THE COURT:   No, we've got a straightforward legal

question.  Now, whatever you want to do about this, Mr. Painter,

you've said everything you can say.  You seized material that

you'd like, that the government would very much like to look at.

     MR. PAINTER:   Correct, Your Honor.

     THE COURT:   And know what's in it because we think 

it shows further evidence of Mr. Mitnick's criminal conduct.

     MR. PAINTER:   Correct, Your Honor.

     THE COURT:   He won't let you know what's in there, 

but he wants it back.  And it's as simple as that.

     MR. PAINTER:   That's correct, Your Honor.

     THE COURT:   That's all that's involved here.  And

it's not part of your case.

     MR. PAINTER:   Correct.

     THE COURT:   It's like demanding your sweater or 

your coat back.

     MR. PAINTER:   Well, except for --

     THE COURT:   Except that he says that in there may 

be something that will help me in the defense of my case.

     MR. PAINTER:   Well, and you know, the sweater or 

coat, I'd put it this way:  It's like asking for your coat back, 

and for all we know, the coat could have a pistol inside of it.

     THE COURT:   That's quite true.

     MR. PAINTER:   And we don't know.




                                                      (13)

     THE COURT:   That's quite true.  Or I want my box

back and it's got more narcotics in it.

     MR. PAINTER:   Correct.  We don't know.

     THE COURT:   In addition to what's being charged in 

this case against him.  Now, I can't do anything about the fact 

that the rule does not help you much with that.

     MR. PAINTER:   Well, Your Honor, I think it does.  I 

mean, I think the rule has never been applied to this.  But here 

it's like having a safe where it could have -- it goes beyond 

just there could be further evidence of criminal conduct that 

would relate to this case.  There could be things in there that

could cause other problems --

     THE COURT:   Of course.

     MR. PAINTER:   -- that we don't know about.

     THE COURT:   And Mr. Mitnick has keys in his pocket.

     MR. PAINTER:   That's correct, Your Honor.

     THE COURT:   As long as he has the keys in his pocket, 

there's nothing this court is going to do about it.

     MR. RANDOLPH:   Well, what could be there, what the 

evidence could contain, the encryptive material I should say --

     THE COURT:   No.  Maybe the government will let you 

have a copy of it if you tell the government how to read it.

     MR. RANDOLPH:   Well, then we have a clash of my 

client's right against self-incrimination, Your Honor.

     THE COURT:   Well, you know, we often have clashes




                                                      (14)

between rules and statutes and all of that.  That's our

business.

     MR. RANDOLPH:   I understand.

     THE COURT:   And I am telling you in this particular 

instance I'm not going to order them to give you a copy of that.

     MR. RANDOLPH:   Well, may I just take a moment, Your

Honor.  We do have clashes of constitutional rights, I agree.

But -- and then when you have that situation, I think what

courts ordinarily do is weigh whose position is the strongest.

     THE COURT:   I don't know what they ordinarily do in 

a situation like this.  I am telling you that this court is not 

going to order the encryptive material to be given to your 

client by the government unless your client has decided that it 

can be other than encryptive.  Now your client has control of 

that.

     MR. RANDOLPH:   Well, given the government's 

articulation, Your Honor, that the reason they don't want to 

turn it over to us is because they don't know what it is, but 

they're concerned that it may contain certain information versus 

my client's right to discovery under Rule 16 and his right not 

to have to incriminate himself by giving the government any help 

in getting access to materials that they could use against 

him --

     THE COURT:   But those materials are not part of

this case.




                                                      (15)

     MR. RANDOLPH:   Well, the government has alluded to

the fact, which we pointed out in our pleadings, that they do

intend to use the headings of the encryptive material for a

purpose in their case.

     THE COURT:   Well, maybe they'll have to rethink 

that.

     MR. PAINTER:   Your Honor, I can state with respect

to that, we would use the headings of the files that we have

decrypted that have material in them and they have specifically

made, but we're not going to use --

     THE COURT:   If they're decryptive, you can give him 

a copy of what's decryptive.

     MR. PAINTER:   And we plan to, Your Honor.

     MR. RANDOLPH:   But that puts aside the fact, Your 

Honor, that the defense believes that there is Brady material 

and otherwise exculpatory material in the files.

     THE COURT:   Just the mere fact that you say it 

doesn't convince me of anything.

     MR. RANDOLPH:   Well, as I was saying, Your Honor, I 

would be prepared to file in-camera a proffer of what

specifically we believe is contained in the encryptive files.  I 

didn't want to be -- it seemed to me I ought not to do that

until the government has been put to the test.

     THE COURT:   As long as the files are encryptive, 

the court isn't going to order the government to give your




                                                      (16)

client a copy of them.

     MR. RANDOLPH:   Well, perhaps I'm suggesting, Your 

Honor, that maybe there's another way which can protect the 

interest of both my client and the concerns of the government.

     THE COURT:   That isn't going to be to anybody's interest.

     MR. RANDOLPH:   I'm sorry?

     THE COURT:   What you're suggesting to me is the 

same thing you said before.  Because I wouldn't have any way of 

checking what is in those encryptive files.  They're not going 

to be other than encryptive just because you give me a 

declaration.

     MR. RANDOLPH:   But let me propose the following,

Your Honor.

     THE COURT:   Well, are you suggesting to the court 

that Mr. Mitnick tell the court how to get into those files then 

have the court read them?

     MR. RANDOLPH:   No.  When I was talking about a 

proffer, I was suggesting presenting a proffer -- 

     THE COURT:   I know, you were going to present, you 

know, whatever you think would be good from your standpoint.

     MR. RANDOLPH:   Yes.

     THE COURT: Well, and then how would I ever check

that?

     MR. RANDOLPH:   Well, I could think of another way






                                                      (17)

to handle this, Your Honor.

     If the government gives us the discovery, we will 

with a protective order against non-disclosure, we will then 

decrypt it, we will then present to the court those portions 

which we -- not just a proffer anymore, but specific items in 

the decrypted materials now which we believe are exculpatory or 

the defense intends to use in this case.

     THE COURT:   That's right.  You have made that offer 

before.  We're not getting any place here.  You said that when 

you glean from the encryptive material that which you want, you 

will let the government know what those things are, but you 

won't let the government know how to decrypt the material in 

general and you will not let them look at the other parts of the 

material.

     MR. RANDOLPH:   But my proposal, given a protective 

order, and that we will basically turn them in to be destroyed 

or whatever at the conclusion of the proceedings.  With a 

protective order, what's the harm that the government is trying 

to avoid?

     THE COURT:   I told you, you are not going to be

permitted, for the ninth time, to argue this case. We are

talking about practically what is to be done.  And as long as

your client knows what's in those files and won't let anybody

else get into them, your client is not going to get a copy of

them.




                                                      (18)

     MR. RANDOLPH:   I was trying to identify in a 

compromise way, Your Honor.

     THE COURT:   But you already did that several months 

ago.  You suggested and I rejected and so has the government 

rejected the idea that your client should take these seized 

encryptive files, use the knowledge he has to decrypt them, pick 

out the tidbits that he thinks would be helpful to him in a case 

not based on those materials, and then tell the government as to 

those tidbits what they say and then that's all they can look 

at.

     MR. RANDOLPH:   But there's no harm to the 

government with that process.  The government's concerns as 

articulated today are completely alleviated.

     THE COURT:   I can't do more than I have done. And

what I have done is I have said -- now I'm going to say it for

the tenth time -- as long as those materials are encrypted and

your client will not let anyone know at all what they say,  your

client is not going to get a copy of them.

     MR. RANDOLPH:   Well, we will let people know.  We 

just don't want to let the government know because it violates 

his Fifth Amendment privilege.

     THE COURT:   You mean you're going to tell the 

court, you're going to decrypt all of those files and tell the 

court what they say and then the court's not to tell the 

government?




                                                      (19)

     MR. RANDOLPH:   I think that's the appropriate way

to do it.

     THE COURT:   Really.

     MR. RANDOLPH:   That would protect his right against 

self-incrimination, yet also protect his right to discovery and 

to exculpatory material.

     THE COURT:   Really.  And the court can decide if 

there's evidence in there of more crimes, right?

     MR. RANDOLPH:   Well, no.  First, I don't think it 

should be this court because you're the presiding justice over 

this case.  But to another, to someone designated by the court 

could maintain those files, they can't be disclosed to the 

government.

     THE COURT:   Well, let me tell you something,

Mr. Randolph.  I'm not going to do it.  A special master is not

going to do it.  And as long as nothing that's in those files is

going to be used as a basis of this prosecution, Mr. Mitnick

cannot have them -- cannot have a copy of them. He knows very

well what's in those files.

     MR. RANDOLPH:   I can represent, Your Honor, that my 

client unequivocally does not know each and every item that's in 

those files.

     THE COURT:   He knows what's in those files.

     MR. RANDOLPH:   There's a --

     THE COURT:   I'm not forcing him to do anything at




                                                      (20)

all. He knows what's in those files. They are in effect usable

to him and not to anybody else. And that's just the way it's

going to have to remain.

     MR. RANDOLPH:   Your Honor, there's not even any 

showing that the information contained in those files, showing 

by the government, was placed there by my client.  So I think 

it's --

     THE COURT:   No one knows what's in those files. 

And as a matter of -- except Mr. Mitnick.  And as a matter of 

fact, that's why the criminal allegations in this case are not 

based on those encryptive materials.

     MR. RANDOLPH:   I understand, Your Honor.  But I'm 

just taking issue with one point the court says, that my client 

knows what's in those files.

     THE COURT:   He does.

     MR. RANDOLPH:   But there's no showing that he knows 

how the information got into those files and therefore there's 

no showing --

     THE COURT:   Oh, so the encryptive material, where 

the encryptive material contains things that were inadvertently 

placed in those files.

     MR. RANDOLPH:   The answer is --

     THE COURT:   Or by someone who was trying to

implicate him?

     MR. RANDOLPH:   The answer is I have no suspicion




                                                      (21)

that someone was trying to implicate him.  But with respect to 

the last point, Your Honor, we're not talking about --

     THE COURT:   You know, I can only tell you, 

Mr. Randolph, this is clever.  This is very clever.  But beyond 

that, I'm not going to go.

     MR. RANDOLPH:   Well, let me ask the following, Your 

Honor.  It wasn't clear to defense counsel how these proceedings 

were going to work in terms of the omnibus discovery order, 

whether each and every separate issue of our access to the files 

both from the motions -- from the items brought up by 

Mr. Sherman in his motions or just what the government has said 

would be determinatively decided by this order.  I would like an 

opportunity with respect to the encrypted files to address that 

in a separate pleading.

     THE COURT:   You already have.  We have now had 

three different hearings where we talked about it.  I have let 

you file written material.  I am now on volume, I think five, 

which is all on the subject of discovery.  We have aired it over 

and over and over again and the ruling is not going to change on 

the encryptive material.

     MR. RANDOLPH:   I understand.

     THE COURT:   We are taking this step by step.

     MR. RANDOLPH:   I understand.

     THE COURT:   All right. Let's go on to the next

part.




                                                      (22)

     MR. RANDOLPH:   All right.

     THE COURT:   Now, if your client changes his mind, 

you can let me know.

     MR. RANDOLPH:   The second point, Your Honor, is the 

I guess what we should call the proprietary, the source code 

file, proprietary business information.  The government seeks to 

not disclose a copy of that to -- to not give a copy to the 

defense, but rather wants to require the defense to come to the 

government to review these materials.

     In reviewing the papers that I filed that are in 

question today, I don't know that I adequately described to Your 

Honor why it is that the defense needs its own copy of these 

materials and why we need a copy at our office subject to any 

protective order that the court deems appropriate which will be 

signed by not only all defense staff, but any experts that 

review these files.

     I tried to set forth in some respects on Page 8 of 

my pleadings why it's important for us to have a copy without 

time restrictions, without security restrictions placed on us by 

the government to look at these materials.  But there's a reason 

I didn't articulate which I'd like to now.

     The discovery in this case in supporting the 

allegations of wire fraud consists of property that my client 

allegedly took which is intangible intellectual property.  And 

there is case law which will be argued I'm sure by both parties




                                                      (23)

prior to trial in this matter which describes the type of 

property falling in this category that is covered by the wire 

fraud statute.

     Not all types of property, when it falls in the 

category of intangible intellectual property, constitutes wire 

fraud when it's compromised.  There's only specific categories. 

And the category that is of interest and applicable here is 

confidential proprietary business information.

     The government is going to have to make a showing 

that each and every item that they claim was compromised by my 

client falls in that category in order to be legally covered by 

the wire fraud statute.

     In order to fall into the designation of 

confidential proprietary business information is not something 

that even I, as a defense counsel, can look at a source code and 

determine whether it falls in that category.  There is a lot of 

factors that go into that.  Not unlike in trademark litigation.

     THE COURT:   Now, you'll forgive me, but I want to 

get right to the heart of this.  What you're telling me is that 

you have to have a copy of this in your office available to 

people, whoever they may be, freely available to them so you can 

decide if this really is confidential information?

     MR. RANDOLPH:   Confidential proprietary, yes.

     THE COURT:   What is it that you do in your office 

that would permit you to reach that conclusion that is different




                                                      (24)

than what you would do in the government's office?

     MR. RANDOLPH:   Well, there's -- it's just going to

be in my -- from what I have been told by experts that I've

already talked to, it is going to, someone's going to have to

analyze each and every item that's claimed to be compromised.

     THE COURT:   I agree with you.

     MR. RANDOLPH:   It may be -- not for me because I 

don't have the expertise to analyze this, what a source code is. 

It's in computer language.

     THE COURT:   Maybe you're going to have an expert 

look at it.

     MR. RANDOLPH:   Yes, Your Honor.

     THE COURT:   I don't know what you mean exactly 

about deciding if it really is confidential proprietary 

information.  You go out and hire an expert and he gives you an 

opinion that it's not?

     MR. RANDOLPH:   He studies it and then he figures 

out what it is, if it's source code.  And if it's in software, 

if it's in non-source code format, then he will just look at it.

     THE COURT:   And he can't do that if he goes over to 

the government's office to look at it?

     MR. RANDOLPH:   I'm going to assume that it is 

physically possible for him to look at the same materials in the 

government's office as mine.

     THE COURT:   Of course it is. Of course it is.




                                                      (25)

     MR. RANDOLPH:   But the question is, we're jumping 

through a loot of hoops which would --

     THE COURT:   All you mean is that you have to have 

somebody look at all this, at the -- you're going to ask me to 

sign an order for an expert that's going to be for a lot of 

money so that expert can sit somewhere and look at every single 

thing that is in these files.

     MR. RANDOLPH:   But at the same --

     THE COURT:   Wait a minute.

     MR. RANDOLPH:   I'm sorry.

     THE COURT:   And come to a conclusion which is that 

none of it is confidential or proprietary and then he'll testify 

to that.

     Now, the only question you're putting to me is 

where does he have to sit when he's reaching that conclusion 

because that's the conclusion that you're going to ask me to 

have the expert paid for.

     MR. RANDOLPH:   All right.

     THE COURT:   It's not magic, Mr. Randolph.  It's 

plain ordinary work just like any other expert does.  And the 

only question you're putting to me is where is he going to do 

it.

     MR. RANDOLPH:   Well, I think that's true, Your 

Honor, although not just the expert, but to the extent that the 

expert has to talk to counsel at the same time or showing me on




                                                      (26)

the screen so I understand what his opinion is about a 

particular item.  And we're not talking about one or two, we're 

talking about a great number of items.  And that's -- but I 

think the court has correctly articulated, obviously the process 

we have to use experts in a case like this.

     THE COURT:   The point you're making is you want to 

do it in your own office.

     MR. RANDOLPH:   Well, yes, and there's a number of 

reasons for that.  First and foremost, the government has not 

and we don't believe they can articulate a reason why the 

proprietary software, which is what we're talking about, a copy 

of that can't be given to defense counsel with a protective 

order.  It's done all the time.

     THE COURT:   Let's stop just a moment.

     MR. PAINTER:   Well, Your Honor, we've gone through 

this before.  Our concern -- the protective order is a 

relatively recent suggestion by defense counsel.  Our concern --

     THE COURT:   And there's nothing wrong with that, 

you do that all the time.

     MR. PAINTER:   It's done in several cases, Your 

Honor.  However, in this case we have special concerns.  The 

special concerns are this is the material -- first of all, the 

victims have been harmed significantly by the fact that this 

proprietary development source code was stolen from them and 

they're quite worried about it being leaked to other parties




                                                      (27)

even now.

     Second, Your Honor, that in this case we have a 

defendant and a defendant who the government is quite concerned 

will leak them.

     THE COURT:   I'm not talking about Mr. Mitnick, but 

about their expert.

     MR. PAINTER:   I understand, Your Honor.  But Mr. 

Mitnick would necessarily at some point look at this as well and 

that's our concern.

     And our third concern is that, you know, there's 

already in this case there are several web sites out there 

devoted to the case.  There are things about this case posted 

all the time.  I don't-- not that I distrust Mr. Randolph or 

Mr. Sherman, I just believe that there is a very big risk that 

this stuff will get out.

     THE COURT:   Well, I think he's going to have to do 

that.  I think for the benefit of their expert, you have to 

enter into a protective order with him in his office.

     MR. PAINTER:   Well, Your Honor, I will note a 

couple of things with respect to that.  First of all, we 

disagree.  We don't need to get into this now, but we disagree 

with their characterization of what we need to show for the mail 

fraud statute.

     THE COURT:   Why worry about that now?






                                                      (28)

     MR. PAINTER:   We're not, Your Honor.

     The second thing, Your Honor, is that if we do a 

protective order, that does change some of our proposals that 

we're willing to do.  We can talk about the other categories 

first --

     THE COURT:   That's right.

     MR. PAINTER:   -- and then we'll talk about it.

     THE COURT:   It does and I certainly think that it 

depends on what they propose to you in terms of a protective 

order.

     MR. PAINTER:   If that protective order covers 

certain things, other things in our proposal will change, and I 

can discuss those after we've gone through the other items, Your 

Honor.

     THE COURT:   All right.  Next.

     MR. RANDOLPH:   All right.  The government has 

agreed to give us the uncontested materials.  They agreed on 

April 27th.  I'm not sure, maybe they're still in the process of 

copying them, so I would like, I'd ask the court to in its final 

order address when those materials will be turned over.

     What we haven't been talking about so far, Your 

Honor, is my client's review of the materials.  And I think 

we've covered all three categories of how I'm going to review 

them in terms of the encryptive and proprietary and the 

non-disputed materials up to now.




                                                      (29)

     MR. PAINTER:   Your Honor, if I may, I think there 

are two categories that we haven't touched on.  Maybe we should 

just touch on them briefly.  The access codes, the passwords and 

other credit cards, that kind of information, and hacker tools I 

think.  We should at least discuss those before we move on to 

the next.

     THE COURT:   Go on.

     MR. PAINTER:   Our feeling with respect to the 

access codes, the passwords, credit card numbers, et cetera, 

that is contraband.  That is stuff that we would not want to 

produce to them for that reason.  The hacker tools, although 

counsel's made the argument the hacker tools are available in 

different places throughout the net, that may or may not be true 

to various extents.  There may be different iterations of these 

things.  However, Your Honor --

     THE COURT:   Well, what are you going to do with 

respect to those items when you're proving your case?

     MR. PAINTER:   Well, Your Honor, it depends on what 

the particular thing is.  The access codes and the stolen credit 

cards, et cetera, the passwords, those are charged in various 

counts or it will show that they were taken from a particular 

entity.

     THE COURT:   That's what I'm asking.

     MR. PAINTER:   That's what those would be used for. 

The hacker tools to various extents would be used to show if




                                                      (30)

those were used at a particular site where the stuff was stolen 

to identify who did the stealing.

     THE COURT:   Anything you're using you have to show 

them.

     MR. PAINTER:   Well, Your Honor, we will show this 

all to them.  We have committed to allowing them to view all of 

this information in an offsite discovery set-up.

     THE COURT:   Do you view those things differently 

than the other materials?

     MR. PAINTER:   Than the materials that we made 

available or the proprietary materials?

     THE COURT:   The materials that you are going to 

make available pursuant to this protective order.

     MR. PAINTER:   Your Honor, I think if we did a 

protective order for all the things we have concerns which I 

voiced with respect to the proprietary software, it's the same 

concerns with respect to these things.  However, if there is a 

protective order, then if I may step back at this point and 

address how that changes some of the other things in our 

proposal.

     THE COURT:   No. You can work up another order.

     MR. PAINTER:   Okay, Your Honor.

     MR. RANDOLPH:   Then moving on from that, Your 

Honor, I guess the next thing on the table is how my client is 

going to have access to these materials.  I now understand how




                                                      (31)

my office and the experts are going to.  But with respect to my

client, the government has proposed that he review these

materials in an offsite discovery room.  We in our order have

suggested that the better place and the less -- the more cost

efficient is to allow us to view it in the attorney conference

room at the Metropolitan Detention Center.

     THE COURT:   Not at all.

     MR. RANDOLPH:   All right.  Just parenthetically if

I may point out, Your Honor, there is a provision in 18 U.S.C.

Section 3142(i)(4) that does allow in a circumstance just like

this for transport of the defendant who is detained to counsel's

office for review of discovery materials.

     THE COURT:   To your office?

     MR. RANDOLPH:   That's --

     THE COURT:   Not at all.

     MR. RANDOLPH:   All right, Your Honor.

     Then that only leaves the offsite discovery room

which has been proposed by the government.  I assume that's then

what the court is going to do.

     THE COURT:   Yes.

     MR. PAINTER:   If I may speak to that briefly, Your

Honor.

     THE COURT:   What?

     MR. PAINTER:   With respect to that offsite room.

Particularly now that the defense with a protective order would




                                                      (32)

have access to all of the material, now the defense is in a 

position to identify what they think is important and make 

copies and show it to defendant Mitnick.  Our one concern with 

the offsite discovery, we can maintain a room for them to come 

over.  We can transport them over.  They will now have the

material with them and they will have the computers, it will

change in that respect.  But I wanted to impress upon the court

that it's my guess that defendant Mitnick would want to be there

on a daily basis. I talked --

     THE COURT:   You mean in the offsite room? 

     MR. PAINTER:   Correct.

     THE COURT:   Not at all, he's not going to be.

     MR. PAINTER:   And against this backdrop, that now 

that defense counsel has access to this evidence and has 

employed experts, there is no legal right for the defendant to 

have access to the electronic material at all, yet we can set up 

a room for them to have access to.  I've talked to the case 

agent and I've talked to people at MDC.  The case agent would 

have to take a lot of precautions to make sure that he's secure. 

The case agent --

     THE COURT:   He's not going -- Mr. Mitnick is not 

going to do it at the MDC.

     MR. PAINTER:   I know, Your Honor.  That's why it 

still requires the case agent to transport him from MDC to the 

offsite, which we believe will be in the federal building.  But




                                                      (33)

because of the cost and expense and also the time involved, 

that's why, especially when he's not entitled to have access 

with counsel at this point, that we wanted to limit it to 

something that's very reasonable and that's what we propose in 

the order.

     THE COURT:   Well, it isn't reasonable in its 

present condition because you can't have him going three times a 

month.

     MR. PAINTER:   Well, Your Honor, one thing that they

can do now is if they find a particular file is relevant, they

can simply print it out.  They can bring the printout to MDC

now.  So that changes the calculus quite a bit.

     THE COURT:   That's true, but he still should have 

access to it on a more reasonable basis.

     MR. PAINTER:   Well, Your Honor, we would request

that whatever basis that is, it's --

     THE COURT:   Well, you're now going to talk it over 

one more time.  Go on.

     MR. RANDOLPH:   Just to read between --

     THE COURT:   This is not going to be done in the 

Metropolitan Detention Center.

     MR. RANDOLPH:   I understand very clearly what the 

court has said and I won't suggest that again.

     If I'm reading between the lines from what

Mr. Painter is saying, I think then that it sounds like it's




                                                      (34)

agreeable, since we will have a copy subject to a protective 

order of essentially the materials that are in question, we can 

bring -- they will be on our hard drive, Your Honor -- I can 

bring a laptop to the discovery room and where it will be worked 

with by --

     THE COURT:   Well, you're just going to have to talk 

this over with the government and see exactly what the mechanism 

is going to be now.

     MR. RANDOLPH:   Well, at any rate, that's what I 

would propose, Your Honor.  As I think I've indicated, we can 

bring a CD rom read-only and a laptop to --

     THE COURT:   Is there something that would keep you 

from discussing that with them?

     MR. RANDOLPH:   No. I'm sorry, I misunderstood the 

court.  I thought we were going to propose it.

     THE COURT:   No.  I'm not going to write it out now.  

I'm going to have you write it out with them.

     MR. RANDOLPH:   All right.  Then I'll discuss that, 

how, the mechanics of that with government counsel.

     May I address then my client's access to the 

discovery materials, which I think is the next thing that was 

under consideration; that is, the government has proposed three 

days a month.  It is true that with the protective order and the 

ability to print out a file, I may be able to, it may be 

helpful -- not may, that will be very helpful in terms of my




                                                      (35)

client's review of the discovery.  But because of the voluminous

nature of the discovery, it won't solve the problem.

     I would ask for the following:  That the notice be 

given -- I'm not sure to whom it would be given, whoever has

control over the room -- that we give no more, not to be

required to give any more than 24 hours' notice; that that

notice be telephonic --

     THE COURT:   No.  The answer is no.

     MR. RANDOLPH:   That it be written notice?

     THE COURT:   Not going to do it on 24 hours' notice 

and not going to permit it to be done by telephone.  And it has 

to be on some routine basis so that it does not cause disruption 

to everybody. This is a criminal case to be dealt with like all 

other criminal cases.  And we are not going to have a steady 

stream of people dedicated simply to making sure that Mr. 

Mitnick gets to see this material whenever he feels like it.

     MR. RANDOLPH:   Well, I certainly wasn't suggesting 

whenever he feels like it.  But we want --

     THE COURT:   That won't work.

     MR. RANDOLPH:   I understand.  It will be more -- 

I'm not certain, Your Honor, whether I have to be there when 

he's reviewing it.  I assume that somebody from my staff has to 

be.

     THE COURT:    There's no reason why you can't discuss 

this with the government and work it out to both of your




                                                      (36)

satisfaction.

     MR. RANDOLPH:   Well, government counsel has

suggested three days a month.

     THE COURT:   That is not enough.

     MR. RANDOLPH:   And then I take it that the court

wants us to go sit down again and come up with a proposal?

     THE COURT:   Yes, indeed I do.  This is your problem 

and his problem.

     MR. RANDOLPH:   All right.  Then I think I'm 

certainly willing to do that immediately, Your Honor.

     THE COURT:   All right.

     MR. RANDOLPH:   So given that the only other request

I have is that the court order for purposes of potential

appellate review that a copy of the encryptive materials be

submitted to this court under seal.

     THE COURT:   Not at all, no.  I'm not going to do 

that.  Nobody's made any showing to me at all about the 

encryptive materials.

     MR. RANDOLPH:   Well, I think those are the points

that I -- oh, given the fact that government counsel and defense

are going to sit down and come up  with a joint proposal, Your

Honor, the only other item I have to be addressed is the trial

date.

     I know the government proposed a date at the end of 

October.  And I have tried to address that in my pleading that




                                                      (37)

aside from the fact that we're not certain how this process is 

going to work and there will probably be some kinks that need to 

be worked out as we go along, I'm asking for a mid-January trial 

date simply because, as I presented in my pleadings, I have 

several matters, obviously not all of which will go to trial, 

but are set for trial between now and October.

     THE COURT:   Did you take those since you've taken 

the representation in this case?

     MR. RANDOLPH:   Well, Your Honor, I --

     THE COURT:   And you'll go on taking cases, won't

you?

     MR. RANDOLPH:   Well, I was appointed in October of 

1996.  So yes, I have taken on cases since that time.

     THE COURT:   Well, of course.  I mean, of course you 

have.  So we are going to have to come to a conclusion about 

what the trial date is going to be.

     MR. RANDOLPH:   I understand.  If we set a

January -- 

     THE COURT:   And then we have to stick with it.

     MR. RANDOLPH:   I understand that too.  That's why 

I've suggested a mid-January trial date with the exception of --

and again, I hope to have some wiggle room because I don't know 

how this process is ultimately going to work -- but putting that 

aside, I don't want to have my client remain in custody longer 

than necessary among others and I know the government has an




                                                      (38)

interest in moving this case to trial

     I believe that if this process works efficiently 

and with cooperation of government counsel that we would be 

ready for trial in mid-January of 1998, and I will gauge my 

trial calendar accordingly in terms of not taking on other 

matters if they're going to interfere with the trial date.

     THE COURT:   Well, I have these motions under 

advisement now.

     MR. RANDOLPH:   I understand.

     THE COURT:   And I'll look at this order and then 

I'll decide what the trial date should be.

     MR. RANDOLPH:   All right.  Well that's -- I 

appreciate it, Your Honor.  That's my presentation.

     THE COURT:   Mr. Sherman, please.

     MR. SHERMAN:   Your Honor, first of all, I would 

like to apologize as I have already apologized to counsel.

     THE COURT:   You don't have to.

     MR. SHERMAN:   Well, I just want to tell you that I 

felt terribly about it, Your Honor.

     I will be very, very brief.  You know, my position 

is totally unlike the position of my co-counsel.  I represent 

Mr. Depayne.  I don't know what the evidence is against 

Mr. Depayne.  Either in what the government has furnished me 

with the exception of one tape recording and the electronic 

information, I think it's going to turn out to be a blank.  I




                                                      (39)

have set forth for the court my feelings on this omnibus order 

that's been prepared.  I have set forth what I thought should be 

done.

     Now, one of the things that I really am very 

anxious to do, Your Honor, because this case was sort of done, 

it didn't work out I think the way the court intended.  The 

court thought, I'm certain, that it had four experienced counsel 

and we would be able to sit down and hammer out these items. 

But we have been given no -- Mr. Depayne tells the court he 

hasn't received any discovery from the government.  The 

government is under no court order to provide anything to 

Mr. Depayne.  I have six or seven motions.

     Now, of course they're boilerplate motions because 

of the time they were prepared.  But there is one exception and 

that's the wiretap motion.  Your Honor, I'm convinced that 

Mr. Shimimora, one of the government's major informants in this 

case, although they say he's not going to testify and thereby 

dismiss him, did substantial electronic surveillance on behalf 

of the government.

     Now, the government might say he did it on behalf 

of a provider.  I just want the government to respond to the 

discovery motions on file.  I would respectfully --

     THE COURT:   I think the government has to respond 

to the discovery motions that you filed.

     MR. SHERMAN:   Well, they did file an omnibus




                                                      (40)

response to all those motions, but they didn't take the items up 

one at a time.  Your Honor, if they feel they have, it's just 

fine with me to just submit the entire matter to the court.  You 

don't have to hear from me anymore about what I wrote and just 

make a ruling.

     THE COURT:   Well, let us not engage in 

generalization.

     MR. SHERMAN:   All right.

     THE COURT:   What specifically do you -- not taking

it generally , because they are boilerplate motions -- what

specifically do you want right now?

     MR. SHERMAN:   I want those things -- what I want 

right now is I want a court order directing the government to 

supply me with the materials it deems are appropriately supplied 

within my motions.  Just rule on those motions.

     One other thing I have to say, then I'll be seated. 

As far as the trial date goes, it's a matter of indifference to 

me.  I intended sometime during these proceedings when I learned 

a little bit more about the evidence, if that day comes, to make 

a motion for severance.  If that motion is granted or whether 

it's granted or not, Mr. Mitnick disappears, I'm ready to try 

this case at the court's convenience without a jury.  I've 

cleared that with Mr. Painter and Randolph.

     THE COURT:   Well, Mr. Painter, I have thought long 

and hard about severing these defendants.




                                                      (41)

     MR. PAINTER:   Well, Your Honor, that we contend 

would not make sense in this case for a variety of reasons. 

There's no motion on the table at this point.

     THE COURT:   No, I am now sharing with you my 

personal views about this.

     MR. PAINTER:   Well, Your Honor, the indictment 

charges that Lewis Depayne aided and abetted Kevin Mitnick in 

the scheme alleged in the first I think, I forget now, 17 counts 

in the indictment.

     THE COURT:   That's right.

     MR. PAINTER:   We laid out in the indictment, 

specifically there's a paragraph that talks about specifically 

what he did to aid and abet defendant Mitnick in that scheme. 

In fact, one of the charged counts involves direct actions by 

defendant Depayne calling up a company pretending to be someone 

else and getting --

     THE COURT:   And that's really all you're going to

prove against him.

     MR. PAINTER:   No. No, that's not, Your Honor.  I 

mean, if you took those two things together perhaps. What we're 

trying to prove is not only that he acted directly in that one 

case, but that he aided and abetted defendant Mitnick in a 

number of ways in all of the scheme, the entire scheme to 

defraud those companies to take their property.

     THE COURT:   Don't leave me out. Tell me, what are




                                                      (42)

you going to show?  Have you given Mr. Sherman everything that 

you have that you're going to use to prove this case?

     MR. PAINTER:   Your Honor, we've not only done that, 

there is the one tape he refers to, but there were other tapes 

that were made, tapes made with defendant Mitnick when he was on 

the run, tapes that involve Lewis Depayne that he's had for 

about a year now.  We've had that electronic discovery made 

available for a year and a half.  He's come and looked at it 

once for about three and a half hours.  He's not really even 

looked at that very extensively.

     We spelled out in a letter that I quoted in our, 

it's our opposition to the bill of particulars motion by 

defendant Depayne, where we spell out specifically the kind of 

evidence and the kinds of things we're going to prove in the 

context of the case.  And I'll refer the court to Paragraph, 

let's see, it's a footnote.

     It talks first about Paragraph 25 in the indictment 

and then talks about the letter where we said that his client 

was in constant contact with Mitnick throughout the period 

Mitnick was a fugitive and throughout the period Mitnick carried 

out the unauthorized intrusions of numerous computer systems and 

engaged in large scale theft of hardware and software.

     The evidence contained in the computer records we 

have yet to review.  This is a letter dated probably about eight 

months ago.  The tapes you already have and statements made by




                                                      (43)

witnesses.  There's also evidence that your client provided

Mitnick with a cellular phone to assist Mitnick in evading

detection, aiding him in reprogramming cellular phones --

     THE COURT: I've read that. 

     MR. PAINTER: -- and the cellular phones, Your 

Honor, were used to help perpetrate the hacking activity and 

that Mitnick used your client's address to obtain a pager while

he was a fugitive.

     Further there is evidence that Depayne's computer 

accounts were used for transferring illegally obtained source 

codes.  Your Honor, those computer accounts maintained by 

defendant Depayne are in the electronic discovery.  They're very 

easy to find.  You'll be able to look at those.

     There's also evidence that your client assisted 

Mitnick in gaining access to computers at USC.  Again, that's in

discovery that's either been provided or been made 

available.  And then finally that direct theft with respect to 

the one count that was charged specifically involving him.

     THE COURT:   And that's all.

     MR. PAINTER:   Well, yes, but he is intricately

intertwined with defendant Mitnick.

     THE COURT:   That is just a generality.

     MR. PAINTER:   I understand, Your Honor.  But we

believe that given that course of conduct over the course of

time -




                                                      (44)

     THE COURT:   But I'm going back to what I said. 

You've said what you're going to use to prove the allegation?

     MR. PAINTER:   Correct, Your Honor.  And we, you 

know, to the extent there is any material that Mr. Sherman 

refers to, it's available -- we have pointed it out to him. 

We'll point it out to him again, you know.  We're not hiding 

things from Mr. Sherman.  And he's said from day one he doesn't 

understand what the case is about.  I don't think he understands 

how aiding and abetting works in this context perhaps. 

     THE COURT:   He doesn't?

     MR. PAINTER:   Well, from what he's continually said

to me and to the court, Your Honor, he keeps saying I don't see

how Depayne has any involvement in this.  And we've pointed to

these things and shown that that is aiding and abetting the

fraud.

     THE COURT:   Oh, I'd be willing to bet that he'll 

have something to say at the trial.

     MR. SHERMAN:   Your Honor, I'd just like to say that

I'm sure Mr.  Painter is trying to paint as accurate a picture as

he can for the court.  But other than the tape, he has 

specifically pointed out nothing.  He says that Mitnick -- I 

mean Depayne aided Mitnick here, Depayne aided Mitnick there. 

I've seen none of these exhibits.  I'm sure there are some 

things that exist like, for example, Mr. Mitnick might have used 

Mr. Depayne's account.  Mr. Mitnick's used the accounts of




                                                      (45)

dozens of people who didn't give him permission to do so.

     You know, my offer stands.  I'll stipulate to the 

foundation on all these exhibits.  I've been in trial with Your 

Honor before.  Mr. Depayne is satisfied to waive jury in this 

court.  We'll stipulate to the foundation of all the exhibits 

and let's go at the court's convenience.

     THE COURT:   All right.  You're going to do with the 

aid of counsel on another order.

     MR. PAINTER:   Correct, Your Honor.

     THE COURT:   And then I'll rule on all these motions.

     MR. PAINTER:   Correct.  The only one other point 

I'd like to make, Your Honor, is that it is in the government's 

interest to try to go to trial sooner rather than later.

     THE COURT:   It's in my interest to go to trial 

sooner rather than later also.

     MR. PAINTER:   The only other thing I would note is

in case the court has not been made aware of this is that the

appeal from defendant Mitnick's denial of bail was denied by the

Ninth Circuit yesterday.

     THE COURT:   No, I didn't know that.

     MR. PAINTER:   That happened yesterday, Your Honor. 

So the court need not take any further action on that.  If the 

court would, I could give it a copy of the order from the Ninth 

Circuit to the clerk.






                                                      (46)

     THE COURT:   Well, I'm sure the Ninth Circuit is 

going to tell me about it.

     MR. PAINTER:   I assume they will, Your Honor.

     THE COURT:   All right.  Now, when are you going to 

get this in?  We really, we've got to go along with this.

     MR. PAINTER:   Yes, we agree, Your Honor.

     THE COURT:   Every five minutes somebody thinks of 

something else the government has not given them, some 

convenience or whatever, but eventually we are going to go to 

trial.

     MR. PAINTER:   That's the government's wish as well,

Your Honor.

     I will need to confer with the defense counsel and 

get something to the court as soon as possible.  I'm trying to 

think of an appropriate date.

     THE COURT:   Well, you can have a week.

     MR. PAINTER:   Okay, Your Honor. That's what we'll 

do.  We'll submit it in a week.

     THE COURT:   Now, let's not go over the ground we've 

been over.  So Mr. Randolph, don't argue.  Let's not go back and 

do what we've already done five times.  That's part of the 

result.

     MR. PAINTER:   Thank you, Your Honor.

     THE COURT:   I'll let you know when I want you to

come back.  After I've looked at the proposed order,  I'll let




                                                      (47)

you know when I want you to come back.

     MR. PAINTER:   Very well, Your Honor. 

     MR. SHERMAN:   Thank you, Your Honor. 

     MR. RANDOLPH:   Thank you.

     THE CLERK:   Please rise. Court concluded.


(I hereby certify that the above-referenced matter is a

true and accurate transcription of my stenographic notes)





ROGER D. MAY, CSR                                               DATE:  9/2/98