United States v. Kyle Kimoto ( 2009 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 08-3731
U NITED STATES OF A MERICA,
Plaintiff-Appellee,
v.
K YLE K IMOTO ,
Defendant-Appellant.
Appeal from the United States District Court
for the Southern District of Illinois.
No. 3:07-cr-30089-MJR-1—Michael J. Reagan, Judge.
A RGUED JUNE 2, 2009—D ECIDED D ECEMBER 2, 2009
Before P OSNER, R IPPLE and K ANNE, Circuit Judges.
R IPPLE, Circuit Judge. Kyle Kimoto was charged with
one count of conspiracy, in violation of 18 U.S.C. § 371,
one count of mail fraud, in violation of 18 U.S.C. § 1341,
and twelve counts of wire fraud, in violation of
18 U.S.C. § 1343. After a ten-day trial, the jury convicted
Mr. Kimoto on all counts. Mr. Kimoto appealed. For
the reasons set forth in this opinion, we affirm
Mr. Kimoto’s conviction and also affirm all aspects of
2 No. 08-3731
his sentence except for the district court’s enhancement
for the number of victims. With respect to this one
aspect of Mr. Kimoto’s sentencing, we remand to the
district court for further proceedings.
I
BACKGROUND
Kyle Kimoto was president of Assail, Inc. (“Assail”), a
telemarketing firm based in St. George, Utah. In 2001,
Assail began marketing a financial package developed by
another telemarketing company, Rockwell Solutions
(“Rockwell”). The package included a pay-as-you-go
debit card,1 along with other promotional discounts, and
was called “First Financial Solutions.” After Assail ended
its association with Rockwell, it began marketing an
equivalent product developed by the Bay Area Business
Council (“BABC”), which was owned and operated by
Peter Porcelli.2 Assail also marketed a similar product
on its own, under the names Premier One, Advantage
Capital and Capital First.
In making cold calls to consumers throughout the
United States, Assail used “lead lists” with names of
1
A pay-as-you-go debit card operates like a pre-paid telephone
or gift card. The card itself has no value until the user loads
funds on it. Unlike a gift card, however, once value has been
loaded on the card, it is accepted wherever that particular
card company’s card (VISA or MasterCard) is accepted.
2
Porcelli also had marketed the program under the name
First American Leisure.
No. 08-3731 3
consumers who either had applied for credit and been
turned down or had a less-than-perfect credit history.
The program was designed to make individuals believe
that the call was in response to a recent credit appli-
cation and that their applications were now being pro-
cessed or reconsidered. A telemarketer would call the
prospective buyer and state: “Our records indicate
that within the past 12 months, you filed an application
for a credit card and you are now eligible to receive
your Visa or a MasterCard.” Gov’t Ex. 2a. The tele-
marketer would proceed to ask about the individual’s
household and monthly income. The customer then
would be put on hold for “computer authorization,”
which consisted merely of the telemarketer placing
the individual on hold; no authorization actually was
occurring. Tr. V at 18. When the telemarketer returned to
the line, he would state: “Mr./Mrs. [Customer Name]
based on your information you are guaranteed to receive
a MasterCard that does not require a security deposit
with an initial pay as you go limit of $2000.” Gov’t Ex. 2a.
The consumer then would be informed that he would be
charged a one-time processing fee of $159.95. The con-
sumer was reminded that nothing “looks better on your
Equifax credit report than a MasterCard.” Id.If the consumer agreed to purchase the package, she
was transferred to a “verifier.” The processing fee was
a one-time debit of the consumer’s bank account, based
upon oral authorization, and therefore, a recording of the
4 No. 08-3731
verification call was made.3 The consumer heard an
automated disclosure mentioning the pay-as-you-go
MasterCard and advising that there would be no credit
on the card until a payment was made. If consumers
asked questions of the verifier, the verifier attempted
to give responses that confirmed the impression that the
consumer would be receiving a credit card. Tr. V at 29-31.
Assail’s programs spawned thousands of customer
complaints about the cards received.4 For cards sold in
connection with BABC, there were as many as one
hundred thousand customer complaints during a seven-
month period. For cards sold by Assail through its own
programs, customer service was outsourced to Specialty
Outsourcing Solutions (“SOS”) in Waco, Texas. Assail
provided “rebuttal” scripts for SOS representatives to
use in addressing customer complaints. One of the meth-
ods that SOS used in assuaging customers was to
inform them that keeping the card would improve
their credit.5 At its height, SOS had approximately
150 customer service representatives fielding calls for
Assail’s programs; between eighty and ninety percent
of those calls were complaints.
We begin with a prefatory note. Mr. Kimoto’s conten-
tions on this appeal focus on three aspects of the pro-
3
No equivalent recording was made of the sales call.
4
In some instances, consumers received no card at all.
5
Despite these representations, none of the companies
involved in developing or marketing the package reported
customer activity to Equifax.
No. 08-3731 5
ceedings: the sufficiency of the evidence to support his
convictions; the responsibilities of the Government with
respect to the timely disclosure of exculpatory and im-
peaching evidence; and the fairness of the sentencing
procedure. With respect to each, we shall state the facts
pertinent to the issue and then discuss our assessment
of the merits of Mr. Kimoto’s submission on appeal.
II
SUFFICIENCY OF THE EVIDENCE
Mr. Kimoto maintains that there was insufficient evi-
dence to convict him on any of the counts of the indict-
ment. He contends that the Government failed to
establish his intent to defraud and that, with respect to
the conspiracy count, the Government failed to show
an agreement between he and Porcelli. We first sum-
marize the evidence presented by the parties to the
district court and then examine Mr. Kimoto’s arguments
in light of this evidence.
A. Background
Mr. Kimoto’s telemarketing activities resulted in
a criminal indictment being returned against him on
June 20, 2007, in the Southern District of Illinois. Count 1
of the indictment charged Mr. Kimoto with conspiracy
to commit mail fraud, wire fraud and money laundering.
Count two charged Mr. Kimoto with mail fraud based
upon the mailing of a “benefits package” to a victim in
the district. Counts three through eight alleged wire
6 No. 08-3731
fraud based upon the telemarketing calls to local vic-
tims. Finally, counts nine through fourteen charged
Mr. Kimoto with wire fraud related to the debit transfer
from the consumers’s bank accounts to payment
processors for the processing fee.
1.
Mr. Kimoto’s trial commenced in late March 2008. The
Government’s theory of the case was that Mr. Kimoto
defrauded hundreds of thousands of people by using
deceptive scripts in the marketing of his financial prod-
ucts. See supra pp. 3-4. Government witnesses testified that
both the language employed and the structure of the sales
pitch were designed to make the consumers believe that
they were purchasing a credit card. For example, Shawn
Hatfield, who worked for Rockwell and helped develop the
debit-card program marketed by Assail, testified that the
intent of the sales script was to make consumers “per-
ceive” that “they were being pitched a Master Card credit
card with a credit limit.” Tr. II at 181-82. Hatfield testified
that he later worked with Mr. Kimoto on other programs
developed by Assail and that Assail used “very similar”
scripts for all of its programs; these were designed to
“mislead[] the customer[s]” into believing they would
“receive a credit card.” Id. at 183. He also confirmed that,
with respect to these programs, Mr. Kimoto was responsi-
ble for the “[f]ront end,” meaning “sales, marketing,
training.” Id. at 184. Similarly, Porcelli testified that the
sales script for the product marketed in conjunction
No. 08-3731 7
with BABC was designed to “leav[e] the unmistakable
impression in the customer’s mind [that] they are going
to get a credit card.” Tr. III at 25. He further testified:
“That was the way [Mr. Kimoto] told me it had to be
sold and I went along with it.” Id.
The Government proffered additional evidence that
Assail, and specifically, Mr. Kimoto, knew that the
scripts were deceptive because they developed “rebuttal”
scripts for SOS to use in fielding customer complaints.
See Gov’t Ex. 40 & supra p. 4. The four scripted rebuttals
were designed to re-sell the product to the unsatisfied
customer. Customers were told that “having good credit
is very important today and we want you to be able to
benefit from this package.” Gov’t Ex. 40. Customers
were reminded that they were getting “an unsecured
master card, which we report to Equifax, that helps
rebuild your credit in a short period of time.” Id. Cus-
tomers, who were still unconvinced of the worth of the
product, were asked “what is it about improving your
credit . . . that doesn’t interest you?” Id. The “Final Effort”
included informing the customer that
[t]he reason why we called you in the first place is
because your credit isn’t as good as it could be. With
Advantage Capitals [sic] not only are you going to
have a master card in case of emergencies, but also
you are going to be able to rebuild your credit in a
short period of time.
Id. Jay Lankford, principal of SOS, testified that Assail
would do “test calls” “to make sure you [we]re using all of
the rebuttals and make sure you were not giving up too
easy on the sale, to try to save the sale.” Tr. IV at 57.
8 No. 08-3731
Lankford further stated that Assail would “demand[]”
that, if a customer service agent failed to use all of the
rebuttals, that agent be taken off the program. Id.
Finally, the Government produced evidence that
Mr. Kimoto knew that the representations made in the
rebuttal scripts also were false. Roger Howard, co-owner
of Apex Merchant Services (“Apex”), which initially
supplied debit cards to Assail, testified that he told
Mr. Kimoto that the card supplied by Apex was “defini-
tively not a credit card, that there was no credit worthi-
ness” and that “there weren’t any credit agencies that
would report on it.” Tr. VI at 141-42.
Mr. Kimoto defended his actions on the ground that
he was engaged in the legitimate business of selling
debit cards, that the scripts themselves were not decep-
tive, and that he did his best to ensure that employees
who crossed the line—who affirmatively represented
that the consumer was getting a credit card—were re-
moved. He posited that, as a marketer, he was entitled
to rely on the representations of those creating the
product, but that he had been duped by unscrupulous
criminals, here Porcelli and Howard, into believing that
the products he was selling had credit worthiness. Specifi-
cally, he proffered the testimony of Jeff Ullman, who
had introduced Mr. Kimoto to Howard; Ullman testified
that Howard had represented that Apex could supply
a debit card and that the use of the card could be
reported to credit agencies. See Tr. VII at 168-71.6
6
Mr. Ullman acknowledged, however, that the parties’s
(continued...)
No. 08-3731 9
Mr. Kimoto’s trial lasted for ten days, after which the
jury convicted him on all counts of the indictment.
2.
In a post-trial motion for acquittal and a new trial,
Mr. Kimoto contended that the evidence was insuf-
ficient to sustain his conviction. Specifically, Mr. Kimoto
claimed that the Government had failed to establish that
a conspiracy existed. The basis for his claim was
(1) that several scripts entered into evidence specifically
stated that the pay-as-you-go card was not a line of
credit and (2) that there was testimony that he had “zero
tolerance” for misrepresentations. R.58 at 3. Mr. Kimoto
also argued that “[t]here was no testimony from any
witness which would show [he] knew that the scripts
might be misleading, or that customers felt misled.” Id.
at 4. Finally, Mr. Kimoto contended that the Govern-
ment did not satisfy its burden of proving his partici-
pation in any of the overt acts alleged in the indictment.
He claimed that this failure of proof was evidenced in
the jury’s “contradictory verdict” with respect to para-
graphs A and B 7 of Count 1 of the indictment. Id. at 4.
6
(...continued)
eventual written agreement did not incorporate a require-
ment that Apex report to Equifax. See Tr. VII at 180-81.
7
Paragraph A stated: “Kimoto developed a sales model for the
sale of a MasterCard Stored Value Debit Card as a credit card
and targeted consumers with bad or no credit, who had
(continued...)
10 No. 08-3731
In its ruling denying the motion, the district court
rejected these contentions. The court noted that Clifford
Dunn, Assail’s vice president and manager of its St.
George, Utah office; Tully Herd, an Assail account man-
ager; and Porcelli all testified that Mr. Kimoto intended
to market the debit card as a credit card and that he
knew the scripts were misleading. Turning to the issue
of Mr. Kimoto’s participation in the overt acts, the court
noted that the jury found that Mr. Kimoto had com-
mitted the overt acts alleged in paragraph B, but not in A.
The court determined that “any combination of ‘yes’ or ‘no’
answers to these two questions could be consistent
because each alleges separate and distinct facts.” R.72 at
10. The court also observed that “[t]he jury specifically
found that the Government had proven beyond a rea-
sonable doubt that Kimoto had committed four overt
acts in furtherance of the conspiracy, which is more
than sufficient to support their verdict.” Id.
B. Analysis
In seeking to overturn a jury verdict based on the suffi-
ciency of the evidence, Mr. Kimoto faces a “daunting” task.
7
(...continued)
applied for and had been turned down for a credit card.”
Paragraph B stated: “Kimoto put together an international
network of ‘affiliates,’ call centers which made unsolicited
telephone calls to consumers, including consumers in the
Southern District of Illinois, utilizing the marketing plan
and sales scripts developed by Kimoto.” R.53 at 2.
No. 08-3731 11
United States v. Roberts, 534 F.3d 560, 569 (7th Cir. 2008)
(internal quotation marks and citations omitted). “In
reviewing a challenge to the sufficiency of the evidence,
we do not weigh the evidence, United States v. Bowman,
353 F.3d 546, 552 (7th Cir. 2003), make credibility deter-
minations, United States v. Woolfolk, 197 F.3d 900, 904
(7th Cir. 1999), or resolve testimonial inconsistencies, see
United States v. Hodges, 315 F.3d 794, 799 (7th Cir. 2003).”
United States v. Webber, 536 F.3d 584, 597 (7th Cir. 2008).
Instead, taking the evidence in the light most favorable
to the Government, we “ ‘will overturn a conviction based
on insufficient evidence only if the record is devoid of
evidence from which a reasonable jury could find guilt
beyond a reasonable doubt.’ ” Id. (quoting United States
v. Stevens, 453 F.3d 963, 965 (7th Cir. 2006)).
1. Intent to Defraud
Turning to the first of Mr. Kimoto’s arguments, he
claims that, with respect to every count of the indictment,
the Government was required to prove his intent to
defraud. He further maintains that the Government
attempted to prove this element by showing either that
he intentionally marketed the pay-as-you-go card as a
credit card or that he intentionally misled consumers
into believing that the pay-as-you-go card would result
in credit reporting. According to Mr. Kimoto, the jury
explicitly rejected the first theory by answering “No” to
Paragraph A of the verdict form for Count 1, and there
simply was no evidence presented to support the
second theory. We disagree.
12 No. 08-3731
Paragraph A of the jury verdict form for Count I of the
indictment stated: “Kimoto developed a sales model for
the sale of a MasterCard Stored Value Debit Card as a
credit card and targeted consumers with bad or no
credit, who had applied for and had been turned down
for a credit card”; the jury responded “No” to this state-
ment. R.53 at 2. However, the jury’s rejection of one
or more of the factual allegations contained in
Paragraph A is not inconsistent with its finding that
Mr. Kimoto possessed the requisite state of mind for
fraud. The jury could have believed that Mr. Kimoto
drafted the deceptive scripts used to make sales, but the
jury may not have been convinced that he alone had
“developed a sales model.” Alternatively, the jury may
have questioned whether all of the targeted consumers
“had applied for and had been turned down for a
credit card.” 8
8
Indeed, the reason that the jury answered “No” to Paragraph
A may be that the language in Paragraph A differed from that
used by some of the Government’s witnesses. As suggested
previously, the jury could have read Paragraph A as stating
that Mr. Kimoto alone was responsible for developing the
sales model. The jury also could have read the interrogatory
as requiring that all of the targeted consumers recently had
submitted a credit application and been turned down. How-
ever, Porcelli testified that Mr. Kimoto was the “primary
author” of the sales model, not its sole author. Tr. III at 67
(emphasis added). Similarly, Porcelli testified that the target
consumers were “people with no credit, bad credit or other-
wise negative ability to process a transaction on a credit card”;
(continued...)
No. 08-3731 13
Furthermore, there was testimony from which the jury
could have concluded that Mr. Kimoto intentionally
had misled consumers into believing that the pay-as-you-
go card would result in credit reporting. As discussed
previously, Howard, co-owner of Apex, testified that
he told Mr. Kimoto that the card supplied by Apex was
not a credit card, did not have credit worthiness and
could not be reported on. See Tr. VI at 141-42. Additionally,
Porcelli testified that, when Assail switched suppliers
(from Apex to Stonebridge), both Mr. Kimoto and Porcelli
were aware that use of the debit card could not be
reported to credit agencies. See Tr. III at 37 (Porcelli
testifying that Stonebridge told him “flat out that they
did no reporting” and that Porcelli told this to
Mr. Kimoto). Nevertheless, the sales scripts still implied
that the card’s use would be reported. Id. at 41 (Porcelli
testifying that, after switching to Stonebridge, the sales
scripts still read “and nothing looks better on your
Equifax credit report than a Master Card”).
8
(...continued)
he did not testify that every targeted consumer recently had
applied for, and been denied, a credit card. Id. at 58. Porcelli
further explained the target audience accordingly:
You want to use the example of a Chia Pet or Ginsu Knife,
people who call in and want to buy the product over the air.
The positive credit people are the responders who pur-
chased and have a valid credit card. The negative credit
people are the ones who send in a money order or
who don’t have a credit card and ended up not buying, but
they did respond and try to place an order.
Id.
14 No. 08-3731
Essentially, Mr. Kimoto is arguing that the testimony of
Porcelli and Howard should not have been believed.
However, it was the province of the jury “to parse the
facts, to weigh the credibility of each witness and to
disregard the testimony of witnesses it found to be less
credible or not worthy of credence.” Carter v. Chicago
Police Officers, 165 F.3d 1071, 1081 (7th Cir. 1998) (internal
quotation marks and citations omitted). We will not
second-guess its credibility determinations.
2. Agreement
Mr. Kimoto also maintains that the evidence was insuf-
ficient for the jury to convict him on Count 1, the con-
spiracy count, because the evidence does not establish
that he and Porcelli entered into a “common agreement”
to defraud. See Appellant’s Br. 25 (quoting United States
v. Gilmer, 534 F.3d 696, 701 (7th Cir. 2008)). Mr. Kimoto
explains that “[e]ven if the jury believed that [he] knew
or should have known the credit reporting representa-
tions were false, no evidence was presented that his
purported co-conspirator, Porcelli, shared this knowl-
edge and joined an agreement to make such a misrepre-
sentation.” Id. Mr. Kimoto’s argument must fail for two
reasons. First, it assumes that the only fraudulent state-
ment in the sales script was the reference to Equifax
reporting. However, several aspects of the sales and
verification scripts were designed to mislead the
consumer into believing that they were securing a
credit, as opposed to a debit, card. See Gov’t Ex. 2a
No. 08-3731 15
(script referencing a customer’s application for a credit
card and informing the customer of his eligibility to
receive “your Visa or MasterCard”). Second, it ignores
evidence in the record that both Mr. Kimoto and Porcelli
knew that cards supplied by Stonebridge could not be
reported on, but they nevertheless continued to employ
the script that referenced the card’s use being reported
to Equifax.
There is ample evidence in the record to support the
jury’s conclusion that Mr. Kimoto had the requisite
intent to defraud and that he and Porcelli, in fact,
formed an agreement to commit fraud. Consequently,
there is no basis on which to overturn the jury’s verdict.
III
DISCOVERY ISSUES
A. Overview
The argument Mr. Kimoto pursues most vigorously is
that the Government either intentionally withheld or
destroyed evidence that was crucial to his ability to
present a complete defense. We begin our consideration
by setting forth the applicable legal standards that
govern this area. We then shall recount the procedural
context in which the district court addressed these stan-
dards. With this background, we shall turn to each of
the specific contentions raised by Mr. Kimoto and assess
the district court’s disposition of each.
16 No. 08-3731
B. Standards
1. Brady v. Maryland
In Brady v. Maryland, 373 U.S. 83, 88 (1963), the Supreme
Court held that “the suppression by the prosecution of
evidence favorable to an accused upon request violates
due process where the evidence is material either to
guilt or to punishment, irrespective of the good faith or
bad faith of the prosecution.” Over the years, the Court
has expanded this duty in several ways. In United States
v. Agurs, 427 U.S. 97, 107 (1976), the Court held that the
duty is applicable regardless of whether there has been
a request by the accused. Later, in United States v.
Bagley, 473 U.S. 667, 676 (1985), the Court made clear
that the duty applies to impeachment evidence as well
as exculpatory evidence. Finally, Kyles v. Whitley, 514
U.S. 419, 438 (1995), established that the duty applies
to evidence known to police investigators even if
unknown to the prosecutor.
The duty of disclosure under Brady, however, is not
unlimited. We have explained that “a Brady violation
only occurs if ‘material’ evidence is withheld, that is ‘if
there is a reasonable probability that, had the evidence
been disclosed to the defense, the result of the pro-
ceeding would have been different.’ ” United States v.
Stott, 245 F.3d 890, 901 (7th Cir. 2001) (quoting Bagley,
473 U.S. at 682). “Furthermore, ‘[a]s long as ultimate
disclosure is made before it is too late for the defendants
to make use of any benefits of evidence, Due Process
is satisfied.’ ” Id. (quoting United States v. Ziperstein, 601
F.2d 281, 291 (7th Cir. 1979)).
No. 08-3731 17
Thus, “[t]o establish a Brady violation, the defendant
must prove three elements: (1) the evidence at issue
was favorable to the accused, either because it was excul-
patory or impeaching; (2) the evidence was suppressed
by the Government, either willfully or inadvertently;
and (3) the denial was prejudicial.” United States v. Roberts,
534 F.3d 560, 572 (7th Cir. 2008). We review a district
court’s Brady determination for an abuse of discretion.
United States v. Price, 418 F.3d 771, 785 (7th Cir. 2005).
2. Arizona v. Youngblood
There is a difference “between those situations in
which the police fail to disclose to the defendant evidence
that it knows to be material and exculpatory, and those
situations in which police simply fail to preserve poten-
tially exculpatory evidence.” United States v. Chaparro-
Alcantara, 226 F.3d 616, 623 (7th Cir. 2000). In Arizona v.
Youngblood, 488 U.S. 51 (1988), the Court addressed
the latter situation. In that case, the Court held that,
“unless a criminal defendant can show bad faith on the
part of the police, failure to preserve potentially useful
evidence does not constitute a denial of due process of
law.” Id. at 58.
In such situations, failure to preserve evidence is not
a violation of due process rights unless the
defendant can demonstrate: (1) bad faith on the part
of the government; (2) that the exculpatory value of
the evidence was apparent before it was destroyed;
and (3) that the evidence was of such a nature that
18 No. 08-3731
the petitioner would be unable to obtain comparable
evidence by other reasonably available means.
Hubanks v. Frank, 392 F.3d 926, 931 (7th Cir. 2004) (citing
Youngblood, 488 U.S. at 58; California v. Trombetta, 467
U.S. 479, 488-89 (1984); United States v. Watts, 29 F.3d 287,
289-90 (7th Cir. 1994)).
3. Jencks Act
Finally, we turn to disclosure requirements under the
Jencks Act, 18 U.S.C. § 3500. As we have explained:
The Jencks Act was enacted in response to the Supreme
Court’s holding in Jencks v. United States, 353 U.S. 657(1957). To ensure the meaningful confrontation of
government witnesses, the Act requires the govern-
ment, upon the defendant’s motion, to produce state-
ments made by any of its witnesses which the par-
ticular witnesses signed, adopted, or approved, and
which pertain to their testimony at trial. 18 U.S.C.
§ 3500(b); see also Fed. R. Crim. P. 26.2; United States
v. Lopez, 6 F.3d 1281, 1288 (7th Cir. 1993). The hope
is that these statements will afford the defense a
basis for effective cross-examination of government
witnesses and the possible impeachment of their
testimony without overly burdening the govern-
ment with a duty to disclose all of its investigative
material. See United States v. O’Malley, 796 F.2d 891,
900 (7th Cir. 1986); United States v. Snow, 537 F.2d
1166, 1168 (4th Cir. 1976).
United States v. Johnson, 200 F.3d 529, 534 (7th Cir. 2000).
No. 08-3731 19
Turning to the statutory provision, 18 U.S.C. § 3500(a)
states:
In any criminal prosecution brought by the United
States, no statement or report in the possession of the
United States which was made by a Government
witness or prospective Government witness (other
than the defendant) shall be the subject of subpoena,
discovery, or inspection until said witness has
testified on direct examination in the trial of the case.
Once a witness has testified on direct examination, how-
ever, “the court shall, on motion of the defendant, order
the United States to produce any statement . . . of the
witness in possession of the United States which relates
to the subject matter as to which the witness has testified.”
18 U.S.C. § 3500(b). Subsection (e) defines statement:
The term “statement”, as used in subsections (b), (c),
and (d) of this section in relation to any witness called
by the United States, means--
(1) a written statement made by said witness and
signed or otherwise adopted or approved by him;
(2) a stenographic, mechanical, electrical, or other
recording, or a transcription thereof, which is a
substantially verbatim recital of an oral state-
ment made by said witness and recorded contem-
poraneously with the making of such oral state-
ment; or
(3) a statement, however taken or recorded, or a
transcription thereof, if any, made by said
witness to a grand jury.
20 No. 08-3731
18 U.S.C. § 3500(e). If the Government fails to comply
with an order of the court to deliver a witness’s state-
ment, “the court shall strike from the record the testi-
mony of the witness.” Id. § 3500(d). Although not set
forth in the text of the Act itself, courts have held that
relief may not be granted under the Jencks Act without
a showing of prejudice. See United States v. Johnson, 200
F.3d 529, 535 (7th Cir. 2000) (collecting cases).
C. Procedural Context
1. Earlier FTC Proceedings
On January 9, 2003, the Federal Trade Commission
(“FTC”) filed a civil complaint against Mr. Kimoto and
Assail (“FTC action”). The complaint alleged that a
variety of individuals and corporations led by
Mr. Kimoto engaged in a fraudulent telemarketing
scheme in violation of 15 U.S.C. § 45(a). See FTC v. Assail,
Inc., 410 F.3d 256, 259 (5th Cir. 2005). Within a week of
the filing, Mr. Kimoto had contacted Robert Draskovich
“to represent him individually regarding potential
criminal exposure, as well as to work along side
Edward Moore regarding his representation for the
pending case [FTC action].” R.14, Attach. 1 at 2.
On September 22, 2003, Mr. Kimoto, Assail and the FTC
entered into a stipulated judgment. According to the
terms of the stipulated judgment, Mr. Kimoto and
Assail were jointly and severally liable for $106 million;
however, the judgment was suspended to the extent
that the amount exceeded Mr. Kimoto’s assets, which
No. 08-3731 21
were to be liquidated by an appointed receiver. See
Assail, 410 F.3d at 260. The stipulated judgment also
provided for the court’s retention of jurisdiction to
modify or enforce the order.
One year after entering the stipulated judgment,
the United States District Court for the Western District
of Texas did modify the order. The FTC’s continued
investigation revealed that Mr. Kimoto had attempted
to hide several million dollars in assets from the re-
ceiver. On motion of the FTC, therefore, the district
court lifted the suspension on the stipulated judgment.
R.59, Attach. (Final Monetary Judgment as to Defendants
Kyle Kimoto and Assail, Inc.).9
2. Reverse Proffer
As set forth previously, on June 20, 2007, a grand jury
returned a fourteen-count indictment against Mr. Kimoto.
The day before Mr. Kimoto’s arraignment and initial
appearance, his counsel met with Government attorneys
to view an eight-hour PowerPoint presentation.1 0
During the PowerPoint presentation, the Government
outlined its theory of the case that, in the sales and mar-
9
We reference these proceedings because they bear on whether
Mr. Kimoto had access to certain documents generated in
connection with that action. See infra pp. 58-59. They play no
other role in our consideration of the issues before this court.
10
The Government refers to this presentation as its
“reverse proffer.”
22 No. 08-3731
keting of a debit card, Assail had used a telemarketing
script, developed and approved by Mr. Kimoto, designed
to mislead prospective buyers into believing that they
actually were purchasing a credit card. The presentation
included excerpts of video interviews with Mr. Kimoto’s
employees, a video interview of Porcelli and video inter-
views of Porcelli’s employees. As part of its presentation,
the Government also played a number of “verification”
recordings, which contained misleading or deceptive
statements.
3. Motions to Continue
Approximately six weeks later, on August 20, 2007,
Mr. Kimoto’s counsel filed his first motion to continue
the trial date.11 See R.8. Mr. Kimoto’s counsel stated that
he knew “of at least 3,000,000 pages of written discovery
and hundreds of thousands of digital recordings that
need to be examined in preparation for trial.” Id. at 3.
Mr. Kimoto did not request a continuance of a specific
period, but asked for the ability to supplement his
motion in forty-five days based on his initial review of
the documentation. Id. at 4.
The Government did not oppose the motion, but re-
quested a trial date set in February 2008, as opposed to the
open-ended request of Mr. Kimoto. The Government
noted that Mr. Kimoto’s counsel had been involved in
11
During the initial appearance and arraignment, the trial
date was set for August 27, 2007.
No. 08-3731 23
his defense since 2003, when the FTC brought a civil
action against Mr. Kimoto. The Government also
informed the court that it had made a reverse proffer
by way of the PowerPoint presentation and that it had
“agreed to provide the dozens of hours of video
interviews and the recorded telemarketing calls that it
has in its possession, samples of which were played
during the PowerPoint presentation.” R.9 at 2. It noted,
however, that it was “awaiting defendant providing the
government with an external hard drive upon which to
transfer the electronic evidence.” Id. at 2-3. Finally, it
advised that “there were searches conducted at three
locations and the original documents seized are in an
office in Fairview Heights maintained by the Postal
Inspection Service. These documents are available to the
defendant.” Id. at 3. Although acknowledging the volumi-
nous documentation at the defendant’s disposal, the
Government also informed the court that “the business
records are largely peripheral to the key issues in the
case which depend for the most part on the scripts,
training manuals, contracts and email.” Id. at 4.1 2 The
12
After filing its original memorandum concerning the trial
date, the Government filed a Supplemental Memorandum
that included as an attachment an application for attorneys’
fees that Mr. Kimoto’s counsel had filed in the FTC action. The
application for fees recounted that counsel had spent approxi-
mately 592 hours in the representation of Mr. Kimoto in the
FTC investigation, that he had been engaged by Mr. Kimoto
“to represent him individually regarding potential criminal
(continued...)
24 No. 08-3731
district court granted the continuance and set a trial
date of February 4, 2008.
In a teleconference held later in August, Mr. Kimoto’s
counsel, Mr. Draskovich, informed the court that, due
to several other trials scheduled in early 2008, he
would not be able to prepare adequately for Mr. Kimoto’s
trial if it were to commence on February 4, 2008. The court,
therefore, asked Mr. Kimoto’s counsel to file another
motion to continue. Mr. Kimoto’s counsel did file a
second motion,13 which was granted by the court.
Mr. Kimoto’s trial then was rescheduled for March 31,
2008.
On October 22, 2007, the Government provided a hard
drive14 to Mr. Kimoto’s counsel containing all of the
digital and video information that had been reviewed by
12
(...continued)
exposure, as well as to work along side Edward Moore re-
garding his representation for the pending case,” and that it
was clear at that time that Mr. “Kimoto could face criminal
prosecution.” R.14, Attach. 1 at 2. The affidavit in support of
the application for fees averred that counsel had spent hours
“[a]nalyzing voluminous materials and documents,” id., Ex. 1
to Attach. 1 ¶ 3, and reflected over forty time entries
dedicated to reviewing documents or other discovery.
13
In the second motion, in addition to recounting the trials to
which he already was committed, Mr. Kimoto’s counsel also
reiterated the voluminous discovery that needed to be
reviewed in preparation for trial. See R.16 at 2.
14
The defense sent a hard drive to the Government on Septem-
ber 24, 2007. See R.42, Ex. E.
No. 08-3731 25
the Government in preparation for the reverse proffer.
Specifically, Postal Inspector Adam Latham wrote to
Mr. Draskovich: “Enclosed you will find the hard
drive with our electronic discovery for the above refer-
enced case. On the disk you will find five data
directories . . . .” R.40, Attach. C. The data directories listed
were “Assail,” “FBI,” “FTC,” “Assail and BABC Videos”
and “VoiceLog.” Id. The origin of all of the information
was provided. Additionally, it was clear that the
discovery did not represent all of the information within
the Government’s possession, but only that which the
Government had reviewed. Specifically, with respect to the
VoiceLog directory, Inspector Latham stated:
[T]his directory contains digital audio recordings
of BABC, FALC, and Assail program sales verifica-
tions that were recorded by VoiceLog. The 750+ files
in this directory are the digital recordings that we
downloaded from VoiceLog’s server—there are
several hundred thousand other verifications that we
did not review.
Id. (emphasis added). Following this disclosure, the
defense did not request the digital discovery in any
other format, nor did it request additional digital discov-
ery. As well, the defense did not seek access to the reposi-
tory of documentary and digital evidence at the
Fairview Heights facility at that time.
Three months later, on January 29, 2008, Mr. Kimoto
filed his third motion to continue. Again the reason cited
for the requested continuance was the “voluminous
26 No. 08-3731
paper discovery in this case,” 1 5 as well as the “extensive
digital discovery” received from the Government.
R.18 at 2.16 The Government objected to the continu-
ance primarily on the ground that, although there was
voluminous paper and digital discovery, little of that
material was pertinent to the issues in the case—whether
the scripts used to market the pay-as-you-go card were
fraudulent. Additionally, the Government noted that
Mr. Draskovich had represented Mr. Kimoto in the FTC
action, and, therefore, presumably was familiar with
much of the documentation at issue.1 7
The district court denied the third continuance. It
acknowledged that there was a great deal of evidence
available to the defense, but noted that Mr. Draskovich
had been involved in the case for some time, that the
Government’s theory of the case was straightforward,
and that there was no suggestion that “the Government
ha[d] shortened [Mr. Kimoto’s] effective preparation
15
At this point, the defense team still had not reviewed the
evidence located at the Fairview Heights facility.
16
Mr. Draskovich acknowledged at that time that the
VoiceLog verifications received were “just a minute sample of
over 300,000 recordings made.” R.18 at 2.
17
The Government also argued that, “[w]hile there is sub-
stantial documentary evidence and voluminous verification
calls, what is missing from defendant’s motion is how a
review of all of the records seized from the search and a
review of all the verification recordings is either necessary or
helpful to the development of a defense given the govern-
ment’s indictment and theory of the case.” R.19 at 6.
No. 08-3731 27
time or failed to provide him with necessary discovery
materials.” R.21 at 4.
4. Discovery
On February 27, 2008, members of the defense team
visited the Fairview Heights location to review the evi-
dence in the Government’s possession. Members of the
defense team spent four days reviewing documentation
in both paper and digital form; they had access to all of
the Government’s evidence, consisting of thirty-three
boxes of documents and thirteen hard drives. After the
defense team departed, copying of documents continued
with the cooperation, and under the supervision, of
postal inspection workers.
On approximately March 7, 2008, the defense
retained the services of Daniel Libby, a former naval
cryptologist and expert in computer forensics;1 8 the
defense engaged Libby’s services for the sole purpose of
reviewing the digital evidence provided. On March 11,
2008, Libby requested that the defense team procure
forensic images of the data turned over by the Govern-
ment. According to Libby, “[a] forensically sound image”
is a byte image of the hard drive, not simply a copy of
the file system, and “insures that the evidence is not
altered and or tainted during the review” of the digital
evidence. Tr. of Hearing on Motion to Dismiss at 10. Libby
was able to determine right away that the hard drive
18
Prior to this time, in November 2007, Mr. Kimoto had
retained a service to review digital evidence.
28 No. 08-3731
provided by the Government was not a forensically
sound image. Id. at 72.
Sometime between March 12 and March 17, 2008,
defense counsel wrote to the attorney for the Govern-
ment concerning the forensic images requested by
Libby;19 counsel for Mr. Kimoto stated: “[W]e have re-
ceived a substantial amount of discovery, including, but
not limited to, a hard drive containing extensive docu-
mentation. However, we are of the belief this is not a
forensic copy, and does not contain every piece of digital
evidence recovered.” R.42, Ex. K at 1. Counsel requested
a “[f]orensically sound copy . . . of ALL data derived
from Information Systems seized and/or forensically
acquired in this matter.” Id.
19
The record is not clear as to when, if at all, this request was
received in writing. One of Mr. Kimoto’s counsel states in an
affidavit that he called Assistant United States Attorney
(“AUSA”) Dan Reppert concerning the request, and, when he
did not receive a response, he sent the request by fax (dated
March 13, 2008). See R.30, Ex. 1. AUSA Reppert represents in
the response to the motion to dismiss that he received a voice
mail from defense counsel on March 17, 2008, when he was
in trial. At that time, he misunderstood the nature of the
request; he believed that defense counsel needed a code to
unlock some of the files, and he instructed his assistant to
provide it to defense counsel. According to AUSA Reppert, he
never received a hard copy of the request, and the true nature
of the request was not made known to him until March 21,
2008—the day his trial was completed—when he spoke with
Mr. Draskovich by telephone.
No. 08-3731 29
On March 21, Mr. Draskovich and AUSA Reppert spoke
over the telephone. During this conversation, Mr.
Draskovich informed AUSA Reppert that he had been
operating under the belief that the hard drive provided
to him in October 2007 was a complete, forensically
sound copy of all of the digital information in the Gov-
ernment’s possession, rather than just the materials that
the Government had reviewed in preparation for the
reverse proffer. Although AUSA Reppert did not believe
that there was any genuine question concerning what
had been provided, based either on the digital infor-
mation contained on the hard drive or on the cover
letter accompanying the hard drive, he reluctantly
agreed not to oppose a motion to continue should one
be filed. Instead of seeking a continuance to review the
additional materials, however, Mr. Kimoto filed a
motion to dismiss on March 24, 2008.
Nevertheless, in response to the request made by
the defense, the Government sent all of its original
digital evidence, not copies, by Express Mail directly to
Libby for his review. Libby stated that “this [wa]s the
first time in [his] career that the Government ha[d] ever
provided original evidence.” Tr. VI at 25.
5. Motion to Dismiss
In his motion to dismiss, Mr. Kimoto first recounted
the defense team’s review of the digital evidence pro-
vided by the Government. He stated:
Because of the voluminous nature of the digital discov-
ery, Counsel retained . . . ProSearch Strategies, Inc., a
30 No. 08-3731
company specializing in collecting, preserving, pro-
cessing, culling, reviewing and producing digital
information. . . .
Upon beginning their work, ProSearch advised
Counsel that the discovery provided to the defense
did not appear to be a complete forensic copy, and
that such was necessary to verify the data as accurate
and unaltered.
R.30 at 2-3.20
Mr. Kimoto’s motion then went on to explain the
efforts of his team to locate two e-mails, which had been
discussed at length in the reverse proffer provided by
the Government. Mr. Kimoto described the discussion of
the e-mails in the reverse proffer as follows:
Mr. Aronson and Assistant United States Attorney
Bruce Reppert spent almost seven minutes
specifically addressing two emails sent from Peter
Porcelli to Alan Aronson on or about July 23, 2002 and
August 6, 2002. According to the Government (in the
video), these emails laid out Mr. Porcelli’s scheme
for changing company names to avoid prosecution.
These emails indicated that new companies would
be formed every four to six moths [sic] in different
cities with different CEO’s [sic], would market the
20
Mr. Kimoto’s motion, however, did not provide the date
that his counsel was informed by ProSearch that the digital
discovery provided “did not appear to be a complete
forensic copy.” R.30 at 3.
No. 08-3731 31
exact same thing as the previous companies, would
all be controlled by Mr. Porcelli, and would sit dor-
mant once the complaints got too high. According to
the testimony, these emails were between Mr. Porcelli
and Mr. Aronson only.
R.30 at 4.
According to Mr. Kimoto, despite an exhaustive search,
his team could not locate the e-mails anywhere in the
digital materials provided by the Government. In all,
Mr. Kimoto claimed that his computer experts could find
only approximately one hundred Porcelli e-mails, com-
pared to the thousands that Mr. Kimoto believed must
have existed. According to Mr. Kimoto, “[t]he missing
emails . . . are clearly exculpatory because they show the
presence of a conspiracy between Mr. Porcelli and Mr.
Aronson outside the presence or knowledge of Mr.
Kimoto, and they have strong impeachment value against
Mr. Porcelli, a key government witness.” Id. at 12 (em-
phasis in original). Additionally, Mr. Kimoto argued
that the failure to provide him with a complete forensic
copy of all digital files impaired his ability to prepare
a defense. See id. at 15.2 1 Finally, Mr. Kimoto submitted
21
Specifically, Mr. Kimoto argued:
It is important to note that this case revolves around the
realm of digital forensics and e-discovery, and that such are
difficult concepts for many to understand. E-discovery
and digital forensics are important because they are the
only way to verify that a complete record of the alleged
(continued...)
32 No. 08-3731
that he should not be punished “because the Govern-
ment failed to properly preserve or maintain a digital
forensic copy of the data. It was the Government who
raided both BABC and Assail, and waited five years to
prosecute the case.” R.30 at 16.2 2
In its response, the Government pointed out that it
never had received a request for a forensically sound
image until March 17, 2008. When it did so, the Govern-
ment agreed to ship all of the original computer images
to Libby’s laboratory; this was done on March 28, 2008,
via Express Mail. The Government also noted that, in
papers filed with the court, Mr. Kimoto stated that he
had retained an investigator, who had been reviewing
digital discovery since November 1, 2007; according to
21
(...continued)
digital crime scene are kept. . . . Without [a forensic record],
there is no way to verify what the source of the data is,
when it was modified, who modified it, who regularly
accessed it, how it was processed, where it was stored, and
how it was networked throughout the workplace. Without
this forensic copy, Mr. Kimoto forced [sic] to look at data-
bases that are not linked properly, and are therefore,
inaccessible. Therefore, he is unable to even reference the
histories of the alleged victim’s [sic] in this case.
R.30 at 15.
22
Mr. Kimoto also concluded that, based on the significance of
the evidence, “[t]here c[ould] be no other conclusion than
that the government has acted in bad faith in failing to
provide Mr. Kimoto with a digital forensic copy of the evi-
dence.” R.30 at 17.
No. 08-3731 33
the Government, “it should have been obvious that the
electronic discovery provided did not consist of complete
‘forensic’ images” because the “imaged hard drive
contain[ed] executable files as well as data and
working files.” R.40 at 11.2 3
Turning to Mr. Kimoto’s allegation that the Govern-
ment had destroyed 2 4 e-mails between Assail and Porcelli,
the Government argued that the claim was founded on
nothing more than speculation:
In order to reach this conclusion, the defendant has to
stack an innuendo upon an already large pile of
baseless and gratuitous assumptions. First, the defen-
dant assumes that Bay Area Business Council main-
tained an email server on premises at their offices
in Tampa. There is no evidence of that. Second, defen-
dant must assume that Bay Area Business Coun-
23
Indeed, it was apparent to Libby, who was retained on
March 7, 2008, that he needed the forensic files to verify the
authenticity of the digital files.
24
With respect to the allegation that the Government had
“broken links with other computers,” R.40 at 12, the Govern-
ment explained that it had “encountered this problem while
we were trying to access customer databases in Assail’s elec-
tronic files in an effort to identify victims,” id. It further stated
that “[t]here were no network schematics in the Assail records
seized during the search and hence there was insufficient
information from which the database could be reconstructed
given the broken links. To establish that there were broken
links is a far cry from establishing that the government
has ‘destroyed’ anything.” Id.
34 No. 08-3731
cil maintained a policy of archiving their email,
instead of purging it. There is no foundation for that.
Third, defendant must assume that the email server
was on hand and the data intact at the time the
Federal Trade Commission successfully threw Bay
Area into receivership. . . . Fourth, defendant must
assume that Porcelli sent his email through Bay
Area’s email server in the first place. He appears to
have used an internet email account established with
Compuserve. Fifth, defendant assumes that what few
emails the government has used in its case in chief
were recovered from that email server, also an unwar-
ranted assumption as the government found physical
copies printed in Bay Area’s files at the time of take
over.
Id. at 13-14. Focusing again on the e-mails, the Govern-
ment stated that it was “particularly disingenuous” that
Mr. Kimoto was arguing that a due process viola-
tion arose as a result of the Government’s not disclosing
the e-mails. Id. at 16. It stated:
[T]he emails were featured prominently in the gov-
ernment’s reverse proffer in the video testimony of
Alan Aronson which was exhibited to defendant
and his counsel and in fact provided in toto on the
external hard drive in October. The fact that defense
could not locate the hard copies in the files they
inspected and chose not to specifically request them
from the government does not establish either that
they have been “destroyed” or not properly
disclosed . . . . It can hardly be said that the govern-
No. 08-3731 35
ment has failed to “properly disclose” evidence which
is featured in a PowerPoint shown to the defendant.
Id. at 16-17.25 The Government further argued that
Mr. Kimoto “misunderstood” the prosecution’s Brady
obligations; it explained that “[t]he government’s obliga-
tion is to make evidence available, which it has done . . . .”
Id. at 17.
25
Although not raised in the motion to dismiss, the Government
also addressed Mr. Kimoto’s complaint, raised during the
course of trial, that only two-thirds of one percent of the
consumer complaints made to SOS were available in paper
form. Because there was testimony that approximately one
million complaints were lodged, the defense argued, the
Government must have destroyed the remaining several
hundred thousand complaints. The Government responded
that this was a “massive non sequitur.” R.40 at 15. It continued:
Jay Lankford testified that all these complaints should be
on the “server.” Moreover, given the fact that SOS’s
network and Assail’s server in Kansas City were ex-
changing data on a daily basis, given the fact that Assail’s
offices in Kansas City were never raided, certainly Kimoto
should currently have this data unless, together with
Dunn’s computer and Assails’ [sic] email in St. George
(according to Dunn’s testimony), the data was destroyed
at the direction of Kimoto himself. An examination of the
stack of complaints that defendant introduced suggests
that these are simply selected printouts of what was origi-
nally entered electronically in Assail’s system. If they were
original documents, presumably they would have been
handwritten. . . . For some reason, someone decided to
print out the complaints we have.
Id.
36 No. 08-3731
After trial commenced, the district court held a
hearing on the motion to dismiss. During the hearing,
Mr. Kimoto presented extensive testimony by Libby and
other witnesses, as well as argument by counsel. The
court denied the motion by oral ruling on April 16, 2008,
which was followed by a written order issued on May 8,
2008. In its order, the district court considered whether
the failure to turn over digital versions of Porcelli’s e-mails
or the failure to supply Mr. Kimoto with a forensic copy
of all of the digital files violated either the duty estab-
lished in Brady v. Maryland, 373 U.S. 83 (1963), to disclose
exculpatory evidence or the duty established under
Arizona v. Youngblood, 488 U.S. 51 (1988), to preserve
evidence. The district court rejected both claims:
Kimoto’s assertions regarding the “missing e-mails”
do not rise above the level of speculation. What
emerges from the parties’ submissions and from
testimony is not a depiction of any animus toward
Kimoto or any design or purpose to deprive him of
exculpatory evidence but a singularly cooperative
effort by the Government to apprise Kimoto of the
case against him and to provide him with all
relevant discovery.
...
Mr. Libby testified that there was nothing unusual
in the way that the files, identified as “native” or
“second generation,” were first provided by the
Government. Libby explained that a forensic image
collects each bit and is a complete representation of
original media. A secondary collection, such as he
No. 08-3731 37
received, is the result of forensic acquisition and
processing of that data. Libby testified that it was
readily apparent that the files were not forensic
images—and did not purport to be—but second
generation files in which data was extracted by the
original examiner and produced to agents in con-
junction with their investigation. The Court notes
that Kimoto’s investigator, Robert Lawson, acknowl-
edged that he had received the hard drive from
Kimoto’s counsel on November 1, 2007, and had been
reviewing discovery an average of six hours a day.
The files were also reviewed by Kimoto’s counsel,
Damian Sheets, who professed to be knowledgeable
about computers. Given that it was “readily apparent”
that the files were not forensic images, Kimoto
should have been aware well before March 17, 2008,
that second generation files had been provided.
...
Upon inquiry by the Court, Mr. Libby stated that
the hard drives that were sent to him were not those
taken from machines at the time the warrant was
executed but the images that were copied onto the
hard drives. Assistant United States Attorney Reppert
represented that the original hard drives were proba-
bly returned and that the warrant language allows
forensic images to be made. This representation is
supported by the testimony of Latham who stated
that the hard drives seized from Specialty Out-
sourcing Solutions (“SOS”) were returned. Latham
also testified that he received no forensic images
from the Secret Service and that no computer evidence
38 No. 08-3731
was destroyed. The Government cannot turn over
material that is not in its possession. And the hard
drives returned could have been the subject of sub-
poena so that they may have been available from
their original owners separate and distinct from the
Government.
There is no evidence that the e-mails were printed
and retained rather than being purged or deleted.
There is evidence, however, that Porcelli used
Compuserve for his e-mail in place of or in addition to
using the BABC e-mail server. If that were the case,
the e-mails would reside not on Porcelli’s computer
but on a central Compuserve computer—and again be
subject to subpoena. Furthermore, even if the e-mails
contained evidence of a conspiracy between Porcelli
and Aronson, this does not preclude the possibility
of a conspiracy between Porcelli and Kimoto. The
Court questions the relevancy, and therefore the
admissibility, of e-mails inculpating Porcelli and
Aronson in a conspiracy claimed to be independent
of the Kimoto-Porcelli conspiracy. Nor does the de-
fense’s showing of a conspiracy between Porcelli and
Aronson, of which Kimoto had no knowledge, relieve
Kimoto of his responsibility in the Kimoto-Porcelli
conspiracy. One need not know all his co-conspirators
in order to be guilty of conspiracy. Kimoto had
written scripts and had a history as a telemarketer
prior to his meeting with Porcelli.
R.66 at 7-9. Turning to the alleged loss or destruction of
the hundreds of thousands of customer complaints taken
from SOS, the court stated:
No. 08-3731 39
There is no foundation to conclude that Jay Lankford,
a principal of SOS, had copies of several hundred
thousand complaints on hand when the Secret Service
searched the facility. The Secret Service recovered
thirty-three boxes of documents from SOS, all of which
were made available to the defense. Additionally, the
information Kimoto sought may have been available
from another source, since the SOS server exchanged
data on a daily basis with Assail’s server in Kansas
City, the offices of which were not raided.[2 6 ]
Actions taken by Assail and Kimoto himself lend
little credence to the argument that e-mails existed
which were important and contained exculpatory
evidence. The Assail information technology director,
Charles Davidson, testified that he destroyed back-up
26
Similarly, the court determined that there was no
destruction of SOS computer links:
Kimoto’s counsel represented that he can access nothing
from the SOS data base because the links are broken.
However, there is no basis to conclude that the Government
knew that by disconnecting the computers it would be
dismantling the network and destroying links that could
not be recreated. Mr. Libby testified that agents executing
a search warrant on site would not know in advance if
computers were linked across the “internet backbone” and
could not plan for that. Additionally, he testified that the
agency is limited by the scope of the warrant, and a rela-
tional database could not be searched if it were not in
the warrant.
R.66 at 8.
40 No. 08-3731
tapes and e-mail, and Clifford Dunn testified that
e-mails were purged and that Kimoto ordered
his computer destroyed.
As to motive, the Court finds no bad faith, that is, no
“conscious effort to suppress exculpatory evidence,”
Jones v. McCaughtry, 965 F.2d 473, 477 (7th Cir. 1992),
on the part of the Government with respect to Kimoto’s
allegations. Even if the e-mails had been preserved
and were lost or destroyed by the Government, the
Court cannot infer bad faith because the exculpatory
significance of the e-mails was not apparent, given
the Government’s theory of the case, as thoroughly
outlined to Kimoto. . . . That the Government
invested the e-mails with little importance is made
clear by the fact that in its eight-hour PowerPoint
“reverse proffer,” among the video clips, verification
recordings, images of sales scripts and references to
the law applicable to the case, only three e-mails
were featured. Kimoto chose, possibly for strategic
reasons, not to alert the Government to the nature
of the information he was seeking, which was
certainly reasonable and proper. However, it shows
no bad faith on the part of the Government that it
failed to perceive how this information could be
material and relevant to any defense theory, even if
such information had been in the Government’s
possession.
R.66 at 9-10.
The Court noted that there were two additional
reasons why it should not grant the motion to dismiss.
No. 08-3731 41
First, Mr. Kimoto had not sought a continuance “based
upon Libby’s eleventh hour revelations and the alleged
discovery miscommunication regarding the computer
files that were obtained by the Government . . . and
provided to Kimoto.” Id. at 10. Although the Govern-
ment had agreed not to oppose a continuance, and the
court previously had indicated that withholding of neces-
sary discovery materials would be a reason for granting
a continuance, “Kimoto elected to forgo the opportunity
to have his expert obtain and review the information
which he now contends is so crucial to his defense.” Id.
at 11. Additionally, the court observed that, although it
was readily apparent that forensic files were not
provided, Mr. Kimoto did not retain Libby until three
weeks before trial and did not seek to obtain forensic
images until two weeks before the trial. The district court
believed that “Kimoto should have raised the problem
of which he now complains much earlier than three
business days prior to the start of trial.” Id. at 11-12.
The court summarized its holding accordingly:
The Government allowed open file discovery and
sent to defense counsel a 500-gigabyte hard drive
loaded with eight of eleven CDs and DVDs, which
included, in the Government’s estimation, all of the
material that underlay its case. According to testi-
mony by Postal Inspector Latham, thirty-three boxes
of evidence, seized from SOS, were made available
to Kimoto; hard drives seized from SOS were re-
turned. In the absence of an articulated request, the
Government had no further obligation.
...
42 No. 08-3731
The Court has herein articulated its reasons for its
April 16th Order denying Kimoto’s Motion to
Dismiss (Doc. 46). Kimoto failed to establish that the
Government intentionally withheld electronic evi-
dence for the purpose of depriving him of the use
of that evidence during his trial. Specifically,
Kimoto failed to show bad faith on the part of the
Government, failed to show that the exculpatory
value of the evidence was apparent and failed to
show that he could not have obtained comparable
evidence by other reasonably available means.
Id. at 12 (citing United States v. Watts, 29 F.3d 287, 289-90
(7th Cir. 1994)).
6. Post Trial Motions
In his post-trial motion for acquittal and a new trial,
Mr. Kimoto renewed his argument that the Govern-
ment’s withholding and/or destruction of evidence im-
peded his ability to mount a defense. With respect to
discovery, Mr. Kimoto also submitted that he was
entitled to a new trial because the “Government’s failure
to provide any digital evidence and the Government’s
production of only 4,600 of 800,000 physical documents
taken from [SOS] prevented Mr. Kimoto from adequately
preparing his defense.” R.58 at 6 (emphasis in original).
Additionally, Mr. Kimoto claimed, a new trial was war-
ranted because the Government failed to provide him
with exhibits accompanying the video deposition of
James Sierra. These exhibits consisted of e-mails sent by
Roger Howard, a Government witness, and therefore
No. 08-3731 43
constituted material that should have been produced
under the Jencks Act, 18 U.S.C. § 3500.
The court recounted, at the outset, that it had
“exhaustively considered the issue of the Government’s
alleged failure to preserve and to provide physical and
digital evidence in its May 8, 2008 Order denying
Kimoto’s motion to dismiss.” R.72 at 13. Specifically, it
reviewed the testimony of Jay Lankford, principal of
SOS, in detail, as well as that of Postal Inspector Adam
Latham. After this review, the court concluded that
computers and hard drives had been seized from SOS
and were returned. With respect to the documents, the
court held that “Kimoto’s chain of assertions simply
does not link up. There is no evidence that SOS had
nearly 800,000 handwritten customer inquiry forms on
its premises when the federal agents executed their
search warrant or that, if present, the documents were
actually seized by agents or, if both present and seized,
that the documents were destroyed.” Id. at 14-15. Finally,
the court also observed that, based on Lankford’s testi-
mony, “the documents at issue were available to Kimoto
on a database linked to the SOS system in Assail’s
Kansas City offices, which were not raided.” Id. at 15.
Finally, the court also held that “Kimoto [had] provide[d]
no objective reason to believe that the documents would
have been helpful to him.” Id. Indeed, this was doubtful
based on the testimony presented that Mr. Kimoto
had ordered the destruction of thousands of documents,
both digital and in hard copy.
Turning to the alleged withholding of Jencks material,
the district court determined that Mr. Kimoto’s argu-
44 No. 08-3731
ment was more appropriately classified as a Brady claim.
The court observed that, although Mr. Kimoto had
entered into a stipulated judgment with the FTC at the
time Sierra’s deposition was taken, Mr. Draskovich re-
mained Mr. Kimoto’s counsel of record. Thus, the docu-
ment allegedly withheld was available to Mr. Kimoto
through the exercise of reasonable diligence.2 7
D. Mr. Kimoto’s Specific Contentions
1. Forensic Images
Mr. Kimoto first maintains that the Government’s
failure to provide him with complete forensic images of
all digital evidence within its possession constituted a
Brady violation. We cannot agree. Even if we could catego-
rize the forensic images as exculpatory or impeaching, the
district court did not abuse its discretion in determining
that the Government did not withhold this evidence.
Additionally, even if we could conclude that the Gov-
27
Subsequently, Mr. Kimoto filed a motion to reconsider the
court’s denial of his motion for acquittal and for a new trial. In
it, he claimed that the court should have considered his
claim under the Jencks Act, not under Brady. The court deter-
mined, nonetheless, that Mr. Kimoto knew of the exhibits to
the deposition long before trial and had made no effort to
secure them. Additionally, the court noted that Mr. Kimoto
had not established that the exhibits were in the hands of the
prosecution team and had not established that he had
suffered any prejudice. The court also determined that Mr.
Kimoto’s other arguments were without merit or were untimely.
No. 08-3731 45
ernment withheld this evidence, the district court’s con-
clusion—that Mr. Kimoto was not prejudiced by the
Government’s action—was not an abuse of discretion.
The record is clear that the Government made both its
documentary and digital evidence available to the
defense from the very beginning of this case. In
October 2007, five months prior to trial, the Government
provided the defense with all of the digital evidence that
it had reviewed and used in preparation for the reverse prof-
fer. Although Mr. Kimoto had several individuals working
on the files beginning in November 2007—all purportedly
conversant in digital technology—these individuals either
did not realize that they were not working with forensi-
cally sound images or did not communicate the importance
of obtaining a forensically sound image to defense counsel.
Alternatively, they informed defense counsel of their
needs, but no action was taken to secure a forensically
sound image of the digital evidence. Regardless, it was not
until Libby joined the defense team, three weeks before
trial, that he requested forensic files and that the request
was passed on to the Government. It is undisputed that the
Government did not receive a request for forensic files
until, at the earliest, March 11, 2008.
Furthermore, the Government, although skeptical that
there was any genuine confusion about the nature of the
digital material that had been provided to Mr. Kimoto in
October 2007, informed defense counsel that the Govern-
ment would not oppose a continuance to allow Libby
an opportunity to review the digital evidence. We have
held that “[a]s long as ultimate disclosure is made before
46 No. 08-3731
it is too late for the defendants to make use of any benefits
of evidence, Due Process is satisfied.” United States v.
Ziperstein, 601 F.2d 281, 291 (7th Cir. 1979). Mr. Kimoto,
therefore, was not prejudiced by any action of the Gov-
ernment. By contrast, it was the defense’s failure to
timely request forensic files and its concomitant decision
to forego a request for a continuance that prevented
Mr. Kimoto from being able to secure and review the
files in the format he sought. The district court, therefore,
did not abuse its discretion in determining that the Gov-
ernment’s actions with respect to forensic images
did not constitute a Brady violation.
2. Material not Examined by the Government
Mr. Kimoto also maintains that he is not really com-
plaining about forensic files, but about the Government’s
failure to turn over all digital evidence in a timely fash-
ion. Specifically, Mr. Kimoto contends that the Government
misled him into believing that the one hard drive provided
to him in October 2007 included all digital evidence in the
Government’s possession. We cannot accept this conten-
tion. In the letter accompanying the hard drive provided in
October 2007, Postal Inspector Latham stated: “Enclosed
you will find the hard drive with our electronic discovery for
the above referenced case. On the disk you will find five
data directories . . . .” R.40, Attach. C (emphasis added). As
well, Postal Inspector Latham specifically informed Mr.
Kimoto’s counsel that one of the directories contained:
audio recordings of BABC, FALC, and Assail program
sales verifications that were recorded by VoiceLog. The
No. 08-3731 47
750+ files in this directory are the digital recordings
that we downloaded from VoiceLog’s server—there
are several hundred thousand other verifications that we
did not review.
Id. (emphasis added). Thus, at least with respect to the
VoiceLog recordings, it was readily apparent that there
was significant digital evidence that was not included on
the hard drive. At no time did anyone affiliated with the
prosecution team represent that the hard drive produced
in October 2007 contained all digital evidence in the
Government’s possession.
Furthermore, the record reflects that, if there were any
genuine confusion concerning what was produced in
October 2007, Mr. Kimoto’s counsel either became
aware of, or should have become aware of, this
deficiency prior to March 13, 2008—the first time any
discovery request was submitted to the Government. The
record reflects that Mr. Kimoto had hired investigators
to review digital evidence in November 2007. At oral
argument, counsel represented that, as Mr. Kimoto’s
investigators delved further into the files, it became
“clearer and clearer” to them that certain digital evidence,
which was thought to exist, was not in the materials that
had been supplied. Again, however, no additional
evidence—nor any clarification of what the Government
had produced—was requested until the middle of
March 2008. When the alleged confusion was brought to
the Government’s attention, it agreed not to oppose a
continuance.
48 No. 08-3731
Under these circumstances, the district court’s determi-
nation that the Government’s actions did not constitute
a Brady violation certainly was not an abuse of discretion.
Again, assuming the existence of some exculpatory evi-
dence somewhere in the digital materials not reviewed
by the Government, the defense was provided these
materials prior to trial and with an offer not to oppose
a motion to continue. In sum, the production was made
“before it [wa]s too late for the defendants to make use
of any benefits of evidence.” Stott, 245 F.3d at 901(internal quotation marks omitted).
Moreover, even assuming that exculpatory material
was withheld, we have stated that, when a defendant
realizes that exculpatory evidence has been withheld,
the “appropriate course” is to seek a continuance if
“more time to investigate the exculpatory potential of
the evidence” is needed. United States v. Grintjes, 237
F.3d 876, 880 (7th Cir. 2001). Here, the defense realized
before trial that it had misunderstood what the Govern-
ment had copied onto the hard drive. The Government,
based on this misunderstanding, agreed not to oppose
a continuance.28 Thus, any prejudice to the defendant
was not the product of the Government’s action, but of
Mr. Kimoto’s conscious decision to forego a motion to
continue and to file instead a motion to dismiss.
28
The district court observed that it could not “recall a time . . .
when it did not grant a continuance where, as here, it
would have been requested by the defense and the Govern-
ment indicated it would not object.” R.66 at 11.
No. 08-3731 49
In addition to his general claim that there must have
been some, unidentified, exculpatory evidence among that
withheld, Mr. Kimoto identifies two specific pieces of
evidence, which were not disclosed to him prior to trial
and which, he believes, impeded his ability to mount a
defense. The first includes homosexual pornography
stored on Clifford Dunn’s computer. Mr. Kimoto
alleges that “[t]his revelation that Dunn had something
of his own to hide on his computer would have pro-
vided an alternative explanation for deletions of data that
Dunn attributed to Kimoto.” Appellant’s Br. 38. This
material, however, was not withheld from the defense,
but was located at the Fairview Heights facility and,
therefore, available to the defense at any time. Had
Mr. Kimoto sought a continuance, it would have been
available for the defense to use at trial. Thus, again,
any prejudice to Mr. Kimoto resulted from his own
failure to review the digital information in a timely
fashion and to seek the court’s assistance when he
realized that there had been a misunderstanding
with respect to the extent of the digital evidence in his
possession.
Mr. Kimoto also references e-mails between Porcelli
and Aronson that evidence a conspiracy between those
two, without direct reference to Mr. Kimoto. Mr. Kimoto
claims that not only was he deprived of the impeach-
ment value provided by these two e-mails, but surmises
that, to the extent that Porcelli’s other e-mails “were
consistent with the little we know about the emails that
were produced, they could only have served to bolster
Kimoto’s case and undermine the Government’s.” Id. at 38-
50 No. 08-3731
39. After the hearing on the motion to dismiss, the
district court found that there was no evidence to sup-
port Mr. Kimoto’s conclusion that the Government had
obtained the e-mails referenced in the reverse proffer
from a BABC database. See R.66 at 8. The court specifically
noted that there was evidence that Porcelli used
Compuserve “for his e-mail in place of or in addition
to using the BABC e-mail server.” Id. Furthermore, given
the reference to, and discussion of, the e-mails in the
reverse proffer, it hardly can be argued that the Gov-
ernment withheld this evidence from Mr. Kimoto.
Mr. Kimoto simply assumed that the e-mails used by
the Government existed in digital form and, when they
could not be located, never requested the e-mails from
the Government in any other form.
We only add that we, like the district court, are at a
loss to see how Mr. Kimoto was prejudiced by any action
of the Government. At some point prior to the cross-
examination of Porcelli, the defense team either was
provided with hard copies of the e-mails or located
the hard copies of the e-mails among the documents
in its possession. Mr. Kimoto’s counsel then cross-exam-
ined Porcelli extensively on the contents of these e-mails.
See Tr. III at 161-75. Clearly, therefore, the disclosure
was made in time for Mr. Kimoto to make use of the
evidence at trial. See Stott, 245 F.3d at 901.
Given that Mr. Kimoto was able to use these “missing”
e-mails in his cross-examination of Porcelli, the crux of
Mr. Kimoto’s argument appears to be that, had he been
able to access the full complement of Porcelli’s e-mail,
No. 08-3731 51
Mr. Kimoto would have discovered evidence of even
greater impeachment value to use during trial. However,
as noted by the Government, this involves a series of
assumptions too weak to support a due process claim.
See supra pp. 33-34 (quoting R.40 at 13).2 9
29
Finally, Mr. Kimoto makes a separate argument, developed
fully only in his reply, that there possibly was other digital and
documentary evidence which had not been made available to
the defense prior to trial. See Reply Br. 8. His belief is based on
his post-trial review of the digital and documentary evidence
that the Government provided to him prior to trial. This
argument was not raised before the district court until
Mr. Kimoto filed “Defendant’s Motion to Reconsider Motion
for a Judgment of Acquittal and Motion for a New Trial,” on
August 12, 2008. The district court believed this argument
was an attempt to circumvent the requirement, set forth in
Federal Rule of Criminal Procedure 33(b)(2), that motions for
a new trial be filed within seven days. The court had a sound
basis for that view. We would add that Mr. Kimoto bears
the responsibility for his own failure to secure complete dis-
covery and to review thoroughly that material. It was Mr.
Kimoto’s decision—or that of his counsel—to commence the
review of the extensive documentary and digital evidence
only a few weeks before trial. It also was his decision to
forego a motion to continue that would have allowed his
defense team additional time to review and understand the
original digital evidence sent to Libby on March 28, 2008. The
district court correctly determined that it was these decisions,
rather than any Government attempts at subterfuge, that
has resulted in any prejudice to Mr. Kimoto.
52 No. 08-3731
3. Customer Service Records
Mr. Kimoto maintains that hundreds of thousands of
customer service complaints seized from SOS were lost
or destroyed by the Government. Mr. Kimoto further
submits that these records were material because they
were “[c]entral” to his theory that “the great majority of
the customer service calls received by SOS and BABC
were not complaints by consumers claiming to have
been misled into believing that they would receive a
credit card.” Appellant’s Br. 33. Mr. Kimoto acknowl-
edges that 6,366 SOS customer inquiry records were
included in the Government’s documents and made
available to him and that he was able to establish that, of
those 6,366 records, “only 22 identified that the caller
had complained that he believed the product to be a
credit card.” Id. at 34. Nevertheless, he claims “[c]omplete
access to the database would have permitted this point
to be made with considerably more force.” Id. at 35.
We agree with the district court that, under the circum-
stances presented here, the alleged loss or destruction of
documents by the Government does not constitute a
due process violation. First, we note that the district court
found that, as a threshold matter, Mr. Kimoto did not
establish that the Government destroyed or lost the
documents in question. See supra pp. 38-39. Mr. Kimoto
asserts that “[t]here can be no doubt that these records
existed and were seized.” Appellant’s Br. 33. However,
he has not pointed to the testimony of any witness
which calls into question the district court’s conclusion
that there is no evidence that 800,000 customer com-
No. 08-3731 53
plaints existed in hard copy at the time the Government
raided SOS offices or that, if they did exist, the Govern-
ment actually took possession of them. See R.72 at 14.
Furthermore, assuming both the existence and destruc-
tion (and/or loss) of the documents, Mr. Kimoto has not
established that “the evidence was of such a nature that
[he] would be unable to obtain comparable evidence by
other reasonably available means.” Hubanks, 392 F.3d at
931. There were over six thousand customer records
from SOS that were in the Government’s possession and
were turned over to Mr. Kimoto. Mr. Kimoto concedes
that the documents were available to him and that
they provided him a basis for arguing that customers
were not confused as to what they were purchasing.
Specifically, Mr. Kimoto’s counsel stated during closing
argument:
Now there ha[s] been a lot of testimony concerning
complaints and the nature of the complaints. . . .
Memories change, especially when they are being
pressed. Documents don’t. The complaints are in
black and white. They don’t change their stories. As
you recall, there is [sic] approximately 6,400 of them.
Of that 6,400, there were only 22 complaints from
people saying that they thought they were getting a
credit card. That is less than one half of one percent.
That happens. There is [sic] occasionally bad agents
that are on the phone and get away with it.
Tr. IX at 55. Here, the Government’s alleged loss or de-
struction of SOS customer service records did not
prevent Mr. Kimoto from arguing that consumers
54 No. 08-3731
were not confused by the sales pitch; his point simply
could have been made with “more force” had the addi-
tional documents been available to him.3 0
30
Mr. Kimoto also maintains that the Government used the SOS
customer service records at sentencing to calculate the loss for
which Mr. Kimoto was responsible. See Appellant’s Br. 36. He
contends that the Government’s use of these documents not only
establishes that the Government has been disingenuous about
their existence, but the use of the documents at sentencing
constitutes a separate Brady violation. The Government did not
employ any customer service records during sentencing. Postal
Inspector Latham testified that he used a database of
identifiable victims that had been compiled by the FTC; this
database contained only the names and addresses of victims.
The sources for the database do not appear in the record;
however, given that the database only contains victim names
and addresses, it could have been the VoiceLog recordings
or information provided by Global e-Telecom, see Sent. Tr. at 35-
36, both of which were available to the defense. Postal Inspector
Latham also testified that, to compose a similar database
for BABC-related victims, he used a database recovered from
one of Assail’s computers; again, this information was avail-
able to the defense. Moreover, all of this information was
entered as evidence at the sentencing hearing without objection
by the defense. See Sent. Tr. at 41.
There is one additional claim concerning the customer
service records that Mr. Kimoto mentions only in passing in
his briefs before us, but which he pursued more thoroughly
before the district court: When executing search warrants,
Government agents destroyed computer links between Assail
and SOS, rendering digital evidence stored at SOS inaccessible.
(continued...)
No. 08-3731 55
In sum, we agree with the district court that Mr. Kimoto
has failed to show either that the Government
destroyed any SOS documents or that other comparable
documents were not available to him. The district court,
therefore, did not abuse its discretion in determining that
there were no violations of Brady or Youngblood with
respect to the SOS customer complaints.
4. Howard’s E-mail
Mr. Kimoto next submits that he was prejudiced by the
Government’s failure to turn over e-mails referenced in a
deposition of James Sierra. Sierra and Howard were co-
owners of Apex, a company that supplied debit cards to
Assail. In Sierra’s deposition in the FTC action, to which
Mr. Kimoto initially was a party, counsel for the FTC
referenced several e-mails sent or received by em-
ployees of Apex. One of those e-mails was from Howard’s
e-mail account and stated that “no fulfillment is para-
mount [sic] to wire fraud.” R.154, Ex. 3 at 143-44.
30
(...continued)
As set forth previously, see supra note 26, the district court
concluded that Libby’s testimony established that there was
no intentional destruction of evidence by the Government and
that the manner in which the Government conducted its
searches did not evidence bad faith. The district court em-
ployed the correct standard in reviewing Mr. Kimoto’s claim
and supported its finding with evidence from Mr. Kimoto’s
own expert. Its holding on this issue, therefore, was not an
abuse of discretion.
56 No. 08-3731
The Government produced the Sierra deposition to
Mr. Kimoto before trial.3 1 Sierra was not called as a
witness, but, when the Government called Howard,
Mr. Kimoto’s counsel objected on the ground that the
e-mail, referenced above, was not provided as required
by the Jencks Act. The district court overruled the objec-
tion. When the issue was raised in subsequent filings
with the court, the court addressed Mr. Kimoto’s with-
holding claim under both the Jencks Act and Brady.3 2
The court determined that the document was available
to Mr. Kimoto through other means and that Mr.
Kimoto suffered no prejudice as a result of any with-
holding.
On appeal, the Government argues, inter alia, that the
e-mail at issue is not a statement within the Jencks Act.
We agree. The Jencks Act defines statement as follows:
(e) The term “statement”, as used in subsections (b),
(c), and (d) of this section in relation to any witness
called by the United States, means--
(1) a written statement made by said witness and
signed or otherwise adopted or approved by him;
31
The record does not reflect when the transcript of the deposi-
tion was turned over to the defense.
32
The court initially characterized Mr. Kimoto’s argument
concerning the Howard e-mail as more appropriately analyzed
under Brady. However, Mr. Kimoto argued in his motion to
reconsider that the court should have considered this to be
a Jencks Act claim. The district court did so, but similarly
rejected the argument.
No. 08-3731 57
(2) a stenographic, mechanical, electrical, or other
recording, or a transcription thereof, which is a
substantially verbatim recital of an oral state-
ment made by said witness and recorded contem-
poraneously with the making of such oral state-
ment; or
(3) a statement, however taken or recorded, or a
transcription thereof, if any, made by said witness
to a grand jury.
18 U.S.C. § 3500(e).3 3 In United States v. Sopher, 362 F.2d
523 (7th Cir. 1966), we further have explained that the
term “statement” as used in § 3500(e) refers to
a recorded recital of past occurrences made by a
prospective prosecution witness. From its very
nature, necessarily it is made after those events
have taken place. If a prosecutor, in reliance on
the statement, uses as a witness the maker
thereof as a part of the government’s case, the
statement must be produced for the use of
defense counsel.
Id. at 525. Thus, in Sopher, we held that the Jencks Act
did not require the Government to turn over the
transcript of a conversation, recorded by a cooperating
witness, during which the defendant accepted a bribe. In
contrast to a witness’s recollection of past events, Sopher
involved “a concurrent tape recording of a conversation
33
Although not spelled out in any detail, Mr. Kimoto presum-
ably is arguing that Howard’s e-mails fall within subsec-
tion (e)(1).
58 No. 08-3731
between the payer and the recipient of an alleged cash
bribe,” which “[wa]s obviously of contemporaneous
sounds.” Id. We continued:
The result is a preservation of a conversation just as
it was spoken. It is direct evidence relevant on the
issue of the alleged guilt of the defendants on trial.
Made when the allegedly extorted bribe money was
being paid, the tape recording in this case is of the
actual voices of the briber and the bribee. It is there-
fore not a recital of a past occurrence by a prospective
witness and is not within the general purview of
§ 3500.
Id.; see also United States v. Skillman, 442 F.2d 542, 553-54
(8th Cir. 1971) (same). Mr. Kimoto does not seek to distin-
guish Sopher, nor does he offer any authority suggesting
a different definition of “statement” should apply.
We agree with the district court that Mr. Kimoto’s
claim with respect to the Howard e-mails is better ad-
dressed under Brady. However, even under this ap-
proach, Mr. Kimoto’s claim fares no better. First, in
the district court, Mr. Kimoto explicitly disclaimed
any reliance on Brady as the basis for seeking Howard’s
e-mails. See R.88 at 11 (“The Court wrongly classified the
demand for emails as a Brady issue as opposed to one
raising rights guaranteed by the Jencks Act.”). Second,
even if we look to the merits of Mr. Kimoto’s Brady claim,
it must fail because Howard’s e-mails were neither
“suppressed” nor “material.” In Ienco v. Angarone, 429
F.3d 680, 683 (7th Cir. 2005), we explained that “[e]vidence
No. 08-3731 59
is ‘suppressed’ for Brady purposes when (1) the prosecu-
tion failed to disclose the evidence in time for the defen-
dant to make use of it, and (2) the evidence was not
otherwise available to the defendant through the
exercise of reasonable diligence.”
Mr. Kimoto argues that the deposition was not
available to him because he “had settled the FTC litigation
months before the Sierra deposition was taken, w[as] not
present for the deposition, and never received that dis-
covery.” Reply Br. 12. Nothing in this statement, however,
dispels the notion that, in the exercise of reasonable
diligence, Mr. Kimoto could have obtained the docu-
ment. He does not claim that he did not receive notice
of the Sierra deposition, nor does he claim that he was not
monitoring the FTC litigation or that he could not have
procured the documents from his co-defendants in that
action. Indeed, although Mr. Kimoto had entered the
stipulated judgment by the time that Sierra was deposed,
that judgment anticipated Mr. Kimoto’s continued cooper-
ation with the court-appointed receiver and provided for
the court’s retention of jurisdiction for purposes of con-
struction, modification and enforcement of the judg-
ment. The court records reflect that, long after the stipu-
lated judgment was entered, Mr. Kimoto was deposed
in the FTC action and also litigated the FTC’s motion to
lift the previously suspended portion of the judgment
against him. Given Mr. Kimoto’s continued involvement
in the FTC action at the time that Sierra’s deposition
was taken, we believe that the deposition was available
to him in the exercise of reasonable diligence.
60 No. 08-3731
Finally, we cannot conclude that the one e-mail attrib-
uted to Howard was “material” for Brady purposes. The
Supreme Court has explained that evidence is material
for purposes of Brady “if there is a reasonable probability
that, had the evidence been disclosed to the defense, the
result of the proceeding would have been different.”
Strickler v. Greene, 527 U.S. 263, 280 (1999) (internal quota-
tions marks and citations omitted). In this case, the
defense extensively cross-examined Howard on his
actions, his relationship with Assail and Mr. Kimoto,
and his criminal background. Given that the jury already
was aware of Howard’s criminal history, we do not
believe that an e-mail suggesting that he was engaging
in actions tantamount to wire fraud would have affected
the jury’s decision to accept or reject his testimony.3 4
In sum, we do not believe that any of the district court’s
rulings on the alleged Brady, Youngblood or Jencks Act
violations constitutes an abuse of discretion. There was
no error, therefore, in denying Mr. Kimoto’s motion to
dismiss, motion for a new trial and motion to reconsider
on those bases.
34
Even if we had determined that the Government had sup-
pressed the Porcelli e-mails and the SOS records, the cumulative
effect of this evidence would not have risen to the level of
Brady materiality. Kyles v. Whitley, 514 U.S. 419, 436-37 (1995).
There was substantial testimonial and documentary evidence
to establish that Mr. Kimoto was instrumental in marketing
debit cards in a deceptive manner, did so with an intent to
deceive, and joined with others to accomplish his goals.
No. 08-3731 61
IV
SENTENCING
Mr. Kimoto challenges two aspects of his sentencing:
the enhancement for the loss calculation and the enhance-
ment for the number of victims. According to Mr. Kimoto,
“[a] finding that any customer suffered a loss that could
be included under § 2b1.1 depends on whether the cus-
tomer paid money ‘as a result of’ a mistaken belief
caused by the defendant’s misrepresentation.” Appellant’s
Br. 49. Because, continues Mr. Kimoto, at least some
customers understood that they were receiving a debit
card, as opposed to a credit card, the district court’s
calculation, which assumed that all individuals who paid
the fee were victims, greatly overestimated both the
number of victims as well as the total loss.
The Government counters that loss, for purposes of
§ 2B1.1, is the “greater of actual loss or intended loss.”
U.S.S.G. § 2B1.1 cmt. n.3(A). Furthermore, the application
notes clearly require the district court only to “make a
reasonable estimate of the loss” based upon the “available
evidence.” Id. at n.3(C). Because the district court’s esti-
mate of actual loss is much less than the intended loss,
continues the Government, any error in the calculation
of actual loss is harmless.
Mr. Kimoto acknowledges that intended loss is an
alternative method of calculating loss for purposes of the
Guidelines. However, he maintains that, even if the
district court had adopted an “intended loss” rationale, as
opposed to an actual loss proposed by the Government,
the Government still had to establish that Mr. “Kimoto had
62 No. 08-3731
intended to cause the loss the District Court used in
its Guidelines calculations.” Reply Br. 23.
We review a trial court’s calculation of the loss caused
by defendant’s fraudulent conduct for clear error.
United States v. Peterson-Knox, 471 F.3d 816, 821-22 (7th Cir.
2006). A defendant challenging a district court’s loss
calculation must not only demonstrate that it is
inaccurate, but also “outside the realm of permissible
computations.” Id. at 822. In conducting our review, we
turn first to the applicable guideline and the district
court’s application of that guideline to Mr. Kimoto.
A. District Court’s Guideline Calculation
Section 2B1.1 is the guideline applicable to Mr. Kimoto’s
offenses. Section 2B1.1 instructs the district court to use
a base offense level and to increase the offense level
according to the amount of “loss.” Application note 3
gives further instruction on how to calculate “loss” for
purposes of that guideline; it states that the “general
rule” is that “loss is the greater of actual or intended
loss.” U.S.S.G. § 2B1.1 cmt. n.3(A). It further provides
that “actual loss” is “the reasonably foreseeable
pecuniary harm that resulted from the offense” and
“intended loss” is the “pecuniary harm that was
intended to result from the offense.” Id. at n.3(A)(i) & (ii).3 5
35
Application note 3 provides in relevant part:
3. Loss Under Subsection (b)(1).--This application note
applies to the determination of loss under sub-
(continued...)
No. 08-3731 63
Here, in calculating the number of victims and the
estimated loss, the district court adopted the figures
compiled in the second addendum to the Presentence
35
(...continued)
section (b)(1).
(A) General Rule.--Subject to the exclusions in subdivi-
sion (D), loss is the greater of actual loss or in-
tended loss.
(i) Actual Loss.--“Actual loss” means the reason-
ably foreseeable pecuniary harm that resulted
from the offense.
(ii) Intended Loss.--“Intended loss” (I) means the
pecuniary harm that was intended to result
from the offense; and (II) includes intended
pecuniary harm that would have been impossi-
ble or unlikely to occur (e.g., as in a govern-
ment sting operation, or an insurance fraud in
which the claim exceeded the insured value).
(iii) Pecuniary Harm.--“Pecuniary harm” means
harm that is monetary or that otherwise is
readily measurable in money. Accordingly,
pecuniary harm does not include emotional
distress, harm to reputation, or other
non-economic harm.
(iv) Reasonably Foreseeable Pecuniary Harm.--For
purposes of this guideline, “reasonably fore-
seeable pecuniary harm” means pecuniary
harm that the defendant knew or, under the
circumstances, reasonably should have known,
was a potential result of the offense.
U.S.S.G. § 2B1.1 cmt. n.3.
64 No. 08-3731
Report (“PSR”). According to the addendum, loss
was estimated at approximately $39 million. This
figure represents the total amount of funds debited
from individual accounts in response to Assail’s
telemarketing calls, less refunds issued. Accordingly,
Mr. Kimoto’s sentence was increased twenty-two levels.
See id. § 2B1.1(b)(1)(L) (instructing that offense levels
should be increased by twenty-two for losses of greater
than $20 million). Additionally, the addendum
estimated over 500,000 victims of Mr. Kimoto’s scheme.
This number represents the number of individuals whose
accounts were debited in response to Assail’s tele-
marketing calls. Because the number of victims
exceeded 250, Mr. Kimoto’s offense level was increased
by six levels. See id. § 2B1.1(b)(2)(C). With additional
adjustments not at issue on this appeal, Mr. Kimoto’s
offense level was calculated at 45, which was treated as
an offense level of 43—the highest offense level set forth
on the sentencing table. An offense level of 43, re-
gardless of a defendant’s criminal history level, results
in a recommended sentence of life imprisonment.
After accepting the sentencing calculation set forth in
the PSR, the court then determined that, although
Mr. Kimoto had committed “an extremely serious of-
fense,” a life sentence was “simply unreasonable in [its]
view.” Sent. Tr. 138. Accordingly, the court sentenced
Mr. Kimoto to 350 months’ imprisonment. The court
explained:
In this case I am going to sentence him . . . to a term on
Counts 1 through 14 of 25 months per count to be
served consecutively and not concurrently. This is an
No. 08-3731 65
effective sentence of 350 months. . . . 350 months
times 85 percent, assuming he gets credit for good
time, is 297 months. That is about 25 years, which is
roughly half of his life expectancy. So he would get
out roughly at age 58. It is [a] long sentence, substan-
tially less than [a] life sentence, but is a sentence, in
my view, that meets all of the requirements of 18[]
U.S.C. Section 3553(a) and is not greater than
necessary to comply with the need for the sentence to
reflect the seriousness of the offense, to promote
respect for the law and to provide just punishment
for the offense, to afford adequate deterrence to crimi-
nal conduct and to protect the public from further
crimes of the defendant.
Sent. Tr. 148.
B. Estimate of Loss
In challenging the district court’s estimation of loss
before this court, Mr. Kimoto does not dispute the accuracy
of the raw numbers used by the district court. That is, he
does not dispute that Assail took in at least $39 million
from the sale of its products. Instead, Mr. Kimoto main-
tains that, because of the necessity of establishing causa-
tion, this payment figure is not the equivalent of loss.
Although there is no question that the sale of Assail’s
debit card generated the sum employed by the district
court, there is evidence in the record that not every indi-
vidual who authorized the $159 debit of his account
was deceived by Assail’s sales pitch; there were at least
66 No. 08-3731
some who understood that they would be receiving a
debit card. See Sent. Tr. 53-55. The district court acknowl-
edged that there may have been some individuals who
knew what they were getting; however, because the
raw numbers of individuals and amount of funds were
so great, it believed that the elimination of those few
individuals from consideration would not affect
Mr. Kimoto’s sentencing calculation. Id. at 55.
If we had to rely on the district court’s actual loss
calculation, we might be compelled to remand for a more
considered estimation of the number of individuals who
were not deceived and, as a result, a more definitive
determination that the sentencing calculation would not
have been affected. However, this step is unnecessary.
As referenced previously, the commentary to U.S.S.G.
§ 2B1.1 required the district court to apply the “greater
of” actual or intended loss. U.S.S.G. § 2B1.1 cmt. n.3(A).
If we apply an intended loss figure, it is clear that the
amount of actual loss pales by comparison.3 6 Defense
counsel represented to the court that Mr. Kimoto pur-
36
Mr. Kimoto believes that the Government’s reliance on
“intended” as opposed to “actual” loss “comes too late,” Reply
Br. 22; he stops short, however, of arguing that the reliance
on intended loss has been waived. Our own review of the
record reveals that, while at the district court, the Govern-
ment raised intended loss as an alternative to actual loss in
its response to Mr. Kimoto’s objections to the PSR and presented
evidence in support of an intended loss calculation during
the sentencing hearing. See Sent. Tr. 74-80.
No. 08-3731 67
chased lead lists of potential customers consisting of
approximately 50,000,000 names. It would be inappro-
priate to use this number to estimate intended loss, how-
ever, because testimony also established that telemarketers
anticipate only a small percentage of positive responses
from a lead list; specifically, an “excellent list” would yield
a two-percent return, whereas an average rate for return
would yield a one-percent return. Sent. Tr. 76-80.3 7 If, in
estimating intended loss, the court employed only an
average rate of return (one percent) and the lowest of the
prices at which an Assail card was offered ($159), the
district court would have arrived at an intended loss
figure of $79,500,000. An intended loss of this amount
corresponds to an offense-level enhancement of 24, as
opposed to the enhancement of 22 levels received by
Mr. Kimoto. An even more modest rate of return of one-
half of one percent yields an intended loss of $39,750,000,
which is very close to the number employed by the
district court for actual loss and which also corresponds
37
Mr. Kimoto’s claim that the Government failed to show that
he “intended to cause the loss” related to this number of
consumers is without merit. Reply Br. 23. The record is replete
with evidence that Mr. Kimoto wanted to convince every
potential purchaser that what he or she was purchasing was
a credit card. As set forth in the application note, the fact
that some prospective purchasers did not want the card, could
not purchase the card, or were not fooled does not affect
Mr. Kimoto’s intent. See U.S.S.G. § 2B1.1 cmt. n.3(A) (stating
that loss “includes intended pecuniary harm that would
have been impossible or unlikely to occur”).
68 No. 08-3731
to an enhancement of 22 levels—the one actually received
by Mr. Kimoto.38
C. Enhancement for Number of Victims
We cannot, however, apply the same rationale to the
district court’s offense-level enhancement for number
of victims. Section 2B1.1 defines “victim” accordingly:
“Victim” means (A) any person who sustained any part
of the actual loss determined under subsection (b)(1);
or (B) any individual who sustained bodily injury as
a result of the offense. “Person” includes individuals,
corporations, companies, associations, firms, partner-
ships, societies, and joint stock companies.
U.S.S.G. § 2B1.1 definitions. In other words, whereas the
loss calculation can be based on either actual or intended
loss, the estimation of the number of victims is limited to
those who incurred part of the actual loss.
Here, the PSR (adopted by the court) considered all
purchasers, well over 500,000, to be victims. It did not
estimate how many of these individuals purchased
38
Any criticism that this method of ascertaining loss is too
speculative is irrelevant in this case. As noted above, the
figure used by the district court represented individuals
who actually responded to Assail’s call and actually spent
money on its product. Mr. Kimoto, therefore, was given the
benefit of the doubt by being sentenced as if he intended a
loss based on actual sales—regardless of whether his scheme
anticipated a greater number of purchasers and a greater return.
No. 08-3731 69
Assail’s products as a result of Assail’s deceptive sales
efforts.
There is evidence in the record from which the district
court could have reached a reasonable estimate of victims,
specifically, the customer service records from SOS, the
testimony of Lankford and of Porcelli during trial, as
well as the testimony of Kristen Davis at sentencing. We
are skeptical that, after review of this evidence, the
district court reasonably could conclude that there were
less than 251 individuals who suffered actual loss. How-
ever, that is a determination for the district court to
make in the first instance.
Because the district court’s calculation of the number of
victims did not focus on actual loss, and because that
enhancement affects Mr. Kimoto’s sentencing range, we
remand to the district court for a more definite
calculation of the number of victims. If the district court,
after review of the record and based on a reasonable
estimate, concludes that the number of victims exceeds
250, then the original sentence shall stand. If, however, the
court concludes that the number of victims does not
exceed 250, then it must reevaluate its enhancement
pursuant to U.S.S.G. § 2B1.1(b)(2)(C). We emphasize
that this is a very limited remand, confined to the cal-
culation of the number of victims for purposes of
§ 2B1.1(b)(2)(C); no other aspects of Mr. Kimoto’s sen-
tencing should be revisited.
70 No. 08-3731
Conclusion
For the foregoing reasons, the judgment of the district
court with respect to Mr. Kimoto’s conviction is affirmed.
Additionally, we affirm all aspects of Mr. Kimoto’s sen-
tencing with the exception of the calculation of victims
under U.S.S.G. § 2B1.1(b)(2)(C). We remand that aspect
of Mr. Kimoto’s sentence to the district court for
further findings concerning the number of victims. In
every other respect, the judgment of the district court is
affirmed.
A FFIRMED in part; R EMANDED in part
12-2-09