As discussed in Episode 9, here is the information pertaining to the armed Secret Service raid on the offices of Steve Jackson Games (Quoted from the SJG website itself):
 

SJ Games vs. the Secret Service

On March 1 1990, the offices of Steve Jackson Games, in Austin, Texas, were raided by the U.S. Secret Service as part of a nationwide investigation of data piracy. The initial news stories simply reported that the Secret Service had raided a suspected ring of hackers. Gradually, the true story emerged.

More than three years later, a federal court awarded damages and attorneys’ fees to the game company, ruling that the raid had been careless, illegal, and completely unjustified. Electronic civil-liberties advocates hailed the case as a landmark. It was the first step toward establishing that online speech IS speech, and entitled to Constitutional protection . . . and, specifically, that law-enforcement agents can’t seize and hold a BBS with impunity.

The Raid

On the morning of March 1, without warning, a force of armed Secret Service agents – accompanied by Austin police and at least one civilian “expert” from the phone company – occupied the offices of Steve Jackson Games and began to search for computer equipment. The home of Loyd Blankenship, the writer of GURPS Cyberpunk, was also raided. A large amount of equipment was seized, including four computers, two laser printers, some loose hard disks and a great deal of assorted hardware. One of the computers was the one running the Illuminati BBS.

The only computers taken were those with GURPS Cyberpunk files; other systems were left in place. In their diligent search for evidence, the agents also cut off locks, forced open footlockers, tore up dozens of boxes in the warehouse, and bent two of the office letter openers attempting to pick the lock on a file cabinet.

The next day, accompanied by an attorney, Steve Jackson visited the Austin offices of the Secret Service. He had been promised that he could make copies of the company’s files. As it turned out, he was only allowed to copy a few files, and only from one system. Still missing were all the current text files and hard copy for this book, as well as the files for the Illuminati BBS with their extensive playtest comments.

In the course of that visit, it became clear that the investigating agents considered GURPS Cyberpunk to be “a handbook for computer crime.” They seemed to make no distinction between a discussion of futuristic credit fraud, using equipment that doesn’t exist, and modern real-life credit card abuse. A repeated comment by the agents was “This is real.”

Over the next few weeks, the Secret Service repeatedly assured the SJ Games attorney that complete copies of the files would be returned “tomorrow.” But these promises weren’t kept; the book was reconstructed from old backups, playtest copies, notes and memories.

On March 26, almost four weeks after the raid, some (but not all) of the files were returned. It was June 21, nearly four months later, when most (but not all) of the hardware was returned. The Secret Service kept one company hard disk, all Loyd’s personal equipment and files, the printouts of GURPS Cyberpunk, and several other things.

The raid, and especially the confiscation of the game manuscript, caused a catastrophic interruption of the company’s business. SJ Games very nearly closed its doors. It survived only by laying off half its employees, and it was years before it could be said to have “recovered.”

Why was SJ Games raided? That was a mystery until October 21, 1990, when the company finally received a copy of the Secret Service warrant affidavit – at their request, it had been sealed. And the answer was . . . guilt by remote association.

While reality-checking the book, Loyd Blankenship corresponded with a variety of people, from computer security experts to self-confessed computer crackers. From his home, he ran a legal BBS which discussed the “computer underground,” and he knew many of its members. That was enough to put him on a federal List of Dangerous Hoodlums! The affidavit on which SJ Games were raided was unbelievably flimsy . . . Loyd Blankenship was suspect because he ran a technologically literate and politically irreverent BBS, because he wrote about hacking, and because he received and re-posted a copy of the /Phrack newsletter. The company was raided simply because Loyd worked there and used its (entirely different) BBS!

As for GURPS Cyberpunk, it had merely been a target of opportunity . . . something “suspicious” that the agents picked up at the scene. The Secret Service allowed SJ Games (and the public) to believe, for months, that the book had been the target of the raid.

The one bright spot in this whole affair was the creation of the Electronic Frontier Foundation. In mid-1990, Mitch Kapor, John Barlow and John Gilmore formed the EFF to address this and similar outrages. It’s a nonprofit organization dedicated to preserving the Constitutional rights of computer users. (For more information, look at the EFF web site, or write them at 454 Shotwell St., San Francisco, CA 94110.) The EFF provided the financial backing that made it possible for SJ Games and four Illuminati users to file suit against the Secret Service.

Two active electronic-civil-liberties groups also formed in Texas: EFF-Austin and Electronic Frontiers Houston, which have since merged to become Electronic Frontiers Texas.

And science fiction writer Bruce Sterling turned his hand to journalism and wrote The Hacker Crackdown about this and other cases where the law collided with technology. A few months after it was published in hardback, he released it to the Net, and you can read it online.

In early 1993, the case finally came to trial. SJ Games was represented by the Austin firm of George, Donaldson & Ford. The lead counsel was Pete Kennedy.

And we won. The judge gave the Secret Service a tongue-lashing and ruled for SJ Games on two out of the three counts, and awarded over $50,000 in damages, plus over $250,000 in attorney’s fees. In October 1994, the Fifth Circuit turned down SJ Games’ appeal of the last (interception) count . . . meaning that right now, in the Fifth Circuit, it is not “interception” of your e-mail messages when law enforcement officials walk out the door with the computer holding them.”

Here is the source of the above news release, plus additional information/links/etc.:

The Steve Jackson Games Secret Service Affair