Telemarketing Fraud Prize Scam

Altaf Amlani was the president and owner of Finer Images, a telemarketing company from the Los Angeles area. Finer Images’ employees would tell prospective customers that they were eligible for valuable prizes, such as cars, cash, a home entertainment center, and/or jewelry. To claim their prize (or prizes), the customers were told they needed to buy advertising specialties, such as pens, T-shirts, and key chains, which were imprinted with the customer’s business name, address, and phone number. These purchases ostensibly would eliminate gift taxes by making the prize a promotional award rather than a gift.

Finer Images’ sales pitches misrepresented the customers’ chance of winning the grand prizes, namely the cars and cash. The evidence presented at trial showed that Finer Images awarded only inexpensive watches or jewelry. Although Finer Images claimed these prizes were worth over $1000 apiece, the evidence showed that the wholesale value was $38-49 for each bracelet and $69 for each watches. Customers that ordered once were subjected to additional high-pressure sales pitches, with more promises of valuable prizes (referred to at trial as “reloading” the customers). The grand prizes, other than the jewelry of questionable value, were never awarded. Cynthia Mai, a Finer Images employee, testified that no customers had any chance of receiving the valuable grand prizes.

The Federal Bureau of Investigation (“FBI”) began an undercover investigation, with agents posing as representatives of a company that produced a “cold call” machine to make initial sales pitches to potential customers and as a telemarketer acting as a reference for the machine company. During the operation, FBI agents interviewed Altaf Amlani and other Finer Images employees, gathering potentially damaging statements. After a demonstration of the machine to Finer Images, FBI agents then posed as potential customers responding to the machine’s cold calls. Finer Images employees made misrepresentations to the FBI agents in these “hot tests.”

Altaf Amlani and two associates were indicted on one count of conspiracy to commit wire fraud and twenty counts of wire fraud.

Following a jury trial, Altaf Amlani and his codefendant Hepburn were convicted on all counts of the indictment. On May 10, 1994, Altaf Amlani was sentenced to fifty-seven months in prison, in addition to three years supervised release, restitution, a fine, and a special assessment. Altaf Amlani timely appealed his conviction. He obtained two limited remands from this court to litigate post-trial motions, and he timely appealed the district court’s orders on those motions as well.

First, Altaf Amlani contends that the government failed to produce a compliance letter written by an attorney, Mr. Pick, that outlined procedures to ensure that Finer Images complied with telemarketing laws (“Pick file”). The Pick file was allegedly seized from Finer Images when the government executed a search warrant. Altaf Amlani contends that the Pick file would have allowed him to show that he intended to comply with the law and not to commit fraud.

The government concedes that it should have disclosed the file, but argues that Altaf Amlani can demonstrate no prejudice. It contends that the Pick file only provided a “cover” to make Finer Images’ misrepresentations look legitimate. We agree with the district court that Altaf Amlani did not show a reasonable probability that the outcome would have been different had the Pick file been disclosed. We will not reverse for this failure to produce.

Second, Altaf Amlani claims that the government failed to produce a purchase order for a Mercedes-Benz that it seized during its search of Finer Images. Altaf Amlani contends that this document would have contradicted Cynthia Mai’s testimony that Altaf Amlani never intended to purchase a Mercedes to award to a winning customer. Even assuming the government actually had possession of such an order, it would not have contradicted Cynthia Mai’s testimony. She testified that none of the customers won or had a chance to win the Mercedes, not that no Mercedes was purchased. The focus of the trial was whether the customers were deceived about their chances of receiving valuable prizes, such as the Mercedes, not whether Finer Images purchased the prizes. Altaf Amlani did not demonstrate the required prejudice from the failure to produce the purchase order, and we will not reverse on this ground.

Third, Altaf Amlani claims that the government failed to turn over seized Finer Images internal memoranda allegedly containing Altaf Amlani’s warnings to his employees not to make misrepresentations. If such documents were in the government’s possession, they should have been turned over. Again, however, we do not find the required prejudice. Cynthia Mai’s testimony and the evidence of the FBI operation supported a prosecution theory consistent with the existence of the documents — that Altaf Amlani attempted to cloak Finer Images’ misrepresentations behind documents that looked good but were ignored in practice.

Altaf Amlani claims he was deprived of his right to counsel because the prosecutor repeatedly disparaged his original chosen trial counsel, David Katz, in front of him. Altaf Amlani alleges that the government essentially told him and his wife that David Katz did not care about Altaf Amlani, was not competent, and could not prevent Altaf Amlani’s conviction. Altaf Amlani claims this disparagement violated the Sixth Amendment because it caused him to change to a different and less competent counsel for trial. The Government denies the disparagement.

Although the United States Court of Appeals, Ninth Circuit, decided that the allegations state a Sixth Amendment claim, the United States Court of Appeals, Ninth Circuit, granted the government’s request for a remand and an opportunity to rebut the allegations.

The United States Court of Appeals, Ninth Circuit, remanded for an evidentiary hearing. At the hearing, the district court shall determine two questions: (1) whether the government in fact disparaged Altaf Amlani’s original counsel, Mr. David Katz, in Altaf Amlani’s presence; and (2) whether this disparagement, if it occurred, caused Altaf Amlani to retain different counsel for his further defense in this case. If both questions are answered in the affirmative, then the district court should vacate Altaf Amlani’s conviction. The government may seek a new trial.

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: Nos. 94-50292, 95-50215 and 95-50603, United States Court of Appeals, Ninth Circuit, April 16, 1997, opinion of Wiggins with Pregerson and Reinhardt concurring.