electronic storage

In 2001 Steven Warshak owned and operated several small businesses in the Cincinnati area, including TCI Media, Inc., which sold advertisements in sporting venues, and a handful of companies offering herbal supplements that were later aggregated into Berkeley Premium Nutraceuticals, Inc. Warshak remained hands-on as Berkeley grew, hiring family members such as his mother Harriet Warshak, who processed credit-card payments, and later bringing on James Teegarden as Chief Operating Officer, Shelley Kinmon as Vice-President of sales, and his sister Sue Cossman and brother-in-law Greg Cossman in customer care and executive roles. Berkeley launched its flagship product Enzyte in late 2001 and promoted it through television, print, and radio advertisements that cited a fabricated 2001 customer study claiming 12-to-31 percent increases in penis size. Berkeley's advertisements also touted a spurious 96 percent customer-satisfaction rating and nonexistent doctors from Stanford and Harvard. The company instituted an auto-ship continuity program in which customers ordering a free trial were automatically enrolled for additional shipments and charges unless they opted out. Early sales scripts contained no disclosure of the program, and later disclosures were placed at the end of calls after unrelated language about sexually transmitted diseases or removed from websites when sales dropped. Berkeley processed credit-card transactions through merchant banks and credit-card processors. After the Bank of Kentucky terminated its account for excessive chargebacks, Berkeley submitted applications that falsely listed Harriet as CEO and owner or omitted prior terminations. Employees split transactions into multiple charges, rang up $1 charges on Warshak's personal cards, and charged and refunded random customers' cards without authorization to keep the chargeback ratio below the 1 percent termination threshold. In October 2004 the government served NuVox Communications with a request under 18 U.S.C. § 2703(f) to preserve all future emails to and from Warshak's account. NuVox complied without notifying Warshak. In January 2005 the government obtained a § 2703(b) subpoena and in May 2005 a § 2703(d) order compelling NuVox to turn over approximately 27,000 emails. On March 16, 2005, agents executed a search warrant at Berkeley's headquarters and imaged the contents of over 90 computers, yielding 17 million pages of electronic evidence and 506,000 pages of hard-copy documents. In September 2006 a grand jury in the Southern District of Ohio returned a 112-count indictment charging Warshak, Harriet, and TCI with conspiracy to commit mail, wire, and bank fraud, multiple counts of mail fraud, bank fraud, money laundering, and related offenses. Trial began in January 2008. After six weeks the jury convicted Warshak on most counts, convicted Harriet on several counts including conspiracy and bank fraud, and convicted TCI on money-laundering counts. A forfeiture hearing led to a $459.54 million proceeds judgment and a $44.88 million money-laundering judgment. On August 27, 2008, Warshak received a 25-year sentence and Harriet a 24-month sentence. Both appealed.