From: Sandy Sandfort <sandfort@crl.com>
Date: Sun, 20 Feb 94 16:16:59 PST
To: David L Womack <dwomack@runner.jpl.utsa.edu>
Subject: Re: Blacknet worries
In-Reply-To: <9402202250.AA24131@runner.utsa.edu>
Message-ID: <Pine.3.87.9402201504.A22643-0100000@crl2.crl.com>
MIME-Version: 1.0
Content-Type: text/plain


C'punks,

David L Womack wrote about several ways he thought the USG could go after 
crypto anarchists and fellow travelers.  While I believe there is much to 
say in agreement with the tools he has identified, in some ways, he is 
still asking the wrong questions.  David wrote:

> 1.  Imputed income.  If you live well, and don't show
>     enough reportable income, the IRS can determine how
>     much you are _Really_ making, and figure your tax
>     thereon.  You disagree?  Prove it in tax court.
>     By the way, the burden of proof is on ...YOU.

If you have no *seizeable* assets, the burden--in effect--moves back to 
the IRS

> 2.  Criminal conspiracy.  Elements are
>    a.  two or more people
>    b.  a prepatory act
> 
>     So...if we were talking about any number of possible
>     illicit activities, conspiracy is a really viable
>     charge. . .
> 
> 3.  CCE (Continuing Criminal Enterprise). . .

Again, without seizable assets, it is highly unlikely any of this neat 
stuff will be used against you.  Only fat or famous targets are worth the 
government's attention.  They aren't in it for their health.

> 4.  IRS-1040, Schedule B, Part III, Foreign Accounts and Trusts. . .

If your total overseas accounts aggregate under $10,000, the correct 
answer to the IRS is "NO."  For amounts over $10k, well, they have to 
find them first, don't they?  *Insurance* and *annuity* policies aren't 
reportable at all.  Give you any ideas?
 
> 6.  RICO. . .
>
> 7.  Did you know that Federal prosecutors have a better than
>     90% conviction rate?

Same answer.  They aren't going to fool with you unless you have bucks or 
are a "name."

> 8.  HOW does one spend "magic money"?  If you have bunches of
>     cash offshore, and bring it in, records are created.  If
>     you buy something, potential witnesses are created.  Can
>     you really expect that the clerk in wire transfer at XYZ
>     bank (who makes $6.50/hr) won't tip off someone when you
>     wire in the $20,000 to buy ...whatever?

(a)  You plan to use your "true name"?  (b)  You plan to actually 
transfer the money?  How crude.  Why not just access the goods and 
services without bringing in the moola?  (Paradyme shift required.)
 
> 9.  . . . lack of discretion.  Can we really expect
>     users of a hypothetical blacknet would never drink too much,
>     never wish to impress someone, never trust someone unwisely?

Yes, for those who can't keep their business secret, think of it as 
evolution in action.

While David has done some great *linear* thinking about the problems that 
will face us all in the brave new world of crypto anarchy, something more 
is needed.  All the problems that have been suggested have solutions.  
But they require that we not get canalized in our thinking.  The digital 
domain is NOT the real world rendered in electrons.  It has its own set 
of rules that are derived from its unique electronic/cryyptographic nature.


 S a n d y