''United States v. Spy Factory, Inc.'' was a criminal case dealing with the largest chain of surveillance equipment shops in the

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territori ...

, the

San Antonio ("Cradle of Freedom") , image_map = , mapsize = 220px , map_caption = Interactive map of San Antonio , subdivision_type = Country , subdivision_name = United States , subdivision_type1= State , subdivision_name1 = Texas , subdivision_t ...

Texas Texas (, ; Spanish: ''Texas'', ''Tejas'') is a state in the South Central region of the United States. At 268,596 square miles (695,662 km2), and with more than 29.1 million residents in 2020, it is the second-largest U.S. state by ...

-based Spy Factory. The store and its officers Ronald Kimball, Marlin Richardson and Tracy Edward Ford were indicted on a total of 70 counts related to smuggling of and illegal trade in equipment used for

wiretapping Telephone tapping (also wire tapping or wiretapping in American English) is the monitoring of telephone and Internet-based conversations by a third party, often by covert means. The wire tap received its name because, historically, the monitorin ...

and surveillance. Despite

motion In physics, motion is the phenomenon in which an object changes its position with respect to time. Motion is mathematically described in terms of displacement, distance, velocity, acceleration, speed and frame of reference to an observer and m ...

s to dismiss the case because of the alleged vagueness of and other issues, the company and all three officers pleaded guilty and were convicted.

The Spy Factory

The Spy Factory, Inc. was the largest chain of surveillance equipment stores (colloquially, spy shops) in the United States, with outlets in Arizona, California, Colorado, Georgia, Illinois, Missouri, Nevada, Texas, Utah and Washington. The company was owned by Ronald Kimball, a former federal agent who worked for the

United States Department of Justice The United States Department of Justice (DOJ), also known as the Justice Department, is a federal executive department of the United States government tasked with the enforcement of federal law and administration of justice in the United Stat ...

Ecuador Ecuador ( ; ; Quechua: ''Ikwayur''; Shuar: ''Ecuador'' or ''Ekuatur''), officially the Republic of Ecuador ( es, República del Ecuador, which literally translates as "Republic of the Equator"; Quechua: ''Ikwadur Ripuwlika''; Shuar: ' ...

and Costa Rica, and also a purveyor of bullet-proof vehicles through his other business, Executive Armoring. According to Kimball, " rporate executives and political figures in Mexico and Latin America" were the Spy Factory's first customers; " en orders started coming in from the Middle East", and by 1991, the company did about 90% of its business overseas.

Customs raids

On April 5, 1995, agents of the United States Customs Service raided surveillance equipment stores in 24 cities across the country. These raids took place following a 17-month investigation into the smuggling of electronic surveillance equipment, and involved the execution of search warrants at 40 stores.

Indictments

On August 21, 1995, federal indictments were issued for three The Spy Factory, Inc. executives, as well as for the company itself. Ronald Kimball, the owner, was arrested that day in San Antonio. The next day, the deputy general manager, Tracy Edward Ford, was also arrested in San Antonio. Marlin Richardson, the general manager, had already been arrested the previous April. The initial indictment contained eight counts per defendant, charging that the Spy Factory was involved in the illegal trafficking of more than of wiretapping devices from

Tokyo Tokyo (; ja, 東京, , ), officially the Tokyo Metropolis ( ja, 東京都, label=none, ), is the capital and List of cities in Japan, largest city of Japan. Formerly known as Edo, its metropolitan area () is the most populous in the world, ...

-based Micro Electronics. The scheme involved the supplier creating duplicate invoices: an accurate one was sent to Spy Factory headquarters, while a falsified invoice (with prices marked down by as much as 90%) was sent with the goods to avoid full payment of customs duties. Since the government alleged that conspiracy, smuggling, possession and sale of illegal devices had taken place, the defendants were liable to serve five years' imprisonment per charge. Additionally, the government sought forfeiture of at least in proceeds. On July 11, 1996, the government entered a superseding indictment that replaced the original allegations with 70 counts. The Spy Factory, Inc. was charged with all but count 69, Kimball and Richardson with all but count 68, and Ford with counts 1, 13–16, 28–31, 43–47, 62–67 and 69–70.

United States District Court

The defendants were

arraigned Arraignment is a formal reading of a criminal charging document in the presence of the defendant, to inform them of the charges against them. In response to arraignment, the accused is expected to enter a plea. Acceptable pleas vary among jurisdi ...

in the

United States District Court for the Southern District of New York The United States District Court for the Southern District of New York (in case citations, S.D.N.Y.) is a federal trial court whose geographic jurisdiction encompasses eight counties of New York State. Two of these are in New York City: New ...

, and tried before Justice

Sonia Sotomayor Sonia Maria Sotomayor (, ; born June 25, 1954) is an American lawyer and jurist who serves as an associate justice of the Supreme Court of the United States. She was nominated by President Barack Obama on May 26, 2009, and has served since ...

. In early 1997, the defendants unsuccessfully moved to dismiss 31 of the counts, contending that the statute upon which several charges were premised, 18 U.S.C. § 2512, was unconstitutionally vague. Sotomayor also denied defendants' motion to have the case heard in the United States District Court for the Western District of Texas, which sits in San Antonio. After a change in his counsel, defendant Ford moved for reconsideration of the vagueness argument, and simultaneously asked to be tried separately (severance), requested additional

discovery Discovery may refer to: * Discovery (observation), observing or finding something unknown * Discovery (fiction), a character's learning something unknown * Discovery (law), a process in courts of law relating to evidence Discovery, The Discover ...

, asked to inspect the grand jury minutes and requested that the government specify the charges in more detail (with a bill of particulars). Sotomayor decided that severance would be wasteful of judicial resources, that further discovery and inspection of grand jury minutes were unnecessary and the government had "more than adequately apprise the defendant of the nature of the charge against him". Following the failure of both motions, all defendants pleaded guilty to a subset of the charges in July and August 1997, and were variously ordered to pay fines, make restitution, serve home confinement and/or be imprisoned. The Spy Factory itself pleaded guilty to all 69 counts against it, and was sentenced to pay a

special assessment In the United States, a special assessment is a charge that public authorities can assess against real estate parcels for certain public projects. This charge is levied in a specific geographic area known as a special assessment district (SAD). ...

of US$13,400 and a fine of US$1, due immediately. Ronald Kimball pleaded guilty to three counts, telling Sotomayor "I accept full responsibility for my conduct", and was sentenced to 51 months' imprisonment. He was ordered to forfeit , the value of the proceeds from the sale of illegal equipment. As part of his plea agreement, Kimball relinquished all of the company's assets to the government, and agreed to close all of the stores. In response, federal agents entered Spy Factory locations and confiscated the contents and the premises. Marlin Richardson pleaded guilty to the same three counts as Kimball, and was sentenced to 46 months' imprisonment. Kimball and Richardson were ordered to pay special assessments of US$150 each. Tracy Edward Ford also pleaded guilty and was sentenced to 36 months' probation with 6 months' home confinement. Ford was prohibited from selling electronic devices while on probation, and was ordered to pay a special assessment of US$100.

18 U.S.C. § 2512

provides criminal penalties for the manufacture, assembly, possession, sale, transmission (by mail or

interstate commerce The Commerce Clause describes an enumerated power listed in the United States Constitution ( Article I, Section 8, Clause 3). The clause states that the United States Congress shall have power "to regulate Commerce with foreign Nations, and amo ...

) or advertisement of surveillance equipment, subject to certain exceptions for governments and communication service providers. Anyone intentionally engaging in the foregoing prohibited conduct, with knowledge (or reason to have knowledge) that the devices are "primarily useful for the purpose of the surreptitious interception of wire, oral, or electronic communications", is liable to be fined (pursuant to 18 U.S.C. § 3571) and/or be imprisoned for up to five years. In a

Senate Judiciary Committee The United States Senate Committee on the Judiciary, informally the Senate Judiciary Committee, is a standing committee of 22 U.S. senators whose role is to oversee the Department of Justice (DOJ), consider executive and judicial nominations ...

report describing this law, it was explained that this prohibition was intended to apply to "the martini olive transmitter, the spike mike, the infinity transmitter, and the microphone disguised as a wristwatch, picture frame, cuff link, tie clip, fountain pen, stapler, or cigarette pack." Similarly, it was intended to exclude things like parabolic microphones, which are not considered "primarily useful for surreptitious listening", because of their ordinary use in the broadcast coverage of sporting events.

Notes

References

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Houston Chronicle The ''Houston Chronicle'' is the largest daily newspaper in Houston, Texas, United States. , it is the third-largest newspaper by Sunday circulation in the United States, behind only ''The New York Times'' and the ''Los Angeles Times''. With i ...

, publisher= Hearst Corporation , publication-place=Houston, TX , place=San Antonio, TX , issn=1074-7109 , oclc=1607806 , id=

Factiva Factiva is a business information and research tool owned by Dow Jones & Company. Factiva aggregates content from both licensed and free sources. Providing organizations with search, alerting, dissemination, and other information management ca ...

hou0000020011007dt3b009m4 , page=1 {{citation , first1=Jeanne , last1=King , title=Spy Factory and owner handed stiff sentences. , date=July 31, 1997 , work=

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, publisher=

Reuters Reuters ( ) is a news agency owned by Thomson Reuters Corporation. It employs around 2,500 journalists and 600 photojournalists in about 200 locations worldwide. Reuters is one of the largest news agencies in the world. The agency was esta ...

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, publisher=

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lba0000020011002dt3a08wn0 {{citation , first1=Tinah , last1=Saunders , title=Shop where paranoia's unshaken, even stirred , date=January 16, 1996 , newspaper=

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The Atlanta Constitution ''The Atlanta Journal-Constitution'' is the only major daily newspaper in the metropolitan area of Atlanta, Georgia. It is the flagship publication of Cox Enterprises. The ''Atlanta Journal-Constitution'' is the result of the merger between ...

, publisher=

Cox Enterprises Cox Enterprises, Inc. is a privately held global conglomerate headquartered in Atlanta, Georgia, United States, with approximately 55,000 employees and $21 billion in total revenue. Its major operating subsidiaries are Cox Communications and ...

, location=Atlanta, GA , issn=1539-7459 , oclc=8807964 , id=

atjc000020011013ds1g00288 , page=J; 03 {{citation , first1=Jonathan , last1=Volzke , title=Seller of spy gear is unlikely victim , edition=Morning , date=August 29, 1992 , newspaper=

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Freedom Communications Freedom Communications, Inc., was an American media conglomerate that operated daily and weekly newspapers, websites and mobile applications, as well as ''Coast Magazine'' and other specialty publications. Headquartered at 625 N. Grand Avenue in ...

, location=Santa Ana, CA , issn=0886-4934 , oclc=12199155 , id=

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The Denver Post ''The Denver Post'' is a daily newspaper and website published in Denver, Colorado. As of June 2022, it has an average print circulation of 57,265. In 2016, its website received roughly six million monthly unique visitors generating more than 13 ...

, publisher= MediaNews Group , location=Denver, CO , issn=1930-2193 , oclc=8789877 , id=

dnvr000020011025dr47006kj , page=B-07 {{citation , first1=Stephen , last1=Schwarz , title=Spy Factory Owner Arrested in Texas , date=August 22, 1995 , newspaper=

San Francisco Chronicle The ''San Francisco Chronicle'' is a newspaper serving primarily the San Francisco Bay Area of Northern California. It was founded in 1865 as ''The Daily Dramatic Chronicle'' by teenage brothers Charles de Young and Michael H. de Young. The ...

, publisher= Hearst Corporation , location=San Francisco, CA , issn=1932-8672 , oclc=8812614 , id=

sfc0000020011026dr8m00on8 , page=B3 {{citation , first1=Lloyd , last1=Watson , title=Spy Factory Adds a Bit of James Bond To the Wharf , date=April 20, 1991 , newspaper=

, publisher= Hearst Corporation , location=San Francisco, CA , issn=1932-8672 , oclc=8812614 , id=

sfc0000020011110dn4k00da7 , page=B1 {{citation , first1=Larry , last1=Neumeister , agency=

Associated Press The Associated Press (AP) is an American non-profit news agency headquartered in New York City. Founded in 1846, it operates as a cooperative, unincorporated association. It produces news reports that are distributed to its members, U.S. ne ...

, title=Spy Factory stores forced to close down , url=http://www.reviewjournal.com/lvrj_home/1997/Mar-11-Tue-1997/business/5009254.html , archive-url=https://web.archive.org/web/20030823013815/http://www.reviewjournal.com/lvrj_home/1997/Mar-11-Tue-1997/business/5009254.html , archive-date=August 23, 2003 , access-date=March 27, 2012 , date=March 11, 1997 , newspaper= Las Vegas Review-Journal , publisher= Stephens Media , publication-place=Las Vegas, NV , place=New York, NY , issn=1097-1645 , oclc=247430999 , id=

lvgs000020011007dt3b003d9 , page=1D {{citation , first1=William C. , last1=Rempel , title=Smuggling Raids Target Spy Gear Stores : Probe: Undercover investigation reveals illegal trafficking in electronic bugs, officials charge. Nine are arrested. , url=http://articles.latimes.com/1995-04-06/news/mn-51580_1_undercover-investigation , url-status=live , archive-url=https://web.archive.org/web/20120327123847/http://articles.latimes.com/1995-04-06/news/mn-51580_1_undercover-investigation , archive-date=March 27, 2012 , access-date=March 27, 2012 , date=April 6, 1995 , newspaper=

Los Angeles Times The ''Los Angeles Times'' (abbreviated as ''LA Times'') is a daily newspaper that started publishing in Los Angeles in 1881. Based in the LA-adjacent suburb of El Segundo since 2018, it is the sixth-largest newspaper by circulation in the U ...

, publication-place=Los Angeles, CA , place=New York, NY , issn=0458-3035 , oclc=3638237 {{Cite book, author1=United States Senate Committee on the Judiciary , author1-link=United States Senate Committee on the Judiciary , title=Senate Report No. 1097 , chapter=Section-By-Section Analysis , series=90th Congress, 2nd Session , volume=12792-1 , date=April 29, 1968 , work=U.S. Congressional Serial Set , publisher=

NewsBank NewsBank is a news database resource that provides archives of media publications as reference materials to libraries. History John Naisbitt, the author of the book ''Megatrends'', founded NewsBank.Andrews 1998, p. 17. The company was launched ...

, location=Washington, DC , oclc=57311738 , id=NewsBank 124417A488D4A690 , pages=82–119 *{{cite book , title=Criminal Resource Manual , date=19 February 2015 , section=1060. Scope of 18 U.S.C § 2512 Prohibitions , url=https://www.justice.gov/usao/eousa/foia_reading_room/usam/title9/crm01060.htm , publisher=U.S. Department of Justice Archives United States District Court for the Southern District of New York cases 1997 in United States case law