- 1 -

Modern Information Rights and the Case of Arie Genger and Trans-Resources Inc

The nature of evidence retrieval and analysis has changed immensely in the last two

decades. In forensics, for example, cases that have been dormant for years are now being

re-opened and re-examined, even if the parties involved are long ago deceased; fifty-

year-old murder cases suddenly become solvable thanks to the sizeable leaps we’ve made

in technology. Just imagine the amount of paperwork that was once stored by the FBI or

CIA, forever exterminated by simply transferring the files to computers allocating a

fraction of the space. The advancements in data analysis, both by computers and the

courts, and file retrieval are, however, not without their problems. Legally, this is a whole

new and continuingly evolving area and much like the current business landscape - with

brands and marketing men being left in the dust, trailing behind the latest social media

platforms - so to it is with the judicial system: the judge, jury, and scales of justice are

often playing catch-up to technology, and laws governing information seem to be forever

in flux.

A recent case which has stirred the judicial world involved a trial that found the

defendant, Arie Genger, in contempt of court due to the nature of how his documents

were handled and what the intrinsic legalities are of a computer's ‘unallocated space’ and

its usage as interpreted or mis-interpreted by the court. This complex case involved the

defendant, the founder of Trans-Resources Inc (TRI) and a minority shareholder who are

seeking a controlling position in the company, wanted Genger out, but the board and the

defendant rejected this request and thus ended up in court. That, however, is just the

beginning of a case that, although not quite as thrilling as a John Grisham novel, or on

par with a Hollywood courtroom drama, is nonetheless very relevant in raising

fundamental questions about the modern dilemma of information rights, and how they are

handled in courts of law.

At the time of the trial in late 2009, Mr. Genger was a successful businessman. He

became president of McCrory Corp. in the early seventies and was able, through his

leadership, to turn around the company from losses to profitability achieving the

deserving title of ‘the youngest ever president of a multi-billion dollar company in the

United States’, at the age of 28. After his success, Genger moved back to Israel, to work

within the economic and defense ministries and in later years as a special private

emissary of Prime Minister Sharon to the White House; a position which later led the

court to refer to Genger as an ‘International man of mystery’ due to the sensitive and

confidential nature of his work. During the same period Mr. Genger started TRI whose

control is now contested in the Chancery Court in Delaware.

As was previously mentioned, some TRI shareholders claim to have gained control of the

company and initiated the legal action in the Chancery Court. What was contested in

court has been written about in both legal and technological quarters, and the

ramifications of what constitutes ‘illegal evidence removal’ are likely to continue to be

- 2 -

scrutinized. The core of the issue involved the court’s decision to find Genger in

contempt due to his ‘wiping’ of the unallocated space on TRI’s hard drive, a space that

“can be considered as a garbage dump where unwanted and discarded information goes

to await recycling” as Daniel B. Garrie explains, or put simply it is that portion of the

computer that does not contain active files. The court, however, didn’t see that space as a

dead zone, and felt the defendant, by wiping the unallocated space after the company’s

attorneys and their consultants had opened, copied, and encrypted emails and all active

files, had tampered with the court preservation order.

The fact that Genger had highly sensitive documents (regarding Israeli and American

national security) and personal business files pertaining to his work with the Israeli

government on his computer, fragments of which inadvertently were copied into the

unallocated space, didn’t sway the Judge to his defense. Moreover, in the face of public

record of Genger’s year of government activity the Judge adopted a skeptical tone when

referring to Genger’s work for Israel and stated that “no indication in the record that”

Genger “openly identified his work to anyone of authority in the United States”. Legal

analyst, digital forensics expert and writer, Leonard Deutchman, believes that the

Delaware Court has made an error in convicting Genger for contempt, as it not only

assumed that what was deleted constituted ”books and records”, since the area concerned

has nothing to do with computer storage.

It’s also interesting to note that the company council and special recovery teams collected

and copied all active files of the TRI computer drives. The company had special file

recovery teams working together with the company counsel and collected data by

obtaining ‘exact copies’ of the TRI hard drives. If this unallocated space was of

importance, one imagines that the company attorney would have regarded it as ‘back up’

and copied its contents. This wasn’t the case.

Genger, the court determined, violated the preservation order, although as Deutchman

pointed out in his piece on the case, “that nowhere in typical computer usage or

professional information technology practice is the unallocated space on a hard drive

regarded as "back up" in the way that the court does here”. A technicality? Yes. But, an

important one that Deutchman believes helped lead to an inappropriate conviction.

When reviewing the case, there is a sense that the court didn’t make a clear enough

distinction on what constitutes legal evidence in regards the storage of a computer’s hard

drive, allowing the conviction to rest primarily on ‘what could have been’ in the corner of

a hard drive, not even allocated for information storage. This case presents a very modern

and perceptive example of what will continue to be a crucial area in law – how and where

books and records can be retrieved is certain to continue to be an important subject, and

one that will remain in dispute until the court would lay clear and practical rules.