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[ISN] Reverse hacker case gets costlier for Sandia Labs


By Jaikumar Vijayan
April 17, 2007 

A wrongful termination lawsuit against Sandia National Laboratories that 
resulted in a jury award of more than $4.7 million in damages to Shawn 
Carpenter, a former security analyst at the organization, may be getting 
even more costly for the labs.

A district court judge in the state of New Mexico, where the case was 
heard, recently awarded 15% per year post-judgment interest on the 
original award as allowed under state law. The amended final judgment 
means that interest in the amount of almost $60,000 per month is 
accumulating while Sandia's appeal against the jury award works it way 
through the courts.

Following that judgment, "Sandia is posting a supersedeas bond in the 
amount of $5.8 million to cover a year and a half of interest and the 
judgment," Carpenter said. Such a bond allows Sandia to delay payment of 
a judgment until the appeals process is over.

"The purchase price of the bond is face value, plus additional fees, and 
guarantees that they will pay the judgment should the appeals fail," 
Carpenter said. "We are trying to find out who is paying for all of 
this. The answer is most likely the taxpayers," he added.

Sandia officials have said they intend to appeal the amended final 
judgment to the New Mexico Court of Appeals and, if necessary, to the 
Supreme Court of New Mexico.

A Sandia spokesman today said the organization would "take all steps 
necessary" to pursue its right of appeal in the case. "While Sandia 
respects the jury process, Sandia maintains that the verdict in this 
case was erroneous," the spokesman said in an e-mailed comment.

"Like all employers, Sandia must retain the ability to discipline its 
employees when they take action in violation of law, refuse supervisory 
instructions or act without authorization," he said.

The spokesman said Sandia officials could not comment further because of 
the ongoing legal proceedings.

Carpenter worked as a network intrusion detection analyst at Sandia. He 
was fired in January 2005 for sharing information related to an internal 
network compromise with the FBI and the U.S. Army. Sandia alleged that 
Carpenter had inappropriately shared confidential information he had 
gathered in his role as a security analyst for the laboratory.

Carpenter said he had done so only for national security reasons. He 
said his independent investigations of a May 2004 breach had unearthed 
evidence showing that the intruders who had broken into Sandia's 
networks belonged to a Chinese hacking group called Titan Rain, which 
also had attacked other sensitive networks and stolen U.S. military and 
other classified documents. He claimed that he had tried in vain to get 
the information to the other agencies through proper channels at Sandia 
before deciding to share the information on his own.

After getting fired, Carpenter filed a wrongful discrimination lawsuit 
against Sandia. In February 2007, a New Mexico jury awarded Carpenter a 
total of more than $4.3 million in punitive damages and more than 
$400,000 in other damages. During the trial, the jury heard testimony 
about how a Sandia official had told Carpenter he would've been 
"decapitated" or how there "would at least be blood all over the office" 
if Carpenter had been working directly for him.

After the verdict, Sandia filed several post-trial motions, including 
one that asked for a new trial and another that asked the judge to 
reduce the amount of the jury award.

"During the course of litigation, we made several settlement offers, and 
they ignored all of them," Carpenter said. "The one offer they made 
wasn't even worthy of consideration," he said.

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