I'm no expert in the Watt prosecution and know nothing about him, but from the reading I did: he wasn't accused of writing an innocuous tool and sharing it with a friend, or even writing a particularly useful network security testing tool. He's accused of writing a sniffer specifically designed to capture and record credit card transactions. Then he shared that tool with the ringleader of the largest credit card theft ring in the history of credit cards, who was a personal friend of his, with whom he partied during the ongoing criminal activities. At least one other longtime associate of Watt's was an active, remunerated contributor to the theft ring.