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Imprisoned Fraudster Ordered to Pay $29.9 Million

LAS VEGAS (CN) - Imprisoned Las Vegas fraudster Kyle R. Kimoto must pay $29.9 million for his part in a scheme that defrauded consumers by offering them free money from the government.

U.S. District Judge Philip M. Pro on Monday ordered Kimoto to pay a final judgment of $29,887,767 for his part in a scheme that offered consumers government grant money for a recurring monthly fee.

Pro vacated a much smaller penalty tied to a dietary supplement scheme the Federal Trade Commission called the "Acai Total Burn scheme."

The final judgment excludes $8,333.48 arising from the acai scheme, which Kimoto successfully asked to be vacated because he was imprisoned before it occurred. Kimoto in 2008 began serving a 29-year sentence after being convicted of 14 counts of conspiracy to commit mail and wire fraud in a scheme that purported to help consumers with bad credit obtain credit cards.

Monday's judgment arises from Kimoto's participation in Grant Connect, a Nevada company that ripped off consumers by promising them "free government or other grant money," then enrolling them in "multiple programs" that charged recurring fees to credit cards and illegally withdrew money from people's bank accounts. The FTC sued Grant Connect et al . in July 2009.

The Acai Total Burn scheme ripped off consumers by making fraudulent claims about the acai berry's ability to burn fat. Consumers provided credit card information for an allegedly "free 14-day trial offer" but found it nearly impossible to cancel the offer before being charged recurring monthly fees.

Both schemes were run by Nevada companies created by Kimoto, one of which, Vertek Group, was placed in his then-wife's name.

His ex-wife, Juliette Kimoto, won the 2006 Mrs. Nevada beauty pageant. She settled the FTC case against her by agreeing to pay $90,000 and turn over $220,000 in personal and company assets to the federal government.

Juliette Kimoto told investigators she was unaware of the company's fraudulent activities and that an accountant assured her it was a legitimate business run by honest people, DailyFinance reported.

The 9th Circuit in August upheld the judgment against Kyle Kimoto for his participation in the Grant Connect scheme but ordered the judgment against him amended to remove penalties involving the Acai berry scheme.

Kimoto's 29-year prison sentence ranks sixth on Forbes' list of longest sentences for white-collar criminals. Bernard Madoff is No. 1.


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