United States v. Bychak
3:18-cr-04683
S.D. Cal.Feb 25, 2021Background:
- Indictment (Oct. 31, 2018) charges four defendants with conspiracy, four counts of wire fraud (18 U.S.C. § 1343) and related counts for a scheme (2010–2014) to obtain and use third‑party IP netblocks by fraud to send commercial email (spam).
- Government alleges defendants identified inactive netblocks, sent fraudulent authorization letters to hosting companies, used the netblocks to send spam, and concealed use; specific interstate PayPal wire transfers are charged as wire acts.
- Defendants moved to dismiss arguing (1) the wire‑fraud statute is unconstitutionally vague as‑applied, (2) IP addresses/netblocks are not "property," and (3) the indictment fails to allege the property element with specificity; they sought judicial notice of various ARIN, government, and industry documents.
- The court largely denied requests to take judicial notice of the factual content of submitted documents (it would only notice their existence) because the documents’ contents are disputed and not appropriate for deciding contested facts pretrial.
- The court held that whether IP netblocks qualify as "property" under § 1343 is a factual question for the trier of fact and that Defendants’ as‑applied vagueness challenge (not a facial First Amendment challenge) is premature; the indictment nonetheless adequately alleges the property element and gives fair notice.
- Result: Motion to dismiss denied without prejudice; defendants may renew challenges to the sufficiency of evidence at trial via a Rule 29 motion for judgment of acquittal.
Issues:
| Issue | Plaintiff's Argument (United States) | Defendant's Argument | Held |
|---|---|---|---|
| Vagueness / as‑applied challenge to §1343 | Statute gives fair notice; challenge requires factual record | §1343 is vague as‑applied here and denies fair notice | Denied as premature: as‑applied vagueness requires trial development; not a facial First Amendment issue |
| Whether IP netblocks are "property" under §1343 | Indictment alleges IP netblocks are property; characteristics supporting property status will be proven at trial | IP addresses/netblocks are not property (ARIN/industry position) | Pretrial resolution improper; question is factual and for the jury; Rule 12 dismissal denied |
| Use of extrinsic evidence / judicial notice to resolve property issue | Government opposed taking truth of contested documents | Defendants asked court to judicially notice ARIN and other documents showing IPs are not property | Court declined to accept contested documentary facts; granted notice only of document existence; refused evidentiary hearing to decide element pretrial |
| Indictment specificity / failure to allege essential element | Indictment adequately identifies IP netblocks as the property and alleges overt acts and wire transfers | Indictment fails to specify sufficient facts about netblocks to show property; therefore defective | Indictment sufficiently alleges elements and gives fair notice; dismissal denied without prejudice; factual sufficiency may be tested at close of evidence via Rule 29 |
Key Cases Cited
- Carpenter v. United States, 484 U.S. 19 (1987) (confidential business information may be treated as property because exclusivity can make it valuable)
- McNally v. United States, 483 U.S. 350 (1987) (mail/wire fraud protects money or property; defining property requirement)
- Pasquantino v. United States, 544 U.S. 349 (2005) (depriving a foreign government of tax revenue can constitute property deprivation)
- Dowling v. United States, 473 U.S. 207 (1985) (limits on treating some intangible rights as stolen property)
- Cleveland v. United States, 531 U.S. 12 (2000) (certain intangible sovereign regulatory interests are not property for fraud statutes)
- Village of Hoffman Estates v. The Flipside, 455 U.S. 489 (1982) (facial vagueness standard; burden for facial challenge)
- United States v. Omer, 395 F.3d 1087 (9th Cir. 2005) (indictment must recite materiality; omission of essential element is fatal)
- United States v. Du Bo, 186 F.3d 1177 (9th Cir. 1999) (complete failure to allege an essential element requires dismissal)
- United States v. Nukida, 8 F.3d 665 (9th Cir. 1993) (premature pretrial attacks on factual elements are improper)
- United States v. Kremen, 325 F.3d 1035 (9th Cir. 2003) (resolution of certain intangible property disputes requires technical/factual development and analogical reasoning)