## Facts

- Kyle Kimoto ran telemarketing companies that targeted consumers with poor credit using lead lists of financially vulnerable individuals.
- Telemarketers represented that consumers were receiving a “pre-approved MasterCard” usable wherever MasterCard was accepted and carrying a substantial credit line, in exchange for an up-front fee debited from consumers’ accounts.
- Consumers instead received a restricted stored-value/shopping card usable only through limited channels and other low-value “benefits”; no general-purpose credit card or promised credit line was provided.
- Thousands of consumers paid fees and later complained to financial institutions and regulators after learning the product was not as represented.
- In discovery, the government collected large volumes of electronically stored information (ESI) and produced reviewed ESI in a conventional format; it also disclosed it possessed additional unreviewed ESI.
- Kimoto’s Rule 16 request did not specify an ESI production format; months later, shortly before trial, his forensic expert requested forensic images of all ESI to examine possible alteration.
- The government promptly produced forensic images after the request; Kimoto did not seek a continuance, but moved to dismiss based on alleged delay, spoliation, and due process violations.
- A jury convicted Kimoto of multiple counts of mail fraud and wire fraud; the district court denied dismissal/sanctions motions and imposed a lengthy prison term and restitution.

## Issues

1. Whether the government violated Rule 16 or due process by producing ESI initially in a non-forensic format and later providing a forensic image near trial.
2. Whether alleged deletion or non-preservation of electronic files required relief for destruction of potentially exculpatory evidence under due process standards requiring bad faith.
3. Whether the district court abused its discretion by denying dismissal or severe sanctions for the asserted discovery failures and by proceeding to trial without additional remedial measures.
4. Whether challenged evidentiary rulings and sentencing determinations warranted reversal or resentencing.

## Decision

- The Seventh Circuit affirmed the convictions and sentence.
- The court held there was no Rule 16 violation because the defense did not request a specific ESI format initially and the government produced reviewed materials in usable form and promptly provided forensic images once requested.
- The court found no due process violation from the timing of production because Kimoto showed no concrete prejudice and declined to seek a continuance after receiving the forensic images.
- The court rejected the spoliation/due process claim because Kimoto failed to show bad faith destruction of evidence with unique, material exculpatory value; the allegedly missing files were similar to materials already available to him.
- The court concluded dismissal was unwarranted and the district court did not abuse its discretion in denying drastic sanctions; remaining evidentiary and sentencing challenges lacked merit.

## Legal Principles

- Under Rule 16, absent a timely, specific request for a particular ESI format, the government generally satisfies its obligation by producing discoverable electronic materials in a reasonably usable form.
- Delayed production of discoverable material warrants severe relief only upon a showing of actual prejudice affecting trial fairness; failure to seek a continuance after late production weighs against claims of prejudicial timing.
- For lost or destroyed evidence that is only potentially useful, due process requires proof of government bad faith; similarity to other evidence in the defendant’s possession and lack of unique exculpatory value defeat the claim.
- Dismissal of an indictment for discovery violations is an extraordinary remedy reserved for deliberate misconduct causing substantial, irremediable prejudice.
- Misrepresenting a central feature of a financial product to induce payment of fees can constitute material deception supporting mail and wire fraud convictions.

## Conclusion

The Seventh Circuit upheld Kimoto’s fraud convictions and sentence, ruling that the government’s handling of electronic discovery did not violate Rule 16 or due process and that allegations of spoliation failed for lack of bad faith and demonstrated prejudice, making dismissal or severe sanctions inappropriate.


United States v. Kimoto, 588 F.3d 464 (7th Cir. 2009)