Arguments Heard Over Obscenity, CAN-SPAM Act Case

SAN FRANCISCO — Oral arguments were heard last week in the joint appeal of the first convictions in the jurisdiction of the 9th U.S. Circuit Court of Appeals for Internet obscenity not involving child pornography and the first convictions ever under the federal CAN-SPAM Act.

Gary Jay Kaufman of The Kaufman Law Group and Greg Piccionelli of Piccionelli & Sarno — attorneys for James Robert Schaffer and Jeffrey A. Kilbride respectively — argued the case before a three-judge panel of the 9th Circuit.

The argument focused on an unconstitutional jury instruction that allowed a jury in Arizona to convict Schaffer and Kilbride of obscenity based on lay witness testimony as to community standards existing in places all over the U.S., including Ames, Iowa, and Boston.

Kilbride of Venice, Calif., was sentenced to more than six years and Schaffer of Paradise Valley, Ariz., was sentenced to more than five years in prison after they were found guilty of embedding porn in mass emails.

In November, 2007, after hiring The Kaufman Law Group and Piccionelli & Sarno, both Schaffer and Kilbride were granted bail pending appeal.

Kaufman told XBIZ that he’s cautiously optimistic about the outcome.

“The panel was very receptive to our arguments,” Kaufman said. “The law as it stands is that obscenity is judged by local community standards. We, of course, believe that a national standard is more appropriate for Internet communications.

“Whether the court agrees remains to be seen. But one thing we do know, it’s either one or the other, and, in this case, the jury got neither. That was reversible error. I hope that the court will agree.”

Piccionelli, meanwhile, said that the judges’ questions “showed a clear appreciation of the problem of determining which community’s standards should apply to allegedly obscene content transmitted via the Internet.”

“It was a problem brought front and center in this case by a jury instruction so erroneous that, to this day, no one knows just which community’s or communities’ standards were actually used by the jury to convict the defendants,” he said.

Piccionelli said that he’s hopeful that the panel will decide that content transmitted online be judged by a national community standard.

Kilbride and Schaffer began their bulk email operation in 2003, using international servers and mismatching “reply to” and “from” addresses, making it difficult to trace the spam emails, according to court filings.

The Justice Department said they registered their domains under the name of a “fictitious employee at a shell corporation” and that the two had set up in the Republic of Mauritius, another CAN-SPAM violation.

They also are alleged to have used overseas banks to launder and hide money from the IRS.

Schaffer also was charged with 2257 violations, after the Justice Department discovered he had not maintained appropriate records for the adult performers featured on, and, three websites he operated overseas through The Compliance Company and Ganymede Marketing.

With the convictions, both were fined $100,000 and forced to hand over $1.1 million of their $2 million in spam profit.

They also were ordered to pay America Online $77,500 after the conglomerate claimed to have had 1.5 million customers complain about spam.

Colin Hardacre, of The Kaufman Law Group, told XBIZ that it would behoove business professionals active in the online adult industry to follow the case.

“If the 9th Circuit finds that this instruction was not plainly erroneous, then Internet obscenity prosecutions will become a circus, with the prosecution and defense each bringing in witness after witness to testify to community standards in location after location where the material was allegedly viewed,” he told XBIZ.

“This case should be on everyone’s radar.”