John Ciccone was the owner of Feed America Inc. (“Feed America”), a telemarketing company in Las Vegas, Nevada. From March of 1994 until October of 1995, he ran a scheme to defraud people throughout the country. He paid his solicitors a straight commission to telephone people, who had previously relied upon the promises of other telemarketers, and persuade them to send money to Feed America. They succeeded in doing so by telling victims that they had won money, a fabulous prize, and the opportunity to donate to charitable causes. There was one hitch: the lucky victims first had to pay a sizeable sum to Feed America. When people refused, the solicitors called them over and over again. When they did send their money, Feed America returned ten percent of their donation and a cheap gift. Its donations to charitable causes were minuscule.
John Ciccone designed a “pitch” for Feed America solicitors to use, which convinced people that they had won an extraordinary prize. It started out like this:
This is (Fundraiser’s Name) with FEED AMERICA in Las Vegas, Nevada … the reason for the call is … a while back, you had filled out an entry form where you had a chance to win a [sic] award. You signed your name on it and left this phone number to notify you if you had won. Do you recall that? (Response)
Well, you’ve done much better than that, because you’re no longer in competition with anybody else!! The Board of Directors of FEED AMERICA have selected your name for one of the absolute nicest awards[.]
I’ve always believed that water seeks it’s [sic] own level and that great things happen to great people!! You must be a great person because no one is competing against you!!
After effusively congratulating the potential victim for winning a fabulous prize in an apparently fierce competition, the solicitor unveiled the catch:
Well, we ask two simple favors of you … and I know that you will agree that they are both fair and reasonable.
First, we would like a photo of you with your award so that we can show that real people, like yourself, do receive the nice awards!!
Second, we want you to help us with the national campaign to help feed America. What FEED AMERICA does is feed the homeless of America…. How can we help people in other countries when we cannot help ourselves? Isn’t it about time we took care of our own people? ….
All we ask is a donation from you in the amount of $___ which guarantees you one of the nicest awards from the Board of Directors of the Organization. (first omission and blank space in original).
As one solicitor testified at John Ciccone’s trial, this pitch was designed in part “[t]o basically single them out as being special. This is only pertaining to them.” Another testified that it gave the impression that victims had “[f]inally hit the jackpot or whatever you want to say.” One victim agreed with this assessment, testifying that she was led to believe that Feed America would send “something very, very valuable.” Another echoed this perception when she testified, “I was supposed to get top awards for doing good.”
In reality, Feed America failed to make good on its promises. The Board of Directors to which solicitors referred did not exist. More important, when John Ciccone’s victims paid to get their fabulous prize, Feed America sent back ten percent of their money and a cheap gift, like a calendar or a porcelain eagle. The homeless did not fare much better under the deal: evidence showed that of the $2,306,611.56 it received, Feed America gave only $149,286.65 to legitimate charities. The rest, some $2 million, was deposited in John Ciccone’s personal bank account.
Testimony at trial revealed that John Ciccone was involved in the day-to-day operations of Feed America. He hired the solicitors and occasionally supervised them. Every day, he provided the solicitors with “reload lists” showing the names of people to call and how much those on the lists had previously given to telemarketers. These lists were, according to one Feed America solicitor’s testimony, the best kind because “they already bought, so chances are they might buy again.” In addition, John Ciccone purchased the decidedly unremarkable gifts Feed America’s solicitors told victims that they had won. As the person in charge of customer service, he also dealt with the steady stream of complaints from donors. In sum, John Ciccone was actively involved in the daily operation of Feed America.
A second superseding indictment, dated March 18, 1998, charged John Ciccone with conspiracy, wire fraud and aiding and abetting, money laundering and aiding and abetting, and forfeiture. On April 6, 1998, after an eight-day trial, the jury returned a guilty verdict on each count.
On October 23, 1998, the district court sentenced John Ciccone to a prison term of 168 months. It made two sets of upward adjustments that John Ciccone challenges in this appeal. First, it added six points after finding that John Ciccone had laundered $2,235,135.20. It then added another two points on the ground that the victims were vulnerable because they had previously fallen for telemarketing schemes.
John Ciccone appeals his conviction and sentence for one count of conspiracy, thirty-four counts of wire fraud and aiding and abetting, thirty-six counts of money laundering and aiding and abetting, and one count of forfeiture.
John Ciccone challenges his conviction on four grounds. First, he argues that the district court erred when it excluded evidence of satisfied donors to buttress his good faith defense. Second, he contends that the government presented insufficient evidence that the scheme to defraud was reasonably calculated to deceive persons of ordinary prudence and comprehension. Third, he asserts that the government presented insufficient evidence of his participation in a conspiracy or scheme to defraud. Finally, he contends that the prosecution violated its obligation to turn over material evidence. The United States Court of Appeals, Ninth Circuit, rejected these arguments and affirm his conviction.
John Ciccone concedes that Feed America solicitors defrauded people, but argues that he was not a knowing participant in the scheme. In support, he specifically claims that he did not call the victims. But there is evidence in the record that John Ciccone did make some calls himself. For example, one solicitor testified that John Ciccone once took the telephone receiver and said:
Congratulations. I just wanted [to] step in and let you know that you can expect everything. It’s all—you know no one else is in competition with you. You know your ship’s finally come in. I’m going to turn it back over to [the solicitor]. He’ll take down the address and information. And once again, congratulations.
But even if John Ciccone had not himself made the calls, the offense may be established where one acts with the knowledge that the prohibited actions will follow in the ordinary course of business or where the prohibited acts can reasonably be foreseen.
As owner and president of Feed America, John Ciccone provided his solicitors with lists identifying victims of other telemarketing schemes. Some of the people on these lists testified that Feed America solicitors repeatedly called them, even on a single day, to ask them for money. In addition, John Ciccone was the author of a sales pitch that was rich with misrepresentations. For example, the claim that potential donors had completed “an entry form where you had a chance to win a[sic] award. You signed your name on it and left this phone number to notify you if you had won” was false. Moreover, the assertions that “you’re no longer in competition with anybody else!!” and “no one is competing against you!!” were untrue because there was no competition. The statement that “the Board of Directors of FEED AMERICA have selected your name” was also untrue because there was no such board. Finally, the pitch’s claim that “FEED AMERICA … feed[s] the homeless of America” was hardly true given that over $2 million went into John Ciccone’s account.
Several solicitors testified that John Ciccone gave them lists of people who had previously fallen for telemarketing schemes. One testified that the people on the list “had donated quite a bit and to be quite frank with you weren’t what you’d say had a lot of money on hand.” Moreover, Feed America’s advertisements in one of Las Vegas’ daily newspapers specifically sought to recruit “Reloaders” for a company that had the “Best Donor Lists in Country” and was “A RELOAD OFFICE ONLY!” A “reloader” is, according to one witness at John Ciccone’s trial, “an individual who will call a customer back a second, third, fourth time to go ahead and resell him.” Another solicitor described the term “reloads” as “people that had already been sold before.” Indeed, victims of John Ciccone’s scheme testified that Feed America representatives repeatedly called them after they had donated for the first time, promising that they would get even greater awards and prizes if they handed over more money. The district court did not clearly err when it determined that the victims were vulnerable because they were “repeatedly targeted for further fraudulent solicitations.”
The United States Court of Appeals, Ninth Circuit, affirmed Ciccone’s conviction and sentence.
The facts summarized above are excerpted from what was written by the United States Court of Appeals, Ninth Circuit. More information is available from the source documents: No. 98-10483, United States Court of Appeals, Ninth Circuit, July 19, 2000, opinion of Ferguson with Hug and Wardlaw concurring.