The World in U.S. Courts: Summer 2017 - White Collar Criminal Law/Money Laundering
June.01.2017
The defendant, an Italian citizen resident in Rome, was alleged to have created a “botnet” to further a “click fraud” perpetrated against advertising companies. He was charged with criminal violations of US “computer intrusion” statutes, wire fraud, and money laundering. The scheme allegedly involved the development of software that infiltrated thousands of computers worldwide, including in the US, which were then commanded to “click” on advertisements for which defrauded advertising companies made payments based on the number of “clicks” an advertisement received.
As relevant here, Gasperini sought to dismiss the indictment on grounds that the Wire Fraud Statute could not be applied extraterritorially to reach conduct allegedly occurring only in Italy. (No similar argument was made regarding the computer intrusion statutes, which the Court found had extraterritorial reach.) The Court agreed that the Wire Fraud Statute applied only US domestically, but found the alleged scheme to satisfy that requirement. To determine the geographic location of an alleged fraud, the Court stated it must determine the “focus” of the wire fraud statute, and then consider whether the “territorial events or relationships” implicated by that focus “were located domestically” and were” substantial” and “integral to the fraud.” Choosing the more conservative of tests articulated in prior cases, the Court first concluded that the “focus” of the wire fraud statute was the alleged scheme. It then noted that Gasperini was alleged to have leased a server in the US that had infected more than 800 US computers as part of the scheme, and concluded these US contacts were sufficient to create a US fraud for purposes of the Wire Fraud Statute.