4/22/2004 -- The longest-standing criminal investigation of an alleged braindumper has come to an end without any charges being filed.

Almost two years ago, San Antonio police seized the business and personal assets of former TestKiller.com and TroyTec.com owner Garry Neale during a criminal investigation of a complaint made by Microsoft alleging that he sold Microsoft certification exam questions, in violation of Texas theft of trade secret statutes.

Now, Neale's assets -- including $408,566.84 from various bank accounts along with business assets and personal items such as a truck, collectibles, children's video games and a refrigerator -- have all been returned to him by court order. The Bexar County District Attorney's Office has also publicly declared that it no longer intends to criminally prosecute Neale.

Neale, who was never charged with any crime, declined CertCities.com's requests for an interview. One of his defense attorneys, John Convery, told CertCities.com that he's "very happy" for his client. Convery confirmed to CertCities.com that all of Neale's belongings were returned to him last month.

According to the parties in the case, a plea deal was almost reached early last year that would have led Neale to plead to a misdemeanor and forfeit half the assets. However, this deal fell through, in part because of a disagreement between the D.A.'s office and Microsoft over who would receive the seized assets.

Cliff Herberg, head of the white collar crime division of the D.A.'s office, did not respond to CertCities.com's multiple requests for an interview. However, Herberg told the San Antonio Express-News, which broke the story (registration required) March 29, that the plea deal fell through because Microsoft did not agree to the way his office wanted to split the assets. "It was ridiculous," the paper quotes him as saying. "We were arguing over $130,000 or $135,000."

In an interview with CertCities.com today, Microsoft Senior Attorney Bonnie McNaughton said that Microsoft was not a party to the plea deal, so the company could not comment on any negotiations that took place. "Those were between Mr. Neale and the district attorney's office," she said.

McNaughton did confirm that Microsoft was contacted during the negotiations. "They came to us and asked us whether or not we would be willing to waive any civil claims that Microsoft as a company might have against Mr. Neale for his [alleged] theft of trade secrets and other intellectual property infringements. Our response was, we'd be willing to consider that step if it would assist them in resolving the case."

The D.A.'s office then asked Microsoft if it would agree to give up any claim on the seized assets it might have through its status as a victim in the case, McNaughton said. "When it came to our being asked to waive our constitutional rights to any victim restitution in this particular case, that was not something that we were prepared to do, and was not something that typically a victim would be asked to do or would agree to do," she explained. "At that point, I believe the plea negotiations may have broken down."

According to McNaughton, soon after the plea negotiations failed, the D.A.'s office filed a separate civil motion asking the state to award all of the seized assets to Bexar County. Microsoft filed a claim in that case to "express our interest in being considered as a victim and our interest in at least receiving a portion of those proceeds," McNaughton said.

While the D.A.'s office and Microsoft were still litigating this issue in civil court, the defense successfully petitioned the criminal court to return Neale's assets. In this Jan. 29 hearing, Neale's attorneys argued that the assets should be returned based on multiple "defects" in the original search warrants, most significantly a lack of probable cause of the charge (i.e., that there was no evidence that the questions were trade secrets under the Texas statute), but also a lack of jurisdiction over certain assets, errors in the search warrants' wording, as well as falsehoods within the police affidavits on which the warrants were based.

According to a transcript of the hearing obtained by CertCities.com, the defense presented testimony from an expert witness, San Antonio-based Intellectual Property Attorney Ted Lee, who testified that exam questions don't qualify as trade secrets because the Texas trade secret statute protects information, not the particular wording of information. "The underlying information has been made widely available...and the underlying information doesn't meet this definition of trade secrets because of acts by [Microsoft, in making the information publicly available], not anyone else," he told the court.

Lee said that he did not view the material sold by the sites nor did he consult with Microsoft before forming his opinion.

While Herberg did cross-examine Lee and challenge several of his statements, multiple times the prosecutor told District Court Judge Bert Richardson that the reason he wasn't presenting his own expert was because of the dispute in civil court with Microsoft. At one point during the proceeding, Herberg said to the judge, "...We're adverse to Microsoft in one of the strangest cases I've been in in my life..."

An attorney representing Microsoft did attempt to address the court during the hearing, but the judge ruled that Microsoft had no standing in the criminal proceeding.

Judge Richardson questioned why some of the assets were seized by San Antonio police: "A refrigerator?" he asked the prosecution at one point, to which Herberg responded, "I understand, Judge...but it would be our position that there was no visible means for support for these defendants other than this business that was believed to be an illegal enterprise and therefore those things were gained as proceeds of their criminal activity. So that's why I think the police took the measures they did."

Judge Richardson -- who signed several of the original search warrants -- later issued an order to return all assets to Neale, citing the lack of a challenge to the defense's witness as a significant factor in his finding that there was not probable cause for the search warrants to be issued in the first place.

Microsoft's McNaughton said her company would have been "delighted" to provide expert testimony to contradict Mr. Lee, but the D.A.'s office never asked. "We firmly and strongly believe that these are trade secrets...For whatever strategic reason the district attorney's office did not ask us to provide that level of support...

"We don't second-guess the rationale for why they decided to handle that particular hearing the way that they did."

In the Express-News article, Herberg said that Microsoft's stance on the issue of the proceeds is why the office decided to no longer pursue the criminal charges: "All this stuck in my craw," he told reporter Maro Robbins. "The government isn't supposed to be a tool for their civil battles."

Convery told CertCities.com, "These are traditionally civil lawsuits. Why should the taxpayers of Bexar County supplement Microsoft's investigative budget?"

Microsoft's McNaughton dismissed the idea that money was a motive in this case. "We spend a lot more doing these cases than we ever bring in," she said. "The people that cheat to get these certifications really degrade the integrity of the certifications, and that's something that's a huge, huge concern to the company, and that's why we do these cases -- there's absolutely no other reason."

McNaughton said Microsoft is still hopeful that the Bexar District Attorney will reconsider its decision and reopen the criminal investigation. In the meantime, the company is considering filing civil charges.

Defense Attorney Convery said this case highlights the "disgrace" of the current forfeiture law. He praised the district attorney's office for its "pursuit of justice, not a conviction."

"I have no need to say nice things, but I do in this case...: the prosecution acted like public servants," he continued.

As for what impact the way this investigation ended could have on the certification industry as a whole, the jury is still out. McNaughton said that Microsoft still firmly believes trade secret statutes can be used as a criminal tactic, citing the successful prosecution of Robert Keppel, who pled guilty to federal charge last year: "We are certainly not intending to abandon trade secret arguments relative to the certification materials as the result of this particular...case."

Jack Killorin, vice president of global security for Thomson Prometric, which partners with Microsoft in providing testing, agreed that this one case did not mean that criminal prosecutions under trade secret statues were done. "We're dealing with state statutes here, which differ in 50 ways and more," he said. "[Braindumps are] a long-term issue, not a knockout in the second round."

David Foster, Ph.D., president of IT certification security provider Caveon, in an e-mail interview said he expects the industry might see more braindump activity in the future because of the way this case worked out; however, he says that, "given the number of braindump sites still operating, I doubt the change will be very noticeable."

"As an industry, we need to double our efforts, use new and creative methods in addition to legal action, and work more closely together to win the battle," he continued. "I'm not qualified to comment on the specific legal efforts used by Microsoft in this case, but I applaud their dedication toward solving the problem and their willingness to use the legal remedies they feel are appropriate. Microsoft's actions have benefited all IT programs, their stakeholders and the certification holders, both present and future."

A source in the certification industry, who asked not to be identified, called such cases "showy": "They're just too expensive. I think we'll see a move away from lawsuits and on to other ways [to protect exams]." -- Becky Nagel