and local taxes on cell phone service. With an ever-growing number of Americans utilizing wireless and broadband technology, these excess taxes being imposed on mobile service providers are crippling the efforts to expand and improve critical infrastructure needed to keep pace with demand."

Rep. Radanovich stated in this release that "Wireless services should not be taxed differently than any other good or service that is a part of our mainstream economy and can be important for both business and personal reasons."

Sen. McCain (at left) stated in a release that "Excessive taxes dampen innovation, and are regressive, hitting the most vulnerable customers the hardest. Although more then 72 percent of all Americans own a cell phone, 26 percent said they could not live without it because it is their only communications source".

"Cell phone only owners are often those who find it difficult to afford a wired and a wireless phone.  Additionally, according to the same report, 74 percent of the Americans say they have used their cell phone in an emergency and gained valuable assistance", said Sen. McCain. "Some State and local governments cannot move beyond the idea that wireless services are some kind of luxury item that can be taxed at a higher rate."

Steve Largent, head of the CTIA -- The Wireless Association, stated in a release that wireless users continue "to be the target of discriminatory taxation". He added that "As a nation, we simply cannot make the strides we have to make with regard to broadband adoption if we continue to tax this innovative and high-tech service in such an exorbitant and regressive fashion."

The House bill was referred to the House Judiciary Committee (HJC). The Senate bill was referred to the Senate Finance Committee (SFC).

People and Appointments

1/12. Neil Fried was named senior Republican counsel for telecommunications for the House Commerce Committee (HCC). He has worked for the HCC since 2003.

1/12. Joseph Palmore was named Deputy General Counsel at the Federal Communications Commission (FCC). He will replace Eric Miller, who will go to work for the Department of Justice's (DOJ) Office of the Solicitor General (OSG). Palmore has worked at the FCC since October of 2005. Before that, he worked for the law firm of Sidley Austin.

More News

1/12. The U.S. Court of Appeals (FedCir) issued its opinion [17 pages in PDF] in E-Pass v. 3Com, affirming the District Court's judgment of noninfringement. E-Pass filed a complaint in 2000 in the U.S. District Court (NDCal) against 3Com, Palm and others alleging that Palm handheld devices infringe its U.S. Patent No. 5,276,311, titled "Method and device for simplifying the use of a plurality of credit cards, or the like". This case is E-Pass Technologies, Inc. v. 3Com Corporation, Palm, Inc., et al., U.S. Court of Appeals for the Federal Circuit, App. Ct. Nos. 2006-1356, 2006-1357, and 2006-1358, appeals from the U.S. District Court for the Northern District of California, Judge Lowell Jensen presiding, D.C. Nos. Nos. 00-CV-2255, 03-CV-4747, and 04-CV-0528.

1/12. The Federal Communications Commission (FCC) released a second version of its quarterly report [PDF] titled "Report on Informal Consumer Inquiries and Complaints: 3rd Quarter Calendar Year 2006". The FCC published the first version of this report in its web site in late 2006, but promptly withdrew it from the web site.

Rep. Ehlers Wants NAS to Study the Value of Online Education

1/11. Rep. Vernon Ehlers (R-MI) introduced HR 412, the "Independent Study of Distance Education Act of 2007", a bill to require the National Academy of Sciences (NAS) to conduct a study of "of the quality of distance education programs, as compared to campus-based education programs, at institutions of higher education".

Rep. Ehlers stated in a release that "before we spend more federal dollars on this, we need to know more about the quality of distance education programs". He added that "there is no scientifically correct, statistically valid study of the quality of online distance education programs compared to campus-based programs. That's why I have proposed this bill."

The bill was referred to the House Education and Labor Committee. The bill has no original cosponsors.

People and Appointments

1/11. Alan Slobodin was named Republican chief counsel for the House Commerce Committee's (HCC) Subcommittee on Oversight and Investigations. He has worked for the HCC since 1995.

1/11. Louis Freeh and Robert Woodson were appointed to the Department of Homeland Security's (DHS) Homeland Security Advisory Council (HSAC). See, DHS release.

More News

1/11. The Federal Communications Commission (FCC) released the text [21 pages in PDF] of its Declaratory Ruling (DR) in its proceeding titled "In the Matter of Telecommunications Relay Services and Speech-to-Speech Services for Individuals with Hearing and Speech Disabilities Internet-based Captioned Telephone Service". The FCC adopted, but did not release, this item on December 20, 2006. This item is FCC 06-182 in CG Docket No. 03-123.

1/11. The U.S. District Court (NDIowa) sentenced Michael Millette to serve over three years in prison following his plea of guilty to conspiring to dispense Schedule III and Schedule IV controlled substances without a legitimate medical purpose and outside the usual course of medical practice. He prescribed controlled substances for distribution by internet based companies. The U.S. Attorneys Office (NDIowa) stated in a release that "Millette is the ninth doctor to be sentenced in the Northern District of Iowa's Internet pharmacy investigation". Three more await sentencing. While these prosecutions are being handled in Iowa, the defendants reside in locations around the U.S.

Go to News from January, 6-10, 2007.