[00:00:00] Speaker 01:
Yes, of course.

[00:00:02] Speaker 02:
All right.

[00:00:03] Speaker 02:
The next case on calendar for argument is United States versus Thompson.

[00:00:07] Speaker 02:
Counsel for appellant, please approach and proceed.

[00:00:20] Speaker 01:
Good morning.

[00:00:20] Speaker 01:
Good morning.

[00:00:21] Speaker 01:
And may it please the court, Tanya Culbertson on behalf of the United States.

[00:00:25] Speaker 01:
I'd like to reserve about two minutes for rebuttal, and I will watch the clock.

[00:00:28] Speaker 01:
All right.

[00:00:29] Speaker 02:
Thank you, counsel.

[00:00:30] Speaker 01:
Paige Thompson carried out one of the largest and most notorious hacking schemes in United States history.

[00:00:36] Speaker 01:
She downloaded the personal identifying information of one third of the United States adult population.

[00:00:42] Speaker 01:
She caused hundreds of thousands of dollars of loss.

[00:00:45] Speaker 01:
She intentionally damaged victims' computers, and she planted malware to mine thousands of dollars of cryptocurrency at her victims' expense.

[00:00:54] Speaker 01:
Then she bragged about her crimes online, and she blamed and mocked her victims.

[00:00:59] Speaker 01:
In response, the district court sentenced Thompson to time served of 100 days and probation.

[00:01:04] Speaker 01:
That sentence is substantively unreasonable.

[00:01:08] Speaker 01:
It cannot be located within the range of permissible decisions based on the totality of the circumstances of this case.

[00:01:15] Speaker 01:
Now, as the Court knows, government appeals for substantive reasonableness are exceedingly rare.

[00:01:19] Speaker 01:
We haven't brought one in the Western District of Washington since our office sought review 15 years ago in United States v. Rissam.

[00:01:27] Speaker 01:
I'm aware, I think, of only two other government appeals in the Ninth Circuit since Rissam.

[00:01:33] Speaker 01:
But this case, like Rissam, is the rare case where correction by this Court is necessary.

[00:01:40] Speaker 01:
The district court committed four principal errors in judgment in how it evaluated the evidence and weighed the sentencing factors.

[00:01:47] Speaker 01:
We have set those all out in our briefing, but I want to quickly talk through them here.

[00:01:52] Speaker 01:
First, the court unreasonably assessed Thompson's history and characteristics, and it discounted evidence of her bad motives.

[00:01:59] Speaker 01:
And so what I mean specifically here is that rather than crediting Thompson's own descriptions of how she felt about what she was doing, all of her statements that they're in the record from trial,

[00:02:09] Speaker 01:
The court concluded instead that Thompson was, quote, tortured and tormented by what she had done.

[00:02:14] Speaker 01:
The record flatly contradicts that.

[00:02:17] Speaker 01:
It is full of statements like, sorry, I'm not sorry, got him, smells like bacon, I'm a thousand times more qualified than the IT people who are protecting the victims' computers,

[00:02:27] Speaker 01:
She even urged one of her friends, and this is shortly before, this was after she had contacted the Twitter user and bragged about what she had done, she urged a friend of hers, said, you know, go ahead, if you want to play around in this Amazon Web Services data, go ahead, it's not my stuff, lol.

[00:02:46] Speaker 01:
The district court, again, just disregarded all of that evidence, did not explain how he was reconciling that with his finding that she was tortured and tormented.

[00:02:54] Speaker 01:
He also said that her Twitter messages were an attempt to get somebody to help.

[00:02:58] Speaker 01:
That is not a reasonable interpretation of the messages on their face.

[00:03:01] Speaker 01:
That Twitter exchange begins with Thompson's statement that says, get an archive of my Twitter if you can and remember my name.

[00:03:08] Speaker 01:
She talks about how she deserves to be exposed.

[00:03:11] Speaker 01:
This is her bragging, again, seeking notoriety.

[00:03:14] Speaker 01:
And so we think that, again, is just an unreasonable conclusion to draw from the record here.

[00:03:20] Speaker 01:
The district court also ignored all of the violations of pre-trial release that the government put forward at sentencing.

[00:03:27] Speaker 01:
The court simply did not address evidence that Thompson withdrew $45,000 of crypto-jacking proceeds while she was on pre-trial release, and also accessed computers and the internet after she was convicted, but before she was sentenced.

[00:03:42] Speaker 01:
Again, the court said nothing about that, did not address that at all, or discuss how that might factor into any judgments about her contrition.

[00:03:50] Speaker 01:
Instead, the court said that it had seen Thompson evolving over the course of the trial.

[00:03:55] Speaker 01:
But again, this evidence in the record flatly contradicts that conclusion.

[00:04:00] Speaker 01:
And in this respect, this case is like Rassam, because in Rassam, the district court made a determination about the cooperation that Rassam had provided and drew unreasonable conclusions and ignored the fact that Rassam had actually not just withdrawn his cooperation in between the two sentencing, but had specifically done everything he could to undermine the convictions that had been obtained through his cooperation.

[00:04:25] Speaker 03:
What do we make of the fact that in the pre-sentence report, the sentence that was given, I believe, was one of the alternatives that was presented?

[00:04:35] Speaker 01:
It was actually a little bit lighter than one of the alternatives in one respect.

[00:04:39] Speaker 01:
Probation recommended as an alternative, said we don't usually do this, but as an alternative you could consider.

[00:04:45] Speaker 01:
this probationary sentence with three years of home incarceration.

[00:04:49] Speaker 01:
And the district court discussed the difference between home incarceration and home confinement, and actually imposed home confinement, which is the less restrictive alternative of the two, which was not actually probation's recommendation.

[00:05:01] Speaker 01:
But I think it's important to note that probation's primary recommendation was for 24 months, and probation explained why that sentence was necessary to serve

[00:05:12] Speaker 01:
all of the sentencing factors, not just to account for Ms.

[00:05:15] Speaker 01:
Thompson's transgender status.

[00:05:18] Speaker 01:
I also want to point out a couple of things about the district court's determination of the seriousness of these offenses.

[00:05:25] Speaker 01:
The district court said that Ms.

[00:05:27] Speaker 01:
Thompson was not acting in a malicious way.

[00:05:29] Speaker 01:
Again, this ignores her own statements to the contrary, where she says, I'm not sorry for making these programmers look stupid.

[00:05:36] Speaker 01:
She says, go for it.

[00:05:38] Speaker 01:
It's not my stuff.

[00:05:39] Speaker 01:
She said, it's the user's fault.

[00:05:40] Speaker 01:
The only respect in which the district court actually addressed those statements was to commend the defense for the way in which it had supported Ms.

[00:05:48] Speaker 01:
Thompson through the ordeal of having people pick through her messages.

[00:05:52] Speaker 01:
But other than that, the district court just simply said nothing else about evidence of the seriousness.

[00:05:56] Speaker 00:
Well, I'm not sure that's actually true, because I read the transcript and the district court said repeatedly that it was a terrible crime, that it was a serious crime.

[00:06:05] Speaker 00:
It was a difficult case because he had to weigh all these different things.

[00:06:10] Speaker 01:
I think the record reflects that the district court at one point said, I find that this is a terrible crime.

[00:06:15] Speaker 01:
But in doing so, the district court was actually addressing the defense argument that because Ms.

[00:06:20] Speaker 01:
Thompson had not disseminated Capital One's data further,

[00:06:24] Speaker 01:
that she hadn't done anything bad.

[00:06:26] Speaker 01:
And he said, now I'm not saying this wasn't a bad crime, I find it was a terrible crime, but, you know, she didn't disseminate it further, so that kind of doesn't really weigh in either direction in terms of sentencing.

[00:06:38] Speaker 01:
I think that in itself is an erroneous conclusion to draw from the evidence.

[00:06:41] Speaker 01:
I think, you know, Miss Thompson did plenty of bad things when she

[00:06:45] Speaker 01:
you know, entered these computer systems without authorization, when she downloaded the data, when she compressed and stored the data, and then manipulated the data, sorted it, and again, it completely ignores the other harms that she did through crypto jacking, that she did monetize through crypto jacking, and the district court did not mention that aspect at all, did not mention the harm to any of the other victims.

[00:07:09] Speaker 03:
What do you make of the district court's statement that she didn't do anything good or bad?

[00:07:15] Speaker 01:
I think, again, he was talking there probably about the dissemination.

[00:07:19] Speaker 01:
She didn't do anything good in that she didn't report the vulnerability.

[00:07:23] Speaker 01:
And so I think that is what the district court was saying there.

[00:07:26] Speaker 01:
But then he said she didn't do anything bad by monetizing.

[00:07:29] Speaker 01:
And I think that overlooks the fact that she did monetize and the very fact that she was holding onto this data for as long as she did for four months and was searching for server storage in Russia, searching for how to do credit card fraud.

[00:07:43] Speaker 01:
Those are indications that this was a serious crime.

[00:07:47] Speaker 01:
This was not just her stumbling upon this and not doing anything good or bad.

[00:07:53] Speaker 01:
Related to Capital One, I also just want to stress that the district courts, from the beginning of the proceedings to the end of the proceedings, seem to minimize the harm to Capital One and somewhat blame the victim, saying things like, Capital One will be making huge profits.

[00:08:09] Speaker 01:
It left itself vulnerable to this attack.

[00:08:10] Speaker 01:
It frittered away its money.

[00:08:13] Speaker 01:
It is a clear error of judgment to discount a victim just because that victim has a lot of money.

[00:08:17] Speaker 01:
But I think the record reflects that that is what the district court was doing here.

[00:08:21] Speaker 01:
And again, that ignores the harm to all of the other victims.

[00:08:24] Speaker 01:
There was testimony from four other companies that were impacted by this, and there were at least 30 companies whose data was stored on Ms.

[00:08:31] Speaker 01:
Thompson's computer.

[00:08:33] Speaker 01:
I see I'm running short on time, so I'd like to reserve the rest.

[00:08:37] Speaker 02:
All right.

[00:08:37] Speaker 02:
Thank you, counsel.

[00:08:38] Speaker 02:
Thank you.

[00:08:48] Speaker 04:
Good morning, Your Honor, and may it please the Court.

[00:08:50] Speaker 04:
My name is Anne Wagner from the Federal Defender's Office in Western Washington, and I'm here on behalf of Paige Thompson.

[00:08:57] Speaker 04:
With me at council table is my co-counsel, Vicki Lai.

[00:09:02] Speaker 04:
The experienced district court judge in this case, a former prosecutor, did not abuse his discretion by varying significantly downward from the advisory guidelines in this case.

[00:09:13] Speaker 04:
The government, the defense and probation all urged the court to adopt a significantly below-guidelines sentence.

[00:09:23] Speaker 04:
And the particular sentence that he chose is entitled to deference.

[00:09:29] Speaker 04:
This was a very unusual sentencing in terms of the nature of the offense, Ms.

[00:09:34] Speaker 04:
Thompson's incredibly difficult childhood and history of a severe mental illness, including a psychiatric hospitalization during the pretrial phase of this case, as well as her status as a 5'11", 130-pound trans woman.

[00:09:54] Speaker 04:
Many of the complaints that the government is making here go to the explanation of the sentence, which is a classic procedural error, and the government has waived any complaints about the procedural reasonableness of this case in its opening brief.

[00:10:08] Speaker 04:
As to substantive unreasonableness, the government needs to show a clear error of judgment,

[00:10:13] Speaker 04:
which in Rasam was the fact that on re-sentencing, the judge gave the exact same sentence even though the circumstances had changed entirely because Rasam had stopped cooperating, one of the main mitigating circumstances that led to the first sentence.

[00:10:28] Speaker 04:
There is no error of judgment like that in this transcript or in the judge's consideration of the totality of the circumstances, which included considering all the parties' submissions and thinking very deeply about this case, including thinking about an alternative sentence that differed from all the recommendations before even arriving at the sentencing hearing.

[00:10:53] Speaker 03:
Counsel, I find this sentencing's transcript just to be odd.

[00:10:56] Speaker 03:
It's just different than most sentencing transcripts I've ever read and participated in.

[00:11:02] Speaker 03:
And I'm, you know, on that totality, what in that transcript can you point to that clearly demonstrates that the court was considering deterrence, considering the need for punishment given the

[00:11:17] Speaker 03:
scale of this offense, what specifically can you point to?

[00:11:22] Speaker 03:
I get that certainly the court would have had the benefit of filings.

[00:11:27] Speaker 03:
But I'm not quite sure from that hearing what he communicates to say that he's weighing those in his calculus.

[00:11:33] Speaker 04:
Well, again, I want to emphasize that anything about the communication of the sentence is a procedural error.

[00:11:40] Speaker 04:
The explanation of a sentence is a procedural reasonableness evaluation.

[00:11:45] Speaker 03:
So we really.

[00:11:45] Speaker 03:
I'm not quite sure how to parse the argument that you're making.

[00:11:50] Speaker 03:
I mean, on a substantive reasonableness review, we're looking at the totality and making sure that the district court

[00:11:55] Speaker 03:
had in his mind all of the relevant factors and was considering them all as a holistic approach.

[00:12:02] Speaker 03:
And so my question is not so much procedures.

[00:12:04] Speaker 03:
I'm looking at this transcript and I can't tell.

[00:12:05] Speaker 03:
Frankly, I'm not quite sure I can tell.

[00:12:08] Speaker 03:
that all of the factors are being weighed.

[00:12:12] Speaker 04:
So I want to agree with you that the sentencing transcript is unusual.

[00:12:16] Speaker 04:
I think that the judge was considering more than just the sentencing, but the participation of all of the participants in the legal process that led up to this sentencing and acknowledging everyone's contributions.

[00:12:31] Speaker 04:
And I think that's what the moral arc

[00:12:34] Speaker 04:
leading towards justice was really referring to, and it wasn't particular to Ms.

[00:12:39] Speaker 04:
Thompson at all.

[00:12:41] Speaker 04:
But the judge discussed many of the 3553A factors and had clearly thought about it.

[00:12:48] Speaker 02:
I mean, coming up with his own sentencing recommendation... It wasn't clear that he had thought about all of the factors.

[00:12:54] Speaker 02:
I think... On the record, it wasn't clear to me that he had thought about all of the factors because he didn't articulate.

[00:13:01] Speaker 04:
because he didn't articulate them.

[00:13:02] Speaker 04:
And that's procedural reasonableness explanation.

[00:13:05] Speaker 02:
I understand what you're saying, but when we're looking at the substantive reasonableness, we look at the entire record to see if we can gauge why this substantial deviation that's almost unheard of was done.

[00:13:21] Speaker 02:
And it's troubling if, generally, as a district court judge, if you're going to deviate from

[00:13:28] Speaker 02:
the guidelines to that degree, you cross all your t's and dot out your i's.

[00:13:34] Speaker 02:
So you make sure that the reason that you're doing it is laid out in excruciating detail so as to not have this type of challenge.

[00:13:45] Speaker 04:
That certainly would be preferable.

[00:13:47] Speaker 04:
I want to note that the Supreme Court in Gall v. United States noted that a sentence of probation will always be an 100% departure.

[00:13:55] Speaker 04:
They were using departure language at the time because it was pre-booker.

[00:14:00] Speaker 04:
So when you are listening to the government's arguments about percentages, that's really reflecting that there was a probation sentence here other than the 100 days.

[00:14:10] Speaker 04:
But the probation sentence included three years of home incarceration, which for this severely mentally ill client is a very difficult time.

[00:14:21] Speaker 04:
It is a significant limitation on liberty, as the Supreme Court said in Gaul, and it is not to be sneezed at.

[00:14:29] Speaker 04:
In addition, every single party at this sentencing urged a huge downward variance from the guideline sentence, including the government.

[00:14:39] Speaker 04:
So the government was recommending something like a third of the guideline sentence that they had calculated.

[00:14:45] Speaker 00:
On the question of did the district court judge consider deterrence, I'm looking at the district courts

[00:14:52] Speaker 00:
Explanation of the decision and I see him say and the question what is justice here is a really really hard question Mr. Freeman who I understand was the prosecutor is absolutely right There are some people out there who are looking at the cost benefit analysis and saying man if I can get away with credit for times served of a hundred days with the possibility of making a couple hundred million dollars with this I'm going to take the chance and

[00:15:15] Speaker 00:
It's not like a crime of passion that happens when people are not considering those things.

[00:15:19] Speaker 00:
So it's an absolutely appropriate argument for the government to make.

[00:15:22] Speaker 00:
So I understood that to be as the court was considering the deterrence argument that the government was making.

[00:15:30] Speaker 00:
I'm not sure how else to, I mean, was there more that was required to consider deterrence?

[00:15:39] Speaker 04:
I think that reflects consideration of the deterrence argument, absolutely.

[00:15:42] Speaker 04:
And one thing that the government didn't bring up when my friend was discussing the sentence was the $41 million restitution obligation, which, especially when you're talking about a cost-benefit analysis and making a few million dollars, being forced to owe $41 million when this process is over is deterrence.

[00:16:04] Speaker 02:
That's the definition.

[00:16:05] Speaker 02:
Is that realistically a deterrence if you're

[00:16:08] Speaker 02:
essentially judgment-proof?

[00:16:11] Speaker 04:
Well, if you're essentially judgment-proof, then you're going to be under that obligation for your entire life.

[00:16:16] Speaker 04:
It doesn't go away just because you have zero dollars in your pocket at a given time, and the government specifically said, you know, Ms.

[00:16:23] Speaker 04:
Thompson may eventually sell her story to the media and be able to pay back that restitution, but it doesn't go away because you're judgment-proof.

[00:16:31] Speaker 02:
On the deterrence issue, the court did say that some people may look at this and think that it's, in essence, a slap on the wrist.

[00:16:39] Speaker 02:
But did the court explain why it wasn't?

[00:16:42] Speaker 02:
Why this sentence would have a deterrent effect?

[00:16:47] Speaker 04:
I think you can see the judge's consideration of that factor in its response to the government.

[00:16:53] Speaker 02:
You can see it in the- What was the judge's response as to why this sentence would have a deterrent effect?

[00:17:01] Speaker 04:
I think what the judge said was that there was a risk of a lack of deterrent effect, and he was thinking about that.

[00:17:08] Speaker 04:
But he chose a sentence that he believed fulfilled all the 3553A factors, including deterrents.

[00:17:14] Speaker 02:
But he didn't articulate why this particular sentence would have a deterrent effect on this particular defendant or on other defendants who might be considering a similar crime.

[00:17:25] Speaker 04:
I'm not sure that he explained why this would happen, but think about $41 million that you owe when you've made $10,000, as the government said, from the cryptocurrency.

[00:17:38] Speaker 02:
Did the district court judge say that?

[00:17:40] Speaker 04:
I'm sorry?

[00:17:40] Speaker 02:
Did the district court judge say that?

[00:17:42] Speaker 04:
The district court did pronounce sentence, including restitution, in a later sentencing hearing.

[00:17:46] Speaker 02:
I understand that, but we're talking about the district court discussion of deterrent effect.

[00:17:50] Speaker 02:
Did the district court say

[00:17:52] Speaker 02:
that the imposition of the 41 million dollars would deter this defendant and future defendants from similar crimes?

[00:18:00] Speaker 04:
Well, the district court judge wouldn't have done that at this sentencing hearing because the restitution amount was to be determined, but everybody in the proceedings knew that there would be restitution owed and they were fighting about the amount.

[00:18:13] Speaker 03:
You made the point before that everybody was recommending a substantial departure.

[00:18:17] Speaker 03:
or variance, I guess, is the word now.

[00:18:21] Speaker 03:
We have information that has been presented to us in terms of similar cases and similar sentences that have been given in those cases.

[00:18:28] Speaker 03:
And from what I can tell, departure downward is common in this fact scenario if you have someone who doesn't have a criminal history.

[00:18:35] Speaker 03:
But in the information that I've read on that, it seems that the practice is to nonetheless give

[00:18:43] Speaker 03:
a custody sentence of some period of time, and it seems to be somewhere around the neighborhood of two years, which is what the recommendation was here.

[00:18:50] Speaker 03:
So that's a long lead up, and you have time to answer the question, right?

[00:18:55] Speaker 03:
Thank you.

[00:18:56] Speaker 03:
The question is really, what should we as the court do with that information about other cases that are somewhat similar to this and the sentences given in those cases?

[00:19:05] Speaker 04:
Well, I think you should specifically look at the sentence given to the co-defendant in FOD, which is cited by the government.

[00:19:11] Speaker 04:
There was a sentence given to Keira Evans, who was FOD's co-defendant, who had benefited to the tune of $300,000 in that fraudulent scheme.

[00:19:22] Speaker 04:
And the same district court judge gave her a sentence of three years probation and no home confinement and no evidence of severe mental illness, as in this case.

[00:19:32] Speaker 03:
I take it, then, that your answer is

[00:19:37] Speaker 03:
The examples of similar cases is broad enough that there isn't one specific pattern.

[00:19:44] Speaker 04:
That's correct.

[00:19:45] Speaker 04:
And this particular judge has given no confinement sentences in severe white collar fraud cases as well.

[00:19:55] Speaker 02:
All right.

[00:19:56] Speaker 02:
Thank you, counsel.

[00:19:56] Speaker 02:
Thank you.

[00:20:07] Speaker 01:
Just briefly, Your Honors, my friend on the other side is correct that district court judges are entitled to deference, but they are not entitled to blind deference.

[00:20:16] Speaker 01:
And what we are asking the court to do here is to review the district court's analysis and determine whether the district court's weighing was at least reasonable.

[00:20:26] Speaker 03:
What's the government's position in terms of what we should do with the sentences that have been given in other similar cases?

[00:20:32] Speaker 01:
I think Your Honor is right, and my friend on the other side is right, that everybody recommended a downward variance here.

[00:20:40] Speaker 01:
The downward variance that the government recommended is in line with the typical downward variances.

[00:20:44] Speaker 01:
We provided data from 2022 that, in a case like this with no criminal history, the average variance is about 50%.

[00:20:52] Speaker 01:
And our recommendation was seven years, which ended up being 50% of the low end of the guidelines range.

[00:20:59] Speaker 01:
I do not know the details of Mr. Fodd's co-defendant's conviction, but I would...

[00:21:06] Speaker 01:
suspect that the record does not support the same kinds of direct evidence of bad intent, intentional behavior over the course of many months.

[00:21:17] Speaker 01:
You know, Ms.

[00:21:18] Speaker 01:
Thompson repeatedly revisited the victims that she had hacked.

[00:21:23] Speaker 01:
She checked that she still had access.

[00:21:25] Speaker 01:
She set up back doors so that she could get in even if they fixed it.

[00:21:28] Speaker 00:
So, I mean, the judge was at the trial, not us.

[00:21:32] Speaker 00:
Yes.

[00:21:32] Speaker 00:
The judge made a decision about his understanding.

[00:21:36] Speaker 00:
Normally, when we're reviewing for sentence substantive reasonability, the sides are reversed here.

[00:21:44] Speaker 00:
So I wanted you to just let me know if this was the flip side and a judge had granted an upward departure more than even what perhaps the prosecution was asking for and more than what was

[00:22:00] Speaker 00:
perhaps in comparable cases based on the judge's determination that the special circumstances of that case, that their judgment of the defendant's culpability and lack of contrition warranted an upward departure.

[00:22:23] Speaker 00:
And there was a dispute about all of those things and the judge's weighing and interpretation of the record.

[00:22:29] Speaker 00:
Would you say then that we should strike that down as an abuse of discretion?

[00:22:38] Speaker 01:
Again, I can't speak to whether the government would choose to appeal in that particular circumstance, depending on how the court conducted its weighing and what it gave as its reasons for why it varied above.

[00:22:51] Speaker 01:
I think that the best I can do here is ask the court to look at the record here and determine whether the weighing that the district court did here was reasonable in light of all of the sentencing factors, including deterrence, which your honors have talked about quite a bit with my friend on the other side.

[00:23:08] Speaker 02:
Thank you, counsel.

[00:23:10] Speaker 01:
Thank you very much.

[00:23:11] Speaker 02:
Thank you to both counsels.

[00:23:12] Speaker 02:
The case just argued is submitted for decision by the court.