## Facts

- Jeffrey A. Kilbride and James Robert Schaffer operated a bulk email business that sent unsolicited commercial emails advertising sexually explicit adult websites.
- After U.S. regulation increased, they shifted operations offshore, using a Mauritian entity (Ganymede Marketing) and servers in the Netherlands while attempting to conceal their ownership and control.
- The emails promoted explicit sites and sometimes included explicit images; two images formed the basis for federal obscenity counts.
- To evade detection and complaints, the operation used materially falsified header information (including “From” fields) and registered domains using false identifying information.
- The Federal Trade Commission and AOL received hundreds of thousands of spam complaints tied to the operation before prosecution.
- A jury in the District of Arizona convicted both defendants on eight counts: conspiracy and substantive violations of 18 U.S.C. § 1037 (CAN-SPAM fraud provisions), obscenity offenses under 18 U.S.C. §§ 1462 and 1465, and conspiracy to launder money under 18 U.S.C. § 1956 based on moving proceeds overseas to conceal their source.
- Kilbride was sentenced to 78 months and Schaffer to 63 months; the written judgment mistakenly labeled certain § 1037 counts as felonies rather than misdemeanors.

## Issues

1. Whether, for obscenity sent via email over the Internet, the jury should apply a national community standard rather than a local community standard.
2. Whether 18 U.S.C. § 1037 is unconstitutionally vague on its face or as applied to materially falsified header information and false domain registration used in commercial email.
3. Whether the written judgment’s classification of certain CAN-SPAM counts as felonies (instead of misdemeanors) required correction.
4. Whether the evidence was sufficient to support the money-laundering conspiracy, including whether the predicate conduct constituted “unlawful activity” under 18 U.S.C. § 1462.
5. Whether the district court properly applied an obstruction-of-justice sentencing enhancement to Kilbride.

## Decision

- The Ninth Circuit affirmed the convictions and sentences on all substantive challenges.
- The court held that, for Internet obscenity (including email), the relevant “community standards” inquiry is a national community standard.
- The court concluded the district court’s use of a traditional community-standards instruction did not warrant reversal under plain-error review given the lack of preserved objection and the strength of the obscenity evidence.
- The court rejected facial and as-applied vagueness challenges to 18 U.S.C. § 1037, finding the defendants’ deliberate falsification conduct fell within the statute’s core prohibitions.
- The court held the money-laundering conspiracy conviction was supported by sufficient evidence, including proof that the obscene-materials offenses supplied the required unlawful predicate activity.
- The court upheld the obstruction-of-justice enhancement as supported by the record and properly applied under the Guidelines.
- The court remanded solely to correct the clerical error in the written judgment mislabeling certain CAN-SPAM convictions as felonies rather than misdemeanors.

## Legal Principles

- Obscenity disseminated via the Internet is evaluated using a national community standard for the “contemporary community standards” component of the Miller obscenity test.
- A conviction will not be reversed for an unpreserved instructional error absent plain error affecting substantial rights and the fairness of proceedings.
- 18 U.S.C. § 1037 is not unconstitutionally vague where it gives adequate notice that materially falsifying header information and using false domain-registration information in commercial email are prohibited, particularly when the conduct is deliberate and deceptive.
- A money-laundering conspiracy under 18 U.S.C. § 1956 may be supported by proof that the proceeds derived from specified unlawful activity, including proven federal obscenity offenses, and that transfers were intended to conceal the proceeds’ nature or source.
- Clerical mistakes in a written judgment may be corrected on remand without disturbing otherwise valid convictions and sentences.

## Conclusion

The Ninth Circuit upheld the defendants’ spam-related, obscenity, and money-laundering convictions and Kilbride’s obstruction enhancement, announced that Internet obscenity requires a national community standard, and remanded only to correct a clerical misclassification of certain CAN-SPAM counts in the written judgment.


United States v. Kilbride, 584 F.3d 1240 (9th Cir. 2009)