United States v. Kilbride

584 F.3d 1240, 2009 U.S. App. LEXIS 23722, 2009 WL 3448360
CourtCourt of Appeals for the Ninth Circuit
DecidedOctober 28, 2009
Docket07-10528, 07-10534
StatusPublished
Cited by86 cases

This text of 584 F.3d 1240 (United States v. Kilbride) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Kilbride, 584 F.3d 1240, 2009 U.S. App. LEXIS 23722, 2009 WL 3448360 (9th Cir. 2009).

Opinion

BETTY B. FLETCHER, Circuit Judge:

Defendants-Appellants Jeffrey Kilbride and James Schaffer (“Defendants”) appeal their convictions and sentences for fraud and conspiracy to commit fraud in connection with electronic mail, interstate transportation and interstate transportation for sale of obscene materials, and conspiracy to commit money laundering. We affirm, but remand for a clerical correction.

Defendants’ convictions arose from conduct relating to their business of sending unsolicited bulk email, popularly known as “spam,” advertising adult websites. See United States v. Kelley, 482 F.3d 1047, 1055 & n. 2 (9th Cir.2007) (Thomas, J., dissenting) (discussing origins of “spam” label). Defendants argue that 1) the district court committed reversible error in its jury instructions defining obscenity; 2) 18 U.S.C. § 1037, which criminalizes fraud in connection with electronic mail, is unconstitutionally vague as applied to Defendants and on its face; 3) the district court committed a clerical error in its written judgment by labeling as felonies Defendants’ convictions for fraud in connection with electronic mail; 4) Defendants’ money laundering conspiracy convictions should be reversed because the required related activity charged in the Indictment was not shown beyond a reasonable doubt to be unlawful as defined in 18 U.S.C. § 1462; and 5) the district court erred in applying an obstruction of justice enhancement to Kilbride’s sentence. We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1291.

I. Background

A. Defendants’ Bulk Email Advertising Business

Defendants began their bulk email advertising business in 2003. They initially operated the business through an American corporation, using servers in Arizona. In response to new legislation regulating email communication, the Defendants shifted the operation of their business overseas, running it through Ganymede Marketing (“Ganymede”), a Mauritian company, and using servers located in the Netherlands. Although Defendants used a business structure preventing a direct link to Ganymede, Defendants were its true owners and operators. If a recipient of Defendants’ emails signed on to the advertised website and paid a fee, Defendants earned a commission from the entity promoted. The advertisements appearing in Defendants’ emails included sexually explicit images, two of which formed the basis for the obscenity convictions.

Defendants had their employees place fictitious information in the headers 1 of their bulk emails. Defendants’ employee Jennifer Clason created nonsensical domain names and matched them with generic user names to generate a series of different email addresses that were almost certainly nonfunctional. These were placed in the “From” field of the headers of each email sent out. 2 Another employee of Defendants, Kirk Rogers, designed a program utilized by Defendants that gen *1245 erated non-functioning email addresses in the “From” field by combining the domain name used to send each email with the recipient of the email’s user name. In addition, the email address appearing in the “From” field and “Return-Path” field of the headers of Defendants’ emails differed, indicating at least one was false.

Defendants also falsified information appearing in the registration of the domain names they used. The registrant for each of the emails was listed as Ganymede Marketing. The correct physical address for Ganymede was listed, but the contact person and phone number listed were false. The email listed in the registration was never tested for functionality, though the evidence indicates that at some point it became invalid. A reverse look-up of the internet provider address appearing in the email headers came back to a different entity, Kobalt Networks, registered in the Netherlands.

B. Indictment and Tñal

On August 25, 2005, Defendants were indicted for conspiracy to violate 18 U.S.C. § 1037(a)(3) through fraud in connection with electronic mail (Count 1), violation of § 1037(a)(3) and (a)(4) through such fraud (Counts 2 and 3), interstate transportation of obscene materials in violation of 18 U.S.C. § 1462 (Counts 4 and 5), interstate transportation of obscene materials for sale in violation of 18 U.S.C. § 1465 (Counts 6 and 7); conspiracy to commit money laundering in violation of 18 U.S.C. § 1956 (Count 8), and failure to meet record keeping requirements in violation of 18 U.S.C. § 2257 (Count 9). Jennifer Clason was indicted as a co-conspirator. She pled guilty and testified against Defendants.

Defendants were convicted on all counts following a three-week jury trial. The two sexually explicit images forming the basis of the obscenity charges were introduced. Jennifer Clason testified to sending these images on behalf of Defendants using the Defendants’ bulk email interface. Evidence was presented at trial as to the obscenity of the two images. The Government called eight witnesses from various parts of the country who had complained to the Federal Trade Commission (“FTC”) about Defendants’ emails. These witnesses testified to the circumstances under which they received Defendants’ emails, their reactions to and attitude towards the images sent by Defendants, and their views on pornography generally. Some of the witnesses did not specifically recall receiving the two images at issue. The Government also presented evidence of over 662,000 complaints received by the FTC from around the country concerning Defendants’ emails, including the text of some of the complaints. Defendants called Jay Pirouznia, a private investigator, who testified as to various digital video discs containing images similar to those at issue that he purchased in the Phoenix metropolitan area and other counties in Arizona.

Prior to the reading of the jury instructions at trial, Defendants objected to instructions relating to Counts 1 through 7 on various grounds, some of which are raised in this appeal. Following their convictions, Defendants filed a motion for judgment of acquittal or a new trial raising grounds not at issue in this appeal. The motion was denied, but a separate motion to dismiss Count 9 was granted.

C. Sentencing

Jeffrey Kilbride (“Kilbride”) was sentenced to 78 months and Robert Schaffer (“Schaffer”) was sentenced to 63 months.

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Bluebook (online)
584 F.3d 1240, 2009 U.S. App. LEXIS 23722, 2009 WL 3448360, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-kilbride-ca9-2009.