Spam Crime Loss Not Measured by Defendant’s Gain–US v. Kilbride

By Eric Goldman

US v. Kilbride, 2007 WL 2774487 (D. Ariz. Sept. 21, 2007)

Kilbride and his co-defendants are porn spammers who have been convicted of obscenity charges and criminal violations of CAN-SPAM. They face very long jail sentences. Their prosecution has produced a number of interesting/groundbreaking rulings, but this post focuses on the court’s discussion about sentencing for CAN-SPAM crimes.

Spam crime sentences are governed by Sec. 2B1.1, the sentencing guideline applicable to theft. In 2004 comments to the Sentencing Commission, my former Marquette colleague Michael O’Hear and I expressed some concern about this model for measuring spam losses, particularly that it would significantly overcount the harms caused by spam.

As far as I know, this is the first case discussing the measurement of harm/loss in a CAN-SPAM crime sentencing. The court does a good job evaluating the evidence. First, contrary to the fears Michael and I expressed, the judge correctly ignores any alleged harm to end user-recipients because there was no evidence these individuals suffered a pecuniary loss. Second, the court largely rejects the government’s argument that the loss should be measured by the defendants’ gain (over $1.1M in profits). Instead, the judge only gives credit to the evidence showing that AOL suffered less than $10,000 of “loss” from the porn spam, computed by AOL’s cost to investigate complaints over the spam (the government did not present evidence for other email service providers). As Michael and I explained in our comment, I’m not even sure AOL’s investigation costs should count as a loss attributable to the defendants, but at least the dollar amount is comparatively low.

So while I’m still not sure 2B1.1′s loss table is the right way to measure spam harms, it’s heartening to see the judge resist overcounting. At the same time, it’s impossible to ignore the significant litigation costs over this issue. Porn spammers have lots of money and face long jail sentences, so it isn’t surprising that they will fight vociferously over loss calculations. Perhaps there are better ways of measuring loss that would reach fair results without these heavy litigation costs.

UPDATE: The defendants were sentenced to 5 years each.