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Date: 08-18-2021
Case Style:
United States of America v. ALLA V. STEPANETS
United States of America v. GENE SVIRSKIY
United States of America v. CHRISTOPHER M. LEARY
Case Number: 19-1471
Judge: David J. Barron
Court: United States Court of Appeals
For the First Circuit
Plaintiff's Attorney: Ross B. Goldman, Criminal Division, Appellate Section, United
States Department of Justice, with whom Andrew E. Lelling, United
States Attorney, Amanda P.M. Strachan, Assistant United States
Attorney, Donald C. Lockhart, Assistant United States Attorney,
Brian A. Benczkowski, Assistant Attorney General, and John P.
Cronan, Deputy Assistant Attorney General, were on brief.
Defendant's Attorney:
Description:
Boston, MA - Criminal defense lawyer represented defendants with racketeering conspiracy, conspiracy to defraud the United States, and seven counts in connection with the introduction of "misbranded" drugs into interstate commerce with the intent to defraud and mislead in violation of the Federal Food, Drug, and Cosmetic Act ("FDCA") charges.
Stepanets was charged in the indictment with the
following federal crimes: racketeering conspiracy, see 18 U.S.C.
§ 1962(d), conspiracy to defraud the United States, see id. § 371,
and seven counts in connection with the introduction of
"misbranded" drugs into interstate commerce with the intent to
defraud and mislead in violation of the Federal Food, Drug, and
Cosmetic Act ("FDCA"), see 21 U.S.C. §§ 353(b)(1), 331(a),
333(a)(2). The jury found Stepanets not guilty of the racketeering
conspiracy and conspiracy to defraud counts. She was convicted,
however, on six of the seven FDCA counts. Her appeal focuses on
those six convictions.
We begin by describing the counts that underlie those
convictions more fully, as well as the relevant procedural
background to Stepanets's challenges to those convictions. We
then consider each of her challenges to her convictions on those
six counts, as well as her challenge to the sentence that she
received.
A.
The FDCA criminalizes, among other things, "[t]he
following acts and the causing thereof . . . : The introduction
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or delivery for introduction into interstate commerce of any . . .
drug . . . that is . . . misbranded." Id. § 331. Various
provisions of the FDCA then describe the ways in which a drug can
be deemed "misbranded."
The drugs at issue in Stepanets's convictions were
alleged to be "misbranded" under § 353(b)(1). That subsection
provides that "[t]he act of dispensing a drug" meeting certain
criteria without a written or oral prescription by a licensed
practitioner "shall be deemed to be an act which results in the
drug being misbranded while held for sale." Id. § 353(b)(1).
Thus, the government's theory as to why the medications
in the shipments at issue in the six counts were "misbranded"
within the meaning of the FDCA was that they were "dispensed" for
patient use without a valid prescription. See id. In support of
that charge, the indictment alleged that the medications at issue
were dispensed for patient use pursuant to fictional
prescriptions, given the evidence linking the medications to
prescriptions for patients like "Wonder Woman" and "Bud Weiser."
In the fall of 2015, Stepanets and two other defendants
filed motions to dismiss the FDCA counts in the indictment. See
United States v. Stepanets, 879 F.3d 367, 371 (1st Cir. 2018).
They argued in those motions, among other things, that the
indictment did not fairly allege the "dispensing" element of the
misbranding offense. See id.
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In seeking the counts' dismissal, the motions argued
that the dispensing element required the government to have alleged
in the indictment that the defendants had engaged in conduct that
amounted to them personally having dispensed the drugs at issue,
even though there was no valid prescription for those drugs. The
motions contended that the indictment included no such allegation,
because it merely alleged that the defendants "worked in the
packing area [of NECC] checking orders prior to shipment," which,
if true, the motions further asserted, would make them "shipping
clerk[s]" and not dispensers.
The District Court granted the motions to dismiss. See
id. In explaining why, the District Court relied on a dictionary
definition of the word "dispensing" according to which "a
pharmacist dispenses a drug when she acts in her role as a licensed
professional authorized to fill (put together) a medical
prescription for delivery to a patient." Id. The District Court
then concluded that the indictment alleged that the defendants had
engaged in conduct that was at most "incidental" to the
"dispensing" of the drugs at issue. Id.
We reversed that ruling on an interlocutory appeal. See
id. at 376. We explained that "the allegations in the indictment
[were] sufficient to apprise the defendant[s] of the charged
offense[,]" because the allegations specified and connected the
relevant statutory provisions, elements, and facts. Id. at 372
- 8 -
(quoting United States v. Savarese, 686 F.3d 1, 7 (1st Cir. 2012)).
We further explained that, contrary to the defendants' contention,
nothing in the indictment committed the government to the view
that the defendants could be convicted of the offense even if they
were mere shipping clerks. See id. at 374. We thus explained
that the issue of whether the dispensing element ultimately could
be met was a question of fact to "be resolved at trial rather than
on pretrial motions to dismiss." Id.
The case then proceeded to trial, at which the jury found
Stepanets guilty of the six FDCA counts at issue here. The jury
did not find that Stepanets acted with an intent to defraud or
mislead on any of these counts, which is a finding that, had it
been made, would have increased her maximum sentence beyond the
one-year term of imprisonment. See 21 U.S.C. § 333(a)(2). The
District Court sentenced Stepanets to twelve months' probation on
each of the counts of conviction, to be served concurrently with
one another.
B.
1.
Stepanets's lead challenge to her convictions takes aim
at what she contends was a lack of sufficient evidence concerning
the dispensing element. Our review is de novo, and we construe
the evidence in the light most favorable to the verdict. Cadden,
965 F.3d at 10. We may reverse her convictions on this basis only
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if we conclude that, reading the record as a whole in that light,
no rational jury could have found that the government proved the
dispensing element beyond a reasonable doubt. See id.
The statute does not define "dispensing," as used in
§ 353(b)(1). See Stepanets, 879 F.3d at 369. But, according to
Stepanets, we held in the interlocutory appeal from the District
Court's dismissal of these counts in the indictment that
"dispensing" involves "the kind of checking that pharmacists
regularly do when filling prescriptions, i.e., confirming that
legit prescriptions triggered the drug shipments." Id. at 374.
She then contends that, under that definition of "dispensing," the
evidence does not suffice to show that she, personally, "dispensed"
any of the purportedly misbranded medications. Accordingly, she
contends, her convictions must be reversed for lack of sufficient
evidence.
A necessary premise of this challenge is that the
government needed to prove not only that the drugs at issue had
been dispensed by someone before Stepanets caused them to be
introduced or delivered into interstate commerce but also that she
personally was the one who dispensed them. It is not clear to us,
however, that this premise is right.
The FDCA provides by its plain terms that to prove that
this type of misbranding-based offense has been committed by the
defendant, the government needs to show only that the drugs at
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issue had been "dispensed" -- such that they qualified as
"misbranded" -- and that the defendant then undertook the
prohibited acts of "causing . . . [t]he introduction or delivery
for introduction into interstate commerce of any" such drug. 21
U.S.C. § 331. That text is not naturally read to equate the
introduction or delivery of misbranded drugs into interstate
commerce -- or the causing of their introduction or delivery into
such commerce -- with their dispensing, because "dispensing" is a
predicate for deeming a drug to be "misbranded."1
1 We note that the District Court instructed the jury
that the government needed to "prove[] . . . beyond a reasonable
doubt" that Stepanets "caused the introduction of drugs or caused
the delivery of them for introduction into interstate commerce"
and "that the drugs were dispensed without a valid prescription."
The District Court did not in doing so instruct the jury that it
needed to find that Stepanets had dispensed the drugs herself to
find her guilty of the offense, although the District Court did
later tell the jury to proceed to a determination of Stepanets's
intent, if it were to find her "guilty of dispensing a drug in
interstate commerce," in the course of distinguishing the counts
on which Stepanets had been charged from those of her codefendants. We note, too, that the indictment charges Stepanets
with the "Introduction of Misbranded Drugs into Interstate
Commerce," and alleges that Stepanets "caused" "the drugs" "to be
dispensed" rather than that she dispensed them herself. In
addition, in our earlier opinion reversing the dismissal of her
indictment, we focused on whether the indictment adequately
alleged "that each defendant-pharmacist performed NECC-assigned
tasks that caused misbranded drugs to be introduced into interstate
commerce," not whether it adequately alleged that each of them
personally dispensed those drugs herself. Stepanets, 879 F.3d at
375.
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But, we need not question that premise here. The
government does not challenge it and, even if we accept it,
Stepanets's sufficiency challenge fails.
Stepanets does not dispute that the evidence suffices to
show that she was what she refers to as a "checker" of the orders
for the drugs at issue in each of the six counts. But, she
contends, the evidence suffices to show only that, in that
capacity, she was responsible merely for verifying that each
package contained the correct medication and bore the correct
address. She contends that the evidence does not suffice to show
that she also was responsible for ensuring that the drugs at issue
were to be provided for patient use pursuant to a valid
prescription.
Stepanets points in support of this contention to the
fact that the evidence supportably shows that she filled out a
"Pharmacist's Rx Order Verification Sheet" ("Verification Sheet")
for each shipment and not a "Prescription Order Form." She
contends that this point is significant because the Verification
Sheet required that she, by her checkmarks and signature, verify
only the customer facility's name and address, as well as the
medication, vial size, number of units, lot number, and -- where
applicable -- the enclosed lab report. Stepanets stresses that
nothing on the Verification Sheet required her to look at NECC's
Prescription Order Form, which, unlike the Verification Sheet, did
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contain the fictitious patient names referenced in the indictment.
Instead, the Verification Sheet referenced information that was
printed on the invoice and label attached to the package containing
each shipment.
Thus, Stepanets argues, the record does not suffice to
permit a rational trier of fact to find that she was responsible
for carrying out the distinct task of verifying the prescription
and patient names. She contends that the record makes clear that
this task was exclusively the responsibility of those NECC
employees who, unlike herself, were responsible for what she refers
to as "confirming" the orders for the drugs in the six shipments,
as they alone were responsible for completing the Prescription
Order Forms.
We agree with Stepanets that there is no evidence in the
record that she was responsible for completing a Prescription Order
Form rather than a Verification Sheet for the six shipments at
issue. Nor does the government contend otherwise to us. But,
that does not mean that a reasonable jury could not find on this
record that, as certainly would befit a licensed pharmacist, the
parameters of her role as to the shipments at issue encompassed
the task of ensuring that the drugs were associated with a valid
prescription for a real patient.
William Frisch, an employee of the Massachusetts Board
of Registration of Pharmacy, testified that the "final pharmacist
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verification check also required to check that the drug is based
on a prescription," (emphasis added), and the evidence in the
record supportably shows that Stepanets did have at least access
to the Prescription Order Forms that NECC collected in customer
folders. There is also testimony about Stepanets's role from two
NECC employees responsible for sales, Mario Giamei and Kenneth
Boneau. They testified that Stepanets was among the employees who
followed up about requests from customers for shipments in which
the requests had "issues with patient names" and who instructed
Giamei and Boneau "to get a real name" or "more patient names"
from their customers in placing orders for those shipments. Giamei
and Boneau at no point indicated that Stepanets took on that role
only as to requests for shipments for which she had not been asked
to fill out a Verification Sheet.
True, none of this evidence expressly concerns one of
the six shipments at issue. But, significantly, the record does
contain evidence of an email chain from May 12, 2011, in which
Stepanets alerted salesperson John Notarianni of "patient name
issues" with respect to shipments requested by Hill Country Sports
Medicine in San Marcos, Texas. That email chain further shows
that Stepanets brought two names to Notarianni's attention --
"Donald Trump" and "Jennifer Lopez." And, the record supportably
shows, those two distinctive names were the names on the
Prescription Order Form for the shipment on May 3, 2011, which is
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the shipment underlying the sixth count of which the jury convicted
Stepanets and for which the evidence shows that she filled out
only the Verification Sheet.
Thus, in light of this evidence, circumstantial though
it is, a reasonable juror could have found that Stepanets's role
at NECC went beyond that of a mere shipping clerk as to the drugs
at issue, even if she filled out only the Verification Sheet for
each of those shipments. Such a juror could have found that her
role encompassed with respect to all six shipments "the kind of
checking that pharmacists regularly do when filling prescriptions,
i.e., confirming that legit prescriptions triggered the drug
shipments." Stepanets, 879 F.3d at 374; see also Cadden, 965 F.3d
at 11 (relying on sufficient circumstantial evidence to support an
inference); United States v. Ridolfi, 768 F.3d 57, 61 (1st Cir.
2014) (noting that a juror may make "reasonable, common sense
inferences drawn from the evidence"). For that reason, this aspect
of Stepanets's sufficiency challenge fails.
2.
Stepanets also mounts a closely related sufficiency
challenge. She contends that, regardless of what the record shows
about her particular role vis-à-vis ensuring that the drugs at
issue were associated with prescriptions for real patients, the
evidence does not suffice to show that the drugs at issue were
dispensed at all -- that is, by anyone at NECC and not just by her
- 15 -
personally. According to Stepanets, "dispensing" requires
delivering the drugs to patients. Yet, she contends, the six
orders at issue were sent to medical facilities rather than to the
patients themselves. Again, our review is de novo. See Cadden,
965 F.3d at 10. Again, we find no merit to the challenge.
Nothing in the statute supports the notion that only
those who deliver misbranded drugs directly to patients -- without
any intermediaries -- "dispense" such drugs under 21 U.S.C.
§ 353(b)(1). See United States v. Ikejiani, 630 F. App'x 933, 937
(11th Cir. 2015) (holding in the context of a 21 U.S.C. § 331(k)
prosecution that "the term 'dispensing,' as used in § 353(b)(1),
applies to all sales, including wholesale sales, and not merely to
sales to end users"); De Freese v. United States, 270 F.2d 730,
736 (5th Cir. 1959) (rejecting, again in the context of a § 331(k)
prosecution, the argument that "dispensing" under § 353(b)(1)
should be interpreted "to connote retail selling only" because
"[s]uch an interpretation would not be consistent with the commonly
accepted meaning of the term and would be carving out an
unwarranted exception to the statute"). Nor does Stepanets develop
any argument that the fictious names were used within NECC merely
as placeholders for tracking orders from medical facilities, so
that the facilities could then receive those drugs in bulk for
office use and dispense them pursuant to valid individual
prescriptions using real patient names. United States v. Zannino,
- 16 -
895 F.2d 1, 17 (1st Cir. 1990). We thus reject this challenge to
her six convictions as well.
3.
We turn, then, to Stepanets's separate contention
that -- even setting aside what the record shows in relation to
the dispensing element -- her convictions must be reversed under
the Fifth Amendment to the United States Constitution because the
underlying offense contained no mens rea element. Stepanets
preserved this contention below, and thus we review it de novo.
See United States v. Silva, 794 F.3d 173, 177 (1st Cir. 2015).
Here, too, however, we are not persuaded.
In Tart v. Massachusetts, 949 F.2d 490 (1st Cir. 1991),
we considered the constitutionality under the Fifth Amendment's
Due Process Clause of "legislative enactments proscribing socalled 'public welfare' offenses" without mens rea terms,
implicitly including 21 U.S.C. § 331(a) and § 333(a)(1) among
them. Tart, 949 F.2d at 502 (relying on United States v.
Dotterweich, 320 U.S. 277 (1943), which characterized predecessor
versions of these provisions as "a now familiar type of legislation
whereby penalties serve as effective means of regulation" and
explained that "[s]uch legislation dispenses with the conventional
requirement for criminal conduct -- awareness of some wrongdoing,"
see id. at 280-81). We explained that, given the nature of such
public welfare offenses, "[t]he elimination of th[e mens rea]
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element [in them] is . . . not violative of the due process
clause." Id. at 502 (quoting Holdridge v. United States, 282 F.2d
302, 310 (8th Cir. 1960)).
Thus, Tart refutes the notion that due process requires
there to be a mens rea element in an offense as a categorical
matter. Accordingly, Tart necessarily refutes Stepanets's due
process challenge to her convictions insofar as it is premised on
that categorical notion.
For similar reasons, her Eighth Amendment-based variant
of this categorical challenge to mens rea-less crimes, which was
not preserved and so is subject only to plain error review, see
United States v. Sirois, 898 F.3d 134, 136 (1st Cir. 2018), also
fails. Stepanets relies here only on Graham v. Florida, 560 U.S.
48, 71 (2010). But, the Supreme Court did not address in that
case whether the Eighth Amendment requires an offense -- as a
categorical matter -- to include a mens rea element, even if the
Fifth and Fourteenth Amendments do not. Nor are we aware of any
authority that would support such a categorical position.
Stepanets does make the additional argument that,
despite Tart, the penalty she faced under the FDCA -- imprisonment
of up to one year -- and the prospect of her losing her state
pharmacist license precluded this offense from omitting a mens rea
element and comporting with the Fifth Amendment's Due Process
Clause. She relies for this contention on Morissette v. United
- 18 -
States, 342 U.S. 246 (1952), which states that public welfare
offenses that lack a mens rea element commonly impose "penalties
[that] are relatively small, and [for which] conviction does no
grave damage to an offender's reputation." Id. at 256.
Here, too, our review is de novo, see Silva, 794 F.3d at
177, and here, too, Tart appears to stand in Stepanets's way. Tart
relied on Morissette to describe the universe of public welfare
offenses that could permissibly omit a mens rea element, yet
Morissette expressly included in that universe the predecessor
FDCA offenses to those at issue here, which themselves lacked a
mens rea element and imposed a maximum prison sentence of one year.
See Tart, 949 F.2d at 501-02 (citing Morissette, 342 U.S. at 250-
51); Morissette, 342 U.S. at 259-60 (quoting Dotterweich, 320 U.S.
at 280-81 (discussing FDCA provisions 21 U.S.C. §§ 301(a), 303
(1938), which are the predecessor versions of 21 U.S.C. §§ 331(a),
333(a) at issue here)).
Moreover, insofar as Stepanets means to suggest that
Tart does not decide the question -- perhaps because the actual
offense at issue there was for landing raw fish without a permit,
see Tart, 949 F.2d at 502 -- her argument still fails. And that
is because Morissette itself does not support it.
Morissette addressed how a court should determine
whether a statute impliedly contains a mens rea element that it
does not expressly set forth. Morissette, 342 U.S. at 252.
- 19 -
Morissette did not purport to hold that all convictions for
offenses that both lack a mens rea element and impose a maximum
punishment of imprisonment for one year violate due process.
Indeed, Dotterweich, which predates Morissette, explained that an
earlier version of the misbranding offense at issue here, which
carried the same penalty, was a public welfare offense and
therefore properly construed not to include a mens rea element.
See Dotterweich, 320 U.S. at 281 (explaining that the provision
"dispenses with the conventional requirement for criminal
conduct -- awareness of some wrongdoing"). Thus, we reject this
variant of her due process challenge as well.
4.
Stepanets's final challenge to her convictions asserts
that, even if the misbranding offense at issue here permissibly
omits a mens rea element, it still must be construed to require
the government to prove that she at least had "a responsible share
in the furtherance of the transaction which the statute outlaws."
United States v. Park, 421 U.S. 658, 669 (1975) (quoting
Dotterweich, 320 U.S. at 284). Yet, she contends, the evidence
did not suffice to show that she had such a share with respect to
the shipments of the misbranded medications that are at issue.
The District Court rejected this contention, because it
held that the two cases on which Stepanets chiefly relies for
it -- Dotterweich and Park -- make clear that the government need
- 20 -
prove that a defendant had a responsible share only if the
defendant did not personally engage in the proscribed criminal
conduct and instead merely oversaw the operations of the company
that produced and distributed the drugs at issue, as, for example,
a chief executive officer of a large pharmaceutical company might.
See United States v. Stepanets, 362 F. Supp. 3d 22, 24 (D. Mass.
2019); see also Park, 421 U.S. at 670-71. Arguably, however,
Dotterweich and Park do accord with Stepanets's contention that
the responsible share requirement is not limited to the class of
cases identified by the District Court.
For example, in Dotterweich, which upheld the conviction
of a corporate officer under earlier versions of the FDCA
provisions at issue here, 21 U.S.C. § 331(a) and § 333(a)(1), the
Court rejected the defendant's contention that 21 U.S.C.
§ 333(a)(1)'s reference to "any person" encompasses only the
corporation that produces or distributes the adulterated or
misbranded drugs or to the sole proprietor of such a business and
not to the individual employees of such a corporation, insofar as
it is not a sole proprietorship. Dotterweich, 320 U.S. at 281-
82. And, in doing so, the Court explained in seemingly
encompassing terms that "any person" punishable for such conduct
refers not only to the corporation itself but also to "the
individual agents of the corporation" who "share[] responsibility
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in the business process resulting in unlawful distribution." Id.
at 282, 284.
Moreover, in Park, the Court stated that in the corporate
context "individuals other than proprietors are [also] subject to
the criminal provisions of the [FDCA]" as long as they "'have . . .
a responsible share in the furtherance of the transaction which
the statute outlaws.'" Park, 421 U.S. at 668, 669 (quoting
Dotterweich, 320 U.S. at 284). And the Court then elaborated on
that conclusion by observing -- again, in seemingly encompassing
terms -- that this limitation on the reach of the offense addressed
the due process-based concern that "literal enforcement [against
'any person' as per 21 U.S.C. § 333(a)(1)] 'might operate too
harshly by sweeping within its condemnation any person however
remotely entangled in the proscribed shipment.'" Id. at 669
(quoting Dotterweich, 320 U.S. at 284).
But, in any event, Stepanets does not dispute that the
responsible share requirement -- which she equates with a
proximate rather than merely but-for cause requirement -- is met
here if the evidence suffices to show that she personally dispensed
the medications in the shipments at issue. Thus, because, for the
reasons that we have already given, we reject her contention that
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the evidence does not suffice in that regard, we reject this aspect
of her challenge as well.2
C.
All that remains of Stepanets's challenges on appeal,
then, is her apparent challenge to her twelve-month probationary
sentence on the ground that, because the underlying offense
contained no mens rea element, it violates the Eighth Amendment.
But, Stepanets did not raise this challenge below, and so it is at
2 Stepanets develops no argument that, even if the
offense omitted a mens rea requirement, the government still needed
to show that she acted negligently in causing the misbranded drugs
to be introduced or delivered into interstate commerce and that
the evidence did not suffice to allow a reasonable juror to find
such negligence, though she does cite at one point to the
concurring opinion in the Eighth Circuit case United States v.
DeCoster, 828 F.3d 626 (8th Cir. 2016), which reads Park as
imposing a negligence standard on misdemeanor offenses under the
FDCA, see id. at 637 (Gruender, J., concurring), because Park
explained that the FDCA "punishes 'neglect where the law requires
care, or inaction where it imposes a duty,'" Park, 421 U.S. at 671
(quoting Morissette, 342 U.S. at 255). But, the passage from
Morissette in Park just quoted refers not only to "neglect" but
also to "inaction where [the statute] imposes a duty." Id.
(quoting Morissette, 342 U.S. at 255). That quotation therefore
indicates that there is criminal liability for failing to fulfill
the statutorily required duty even in the absence of a showing of
negligence. Id. And, consistent with this conclusion, Park's
immediately preceding quotation of Smith v. California, 361 U.S.
147 (1959), is that "the public interest in the purity of its food
is so great as to warrant the imposition of the highest standard
of care on distributors." Park, 421 U.S. at 671 (quoting Smith,
361 U.S. at 152) (emphasis added). Smith makes clear that the
"highest standard of care" to which Park refers is "strict or
absolute criminal responsibility" rather than negligence. Smith,
361 U.S. at 150.
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most subject to review for plain error. See Sirois, 898 F.3d at
136.
We conclude that Stepanets has failed to meet that
demanding standard in pressing this challenge. Her probationary
sentence is less severe than the prison sentences for strict
liability crimes that we have held were not cruel and unusual.
See Tart, 949 F.2d at 503-04; McQuoid v. Smith, 556 F.2d 595, 597
(1st Cir. 1977). For that reason, we cannot say that it was "clear
or obvious" error under the Eighth Amendment, Sirois, 898 F.3d at
138, for the District Court to impose the sentence that she
received.
III.
We next consider the appeal that Gene Svirskiy, an NECC
pharmacist in charge of one of NECC's clean rooms, brings. He was
indicted for a substantive racketeering offense, see 18 U.S.C.
§ 1962(c), predicated on twelve acts of mail fraud, see id. § 1341,
which is a racketeering activity, see id. § 1961(1)(B). Of those
twelve acts of racketeering activity, ten were based on NECC's use
of Scott Connolly, a pharmacist technician who lacked a
registration that was required by Massachusetts law for those
performing such work, in the clean room that Svirskiy oversaw.
The remaining two predicate acts of mail fraud were based on
shipments of medications that NECC sent to customers that either
were untested or contained expired ingredients in violation of
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Chapter 797 of the United States Pharmacopeia, which is a set of
specifications for the compounding of sterile medications that
Massachusetts requires pharmacists to follow. See 247 Mass. Code
Regs. 9.01(3); United States Pharmacopeia, General Chapter <797>
Pharmaceutical Compounding -- Sterile Preparations (2008)
[hereinafter "USP-797"].
In addition to the substantive racketeering offense just
described, Svirskiy was charged with a racketeering conspiracy
offense, see 18 U.S.C. § 1962(d). The racketeering conspiracy
offense was predicated on unspecified acts of mail fraud.
Separately, Svirskiy was charged with twelve stand-alone
mail fraud counts. See id. § 1341. Each count corresponded to
one of the twelve predicate acts of mail fraud on which the
substantive racketeering charge rested.
Finally, the indictment charged Svirskiy with committing
a pair of FDCA violations. One count was for introducing
adulterated drugs into interstate commerce, and one count was for
introducing misbranded drugs into interstate commerce. See 21
U.S.C. §§ 351(a)(2)(A), 352(a), 331(a), 333(a)(2).
Svirskiy's case went to trial, and the jury convicted
him of the following crimes: racketeering; racketeering
conspiracy; ten of the twelve counts of stand-alone mail fraud,
based on nine of the ten Connolly-related counts and one additional
count for shipping expired drugs; and two FDCA violations, both of
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which, the jury found, he committed with an intent to defraud or
mislead -- an aggravating factor, see id. § 333(a)(2). The special
verdict form revealed that the jury found, as to the substantive
racketeering offense, that the government proved the same ten
racketeering acts of mail fraud that corresponded to the ten standalone mail fraud counts for which Svirskiy was found guilty. The
District Court sentenced Svirskiy to a prison term of thirty months
and one year of supervised release.
On appeal, Svirskiy raises various challenges to his
convictions, most of which focus on whether the evidence sufficed
to support his convictions. We begin by focusing on his
sufficiency challenges to his stand-alone mail fraud convictions,
which, he contends, also require the reversal of his racketeering
convictions, given their dependence on the same allegations of
mail fraud as the stand-alone mail fraud convictions. We then
turn to his sufficiency challenges to his racketeering-related
convictions that do not pertain to whether the evidence of mail
fraud sufficed to support them. Next, we address his sufficiency
challenges to his FDCA convictions. Finally, we address his
challenge to one of the instructions that the District Court gave
the jury on the FDCA counts. We find no merit to any of these
challenges.
- 26 -
A.
To prove mail fraud, the government needed to show three
elements: "(1) a scheme to defraud based on false pretenses; (2)
[Svirskiy's] knowing and willing participation in the scheme with
the intent to defraud; and (3) the use of interstate mail . . .
communications in furtherance of that scheme." United States v.
Soto, 799 F.3d 68, 92 (1st Cir. 2015) (quoting United States v.
Hebshie, 549 F.3d 30, 35 (1st Cir. 2008)). Svirskiy first contends
that the evidence did not suffice to permit a reasonable juror to
find beyond a reasonable doubt that he committed mail fraud on the
nine counts for which he was convicted that related to shipments
of medications compounded by Connolly. Our review is de novo,
though we must assess the evidence in the light most favorable to
the jury verdict. See United States v. Tanco-Baez, 942 F.3d 7, 15
(1st Cir. 2019).
1.
The government's theory of mail fraud on the Connollyrelated, stand-alone counts of mail fraud was that each of the
customers who received a shipment of compounded medications that
Connolly helped to prepare had been informed that NECC would only
use registered technicians, even though Connolly was not one.
Svirskiy does not dispute that Connolly was involved in preparing
the medications at issue or that Connolly lacked a registration
required by Massachusetts law. Svirskiy also does not dispute
- 27 -
that, to the extent a mail fraud scheme existed, he was a knowing
and willing participant in it. Svirskiy contends, however, that
the evidence did not suffice to establish that false
representations about NECC's use of registered technicians were
ever made to the NECC customers who received the shipments of
medications that Connolly helped to prepare. It is on that basis
that he contends that the evidence does not suffice to support his
convictions.
In support of this contention, Svirskiy points out,
correctly, that none of the NECC customers identified in the
Connolly-related counts testified that they personally received
such a representation from NECC. But, there was testimony from
others that we conclude sufficed to permit a reasonable juror to
make the requisite finding.
Kenneth Boneau, a salesperson for NECC, testified at the
trial that NECC's sales strategy emphasized that to ensure the
quality of its compounding operations the company "had pharmacists
that were making [its] medications, not technicians." Boneau also
testified about some of the specific representations NECC made to
its customers about the qualifications of its technicians,
including one that was set forth in a document introduced at trial.
Boneau described that document, which was labeled with the NECC
logo on the front page and contained the word "Hospital" there as
- 28 -
well, as "material[] that we would bring with us on our sales calls
to hospitals" and give to customers.
That document contained a page labeled "Company
Overview," and it made claims to NECC's customers about its
"Personnel." Among those claims was that NECC's personnel
consisted of "Highly Specialized and Extensively Trained
Compounding Pharmacists and Certified Technicians." (emphasis
added).
Svirskiy makes no developed argument that Boneau's
testimony failed to suffice to permit a reasonable juror to infer
that those marketing materials were provided to each of the
customers described in each of the nine Connolly-related mail fraud
counts of which he was convicted. Thus, he makes no developed
argument that a reasonable juror could not infer that each customer
identified in those counts received a representation from NECC
indicating that it would use "Certified Technicians" to compound
its products.3 Instead, Svirskiy contends only that the evidence
was insufficient to permit a juror supportably to find that
Connolly was not a "Certified Technician," as the marketing
3 For that reason, Svirskiy's arguments that he had no
duty to correct a misleading omission about NECC's use of Connolly
are beside the point. NECC made affirmative representations to
its customers about the qualifications of its pharmacy
technicians, and it is the misleading nature of those
representations that grounds each of the Connolly-related mail
fraud convictions.
- 29 -
materials represented him to be, and thus that the evidence was
insufficient to permit a reasonable juror to find that the alleged
false representation pertaining to Connolly being "registered" had
been made.
To make that case, Svirskiy points out that, despite
working without a state-mandated registration during the relevant
period, the undisputed evidence in the record shows that Connolly
did in fact possess a "certification" issued by the national
Pharmacy Technician Certification Board during the period in which
he helped to produce each of the shipments. Svirskiy further
asserts, correctly, that, although there is no dispute that
Massachusetts law requires pharmacy technicians to be "registered
by the board of pharmacy," the provision of Massachusetts law that
imposes that requirement does not use the words "certified" or
"certification." Mass. Gen. Laws ch. 112, § 24E. Thus, he
contends, the marketing materials that described NECC pharmacist
"[t]echnicians" as being "[c]ertified" were not a representation
that they were "registered," as Massachusetts law required them to
be, thereby precluding them from providing support for finding
that the alleged false representation to customers had been made.
The jury instructions were clear, however, that the
"false or fraudulent pretenses [and] representations" prohibited
by the mail fraud statute, 18 U.S.C. § 1341, encompass "half
truth[s]" and the "concealment of a material fact" -- something
- 30 -
that Svirskiy nowhere challenges. And, the language of the
marketing materials, which refers only to "Certified Technicians,"
gives no indication that the use of the term "Certified" is meant
only in some technical sense.
The marketing materials fail to specify what
certification is required or who must do the certifying. Nor does
Svirskiy point to anything in the record that would suggest that
either NECC or any of its customers understood "Certified" as used
in the marketing document in the technical sense that he urges us
to conclude is the only understanding that a reasonable juror could
have had of how that word was used. In fact, the record shows
that at least one pharmacy technician formerly employed by NECC
referred to her state registration at trial as a "certification."
And, in an ordinary sense, someone who cannot legally work within
a given profession at their place of employment because they are
not "registered" as required by the law is not a "certified" member
of that profession. See Webster's Third New International
Dictionary (2002) (defining "certified" as "endorsed
authoritatively: guaranteed or attested as to quality,
qualifications, fitness, or validity"). Consistent with that
usage of the term, Massachusetts law itself presently defines a
"certified pharmacy technician" as a "pharmacy technician who is,"
among other things, "currently registered by the [Massachusetts]
Board [of Registration in Pharmacy]." 247 Mass. Code Regs. 2.00.
- 31 -
Thus, although the defendant in Cadden did not advance
the argument that Svirskiy now makes about why the use of the word
"Certified" in the marketing document cannot suffice to ground a
mail fraud conviction predicated on NECC's use of an unregistered
pharmacist, we reach the same conclusion here as we did there,
based on Boneau's testimony and the marketing document
representing that NECC used only "Certified Technicians." For, in
light of that evidence, on this record as on that one, "a juror
reasonably could find that there was a sufficient circumstantial
basis to draw the inference that the allegedly fraudulent
representations concerning technician licensure had been made in
each instance for these seven convictions, notwithstanding the
absence of direct evidence to that effect." Cadden, 965 F.3d at
11.
Svirskiy next asserts that, even if the evidence did
suffice to show that each customer received a false representation
that the medications would be prepared by registered pharmacist
technicians, the evidence fails to establish that such
representations were "material" ones. But, as we explained in
Cadden, to establish materiality, "the government 'need not prove
that the decisionmaker actually relied on the falsehood,'" so long
as "the false statement 'had a natural tendency to influence, or
[was] capable of influencing' its target's decision." Id. at 12
(alteration in original) (quoting United States v. Prieto, 812
- 32 -
F.3d 6, 13 (1st Cir. 2016)). And, here, the evidence of
materiality was strong, just as it was there.
Ralph McHatton, an employee of North Shore Medical
Center, which received the shipment underlying one of the Connolly
counts, testified that compliance with state registration and
certification requirements was "vital" and that he would not have
purchased compounded medications from NECC had he known that those
medications were prepared by a pharmacy technician who lacked a
required registration. Moreover, Boneau, the NECC salesperson,
similarly testified that it was important, from a marketing
perspective, to inform customers that NECC's pharmacy technicians
were licensed.4 Finally, evidence at trial showed that the
American Society of Hospital Pharmacists ("ASHP") put out a "tool"
for hospital pharmacies to use to evaluate outside contractors
like NECC and that the tool recommended that such pharmacies
inquire as to whether pharmacy technicians employed by the
contractor were "licensed or registered in the state where they
4 As Svirskiy points out, the transcript reveals that
the government asked Boneau whether it was important "that the
pharmacists were licensed [and] the physician [sic] technicians
were licensed," and that it was this question that Boneau responded
to with a "[y]es." (emphasis added). Of course, Connolly was a
pharmacy technician, not a "physician technician." But, context
makes clear that the government and Boneau were both discussing
the pharmacy technicians employed by NECC, and Svirskiy advances
no plausible alternative explanation for what Boneau could have
understood the government to mean when he responded to the
question.
- 33 -
are practicing." Thus, as in Cadden, we see no merit to the
defendant's materiality-focused sufficiency challenges. See 965
F.3d at 12.
Svirskiy also challenges the sufficiency of the evidence
to support the nine Connolly-related, stand-alone counts of mail
fraud on one other ground. Here, he contends that the evidence
failed supportably to show that he "obtained money or property 'by
means of' [the] alleged fraud," United States v. Berroa, 856 F.3d
141, 148 (1st Cir. 2017) (quoting 18 U.S.C. § 1341), and he
contends that Berroa itself supports that contention. But, there
is no merit to this argument either.
In Berroa, we considered mail fraud convictions of
defendants who obtained medical licenses through falsified test
scores and went on to use those licenses to make money off medical
patients years later. See id. We held that even though the
defendants' gains from patients could not have been acquired absent
their fraudulent scheme to obtain medical licenses, those gains
were not acquired "by means of" that fraud within the meaning of
18 U.S.C. § 1341. Id. In reaching that conclusion, we held that
the mail fraud statute imposed not only a but-for causation
requirement, but also a "natural[] induc[ement]" requirement, akin
to proximate causation. Id. at 149 & n.4. We went on to hold
that the "fraud in obtaining . . . medical licenses cannot be said
to have 'naturally induc[ed]' healthcare consumers to part with
- 34 -
their money years later." Id. at 150 (quoting Loughrin v. United
States, 573 U.S. 351, 363 (2014)).
But, here, the recipients of NECC's fraudulent
representations and the entities from whom NECC obtained its
profits were one and the same: medical providers who were
customers of NECC. The conclusion that this distinction is fatal
to Svirskiy's contention draws support from Loughrin.
There, the Supreme Court interpreted the federal bank
fraud statute, which criminalizes executing a fraudulent scheme to
acquire the property of a financial institution if done so "by
means of false or fraudulent pretenses, representations, or
promises." 18 U.S.C. § 1344(2) (emphasis added). The Court
interpreted that statute's "by means of" language to impose a
natural inducement requirement. Loughrin, 573 U.S. at 363.
Berroa made clear that the "by means of" language that
Loughrin interpreted in the bank fraud statute carries a similar
meaning when used in the mail fraud statute. 18 U.S.C. § 1341;
see Berroa, 856 F.3d at 149-51. We thus find it significant that
the Supreme Court made clear in Loughrin that the natural
inducement requirement is met "most clearly, when a defendant makes
a misrepresentation to the bank itself -- say, when he attempts to
cash, at the teller's window, a forged or altered check."
Loughrin, 573 U.S. at 363. Accordingly the fraudulent scheme
involved here -- which, unlike the scheme in Berroa itself,
- 35 -
depended on the use of fraudulent representations to the precise
entities whose property the perpetrators of the fraudulent scheme
sought to obtain -- relied on the "most clear[]" way for a
misrepresentation to naturally induce a victim to part with their
money.
Svirskiy emphasizes that Berroa expressed concern that,
absent a natural inducement requirement, "virtually any false
statement in an application for a medical license could constitute
[the] federal crime" of mail fraud. 868 F.3d at 150. Berroa thus
worried that reading the mail fraud statute to cover the conduct
at issue there might "infringe on the states' 'distinctively
sovereign authority to impose criminal penalties for violations
of' licensing schemes, 'including making false statements in a
license application.'" Id. (quoting Cleveland v. United States,
531 U.S. 12, 23 (2000)). But, the only fraud in Berroa involved
the use of misrepresentations to a state agency in order to obtain
a license from it. The charged fraud here, by contrast, arises
from misrepresentations to other private parties about whether a
license from the state exists. Punishing such a misrepresentation
does not infringe on the ability of states to regulate the
licensing process itself. After all, there is little difference
between a misrepresentation about a state licensing regime made to
one's customers and other types of misrepresentations made to those
- 36 -
customers about the seller's credentials that the federal mail
fraud statute undoubtedly does penalize.
2.
That brings us to Svirskiy's challenge to the last of
his stand-alone mail fraud convictions, which is the only one for
a count that is not related to NECC's use of Scott Connolly in its
compounding operations. This final count alleged that Svirskiy
had committed mail fraud because NECC sold methotrexate
injectables to one of its customers, USC University Hospital, after
making false representations to that customer about the products
that it would sell them.
Svirskiy argues that his conviction on this count cannot
stand because the evidence shows that the medications that were
shipped were both sterile and potent. But, even assuming that is
so, his opening brief fails to acknowledge, much less engage with,
the government's theory that the mail fraud was based on the fact
that NECC claimed to comply with USP-797 yet subsequently sold
medications to USC University Hospital that contained an expired
ingredient in violation of USP-797.5 And, indeed, the evidence
5 Svirskiy's reply brief does make note of witness
testimony indicating that the FDA allows for the stockpiling of
certain emergency medications past their expiration date upon
appropriate testing. But, he fails to develop an argument for why
the existence of this program -- of which Svirskiy does not contend
NECC's activities to have been a part -- suggests that NECC's
conduct adhered to USP-797, which is the critical issue.
- 37 -
supportably shows that even though NECC represented to USC
University Hospital that it complied with USP-797, the
methotrexate injectables at issue were prepared with an expired
ingredient -- the methotrexate itself, which had expired more than
four years prior -- in violation of USP-797. Thus, Svirskiy's
sufficiency challenge to his conviction on this count fails as
well.
B.
We come, then, to Svirskiy's challenges to his
racketeering convictions, rather than his convictions for
committing stand-alone mail fraud offenses. Here, too, though,
the challenges are without merit.
1.
We first confront Svirskiy's contention that, because
his convictions for racketeering and racketeering conspiracy were
premised, at least in part, on acts of mail fraud that mirror the
mail fraud grounding each of his ten stand-alone mail fraud
convictions, the evidentiary holes that he identifies in the
government's theory of mail fraud in challenging his convictions
on the stand-alone counts of mail fraud also require us to reverse
his racketeering and racketeering conspiracy convictions due to a
lack of sufficient evidence. But, as we have just explained, his
challenges to the sufficiency of the evidence supporting the
convictions on the stand-alone mail fraud counts lack merit. Thus,
- 38 -
these challenges to his racketeering or racketeering conspiracy
convictions lack merit as well.
2.
Svirskiy's next set of challenges to these racketeeringrelated convictions also takes issue with the sufficiency of the
evidence supporting them. But, in this set of challenges, Svirskiy
does not question whether the evidence suffices to support the
existence of the predicate acts of mail fraud found by the jury.
Instead, he contends that the evidence did not suffice to show
that those predicate acts, when viewed as a collective, constitute
a "pattern of racketeering activity," 18 U.S.C. § 1962(c), even
assuming the evidence of the existence of each individual predicate
act of mail fraud sufficed.
A pattern of racketeering activity must consist of "at
least two acts of racketeering activity," the most recent of "which
occurred within ten years . . . after the commission of a prior
act of racketeering activity." Id. § 1961(5). The Supreme Court
has made clear that, to establish such a "pattern," the government
"must show that the racketeering predicates are related, and that
they amount to or pose a threat of continued criminal activity."
H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 239 (1989).
Svirskiy argues that the government's evidence of both
relatedness and continuity was lacking and that his convictions
for racketeering and conspiring to racketeer for that reason must
- 39 -
each be reversed. Our review is de novo. See Cadden, 965 F.3d at
15.
a.
The showing that the government needed to make to prove
relatedness "is not a cumbersome one." Feinstein v. Resolution
Tr. Corp., 942 F.2d 34, 44 (1st Cir. 1991). The government needed
to prove only that "the predicate acts 'have the same or similar
purposes, results, participants, victims, or methods of
commission, or otherwise are interrelated by distinguishing
characteristics and are not isolated events.'" Id. (quoting H.J.,
492 U.S. at 240).
As we have explained, the jury found that Svirskiy
committed ten predicate acts of mail fraud: nine Connolly-related
predicate acts and one predicate act based on a fraudulent
representation of USP-797 compliance. Svirskiy argues that the
Connolly-based predicate acts and the USP-797-based predicate act
are not related to one another and thus that the relatedness
requirement is not supported by sufficient evidence. The Connollybased predicate acts, he contends, concerned "one state regulatory
violation, raise[d] no issues relating to patient harm or
production practices, and ha[d] no link to . . . deficient drugs
or improper cleaning and sanitization practices."
We considered and rejected an identical challenge in
Cadden. As we explained, despite the evident differences between
- 40 -
the Connolly-related predicate acts and the one non-Connollyrelated predicate act, the similarities between the two categories
of acts were numerous:
[A]ll reflect the same crime (mail fraud), the
same category of victims (medical providers),
the same purpose (profit), similar fraudulent
misrepresentations (claims of compliance with
regulatory schemes), similar methods of
communicating those representations (NECC
marketing materials), similar participants
(employees of NECC), and the same method of
commission (medication sales through NECC).
They also all occurred within the same time
frame. Thus, a juror reasonably could find
that they were related, despite their
differences.
Cadden, 965 F.3d at 15–16 (citing Feinstein, 942 F.2d at 44). The
same conclusion follows here.
b.
The next aspect of Svirskiy's challenge to these
racketeering-related convictions takes aim at the evidence offered
in support of the requirement that a "pattern of racketeering
activity" be continuous. The Supreme Court has recognized two
ways in which the government may satisfy this continuity
requirement. First, it may establish the existence of closedended continuity "by proving a series of related predicates
extending over a substantial period of time." H.J., 492 U.S. at
242. Alternatively, the government may prove open-ended
continuity by establishing the existence of "past conduct that by
- 41 -
its nature projects into the future with a threat of repetition."
Id. at 241.
The jury found ten predicate acts of mail fraud that
were committed over more than twenty-one months and targeted eight
different customers. Svirskiy contends that the government failed
to establish that these acts demonstrate either open-ended or
closed-ended continuity. We conclude, reviewing de novo, see
Cadden, 965 F.3d at 15, that the government has adequately
established the existence of at least a closed-ended continuity.
Closed-ended continuity is "centrally a temporal
concept." H.J., 492 U.S. at 242. While the Supreme Court has
made clear that it is not enough to show that the acts "extend[ed]
over a few weeks or months," id., we have previously recognized
that a twenty-one month period is longer than what the Supreme
Court has required, see Efron v. Embassy Suites (P.R.), Inc., 223
F.3d 12, 17 (1st Cir. 2000). Nevertheless, we have also recognized
that such a period of time is "no[t] so far beyond the minimum
time period that common sense compels a conclusion of continuity."
Id. at 18. In particular, we have deemed "highly relevant" the
fact that "a defendant has been involved in only one scheme with
a singular objective and a closed group of targeted victims." Id.
As we have explained, a racketeering pattern "does not encompass
a single criminal event, a single criminal episode, a single
'crime' (in the ordinary, nontechnical sense of that word)."
- 42 -
Apparel Art Int'l, Inc. v. Jacobson, 967 F.2d 720, 722 (1st Cir.
1992). Rather, we look for whether "the defendant's conduct
consists of 'multiple criminal episodes' over long periods of
time." González–Morales v. Hernández–Arencibia, 221 F.3d 45, 52
(1st Cir. 2000) (quoting Schultz v. R.I. Hospital Tr. Nat'l Bank,
94 F.3d 721, 731–32 (1st Cir. 1996)).
Svirskiy contends that all the predicate racketeering
acts found by the jury are part of the same criminal effort and
thus do not establish closed-ended continuity as a matter of law.
We disagree.
This is not a case where the multiple predicate acts
"were aimed at [a] single goal," Efron, 223 F.3d at 18, or involved
the same "transaction," Home Orthopedics Corp. v. Rodríguez, 781
F.3d 521, 530 (1st Cir. 2015) (quoting González–Morales, 221 F.3d
at 52), because each individual predicate act of mail fraud was
intended to generate its own distinct payment from a customer.
Nor is this case one where all the predicate acts had the same
"targeted victim" in common, id., as the ten predicate acts
involved shipments sent to eight different customers of NECC.
The racketeering acts here, moreover, "had the potential
to last indefinitely," id. at 529, and were not merely of a "finite
nature," id. (quoting Efron, 223 F.3d at 19). NECC's pattern of
defrauding customers with false representations about the quality
of its production process, after all, was not the sort of conduct
- 43 -
that would invariably come to an end once a certain objective was
met. Cf. Schultz, 94 F.3d at 732 (finding no closed-ended
continuity where "the alleged racketeering acts . . . 'taken
together, . . . comprise a single effort' to facilitate a single
financial endeavor" (quoting Apparel Art, 967 F.2d at 723)). Had
the operation not come to a halt, NECC's pattern of mail fraud was
such that it could easily have reproduced its fraudulent conduct
with new shipments of medications and new targets.
Svirskiy nevertheless persists in his characterization
of the illegal activity as consisting only of a single event. In
doing so, he emphasizes that the Connolly-based predicate acts
involved a single regulatory violation, namely, Connolly's work
without a mandatory registration.
But, even setting aside the fact that the jury found a
pattern of racketeering activity that included a non-Connollybased act, the Connolly-based acts themselves were distinct. Those
acts were deemed predicate acts because each one constituted a
separate instance of mail fraud, not because each was a separate
violation of Massachusetts law. Each act of mail fraud in turn
involved a separate fraudulent shipment to an NECC
customer -- eight customers in total.
Svirskiy also argues, in an attempt to support his
characterization of the alleged pattern of racketeering activity
as constituting a single episode, that "the government did not
- 44 -
allege and did not offer any evidence that [he] did anything other
than work alongside" Connolly. But, Svirskiy does not dispute
that, as the jury necessarily found, the evidence sufficed to show
that, for each of the mail fraud counts and corresponding predicate
acts, he did not simply work alongside Connolly but actually
"cause[d] the use of the mails . . . for the purpose, or in
furtherance, of executing [a] scheme to defraud." Hebshie, 549
F.3d at 36. Thus, this aspect of Svirskiy's challenge must fail.
c.
Svirskiy's brief also could be read to claim that
insufficient evidence supported his racketeering conspiracy
conviction, as, he claims, the evidence failed to show that the
predicate acts he conspired to commit constituted a "pattern of
racketeering activity." But, to the extent he means to make this
argument, he simply echoes his challenges to the existence of a
pattern of racketeering for the purpose of the racketeering count.
Because those challenges fail, so, too, must his challenges to the
racketeering conspiracy count.
C.
Svirskiy has one last evidentiary sufficiency challenge,
and it takes aim at one of his two FDCA convictions. That
conviction was for introducing adulterated drugs into interstate
commerce with the intent to defraud or mislead, see 21 U.S.C.
§§ 351(a)(2)(A), 331(a), 333(a)(2), and it was based on a shipment
- 45 -
of polymyxin-bacitracin that NECC sold to Glens Falls Hospital.
Our review is de novo. See Tanco-Baez, 942 F.3d at 15.
Svirskiy contends that the medication contained in the
shipment was untested, and, furthermore, that the existing
evidence suggests that the medication was in fact sterile. But,
even accepting his characterization of the record, the FDCA defines
a drug as adulterated "if it has been prepared, packed, or held
under insanitary conditions whereby it may have been contaminated
with filth, or whereby it may have been rendered injurious to
health." 21 U.S.C. § 351(a)(2)(A). Svirskiy makes no argument
that the evidence failed to support the government's contention
that the conditions in the NECC clean room where the polymyxinbacitracin was compounded were sufficiently unclean or unsafe to
render medications produced in that clean room "adulterated."
Thus, he provides no ground for concluding that the conviction
must be overturned for insufficient evidence.6
D.
Svirskiy's final challenge targets his FDCA conviction
relating to the shipment of polymyxin-bacitracin sent to Glens
Falls Hospital. But, unlike in his challenges to his other
6 Svirskiy also contends that the evidence showed that
he had no personal interaction with Glens Falls Hospital. But, he
fails to explain why this fact, even if compelled by the evidence,
would require reversal of his FDCA conviction, and thus he has
waived any argument to that effect. See Zannino, 895 F.2d at 17.
- 46 -
convictions, in this one he asks us only to vacate the conviction,
as he contends that the District Court erred in instructing the
jury with respect to the underlying offense.
The relevant background is the following. Multiple
defendants charged with multiple FDCA crimes were being tried
together. Accordingly, the District Court identified three
distinct sets of charged FDCA offenses for which instructions would
have to be given: (1) counts premised on drugs alleged to be
"adulterated" because they had been compounded under unsanitary
conditions, see 21 U.S.C. § 351(a)(2)(A); (2) counts premised on
drugs alleged to be "misbranded" because their labels were false
or misleading, see id. § 352(a); and (3) counts premised on drugs
alleged to be "misbranded" because they were dispensed without a
prescription, see id. § 353(b)(1). The District Court proposed
instructing the jury on the different sets separately. However,
because all three sets of counts involved allegations that the
defendants introduced drugs into interstate commerce "with an
intent to defraud or mislead," id. § 333(a)(2), the District Court
also proposed defining "intent to defraud or mislead" in the
portion of the instructions in which it explained the elements of
the unsanitary conditions counts, and then relying on that
definition when describing the counts premised on mislabeling or
dispensing drugs without a prescription.
- 47 -
Consistent with this proposal, the District Court's
draft instructions to the jury explained what the government needed
to show to prove "an intent to defraud or mislead" as follows:
An intent to defraud or mislead signifies
a departure from fundamental honesty, or fair
play and candid dealings in the general life
of the community. To act with "intent to
defraud" means to act knowingly and with the
intention or the purpose to deceive or to
cheat.
An intent to defraud or mislead may be
shown by evidence that a defendant took
actions to conceal or prevent the discovery of
the truth. The deceit must be about something
material, that is, something important that
has a natural tendency to influence, or that
is capable of influencing, a customer. The
government does not have to prove that any
person to whom the deceit was directed was in
fact influenced, only that a defendant
intended such a result.
As with any other offense alleging an
intent to defraud or mislead, the government
must prove beyond a reasonable doubt that a
defendant did not act in good faith for you to
find on these counts that he acted with an
intent to defraud or mislead.
The government then proposed revisions to the draft
instructions, in which it asked for the words "or a government
regulator" to be inserted after "a customer," to clarify that the
deceit could target not only customers, but also regulators. In
the next round of revisions, the District Court adopted the
government's suggestion on this point.
At a subsequent charge conference with counsel,
Svirskiy's attorney took issue with the relevant instruction as it
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had been revised. He argued that, as to the unsanitary conditions
counts, "[t]here's no evidence of any representations or
involvement with regulators." The government's counsel, in
response, pointed out that, in the District Court's instructions,
the same "definition of an intent to defraud or mislead is used in
reference in the counts that go to the unsanitary conditions [FDCA
counts], to the mislabeling [counts], and the no prescriptions
[counts]," and that, as to "the no prescriptions" counts,
"[t]here's certainly an allegation" of "an intent to defraud or
mislead a regulator." The District Court proceeded to instruct
the jury with the "regulator" phrase included.
Svirskiy challenges his conviction based on the
instructions' inclusion of the "regulator" phrase. He does not
dispute that, in theory, an "intent to defraud or mislead" could
be based on deceit that targets a government regulator, see United
States v. Bradshaw, 840 F.2d 871, 872 (11th Cir. 1988), and thus
we may assume that the District Court's instruction did not
misstate the law. Yet, he argues that there was "not a scintilla
of evidence to link Svirskiy's role as checking pharmacist of the
polymyxin-bacitracin sent to Glens Falls Hospital to" an intent to
"violate or defeat government enforcement of NECC."
Because Svirskiy does not argue that the instruction in
question was legally deficient, we review for abuse of discretion,
see United States v. De La Cruz, 835 F.3d 1, 12 (1st Cir. 2016),
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assuming, that is, the challenge to the instruction was preserved.
We find no such abuse.
The District Court structured the instructions so that
the description of the requisite "intent to defraud or mislead"
applied not just to the FDCA count at issue here but also to
multiple FDCA counts involving multiple defendants. Svirskiy does
not dispute that this is so or that, as to some of those FDCA
counts (albeit ones that did not involve him), the government did
present evidence that would allow a jury to find an intent to
defraud or mislead a regulator. Moreover, he acquiesced in the
District Court's structuring of the instructions at trial and fails
to argue now that the District Court abused its discretion in
structuring its instructions the way it did, such that the "intent
to defraud or mislead" explanation first appeared in the
"unsanitary conditions" section of the instructions on the FDCA
counts and then was referred to in the other portions of the
District Court's FDCA instructions. Instead, his only argument to
the District Court was that the instructions should not have
referenced government regulators at all. Given that he concedes
that the instruction was legally accurate and applicable to at
least some of the FDCA counts to which it applied, this argument
provides no basis for concluding that the District Court abused
its discretion. Thus, we reject his instructional-error
challenge.
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IV.
The last of the three former NECC pharmacists who
challenge their convictions in these consolidated appeals is
Christopher Leary. Leary worked in NECC's clean rooms and was
sometimes responsible for signing off on medications before they
left a clean room for shipment.
The indictment charged him with racketeering, see 18
U.S.C. § 1962(c), racketeering conspiracy, see id. § 1962(d), six
counts of mail fraud, see id. § 1341, and three FDCA violations,
see 21 U.S.C. §§ 331(a), 333(a). One mail fraud count was
dismissed before the verdict.
The case went to trial, and the jury convicted Leary of
three mail fraud counts and three FDCA counts -- one with an intent
to defraud or mislead -- but acquitted him of the racketeering
count, the racketeering conspiracy count, and the other mail fraud
counts. Based on those convictions, the District Court sentenced
him to two years' probation with eight months of home confinement
and one hundred hours of community service.
Leary appeals each of his mail fraud convictions on
sufficiency-of-the-evidence grounds. He does the same for his
FDCA convictions. He also raises a Confrontation Clause challenge.
We review each argument in turn.
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A.
Leary first contends that the evidence does not suffice
to establish his guilt as to each of the three mail fraud counts.
Our review is de novo. See Tanco-Baez, 942 F.3d at 15.
For each of the charged shipments, the government's
theory was, at least in part, that Leary participated in a mail
fraud scheme that involved informing customers of NECC's
compliance with USP-797 and then selling them medications that
were not tested in the manner that USP-797 required prior to
shipment. Leary does not dispute that he caused each of the
shipments of medications identified in each mail fraud count to be
sent in the mail. See Hebshie, 549 F.3d at 35-36. He also does
not dispute that NECC represented to the customers identified in
each of the shipments that it complied with USP-797. Nor does he
meaningfully dispute the government's contention that, despite
those representations of compliance, each of the charged shipments
was sent to a customer without having gone through the testing
that USP-797 requires.7 Instead, Leary focuses on the requirement
7 Leary does suggest that the lack of testing for two of
these shipments may not have violated USP-797. But, as he concedes
in his brief, he does "not go into detail on the technicalities
for required testing under the USP guidelines," and instead only
refers back to his District Court filings for a more developed
argument. Thus, we treat this aspect of his argument as waived
for lack of development. See Zannino, 895 F.2d at 17; United
States v. Burgos-Montes, 786 F.3d 92, 111 (1st Cir. 2015)
("Arguments incorporated into a brief solely by reference to
district court filings are deemed waived.").
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that he was a "knowing and willing participa[nt]" in "a scheme to
defraud." Id. at 35.
Leary primarily contends that the evidence did not
suffice to show that, for each of the charged shipments, he was
aware that the medication was prepared in violation of USP-797.
He also contends, in support of this argument about his lack of
knowledge, that other employees of NECC were responsible for
conducting tests in accordance with USP-797 and reviewing the
results of such tests.
But, as the government points out, and Leary does not
contest, the evidence clearly establishes that Leary was aware of
NECC's frequent practice of sending out untested lots of medication
and that he personally approved of the production of such lots
without the mandated testing on a number of occasions. Leary also
fails to identify any relevant differences between the untested
shipments underlying the counts for which he was convicted and
untested shipments of which the evidence showed Leary to have been
generally aware. Moreover, Leary concedes that, for each of the
counts of conviction, he was responsible for filling out a logged
formula worksheet, a step that William Frisch, the Massachusetts
Board of Pharmacy witness, testified was the "final quality control
of the compounded mixture" and signified that the pharmacist had
"check[ed] that [the] formulation is correct, [and] that there
[were] proper ingredients, proper weights, . . . [and that the]
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expiration dates of components" had not passed. Thus,
notwithstanding that Leary would not have been personally
responsible for testing the medications, given his important role
in approving the medications to leave the clean room for shipment
and the strong evidence that he was generally aware of NECC's
practice of shipping untested medications, we do not see how a
juror would be precluded from drawing the reasonable inference
that Leary would have been aware of the untested nature of each of
the medications underlying each of the counts of conviction.
Leary also argues that he was unaware of various other
substandard aspects of the medications contained in the shipments
in question. For instance, he contends that, as to one of the
counts, he was unaware that the medication was made using
contaminated stock solution, and that, as to another, he was
unaware that it was improperly prepared. But, because we find the
evidence that Leary was aware of the untested nature of the
medications to be sufficient to establish mail fraud, we need not
consider whether Leary had knowledge of other facts about the
compounded medications that would conflict with representations
that NECC had made to its customers about the quality of its
products. For similar reasons, the arguments Leary makes that
customers were satisfied with NECC's medications are beside the
point, as they fail to show that Leary did not participate in a
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mail fraud scheme aimed at misleading customers about NECC's
compliance with the testing requirements of USP-797.
Leary further contends that, even if he did know that
the medications he was verifying had been prepared in violation of
USP-797, he nevertheless could not have been a participant in a
mail fraud scheme, because he was unaware that NECC had made any
misrepresentations to customers about that standard. Leary points
out, furthermore, that the evidence did not show any interaction
between him and NECC's customers or NECC's marketing staff.
But, as a pharmacist working in Massachusetts, Leary was
legally obligated to follow USP-797, see 247 Mass. Code Regs.
9.01(3), and a juror could easily infer that Leary would not have
been ignorant of that obligation. Likewise, a juror could easily
infer that Leary would have been aware of the importance of NECC's
compliance with this obligation to customers.
Boneau, the NECC salesperson, testified that "U.S.
Pharmacopeia was like the Bible for all pharmacies" and that as a
compounding pharmacy "you need[ed] to show that you're . . .
exceeding those guidelines so that [customers] felt more
comfortable outsourcing." After all, the testing and sterility
guidelines of USP-797 that the government introduced into evidence
were explicitly aimed at "prevent[ing] harm, including death, to
patients that could [otherwise] result." USP-797 at 1. Thus, a
reasonable juror could conclude that Leary knew that NECC's
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customers were relying on its compliance with USP-797 and that
their orders despite NECC's lack of compliance were indicative of
misrepresentations by NECC -- at the very least in the sense that
they were indicative of concealment.8
Leary does contend that, in any event, the evidence was
insufficient to conclude that those misrepresentations were
material and also to show that he possessed the requisite intent
to defraud or mislead. But, here, too, we are not persuaded.
Leary does not challenge the District Court's jury
instructions on the elements of materiality and intent, which
defined "a fact or matter [a]s material if it has a natural
tendency to influence or is capable of influencing the
decisionmaker involved" and explained that "[t]o act with intent
to defraud means to act willfully and with the specific intent to
deceive or cheat for the purpose of either causing some financial
loss to another or to bring about some financial gain to oneself."
Because of the importance of USP-797 for the safety of NECC's
medications, as we have just explained, the jury had sufficient
evidence to find that the government had proven beyond a reasonable
8 Like Svirskiy, Leary does not challenge the jury
instructions' definition of "false or fraudulent pretenses [and]
representations" under the mail fraud statute, 18 U.S.C. § 1341,
as encompassing "half truth[s]" and the "concealment of a material
fact."
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doubt that the misrepresentations concerned "a material fact or
matter."
Moreover, a reasonable juror could supportably find that
NECC's sales were premised on USP-797 compliance and, hence, that
its misrepresentations about that fact were aimed at "bring[ing]
about some financial gain" to NECC. Combining this aim with
Leary's "knowing and willing participation" in "a scheme to
defraud," and "taking all reasonable inferences in [the
government's] favor," we see no reason that a reasonable juror
could not also have inferred that Leary participated in that scheme
"with the intent to defraud." Hebshie, 549 F.3d at 35 (quoting
United States v. Cheal, 389 F.3d 35, 41 (1st Cir. 2004), and United
States v. O'Brien, 14 F.3d 703, 706 (1st Cir. 1994)). Nor does
Leary provide such a reason.
Separately, Leary argues that the jury's findings that
he committed mail fraud are impossible to square with its
acquittals of Leary and some of his co-defendants on other counts
involving related conduct. But, even assuming we were to agree
with him that the jury's verdict could not be reconciled with
itself in these respects (a matter on which we take no view), he
concedes that it would not provide an independent reason to upset
the jury's findings of guilt. See United States v. VizcarrondoCasanova, 763 F.3d 89, 104 (1st Cir. 2014) ("[L]ogically
- 57 -
inconsistent jury verdicts on multiple counts are not grounds for
reversing a conviction.").
That leaves Leary's assertions that, because he
personally did not represent to customers that NECC was complying
with USP-797 and because he personally was not responsible for
NECC's failure to test the medications, he could not have committed
mail fraud. But, as we have explained, the government presented
sufficient evidence for a jury to conclude that NECC was engaged
in a mail fraud scheme, that Leary was a knowing and willing
participant in that scheme, and that, as to each count, Leary
caused a shipment of medication to be sent through the mail in
furtherance of that scheme. No more was needed to show his guilt.
See Hebshie, 549 F.3d at 35-36.
B.
There remain Leary's challenges to the evidentiary
sufficiency for each of his three FDCA convictions. Because Leary
already raised these challenges in his Rule 29 motion, we apply de
novo review. See Tanco-Baez, 942 F.3d at 15.
1.
Leary first takes issue with his one FDCA conviction in
which the government alleged that he introduced an adulterated
drug into interstate commerce in violation of 21 U.S.C. § 331(a).
The government's theory was that the medication in question was
adulterated because it was produced under unsanitary conditions.
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See id. § 351(a)(2)(A). As to this conviction, the jury found
that he engaged in this conduct with an "intent to defraud or
mislead," an aggravating factor. Id. § 333(a)(2). Leary disputes
that he possessed such an intent.
The District Court's instructions to the jury specified
that the jury may find an intent to defraud or mislead if there is
evidence of "deceit . . . about something material" and a failure
to act in "good faith." Leary does not argue that these
instructions in any way misstated the law. Instead, he contends
that he acted in good faith and without deceit about something
material. But his contention does not grapple with the relevant
evidence.
The shipment at issue in this FDCA count was identical
to a shipment that also grounded one of Leary's mail fraud
convictions: a shipment of polymyxin-bacitracin irrigation bags
to Glen Falls Hospital in New York. As we explained for that
conviction, a jury could find that Leary knew that the medication
was not tested in accordance with USP-797, despite NECC's
representations to the contrary, and that Leary nevertheless
approved the medication for shipment without notifying the
customer about the inconsistency.9 Leary fails to explain why this
9 Leary again contends that the jury's verdict on this
count is impossible to reconcile with some of its other findings.
But, as we have already explained, such inconsistencies are not
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conduct did not constitute a failure to act in good faith or why
the deceit involved in this conduct was not material.
2.
Leary's remaining two FDCA convictions were each
premised on shipments of methotrexate injectables that were
alleged to have been misbranded due to false and misleading
labeling. See 21 U.S.C. § 352(a). Leary's contention is that the
evidence did not suffice to demonstrate that he acted with an
intent to defraud. But, the jury did not find that Leary acted
with an intent to defraud or mislead, see id. § 333(a)(2); it
convicted Leary on these counts only of misdemeanor strict
liability FDCA violations, see id. § 333(a)(1). Thus, Leary's
challenge to these convictions lacks merit.10
C.
In Leary's last challenge, he contends that we should
reverse all of his convictions because a government exhibit was
improperly introduced into evidence in violation of his rights
under the Confrontation Clause of the federal Constitution. We
grounds for reversing a conviction. See Vizcarrondo-Casanova, 763
F.3d at 104.
10 In a short footnote, Leary asserts that his
convictions on all three FDCA counts should also be vacated because
their underlying strict-liability provisions -- like "any statute
that does not require a mens rea" -- "violate his constitutional
rights afforded to him by due process." We find this assertion
unpersuasive for the same reasons that led us to reject Stepanets's
due process challenge above.
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review his preserved Confrontation Clause challenge de novo. See
United States v. Veloz, 948 F.3d 418, 430 (1st Cir. 2020).
The exhibit in question relates to the testimony of a
witness, Owen Finnegan, who was a pharmacy technician at NECC.
During Finnegan's testimony, Leary's lawyers tried to show that
Finnegan harbored a personal dislike of Leary. In furtherance of
that objective, they introduced into evidence an email chain
involving Finnegan and Leary that, they claimed, showed the
animosity between them. After Finnegan's testimony concluded,
though, the government attempted to introduce other parts of that
same email exchange that could be read to show that what Leary
characterized as hostility was just the two men joking around.
Leary argues that the introduction of the email exchange
between him and Finnegan after Finnegan's testimony concluded
violated his rights under the Confrontation Clause. But, the
"threshold question in every [Confrontation Clause] case is
whether the challenged statement is testimonial," and "the
Confrontation Clause has no application" if the answer is no.
Veloz, 948 F.3d at 430-31 (quoting United States v. FigueroaCartagena, 612 F.3d 69, 85 (1st Cir. 2010)). The emails Finnegan
sent to his co-worker were in no sense testimonial, as we cannot
see how they were "produced with a 'primary purpose of creating an
out-of-court substitute for trial testimony,'" United States v.
Lyons, 740 F.3d 702, 719 (1st Cir. 2014) (quoting Michigan v.
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Bryant, 562 U.S. 344, 358 (2011)), and Leary mounts no argument to
the contrary.11 Thus, we find no merit to this final challenge.
Outcome: We affirm Stepanets's convictions and sentence, and we affirm Svirskiy's and Leary's convictions.
Plaintiff's Experts:
Defendant's Experts:
Comments: