United States v. Kyle Kimoto

Citation: Not availableDocket: 08-3731

Court: Court of Appeals for the Seventh Circuit; December 1, 2009; Federal Appellate Court

Original Court Document: View Document

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Kyle Kimoto, president of Assail, Inc., was charged with conspiracy, mail fraud, and multiple counts of wire fraud. Following a ten-day trial, he was convicted on all counts. Kimoto appealed the decision, but the Court of Appeals affirmed his conviction and most aspects of his sentence, remanding only the district court’s enhancement related to the number of victims for further proceedings.

Assail, a telemarketing firm, marketed financial packages, including a debit card product called "First Financial Solutions," originally developed by Rockwell Solutions and later by the Bay Area Business Council. The company employed deceptive practices in cold-calling potential customers, utilizing lead lists of individuals with poor credit histories to mislead them into believing they were eligible for credit cards. Telemarketers falsely claimed that consumers were guaranteed a credit card, conditioned on a one-time processing fee of $159.95, while the promised card required a payment to activate any credit. Customer complaints were rampant, with reports of up to one hundred thousand complaints within seven months for one product line. Customer service was outsourced, and scripts were provided to manage complaints, indicating a systematic approach to handling customer dissatisfaction.

SOS employed a strategy to alleviate customer concerns by suggesting that retaining their card would enhance their credit. At its peak, SOS operated with around 150 customer service representatives, with complaints making up 80-90% of calls. Mr. Kimoto's appeal centers on three main issues: the adequacy of evidence supporting his convictions, the Government's obligation regarding the timely provision of exculpatory and impeaching evidence, and the fairness of the sentencing process. 

Mr. Kimoto argues that there was insufficient evidence for his convictions, particularly asserting that the Government did not demonstrate his intent to defraud or an agreement with co-defendant Porcelli regarding the conspiracy count. The background involves a criminal indictment against him for telemarketing activities related to fraud, including conspiracy to commit mail fraud, wire fraud, and money laundering, with multiple counts related to mail and wire fraud involving deceptive marketing practices.

The Government's case posited that Mr. Kimoto defrauded numerous individuals through misleading telemarketing scripts that falsely indicated customers were purchasing a credit card. Testimonies from key witnesses, including Shawn Hatfield and Porcelli, revealed that the sales scripts were intentionally crafted to create a false impression of receiving a legitimate credit card. They also highlighted that rebuttal scripts were created to counter customer complaints, suggesting benefits such as credit improvement and association with credit reporting agencies, thus reinforcing the deceptive marketing strategy.

The 'Final Effort' involved informing customers that their credit was subpar and promoting Advantage Capital's services as a means to obtain a MasterCard for emergencies and rebuild credit quickly. Jay Lankford, principal of SOS, testified that Assail conducted 'test calls' to ensure sales agents employed all rebuttals to avoid losing sales and that agents who failed to do so would be removed from the program. The Government presented evidence that Mr. Kimoto was aware the rebuttal scripts contained false representations. Roger Howard, co-owner of Apex Merchant Services, testified that he informed Mr. Kimoto that the debit cards provided were not credit cards and would not be reported to credit agencies. Mr. Kimoto defended his actions by claiming he was legitimately selling debit cards and believed in the credibility of the product representations made by others. He asserted that he had a 'zero tolerance' policy for misrepresentations and that the scripts indicated the cards were not credit lines, arguing the Government failed to prove a conspiracy existed. In a post-trial motion for acquittal, he contended that there was insufficient evidence to support his conviction, particularly regarding his knowledge of misleading scripts and his involvement in alleged overt acts. The district court denied his motion, noting testimony from several witnesses indicating Mr. Kimoto's intention to market the debit card as a credit card and confirming he knew the scripts were misleading. The court concluded that the jury’s findings regarding his commitment of overt acts were sufficient to uphold the verdict, despite the jury’s mixed findings on different paragraphs of the indictment. Mr. Kimoto faces a significant challenge in overturning the jury's verdict based on the evidence's sufficiency.

In the case of United States v. Roberts, the court emphasized that in evaluating the sufficiency of evidence, it refrains from weighing evidence, making credibility assessments, or resolving inconsistencies in testimonies. A conviction may only be overturned for insufficient evidence if no reasonable jury could find guilt beyond a reasonable doubt when viewing the evidence in the light most favorable to the Government.

Mr. Kimoto argued that the Government needed to prove his intent to defraud for each count of the indictment, suggesting that the jury's "No" response to a specific question about his sales model negated the intent element. However, the court found that the jury's rejection of certain factual allegations did not necessarily contradict their determination of Mr. Kimoto's fraudulent intent. The jury may have believed he participated in drafting deceptive sales scripts or misled consumers regarding the credit reporting capabilities of the pay-as-you-go card, despite doubts about his exclusive role in developing the sales model.

Testimony indicated that Mr. Kimoto was involved in misleading practices, with evidence suggesting that he was aware of the card’s limitations. The court concluded there was sufficient evidence for the jury to find Mr. Kimoto had the intent to defraud and that the verdict should not be overturned.

Additionally, Mr. Kimoto raised concerns about the Government allegedly withholding or destroying evidence critical to his defense.

Applicable legal standards governing evidence disclosure in criminal proceedings are outlined, starting with the principles established in Brady v. Maryland, which mandates the prosecution to disclose evidence favorable to the accused, relevant to guilt or punishment, regardless of the prosecution's intent. This obligation extends to evidence known to police investigators, as clarified in Kyles v. Whitley. A Brady violation requires proof of three elements: the evidence must be favorable, suppressed by the government, and the suppression must be prejudicial. The standard for reviewing Brady determinations is for abuse of discretion.

In contrast, Arizona v. Youngblood addresses the non-preservation of potentially exculpatory evidence, stating that unless bad faith can be demonstrated, failure to preserve such evidence does not violate due process. To establish a violation in this context, the defendant must prove bad faith, the apparent exculpatory value of the evidence before its destruction, and the inability to obtain comparable evidence through other means.

Finally, the Jencks Act, enacted to enhance the defendant’s ability to confront government witnesses, requires the government to produce statements made by witnesses after they have testified, upon the defendant's request. Specifically, 18 U.S.C. 3500(a) prohibits pre-testimony discovery of such statements but mandates their production once a witness has testified on direct examination.

Failure by the Government to comply with a court order to deliver a witness's statement results in the striking of that witness's testimony from the record. Courts have established that relief under the Jencks Act requires a showing of prejudice, although this is not explicitly stated in the Act.

In procedural context, on January 9, 2003, the Federal Trade Commission (FTC) filed a civil complaint against Mr. Kimoto and Assail for engaging in a fraudulent telemarketing scheme in violation of 15 U.S.C. 45(a). Shortly after, Mr. Kimoto sought legal representation for potential criminal exposure and in connection with the ongoing case. A stipulated judgment was entered on September 22, 2003, holding Mr. Kimoto and Assail jointly and severally liable for $106 million, with the judgment suspended pending liquidation of Mr. Kimoto's assets by a receiver. The court retained jurisdiction to modify or enforce this order.

One year later, the judgment was modified when the FTC discovered Mr. Kimoto had concealed several million dollars from the receiver, leading the district court to lift the suspension on the judgment. On June 20, 2007, a grand jury indicted Mr. Kimoto on fourteen counts. The day before his arraignment, his counsel met with Government attorneys to review an extensive PowerPoint presentation outlining the Government's case, which included misleading telemarketing scripts developed by Mr. Kimoto. Six weeks later, on August 20, 2007, Mr. Kimoto's counsel filed a motion to continue the trial date, citing the need to review a significant volume of discovery materials. The Government did not oppose the motion but proposed setting a trial date in February 2008, noting Mr. Kimoto's counsel had been involved since the FTC's civil action in 2003 and that the Government was prepared to provide the necessary electronic evidence, pending Mr. Kimoto supplying an external hard drive for the transfer.

Searches were conducted at three locations, and the original documents seized are held by the Postal Inspection Service in Fairview Heights, available to the defendant. The Government noted that while the defendant has access to extensive documentation, most of it is peripheral, with key issues revolving around scripts, training manuals, contracts, and emails. The district court granted a continuance, setting the trial date for February 4, 2008. In an August teleconference, Mr. Kimoto’s counsel, Mr. Draskovich, requested a postponement due to conflicts with other trials. The court instructed him to file a second motion to continue, which was granted, rescheduling the trial to March 31, 2008.

On October 22, 2007, the Government provided Mr. Draskovich with a hard drive containing digital and video information reviewed in preparation for the case, including five data directories related to various investigations and digital audio recordings from VoiceLog. The Government clarified that this material was not exhaustive, as hundreds of thousands of other verifications were not reviewed. The defense did not request additional discovery or access to the Fairview Heights facility at that time. On January 29, 2008, Mr. Kimoto filed a third motion to continue, citing the volume of paper and digital discovery. The Government objected, arguing that much of the material was not pertinent to the case's key issues regarding potential fraud in marketing scripts. The district court denied the continuance, emphasizing Mr. Draskovich's familiarity with the case, the straightforward nature of the Government's theory, and that the Government had not impeded Mr. Kimoto’s preparation.

Defendant's motion lacks clarity on the necessity of reviewing all records and verification recordings in relation to the government's indictment and case theory. Despite substantial documentary evidence and numerous verification calls, the defense has not demonstrated how further examination of these materials would aid in developing a defense. On February 27, 2008, the defense team reviewed evidence at the Fairview Heights location for four days, gaining access to thirty-three boxes of documents and thirteen hard drives. Following this visit, copying of documents continued under the supervision of postal inspection workers.

On March 7, 2008, the defense hired Daniel Libby, a computer forensics expert, specifically to review the digital evidence. Libby requested forensically sound images of the data provided, emphasizing that such images ensure the integrity of the evidence during review. He quickly identified that the hard drive received from the government was not forensically sound. Between March 12 and March 17, defense counsel communicated concerns regarding the adequacy of the hard drive, requesting a forensically sound copy of all relevant digital evidence. The timeline indicates some confusion regarding the request, as AUSA Dan Reppert initially misunderstood its nature and only became fully aware of the request on March 21, 2008, after his trial concluded.

Mr. Draskovich communicated to AUSA Reppert that he believed the hard drive received in October 2007 contained a complete and forensically sound copy of all digital information held by the Government, rather than only materials reviewed for the reverse proffer. AUSA Reppert, while not convinced there was any real issue regarding the completeness of the hard drive, agreed to not oppose a potential motion for continuance. Instead of seeking a continuance, Mr. Kimoto filed a motion to dismiss on March 24, 2008. The Government subsequently sent all original digital evidence to Libby for review, which he noted was unprecedented in his experience.

In his motion to dismiss, Mr. Kimoto described the defense's review of the digital evidence, indicating that ProSearch Strategies, Inc., a company specializing in digital information management, had been engaged to assist. ProSearch informed counsel that the discovery did not appear to be a complete forensic copy, which was necessary to confirm data accuracy and integrity. Mr. Kimoto's motion detailed efforts to locate two critical emails discussed in the reverse proffer, sent by Peter Porcelli to Alan Aronson, which allegedly outlined a scheme to evade prosecution by forming new companies. Despite extensive searches, the defense team could only find about one hundred emails from Porcelli, while they believed thousands should exist. Mr. Kimoto asserted that the missing emails were exculpatory and would significantly undermine Porcelli's credibility, impacting the defense's preparation. Additionally, he argued that not receiving a complete forensic copy of all digital files hindered the defense's efforts.

Mr. Kimoto contended that he should not face penalties due to the Government's failure to preserve a digital forensic copy of evidence, arguing that digital forensics and e-discovery are crucial for verifying the integrity of data. He noted that without such a forensic record, it is impossible to ascertain details about the data's origin and modifications, leaving him unable to access important historical information related to the alleged victim. Additionally, Mr. Kimoto accused the Government of acting in bad faith for not providing a complete digital forensic copy, as the available electronic discovery was incomplete.

In response, the Government stated it did not receive a request for a forensically sound image until March 17, 2008, and complied by sending original computer images to a laboratory on March 28, 2008. The Government highlighted that Mr. Kimoto had engaged an investigator for digital discovery as early as November 1, 2007, which suggests he had access to some digital evidence. 

Regarding Mr. Kimoto's claim that the Government destroyed e-mails between Assail and Porcelli, the Government dismissed this allegation as speculative, arguing that it was based on unfounded assumptions about the existence of an email server and its archiving practices. Furthermore, the Government clarified that the challenges encountered in accessing customer databases were due to broken links and a lack of network schematics, not destruction of data.

Defendant's argument relies on the assumption that Porcelli's email was sent through Bay Area’s email server, despite evidence indicating he used a Compuserve account. The assertion that the government obtained key emails from the email server is also questioned, as physical copies were discovered in Bay Area’s files during the takeover. The government criticized Mr. Kimoto's claim of a due process violation regarding email disclosures, emphasizing that the emails were presented during the prosecution's reverse proffer and provided in full on an external hard drive. The defense's inability to locate these documents does not imply they were destroyed or improperly disclosed. The government clarified its Brady obligations, stating it is responsible for making evidence available, which it has done.

Furthermore, the government addressed a separate complaint from Mr. Kimoto about the limited availability of consumer complaints in paper form, asserting that his conclusion about evidence destruction was unfounded. Testimony confirmed that complaints should be stored on the server, and given the daily data exchange between SOS’s network and Assail’s server, Kimoto should have access to this information unless he directed its destruction. The printed complaints introduced by the defense were deemed selective outputs of electronically entered data, not original documents.

After trial began, the district court held a hearing on Kimoto's motion to dismiss, where extensive testimony was presented. The court denied the motion on April 16, 2008, with a subsequent written order on May 8, 2008, evaluating whether the government's failure to provide digital copies of emails or forensic files breached its obligations under Brady v. Maryland and Arizona v. Youngblood regarding the disclosure and preservation of evidence.

The district court dismissed Kimoto's claims regarding "missing e-mails," labeling them as speculative. Evidence presented indicated that there was no malicious intent from the Government to withhold exculpatory evidence from Kimoto; rather, there was a cooperative effort to ensure he was informed about the case and provided with relevant discovery. Testimony from Mr. Libby clarified that the files given to Kimoto were second generation, not forensic images, and that it should have been evident to Kimoto prior to March 17, 2008, that these files were not original forensic representations. Kimoto's investigator had access to the hard drive and had been reviewing the discovery extensively. Libby also testified that the hard drives sent to him were copies, not the originals seized during the warrant execution, and the original hard drives were likely returned. Assistant U.S. Attorney Reppert indicated that non-forensic material could not be disclosed if it was not in the Government's possession. The court noted the absence of evidence that the missing e-mails were retained rather than deleted and questioned the relevance of any e-mails implicating Porcelli and Aronson in a conspiracy unrelated to Kimoto. The defense's demonstration of a conspiracy between Porcelli and Aronson did not absolve Kimoto of his involvement in the conspiracy with Porcelli, as knowledge of all co-conspirators is not necessary for a conspiracy conviction. Kimoto's background as a telemarketer and his prior scripting work were also noted.

The court found no evidence to support claims that Jay Lankford of SOS had copies of hundreds of thousands of customer complaints at the time of a Secret Service search. The Secret Service retrieved thirty-three boxes of documents from SOS, which were accessible to the defense. Additionally, relevant information may have been available from Assail’s server, which was not raided and exchanged data daily with SOS. Testimony from Assail's IT director indicated that backup emails were destroyed, and Kimoto had ordered the destruction of his own computer. The court ruled there was no bad faith on the Government's part regarding the alleged destruction of evidence, as the significance of the emails was not apparent based on the Government's case theory. The Government’s limited focus on three emails during its extensive presentation further indicated its view of their importance. Kimoto did not request a continuance following last-minute revelations concerning alleged discovery issues, despite the Government's agreement not to oppose such a request. As a result, the court declined to grant the motion to dismiss the case.

The court found that Mr. Kimoto did not timely address the issue of missing forensic files, retaining counsel only three weeks before the trial and seeking forensic images two weeks prior. The district court determined that Kimoto should have raised his concerns earlier, noting that the Government provided open file discovery, including a 500-gigabyte hard drive with substantial materials related to the case. Postal Inspector Latham testified that thirty-three boxes of evidence were accessible to Kimoto, and hard drives had been returned. The court concluded that the Government had no further obligation without a specific request from Kimoto.

In denying Kimoto’s motion to dismiss, the court found insufficient evidence of intentional withholding of electronic evidence by the Government. Kimoto failed to demonstrate bad faith, the apparent exculpatory value of the evidence, or the inability to obtain similar evidence through other means.

In his post-trial motions for acquittal and a new trial, Kimoto argued that the Government's alleged withholding and destruction of evidence hindered his defense. He claimed the lack of digital evidence and the production of only a fraction of physical documents impaired his preparation. Additionally, he asserted that the Government's failure to provide exhibits related to a video deposition constituted a violation of the Jencks Act. The court reiterated its previous findings regarding the Government's evidence handling, stating that no evidence linked the alleged 800,000 handwritten forms to the premises during the federal search, and noted that relevant documents were accessible through a database not raided during the investigation.

The court found that Mr. Kimoto failed to demonstrate any objective reason to believe that the withheld documents would have been beneficial to him, especially given his prior order to destroy thousands of documents. The court categorized his claims regarding the withholding of Jencks material as a Brady claim, noting that despite his stipulated judgment with the FTC, he retained Mr. Draskovich as counsel, who had access to the relevant documents through reasonable diligence. Kimoto argued that the government's failure to provide complete forensic images constituted a Brady violation, but the court disagreed, ruling that the government did not withhold this evidence. It emphasized that the government had made all documentary and digital evidence available to the defense well before the trial. 

The court noted that despite having multiple individuals working on the case who were knowledgeable about digital technology, there was a failure to secure forensically sound images until three weeks prior to trial when Mr. Libby joined the defense team and requested them. The request for these forensic files was not made until March 11, 2008. The government was open to granting a continuance for Libby to review the evidence but noted that any confusion regarding the digital materials was unsubstantiated. Ultimately, the court concluded that Mr. Kimoto was not prejudiced by the government's actions and that the defense's delay in requesting the necessary forensic files was the primary reason for any difficulties he faced.

The district court's decision was upheld, finding no abuse of discretion regarding the Government's handling of forensic images and its compliance with Brady obligations. Mr. Kimoto argued that the Government failed to provide all digital evidence promptly, claiming he was misled into believing that the hard drive received in October 2007 contained all relevant materials. However, a letter from Postal Inspector Latham explicitly stated that the hard drive contained only a portion of the digital evidence, including audio recordings, and noted that hundreds of thousands of other verifications were not reviewed. The prosecution never claimed that the hard drive included all evidence. Mr. Kimoto's counsel should have recognized this deficiency before March 13, 2008, as they had hired investigators to review the digital evidence in November 2007. These investigators later confirmed that certain expected evidence was absent, yet no further requests for clarification were made until mid-March 2008. Upon raising concerns, the Government agreed to a continuance, allowing the defense access to the materials before trial. Consequently, even if exculpatory evidence was missed, the court concluded that the defense had ample opportunity to investigate and utilize the evidence prior to trial, negating claims of a Brady violation.

The defense acknowledged a misunderstanding regarding the government's copying of evidence onto a hard drive prior to trial, which led the government to agree to a continuance. However, any prejudice experienced by Mr. Kimoto stemmed from his own choice to file a motion to dismiss instead of seeking a continuance. The district court noted it typically grants continuances when requested by the defense, and the government indicated it would not oppose such a request.

Mr. Kimoto claimed two specific undisclosed pieces of evidence impeded his defense: homosexual pornography on Clifford Dunn's computer, which he believed could explain data deletions attributed to him, and e-mails between Porcelli and Aronson indicating a conspiracy. The court found that the pornography was accessible to the defense at the Fairview Heights facility and that Mr. Kimoto's failure to seek a continuance resulted in his inability to utilize this evidence. 

Regarding the e-mails, the court determined there was no proof the government had obtained them from a specific database, noting Porcelli used an alternative email service. It concluded that Mr. Kimoto had not demonstrated the government had withheld evidence since the e-mails were discussed in the reverse proffer. Furthermore, Mr. Kimoto's counsel had either received or located hard copies of the e-mails before cross-examining Porcelli, allowing for their use during the trial. The court ultimately found no basis for Mr. Kimoto's claims of prejudice caused by the government's actions.

Mr. Kimoto argues that his inability to access a complete set of e-mails from Porcelli limited his ability to effectively impeach her during trial. However, the Government counters that this claim relies on weak assumptions insufficient to support a due process violation. Additionally, Mr. Kimoto claims, only in his reply, that there might be other digital and documentary evidence not provided before trial, a point he did not raise until filing a motion for reconsideration on August 12, 2008. The district court viewed this late argument as an attempt to bypass the seven-day filing requirement for new trial motions under Federal Rule of Criminal Procedure 33(b)(2), attributing any prejudice to Mr. Kimoto’s own decisions, including the timing of evidence review and the choice not to seek additional time for preparation.

Regarding customer service records, Mr. Kimoto asserts that the Government lost or destroyed numerous complaints relevant to his defense theory, which posits that most customer calls did not involve claims of misleading credit card offers. Although he acknowledges receiving 6,366 records, of which only 22 indicated complaints about credit card misrepresentation, he believes complete access to the database would have strengthened his argument. The district court found no due process violation related to the alleged loss of documents, concluding that Mr. Kimoto failed to prove that the Government destroyed or lost any records, and noted that he did not provide evidence to contest the court’s finding that there was no proof of the existence of 800,000 customer complaints at the time of the Government's raid.

Mr. Kimoto has not demonstrated that the alleged destruction or loss of documents hindered his ability to obtain comparable evidence through other means. There were over 6,000 customer records from SOS in the Government's possession, which were provided to him, supporting his argument regarding customer confusion. Mr. Kimoto's counsel acknowledged during closing arguments that only 22 complaints indicated confusion about receiving a credit card, representing less than 0.5% of the total records. This suggests that the loss of additional documents would have enhanced his argument but was not essential.

Mr. Kimoto claims that the Government's use of SOS records during sentencing constitutes a Brady violation, asserting that this indicates dishonesty regarding the documents' existence. However, the Government did not use SOS customer service records at sentencing; instead, they relied on a database of identifiable victims compiled by the FTC, which was available to the defense. The defense also did not object to the evidence presented at the sentencing hearing.

Additionally, Mr. Kimoto briefly mentioned that the Government destroyed digital links between Assail and SOS during searches, rendering certain digital evidence inaccessible. The district court concluded that Mr. Kimoto failed to prove the destruction of SOS documents or the unavailability of comparable evidence, affirming that there were no Brady or Youngblood violations regarding the SOS customer complaints. 

Lastly, Mr. Kimoto argues that he was prejudiced by the Government not disclosing e-mails mentioned in a deposition related to the co-owners of Apex, who supplied debit cards to Assail.

In the FTC action involving Sierra and Mr. Kimoto, an email from Howard's account was referenced, which suggested that "no fulfillment is paramount to wire fraud." The district court found no intentional destruction of evidence by the Government, affirming the Government's search methods did not indicate bad faith. Mr. Kimoto's claim, supported by his expert, was deemed to have been reviewed under the correct standard without abuse of discretion. The Government provided Sierra's deposition to Mr. Kimoto before trial, but Sierra was not a witness. When Howard was called, Mr. Kimoto's counsel objected, arguing that the referenced email was not disclosed per the Jencks Act, but the court overruled this objection. The court later analyzed the withholding claim under both the Jencks Act and Brady, concluding that Mr. Kimoto had access to the document through other means and experienced no prejudice. On appeal, the Government contended that the email did not qualify as a statement under the Jencks Act. The Jencks Act defines a "statement" as a written or recorded account from a witness, and precedent indicates such statements must be produced if relied upon in prosecution. The court found that unlike in prior cases, the circumstances surrounding Howard's emails did not meet the Jencks Act criteria for disclosure.

The excerpt addresses the admissibility and relevance of a tape recording capturing a conversation during an alleged bribery incident, affirming its status as direct evidence of the defendants' guilt. The recording features the actual voices of both the briber and the bribe recipient, distinguishing it from hearsay or retrospective accounts. Mr. Kimoto's contention regarding the availability of certain e-mails from Howard is analyzed under the Brady standard for evidentiary disclosure. The court agrees with the district court's assessment that Kimoto's claims about the e-mails should be evaluated under Brady, yet finds his arguments lack merit. Kimoto previously disavowed reliance on Brady for these e-mails and failed to demonstrate that they were either suppressed or material, as defined by Brady standards. The court elaborates that suppressing evidence means it was not disclosed in time for use by the defense, and that Kimoto could have obtained the deposition through reasonable diligence, given his ongoing involvement in related litigation. Lastly, the court concludes that the single e-mail attributed to Howard does not meet the materiality threshold, as there is no reasonable probability that its disclosure would have altered the trial's outcome.

The defense rigorously cross-examined Howard regarding his actions, his associations with Assail and Mr. Kimoto, and his criminal history. The jury was already aware of Howard’s criminal background, making it unlikely that an email suggesting his involvement in wire fraud would have influenced their acceptance or rejection of his testimony. Consequently, the district court's decisions regarding alleged Brady, Youngblood, or Jencks Act violations were not considered an abuse of discretion, and Mr. Kimoto’s motions to dismiss, for a new trial, and to reconsider were rightfully denied. Even if the Government had suppressed the Porcelli emails and SOS records, their cumulative effect would not have reached the level of Brady materiality, as there was ample evidence showing Mr. Kimoto's role in the deceptive marketing of debit cards with the intent to deceive.

Regarding sentencing, Mr. Kimoto contested two enhancements: one based on the loss calculation and the other on the number of victims. He argued that a customer’s loss must stem from a mistaken belief caused by his misrepresentation and that since some customers understood they were receiving a debit card, the district court overestimated both the number of victims and the total loss. The Government countered that loss for guideline purposes includes the greater of actual or intended loss and that the district court was only required to make a reasonable estimate based on available evidence. The Government argued that any error in calculating actual loss was harmless as the intended loss was significantly greater. Mr. Kimoto acknowledged that intended loss could be a valid calculation but insisted the Government still needed to prove his intent to cause the loss used in the Guidelines calculations. The court’s review of the loss calculation made by the district court is for clear error, requiring the defendant to show that the calculation was both inaccurate and outside permissible limits. The applicable guideline for Mr. Kimoto’s offenses is Section 2B1.1, which directs the district court to determine a base offense level and adjust it based on the amount of loss, with application notes clarifying that loss is defined as the greater of actual or intended loss.

Actual loss is defined as the reasonably foreseeable pecuniary harm resulting from an offense, while intended loss encompasses the pecuniary harm that was intended to result, including harm that was unlikely to occur. Pecuniary harm refers to measurable monetary harm and excludes non-economic damages like emotional distress. Reasonably foreseeable pecuniary harm is that which the defendant knew or should have known could result from their actions.

In this case, the district court calculated losses based on a Presentence Report (PSR) addendum, estimating a total loss of approximately $39 million from debits to individual accounts due to telemarketing calls, minus refunds. Mr. Kimoto's offense level was increased by twenty-two levels for losses over $20 million and by six levels for exceeding 250 victims, totaling an offense level of 45, treated as 43—the highest level on the sentencing table, suggesting a life sentence.

Despite the calculated severity of the offense, the court deemed a life sentence unreasonable and instead imposed a sentence of 350 months of imprisonment, structured as 25 months for each of 14 counts, to be served consecutively. With good time credit, this could reduce to approximately 297 months, equating to about 25 years, allowing for release around age 58.

The sentence imposed is significantly shorter than a life sentence and aligns with the requirements of 18 U.S.C. Section 3553(a), addressing the seriousness of the offense, promoting respect for the law, providing just punishment, deterring criminal conduct, and protecting the public. Mr. Kimoto contests the district court's loss estimation but does not dispute the factual accuracy of the $39 million figure generated from Assail's product sales. He argues that this figure does not equate to loss due to the need for establishing causation. Evidence indicates that not all individuals who authorized the $159 debit were misled, with at least 66 individuals aware of their purchase. While the district court acknowledged this possibility, it concluded that the large scale of the transactions meant that excluding these individuals would not significantly alter the sentencing calculation. Although remanding for a more precise loss estimation could be warranted, it is unnecessary since U.S.S.G. 2B1.1 mandates using the greater of actual or intended loss. The intended loss figure, based on Mr. Kimoto's purchase of potential customer leads, far exceeds the actual loss. The defense argued that reliance on the intended loss was raised too late but did not claim it was waived. The government had previously indicated intended loss as an alternative during the district court proceedings. Testimony revealed that telemarketers expect low response rates from lead lists, with an average return estimated at one percent, which would inform the intended loss calculation.

The district court calculated an intended loss of $79,500,000 for Mr. Kimoto, which would warrant a 24-level offense enhancement under the guidelines, compared to the 22-level enhancement he received. A lower intended loss estimate of $39,750,000 was also considered, aligning closely with the district court's actual loss figure. Mr. Kimoto's assertion that the government did not prove his intent to cause loss is rejected, as evidence indicates he aimed to mislead potential buyers into believing they were purchasing credit cards. The guidelines state that intended loss includes potential harm, regardless of whether some individuals did not purchase or were not deceived.

However, the district court's enhancement for the number of victims was not supported by the same rationale. The guidelines define "victim" as individuals or entities that suffered actual loss. The presentence report, which the court adopted, counted over 500,000 purchasers as victims without determining how many incurred actual loss. The court is skeptical that fewer than 251 individuals experienced actual loss, but it acknowledges that this is a determination for the district court. Therefore, the case is remanded for a precise assessment of the number of victims. If the count exceeds 250, the original sentence will remain; if not, the court must reevaluate the enhancement according to the guidelines. The judgment regarding Mr. Kimoto's conviction is affirmed, with a partial remand to clarify the victim count.