March 06, 2004

Extortion, or abuse of power?

Anyone thinking of making a gift to the cops might want to think twice. Via The Proximal Tubule, this intriguing case of a website operator arrested for extortion when he told the Macomb County Sheriff's Department that he would shut down the website he maintained for the sheriff unless he was paid $300,000:

"This is a case of someone trying to get rich quick," said Eric Kaiser, chief trial attorney for the Macomb County Prosecutor's Office. "He was given the privilege of carrying the banner of the Macomb County Sheriff's department and he tried to take advantage of it."

"He built up the site so that we would rely on it so much and would pay him," Hackel said. "(But) that content belongs to all of us."

The problem is that it looks more like a gratuitous benefit that's being withdrawn:

Richard, a former reserve deputy in the sheriff's marine division, more than three years ago offered to provide the Web site at no cost to the county as an in-kind contribution. [Sheriff Mark] Hackel, who enthusiastically supported it, said Richard agreed to operate it in exchange for publicity for his company.

Or, as reported here:

Both sides agreed on a few points: that Richard started running the site for free a few years ago; that his site became so popular, the Sheriff's Department -- and the public -- came to rely on it. And that Richard decided the site was too costly to run for free any longer.

I don't know the details of the extortion law that he's being charged under, but it seems at least that Richard hasn't been a naughty boy under contract law. There was no consideration for Richard's maintaining the site. Richard says the website was run for the sheriff in exchange for publicity for Richard's company. The publicity apparently was provided on the website itself, and (arguably) by printing the URL on the sides of patrol cars and on official letterhead. The sheriff seems to have been looking for a way to get a website on the cheap: "Hackel said he didn't want the county to run his department's site to ensure it wouldn't cost taxpayers any money."

If there were no other terms, it seems likely that Richard could shut the site down if economic conditions changed and the site was losing money. In fact, it seems that Richard could shut the site down for no reason at all.

But I'd like to know if there were other terms or promises. Did Richard ever promise to keep the site open for a given length of time, such that the sheriff's department justifiably relied on the promise (a la R2K 90)?

I hope that more facts about this case become available. Otherwise, it just looks like a simple abuse of power by the Sheriff.

Posted by Carey at March 6, 2004 04:14 PM

I'm not sure there's "no" consideration; Richard is getting advertising, which is surely something. The consideration doesn't have to be adequate; just because Richard made a bad deal doesn't mean he can get out of the contract.

The real question is what constituted the contract. As you point out, unless Richard promised to keep the site open for a given length of time, there's no breach of contract here. (In fact, if either party can get out of hosting the website for any reason at any time, there probably isn't a contract at all for reasons of mutuality.)

So if this were a simple case of his refusing to host the site any longer, I'd probably agree with you on most things.

That being said, I think the article is much more favorable to the sheriffs than you think. I disagree that the situation "looks more like a gratuitous benefit that's being withdrawn." First of all, Richard wasn't (just) trying to negotiate future payments; he was trying to get payment for the 33 months that had previously elapsed ("Richard said the money would offset the huge expense of running the Web site for the 33 months.")

Even that's not extortion; you can modify contracts after they've been made, and if there's no prior contract, he can't threaten to breach.

But also notice that he's not just "ceasing to run" the site. He's holding the domain name hostage to his demands. Not only that, but even though he claimed to be making an "in kind" contribution, he hasn't allowed the sheriff's department to re-post the content of the site elsewhere. This isn't a simple matter of him asking for renumeration for hosting services and further work updating the website; this is him taking content that he has already donated away until they give him further money.

So I think the extortion charge is not about giving him money to continue hosting the website, which you correctly note doesn't seem to be extortion or even a contractual problem. The problem is that he's holding content and a domain name arguably owned by the sheriffs hostage pursuant to a further contract and payment for prior work done. Since they have no other source for either that content, and since the public as well as the sheriff have relied on the domain name, I think they have a reasonably good case.

So one issue here is: what was Richard's prior contribution in kind? His defense is that the sheriff's department "never disputed" the disclaimer on the site while it was running which said it was owned by Richard's company. So Richard is claiming that he never donated the website to the county; he just donated the materials to run it and the time to create and update it, but retained ownership. If Richard is refusing to give the county access to their own materials, he is almost certainly guilty of some crime here. This is something that could be resolved by looking at, for instance, tax write-offs that he claimed for his donation. It doesn't matter that there was no consideration for his intellectual property input because he's already, in effect, delivered it--a gift, once given, can't be taken back. It doesn't matter whether there was consideration.

On the other hand, even the best case for Richard in which he really owns the materials doesn't evade the extortion charge (depending on what extortion means in the county). It's going to depend on what reasonable prices for hosting and updating the website are, but if a website built a site for anyone but retained ownership of the intellectual property, and then changed their prices to charge an exorbitant amount and refused to allow transfer of the intellectual property, it could very well be considered extortion.

Imagine a case where a company really charges $300,000 to develop a website for a business but it costs very little to keep it running on a day to day basis. If the company retains ownership of the IP involved, they have a lot of leverage--they could charge lots of money for the day to day running of the website just because the business wouldn't want to have to pay the $300K again to some other company to have them develop another website (and for reasons of continuity in the look of the site may not want to do so).

Bottom line is that it seems that the sheriff's department is more angry about the deprivation of content than the fact that they'll have to pay for their website.

Posted by: Heidi at March 6, 2004 05:46 PM

Ahh. Man. I was just reading this and reading the comment afterwards thinking that this would be such a great idea to implement this type of feedback to articles for my sites. Then after the first real comment all I see is spam. Maybe it's not such a great idea after all. Spam is like the pest infestation of web. We need a strong pesticide. Anyways...

I don't care what the arguments of this case is between the Webmaster and the Clients. Bottom line is that it was a contractual dispute over fees for a service given and future service and a re-negotiation of that contract.

Which means... It belongs in CIVIL Court as a LAWSUIT Dispute! Not Criminal Court! I'm so sickened to death of all these stupid law enforcement people abusing there power and intimidating people through their mob fear tactics! The guy doesn't have to KEEP giving for free. They are extorting his services and goodwill from him through fear of prison and forcing him to continue giving it to them for free!

Posted by: Cameron at August 27, 2004 07:53 PM