"At the beginning of this case the federal government manipulated the facts to allege losses that were grossly inflated," Mitnick said in a telephone interview Thursday night from the Los Angeles Metropolitan Detention Center. "Hopefully, if the court considers this motion and rules upon its merits, it will clear me publicly of the allegations that I caused these significant losses."
The motion, filed by defense attorney Don Randolph on July 22, is the latest conflict in a case that's remained unusually acrimonious, considering that both sides reached a plea settlement in March. Under the terms of the agreement, Mitnick pleaded guilty to seven felonies and admitted to penetrating computers at such companies as Motorola (NYSE:MOT), Fujitsu and Sun Microsystems, (Nasdaq:SUNW) and downloading proprietary source code. On Aug. 9, he's expected to be sentenced to 46 months in prison, on top of the 22 months he received for cell phone cloning and an earlier supervised release violation.
Mitnick vexed by 'snowball effect'
The only sentencing issue left unresolved is the amount of money Mitnick will owe his victims.
Prosecutors are seeking $1.5 million in restitution -- a modest figure compared to the more than $80 million the government quoted to an appeals court last year, when it successfully fought to hold the hacker without bail. That figure, though no longer promulgated by prosecutors, vexes Mitnick, who sees a "snowball effect" of bad press that began with a 1994 front-page article in the New York Times.
"Because of this assault that was made upon me by John Markoff of the New York Times, then the federal government grossly exaggerating the losses in the case and the damages I caused, I have a desire to clear my name," Mitnick said. "The truth of the matter is that I was never a malicious person. I admit I was mischievous, but not malicious in any sense."
Markoff reported on Mitnick for the New York Times, and went on to co-author Tsutomu Shimomura's book, "Takedown: The Pursuit and Capture of America's Most Wanted Computer Outlaw -- By The Man Who Did It," slated as an upcoming movie from Miramax. Markoff's portrayal of Mitnick, and the profit it ultimately earned him, has been the subject of some criticism from Mitnick's supporters, and raised eyebrows with a handful of journalists.
Markoff's most enduring Mitnick anecdote is the story that the hacker cracked NORAD in the early 1980s, a claim that was recycled as recently as last May by another New York Times reporter. "I never even attempted to access their computer, let alone break into it," Mitnick said. "Nor did I do a host of allegations that he says I'm guilty of."
For his part, Markoff says of the NORAD story: "I had a source who was a friend of Kevin's who told me that. I was not the first person to report it, nor the only person to report it."
The July 22 motion filed by Mitnick's attorney accuses the government of coaching victim companies on how to artificially inflate their losses. The filing is based on documents Randolph subpoenaed from Sun, which show that shortly after Mitnick's February 1995 arrest, the FBI specifically instructed Sun to calculate its losses as "the value of the source code" Mitnick downloaded, and to keep the figure "realistic."
Following the FBI's advice, Sun estimated $80 million in losses based on the amount they paid to license the Unix operating system. Six other companies responded, using software development costs as the primary calculus of loss. The total bill came to $299,927,389.61, significantly more than the $1.5 million the government says Mitnick inflicted in repair and monitoring costs, and theft of services and the $5 million to $10 million both sides stipulated to for purposes of sentencing.
"At the beginning of this litigation, the government misrepresented to the federal judiciary, the public and the media the losses that occurred in my case," Mitnick said.
To Randolph, it all smacks of collusion. "What comes out from the e-mails that we have, is that the so-called loss figures solicited by the government were research and development costs at best, fantasy at worst," he said. "I would classify it as government manipulation of the evidence."
However, prosecutor David Schindler dismissed Randolph's claims as "silly and preposterous."
"What would be inappropriate is to tell them what dollar amount to arrive at. In terms of the methodology, in terms of what is to be included in loss amounts, that direction is something we often provide because we're aware of what components are allowable under law, and which components are not," he said.
Schindler said development costs are a valid indicator of victim loss, but acknowledges that putting a dollar figure on software can be difficult.
Mitnick claims cover-up
Mitnick and his attorney both say there's more to the story, but they can't talk about it. At Mitnick's last court appearance on July 12, the judge granted a government request that any filings relating to victim loss be sealed from the public.
"As much as the government would like to, you can't take the recipe for ice and file it under seal and have it become confidential," said Mitnick, who, along with his attorney, is challenging the confidentiality of the loss information, and asking for the motion to be unsealed.
Mitnick claims he smells a cover-up. "The government should not be permitted to bury the truth of the case from the public and the media by seeking and obtaining a protective order to essentially force me to enter a code of silence," he said.
"Our only concern, as it has been from day one, is the protection of the victims of Mitnick's crimes," prosecutor Schindler said. "Why Mitnick and his lawyers want to continue to harass, embarrass and abuse them remains a mystery to us, but it's something that we will continue to oppose vigorously."
Although the software costs are no longer being used against his client, Randolph claimed that by "manipulating the loss figures," the government raises the issue of whether even the more modest $1.5 million calculation is accurate. In the sealed motion, he's seeking an evidentiary hearing to explore the matter, and asking that Mitnick be released on a signature bond pending that hearing.
And if Mitnick winds up owing money anyway? "We're asking for sanctions that the government pay the restitution," Mitnick said, "and that the judge recommend that I be immediately designated to a halfway house for the government's misconduct in this case."
Excerpt of the Sun documents are available on the Free Kevin Web site, maintained by members of a tireless grass-roots movement that's protested the hacker's imprisonment for years. "I'd like to sincerely thank all my friends and supporters for all the support they've given me over this long period of time," Mitnick said. "I'd like to thank them from my heart."
Kevin Poulsen writes a weekly column for ZDTV's CyberCrime.