Alleged "PayPal 14" Hackers Seek Deal

Before he was charged in July 2011 with aiding the hacker group Anonymous, Josh Covelli lived what he considered the life of an ordinary 26 year-old. He spent countless hours on the Internet. He had a girlfriend. He was a student and employee at Devry University in Dayton, Ohio.

But after federal authorities accused him and 13 other people of helping launch a cyberattack against the online payment service PayPal, Covelli faced potentially 15 years in prison, and his life began to unravel.

His girlfriend broke up with him. He struggled to find an employer willing to hire an accused computer hacker. His friends "wanted nothing to do with me," he said, and he suffered from bouts of paranoia – "looking out windows, not sure who to trust" – before checking into a behavioral health center for three days.

"It was as if I got kicked off a cliff," Covelli, now 28, told The Huffington Post in an interview.

Nearly two years after the charges made headlines, the case remains an anxiety-provoking daily reality for Covelli and his 13 co-defendants. Though they come from disparate worlds – drawn from different points on the map and stages in their lives – the defendants collectively share a sense of unsettling uncertainty, their plans and aspirations stuck in a limbo of indeterminate duration as they await a resolution of their case.

Their wait may be nearing a conclusion. This week, the defendants – known collectively as the "PayPal 14" – attended a closed-door hearing in federal court in San Francisco in hopes of negotiating a settlement that could keep them out of prison. Lawyers for both sides declined to discuss the negotiations, but a joint court filing called the meeting "productive."

"We're at a delicate point," one defense attorney said in an interview.

Such a deal would mark the final chapter in a case that has been seen as one of the first major salvos in the federal government's war on Anonymous, a loose collective of hackers who say they are motivated by ideological beliefs, not financial gain. It would also bring to a close months of legal uncertainty that the defendants say has caused them both financial and emotional strain. One defendant in the case told The Huffington Post that she would "jump off the Hoover Dam" if convicted.

While the PayPal case has largely faded from public view, the law under which the 14 defendants were charged – the Computer Fraud and Abuse Act – has come under increased scrutiny. The government used the same anti-hacking law to prosecute Internet activist Aaron Swartz, charging him with illegally downloading millions of articles from a Massachusetts Institute of Technology computer archive. Facing the prospect of a lengthy prison sentence, Swartz committed suicide, provoking claims of prosecutorial overreach and calls to reform the law. Critics say it is overly broad and excessively punitive, meting out stiff prison terms for some computer-related crimes they deem relatively innocuous.

The PayPal arrests appeared to have done little to deter Anonymous. Six months after the indictment was unsealed, in January 2012, Anonymous launched one of its largest attacks, knocking offline the Justice Department's website in protest of the U.S. government's arrest of leaders of Megaupload.com, a file-sharing site that allegedly facilitates Internet piracy. Since then, the group has taken credit for numerous other attacks on corporate and government websites.

But the charges in the PayPal case had one noticeable impact on the hacker group – its members became more careful. They began circulating manuals online on how to use virtual private networks, or VPNs, to shield their IP addresses from the watchful eye of law enforcement, said Gabriella Coleman, a professor at McGill University who has studied Anonymous. "The arrests led to a kind of moment of education," she said.

The case against Covelli and the 13 other defendants stems from a series of cyberattacks in December 2010. In response to PayPal's decision to cut off donations to the whistleblower site Wikileaks, Anonymous encouraged supporters to download software that bombards websites with traffic, causing them to crash. The resulting "denial of service attack," which brought down PayPal's site intermittently over four days, was nicknamed "Operation Avenge Assange" in reference to the Wikileaks founder.

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