Here's brief article about it: U.S. Manga Obscenity Convictions Roils Comic World Has links to the other articles about it. From the article: "The 39-year-old office worker was charged under the 2003 Protect Act, which outlaws cartoons, drawings, sculptures or paintings depicting minors engaging in sexually explicit conduct, and which lack “serious literary, artistic, political, or scientific value.” Handley’s guilty plea makes him the first to be convicted under that law for possessing cartoon art, without any evidence that he also collected or viewed genuine child pornography. He faces a maximum sentence of 15 years in prison."
Matt Thorn has an article and links to other articles that are well-worth reading concerning the case. From his article: "But whether I would like him or not, or think he is a “nice guy” or not, is irrelevant. It’s also irrelevant that I personally find lolicon manga, and a lot of other hentai manga, to be offensive and disturbing. As others have pointed out, to support free expression is not just to defend expression you like, but rather to defend expression you despise.
The chilling bottom line is that an American may very well go to prison for acquiring and looking at drawings of characters who do not actually exist." Emphasis mine. Totally agree and totally freaked out now.
Comi-Press: Down the Slippery Slope--The Crime of Viewing Manga is one of the best articles I've read on the subject. It starts out discussing the Whorley case (a man previously convicted of viewing real-life child porn) and then discusses the Handley case. "Christopher Handley's circumstances were vastly different from Dwight Whorley's when law enforcement officers followed him home from the Post Office on May 23, 2006. He had just picked up a package from Japan containing manga. A thorough search of his home turned up only more of it: some 1200 magazines, hundreds of DVDs, laser discs and videotapes, and an untold number of images on computer, but no child pornography or even images of nude minors. Handley was a collector of manga, not lolicon, and the vast majority of the manga and images he possessed contained no fantasy representations of minors at all. The fact that a small amount of it represented fictional pre-pubescents and fantasy portrayals of sadomasochistic or violent sex, however, meant that Handley faced a sentence ranging from a minimum of 7 years and 3 months in prison to a maximum of 9 years.
Also from the Slippery Slope: "Soon, if the so-called "Safety Act," currently pending before Congress, is passed, the sentence for receiving even a single prohibited cartoon in violation of Section 1466A will jump from "not less than 5 years and not more than 20 years" to "15 years or for life."  Life. For cartoons." All emphasis mine. According to the article, just looking at such images on the Internet is punishable and convictable--you're receiving child "porn"--and if you draw it, you're in "production" of it and also prosecutable.
I have no words, really. Talk about thought control and police. Do I need to now hide my fic recs (the Sky High recs I just posted are about teenagers--Will/Warren). Am I going to be arrested for that? Do I need to make my memories private to prevent government snooping? Where does it stop? How do you define a child? Yes, a thousand times yes, go after the real-life child porn producers and molesters but leave drawings, cartoons, anime, art, and anything that doesn't involve real-life anybody (adult, child) alone. I feel like I'm now living in 1984/Farenheit 451 even moreso.