The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Bahamian ‘celebrity hacker’ could have cost an international pop artist $6 million in lost sales had he made good on threats to reveal half the songs on their new album prior to its release.

US government attorneys are arguing that magnitude of this potential loss means that existing sentencing guidelines “do not accurately capture the gravity” of the offences committed by Grand Bahama native, Alonzo Knowles.

Mr Knowles, who in May pleaded guilty to electronically hacking more than 100 global celebrities, and stealing unreleased movie and TV scripts, social security numbers and private sex videos, is due to be sentenced on September 30, 2016.

And the US district attorney for southern New York is pushing for a 27-33 month prison term for Mr Knowles, a duration above the range suggested by advisory guidelines, because “a substantial term of imprisonment is justified to reflect the seriousness of the offense, promote respect for the law, and provide deterrence for this defendant”.

Court documents obtained by Tribune Business allege that normal US sentencing guidelines for copyright infringements are not adequate in Mr Knowles’ case.

“The criminal copyright infringement offense in count one of the indictment does not accurately capture the gravity of the unique circumstances of this case,” the US attorney’s office argued.

While the level of financial sanctions imposed on an offender was normally determined by the retail value of a copyrighted item, multiplied by volume, it added that the damage inflicted by Mr Knowles related to the potential loss of revenues and profits.

“In this case, the value of unreleased movie and television scripts to the networks and studios is not defined by their retail value, but rather, by the potential loss in profits and associated costs if the scripts were made public prior to the release of the relevant movies and television shows,” the US attorney’s office alleged.

“According to the executive of one victim network, if the scripts of unaired movies or television show episodes were to be made public prior to their release, significant costs could be incurred, including complete or partial rewrites of the scripts, reshooting of scenes or episodes, or eliminating the project entirely.”

Its sentencing memorandum added that Mr Knowles had also offered to sell to US undercover agents “over half the songs from an unreleased album of a pop artist”. The court papers do not name the artist in question, referring to them as ‘Victim 8’.

“Knowles played one of ‘Victim 8’s’ songs for the undercover agent, and possessed in his Dropbox account and on his iPad numerous unreleased songs by ‘Victim 8’ and other artists,” the US attorney’s office said.

While sentencing guidelines based financial sanctions on the retail value of the musician’s album, multiplied by the amount sold, “‘Victim 8’s’ manager stated that ‘Victim 8’ sold over one million copies of ‘Victim 8’s’ last album.

“Release of over half the new album in advance of its public release by ‘Victim 8’ would ‘cannibalise the sales by at least 50 per cent’,” the US attorney’s office was told.

“According to ‘Victim 8’s’ manager, had half of ‘Victim 8’s’ album been released prior to ‘Victim 8’ dropping it, ‘Victim 8’ would have lost album sales of approximately $6 million.

“The significant potential cost to ‘Victim 8’ of unreleased music being distributed to the public is not accounted for in the guidelines calculation for criminal copyright infringement.”

Mr Knowles’ case illustrates the great harm, and potential cost, associated with copyright infringements and abuses. The Bahamas has traditionally struggled to enforce the law in this area, as shown by the numerous young men selling pirated CDs and DVDs along the roadside and at shopping plazas.

Recalling the meeting with undercover US law enforcement agents that which ultimately led to the Grand Bahama native’s capture, federal attorneys alleged that Mr Knowles sold 15 unreleased movie and TV show scripts to them for $80,000.

This valued the scripts at $5,333 each, and a search of Mr Knowles’s Dropbox account later uncovered a further 10 unreleased movie scripts that he had also obtained via e-mail hacking.

“Assuming each of those scripts had the same retail value, the total retail value of Knowles’s 25 copyrighted unreleased movie and television scripts was $133,333,” the US attorney’s office said, implying that existing penalties are woefully inadequate.

What appears to be of particular concern to US authorities is that Mr Knowles has refused to hand over to them at least one computer - which may be in the Bahamas - upon which celebrity information obtained via e-mail hacking has been stored.

The US attorney’s office is alleging that based on his phone calls and communications from prison, which have all been monitored, Mr Knowles is prepared to endure a longer sentence in return for retaining that information, which he can then exploit for future profit.

“Knowles’s prison e-mails reveal that he is anxious to get out of jail so that he can go right back to making money by exploiting celebrities,” the US attorney’s office alleges.

“Specifically, Knowles is planning to write a book airing non-public information about the celebrities he has hacked. It is incredible that Knowles already has a plan in place to re-offend by publishing intimate stolen information about celebrities, and then hacking celebrities to promote his efforts.”

Its sentencing memorandum added: “Significantly, Knowles has at least one computer that he has refused to forfeit to the Government that contains celebrities’ private information that Knowles believes is worth a lot of money.

“It is significant that Knowles is willing to risk serving more time in jail – what he believes will be a year – rather than produce his computer to the Government.

“Knowles says that with the computer he’s a ‘millionaire’, and without it, he’s a ‘loser’. The reason for that is obvious – the computer clearly contains valuable information about celebrities from which Knowles believes he can profit handsomely (“a lot more stuff that’s worth a lot more money.”).”