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IPhone raid puts high-tech enforcement squad in spotlight

Little is known outside the tech world about REACT, the task force that searched the home of a Bay Area blogger who had acquired a missing iPhone prototype.

May 05, 2010|By David Sarno and Jessica Guynn, Los Angeles Times

Reporting from Los Angeles and San Francisco — When a top-secret prototype of Apple Inc.'s new iPhone went missing recently, the computer giant summoned Silicon Valley's version of the cavalry -- an elite squad whose main mission is investigating crimes against high-tech companies.

Little-known outside the tech world, the unit is suddenly in the spotlight for its April 23 raid on the Bay Area home of Jason Chen, the 29-year-old technology blogger who had gained possession of the missing phone.

The unit swept in after Chen posted a photo and details of the new iPhone on the website. But the raid itself has become secondary to a larger debate burning up Silicon Valley and the blogosphere: What is this high-tech police force, and who controls it?

"It's the iPolice," said Steve Meister, a former Los Angeles County deputy district attorney. "This whole thing appears, rightly or wrongly, to be law enforcement doing the bidding of a private company."

The task force, called REACT (for Rapid Enforcement Allied Computer Team), is a kind of SWAT team, chartered in 1997 to focus on "large-scale crimes that victimize the high technology industry in the Bay Area."

The unit is composed of 30 investigators and prosecutors on loan from local, state and federal agencies in the Bay Area, including the FBI and the Secret Service. These various jurisdictions cover some of the salary costs under their own budgets; the rest of comes from a $2.3-million allotment from the state and Santa Clara County.

Led by the Santa Clara County district attorney's office the task force investigates a variety of fraud, piracy and identity theft cases on behalf of both individuals and corporations.

But the recent raid has renewed worries about the close ties between the industry and specialized enforcement units such as REACT. One concern is that Apple and other high-profile tech companies, because of the economic benefits they bring to the state and their close relations with REACT, get a higher level of service and attention than other businesses and individuals. In 2008, technology industry payrolls pumped more than $100 billion into the California economy.

"There are a lot of serious crimes that get committed in California that don't get these kinds of resources," said Michael Risher, staff attorney at the Northern California chapter of the American Civil Liberties Union. "Hopefully sooner rather than later we will know what's going on here and whether their actions were justified."

Though Apple would not comment on its ties with REACT, state documents show it has collaborated with the task force in the past. Last year, REACT reported working with "an Apple investigator" on a case in which an Apple employee stole more than $100,000 worth of computers and sold them on EBay.

REACT task force leader Michael Sterner, an investigator with the Santa Clara County district attorney's office, said it's not uncommon for investigators to make use of intelligence from firms' internal security teams, or to consult with companies' security personnel as cases move forward.

But, Sterner emphasized, "we don't take directions on our investigations."

In 2005, REACT, working with the FBI, seized nearly half a million counterfeit DVDs and CDs containing music and software programs in what was billed as the nation's largest disc piracy case ever. The resulting convictions drew plaudits from the Recording Industry Assn. of America and from software makers Adobe Systems Inc. and Symantec Corp.

In 2006, two Bay Area residents were convicted in federal court of fraudulently reselling more than $29 million worth of Microsoft software in a scheme exposed by a team that included REACT.

"There's a recognition that you have to be responsive when there's a potential impact on the city, county or state economy when it comes to cases like that," said Paul Weber, president of the Los Angeles Police Protective League. "It's a fine balance between preserving the local economy and providing the meat-and-potatoes policing. I don't think one excludes the other."

Silicon Valley prosecutors are sensitive to allegations of being too cozy with companies after a long history of instances in which law enforcement agencies were showered with hundreds of thousands of dollars in grants and equipment by tech firms to help combat crimes.

"There is a keen awareness of the necessity to insulate ourselves from industry," said Santa Clara County Deputy Dist. Atty. James Sibley, who headed REACT for six years. "I don't want to hurt Steve Jobs' feelings, but he doesn't pull our strings."

Still, Apple is one of a number of high-profile technology companies that sits on REACT's steering committee, a board that offers the task force "advice, recommendations and strategic input and direction" about high-tech crimes, according to a REACT spokesman.

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