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1 UNITED STATES DISTRICT COURT
1 SOUTHERN DISTRICT OF NEW YORK
2 ------------------------------x
2
3 UNITED STATES OF AMERICA
3
4 v. 11 Cr. 666 (LAP)
4
5 JOHN DOE,
5 Arraignment
6 Defendant.
6
7 ------------------------------x
7
8 New York, N.Y.
8 August 5, 2011
9 11:35 a.m.
9
10 Before:
10
11 HON. LORETTA A. PRESKA
11
12 District Judge
12
13
13 APPEARANCES
14
14
15 PREET BHARARA
15 United States Attorney for the
16 Southern District of New York
16 JAMES PASTORE
17 Assistant United States Attorney
17
18
18 FEDERAL DEFENDANTS OF NEW YORK, INC.
19 Attorneys for Defendant
19 BY: PHILIP L. WEINSTEIN
20 PEGGY CROSS
21
22
23
24
25
SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300
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1 (Case called)
2 THE COURT: Good morning, counsel. Is the government
3 ready?
4 MR. PASTORE: We are. Jim Pastore for the United
5 States. Joining me at counsel table is FBI Special Agent
6 Christopher Tarbell. Good morning, your Honor.
7 MS. CROSS: Good morning, your Honor. The Federal
8 Defenders of New York by Peggy Cross and Philip Weinstein for
9 Mr. Monsegur.
10 THE COURT: Good morning. How do you wish to proceed?
11 MR. PASTORE: Your Honor, at this time the government
12 has two motions for the Court's consideration. First, pursuant
13 to Title 28, United States Code, section 50.9, the government
14 is moving to seal the courtroom. This application has been
15 authorized by Associate Deputy Attorney General David Margolis
16 in compliance with the relevant statutes.
17 We also believe that putting on the record the reasons
18 for the closure at this time would defeat the purpose of
19 closing the proceedings. We do believe that there is a
20 likelihood that it would, among other things, compromise the
21 safety of the defendant to have these proceedings open, that no
22 reasonable alternatives exist for protecting the interests at
23 stake, that closure is clearly likely to prevent the harm
24 sought to be avoided.
25 We are of course going to minimize the degree of
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1 closure to the extent possible, meaning that at an appropriate
2 time we will be seeking to unseal these proceedings. That is
3 something that we have discussed with defense counsel, and I
4 understand defense counsel has no objection to that motion.
5 THE COURT: In light of the danger to the defendant, I
6 am certain that defense counsel has no objection. Is that
7 right, counsel?
8 MS. CROSS: That's right, your Honor.
9 THE COURT: Thank you. That motion is granted.
10 MR. PASTORE: Thank you, your Honor. With respect to
11 the government's second motion, we move to seal the docket in
12 this case. On June 8, 2011, Magistrate Judge Cott sealed the
13 proceedings before the magistrate court. We would ask that
14 that order essentially be continued here and that the docket
15 remain sealed until such time as we can up seal it.
16 THE COURT: For the reasons set forth by Judge Cott on
17 that occasion and in light of the danger to the defendant, that
18 order is extended.
19 MR. PASTORE: Your Honor, I believe at this time the
20 defendant has executed a waiver of indictment. The waiver of
21 indictment covers not only waiving indictment here in this
22 district but also in four other districts.
23 THE COURT: Yes, sir.
24 MR. PASTORE: It also includes a specific waiver of
25 the defendant's rights to any sort of personal appearance in
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1 those other districts.
2 THE COURT: Yes, sir.
3 MR. PASTORE: As well as any right to appointed
4 counsel in those other districts. He is comfortable, as I
5 understand it, proceeding through the Federal Defenders of New
6 York. This is in anticipation of Rule 20 proceedings that will
7 bring all of those informations, the four informations from
8 other districts, before this district for resolution.
9 THE COURT: Yes, sir.
10 Ms. Cross, how does your client pronounce his last
11 name, please?
12 MS. CROSS: "Mon-se-gur," your Honor.
13 THE COURT: Thank you. Mr. Monsegur, would you stand
14 and raise your right hand.
15 (Defendant sworn)
16 THE COURT: Sir, have you received copies of the
17 information filed against you in the Southern District of New
18 York, the Eastern District of California, the Central District
19 of California, the Eastern District of Virginia, and the
20 Northern District of Georgia?
21 THE DEFENDANT: I did, your Honor.
22 THE COURT: Have you gone over those informations with
23 your attorneys?
24 THE DEFENDANT: Yes, I have.
25 THE COURT: Do you understand that you have the right
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1 to have your case presented to the grand jury in each of those
2 districts?
3 THE DEFENDANT: I do.
4 THE COURT: Do you understand that you are under no
5 obligation to give up, or to waive, that right?
6 THE DEFENDANT: I do.
7 THE COURT: Do you understand that if you do not waive
8 that right, the government would have to present your case to
9 the grand jury in each one of those districts?
10 THE DEFENDANT: I do.
11 THE COURT: Do I correctly understand that after
12 speaking with your attorneys, you have decided that it is in
13 your best interests to waive your right to have your case
14 presented to the grand jury in each of those districts?
15 THE DEFENDANT: Yes.
16 THE COURT: Sir, did you indicate your waiver of that
17 right by signing this document which I'm holding up now called
18 "Waiver of Indictment," which is dated August 5?
19 THE DEFENDANT: Yes.
20 THE COURT: Is that your signature there, sir, on the
21 top line?
22 THE DEFENDANT: Yes, it is.
23 THE COURT: Thank you.
24 I find that Mr. Monsegur has knowingly and voluntarily
25 waived his right to indictment not only in this district but in
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1 the other four districts I mentioned.
2 Thank you. You may be seated, sir.
3 Mr. Pastore?
4 MR. PASTORE: Yes, your Honor. We have provided the
5 Court with a copy of the information in the Southern District
6 of New York.
7 THE COURT: Yes, sir.
8 MR. PASTORE: It is a sealed information. At this
9 time I believe the defendant is prepared to be arraigned on
10 that information.
11 THE COURT: Mr. Monsegur, have you received a copy of
12 the information here in the Southern District of New York?
13 THE DEFENDANT: Yes.
14 THE COURT: Have you gone over it with your attorneys?
15 THE DEFENDANT: Yes, I have.
16 THE COURT: Would you like me to read the whole thing
17 out loud right now, or is it sufficient that you reviewed it
18 with counsel?
19 THE DEFENDANT: It's sufficient.
20 THE COURT: How do you now plead, sir?
21 THE DEFENDANT: Not guilty.
22 THE COURT: Thank you, sir. Just out of an excess of
23 caution, Mr. Monsegur, I wanted to be sure that you understood
24 in the waiver of indictment that you had also waived your right
25 to appear personally in those other four districts that I
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1 mentioned. Is that correct, sir?
2 THE DEFENDANT: Yes.
3 THE COURT: You had also in this document waived your
4 right to have separately pointed counsel in each one of those
5 districts, is that right, sir?
6 THE DEFENDANT: Yes.
7 THE COURT: Thank you very much.
8 Mr. Pastore.
9 MR. PASTORE: Your Honor, the parties have conferred.
10 If it is convenient for the Court, we would like to come back
11 on August 15th at 4:30 p.m. for what we anticipate will be a
12 guilty plea that will resolve each of the informations that we
13 have been discussing.
14 THE COURT: Yes, sir. Is that all right with you, Ms.
15 Cross?
16 MS. CROSS: Yes, your Honor.
17 THE COURT: August 15 at 4:30, counsel.
18 MR. PASTORE: We ask that time be excluded between now
19 and then so the parties can resolve the cases and continue
20 their discussions.
21 THE COURT: Any objection?
22 MS. CROSS: No objection, your Honor.
23 THE COURT: In order to permit counsel to continue
24 their conversations, the time between today and August 15 is
25 excluded from calculation under the Speedy Trial Act in the
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1 interests of justice.
2 MR. PASTORE: Your Honor, I did want to address bail
3 for a moment.
4 THE COURT: Yes, sir.
5 MR. PASTORE: This is a defendant who has been charged
6 with serious crimes. He is facing a significant amount of jail
7 time. I wanted to briefly address why the government continues
8 to believe that the bail conditions set by Magistrate Judge
9 Cott on June 8th continue to be appropriate.
10 Since literally the day he was arrested, the defendant
11 has been cooperating with the government proactively. Those
12 efforts have involved cooperation against targets of national
13 and international interests. Some of the groups against whom
14 the defendant is cooperating are known to retaliate against
15 people who cooperate with the government in ways ranging from
16 the mundane, for example, ordering hundreds of pizzas to
17 someone's house, to much more serious: Calling in hostage
18 situations in part by using family information and having a
19 SWAT team show up at that person's home. It's actually called
20 "swatting." It's fair to say that this defendant has already
21 incurred a significant amount of personal risk by deciding to
22 cooperate.
23 As to the cooperation itself, because it involves
24 efforts against targets both here and abroad, the defendant has
25 literally worked around the clock with federal agents. He has
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1 been staying up sometimes all night engaging in conversations
2 with co-conspirators that are helping the government to build
3 cases against those co-conspirators.
4 During this time the defendant has been closely
5 monitored by the government. We have installed software on a
6 computer that tracks his online activity. There is also video
7 surveillance in the defendant's residence. So, all of his
8 activities have been closely monitored, which has obviously
9 been an imposition not only on him but he also has two
10 daughters that he takes care of, is the foster parent for them.
11 The results of this carefully monitored cooperation
12 have already been quite positive. To give the Court some sense
13 of it, the defendant receives information about security
14 vulnerabilities from a network, literally a worldwide network
15 of criminals, cybercriminals. On a day-to-day basis the
16 defendant can sometimes receive upwards of two dozen
17 vulnerabilities. Working with the FBI, that information has
18 been used to patch more than 150 vulnerabilities to date.
19 When I say "patch," I mean the FBI has been able to
20 reach out to victims sometimes before the hack has actually
21 occurred, other times after the hack has occurred but in an
22 effort to mitigate the harm from that hack. That is, frankly,
23 something that we would probably not have been in a position to
24 do without the defendant's cooperation.
25 The defendant's information is also helping the
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1 government close in on several prominent cybercriminals.
2 So, there is every reason to believe that by
3 continuing the defendant's bail, by allowing him to continue to
4 mitigate harm from cyberattacks, to continue to develop
5 evidence against other targets, that will able to mitigate
6 cybercrime and also apprehend some pretty serious
7 cybercriminals.
8 The defendant has been compliant with his bail
9 conditions for more than two months. I think he has shown that
10 at this point he is not a risk of flight, nor is he presently a
11 danger to the community.
12 For those reasons, the government respectfully submits
13 that bail be continued as set by Magistrate Judge Cott.
14 THE COURT: So ordered.
15 Anything else today, counsel?
16 MR. PASTORE: Nothing further from the government.
17 MS. CROSS: No. Thank you, your Honor.
18 THE COURT: The record remains sealed as we have
19 discussed.
20 (Adjourned)
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