Petition for Writ of Certiorari — Mustafa Hasan Arif, Petitioner v. United States

Supreme Court briefAug 31, 2018

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IN THE

SUPREME COURT OF THE UNITED STATES

Mustafa Hassan Arif

PETITIONER

(Your Name)

vs.

United States of America RESPONDENT(S)

ON PETITION FOR A WRIT OF CERTIORARI TO

United States Court of Appeals For the First Circuit

(NAME OF COURT THAT LAST RULED ON MERITS OF YOUR CASE)

PETITION FOR WRIT OF CERTIORARI

Mustafa Hassan Arif

(Your Name)

BOP# 69898-054 Unit A-4, Moshannon

Valley Correctional Center, 555 Geo Drive,

(Address)

Philipsburg, PA 16866

(City, State, Zip Code)

None

(Phone Number)

QUESTION(S) PRESENTED

Whether petitioner was wrongly prosecuted under the Wire Fraud statute

because Congress intended such allegations of false advertising of nonprescription drugs to be prosecuted only under 15 U.S.C. 52-57?

Whether petitioner's advertising practices in themselves constituted

Wire Fraud despite his honest belief in the efficacy of his remediesand

where there was no claim that the remedies were not actually effective as

advertised nor their physical contents or licensing status misrepresented?

Whether an 'intent to harm' is a necessary part of the 'intent to defraud'

element of Wire Fraud, as held by a majority of appellate courts but disputed

by the First Circuit which also dispensed away with any such requirement

in petitioner's case?

LIST OF PARTIES

[l All parties appear in the caption of the case on the cover page.

II] All parties do not appear in the caption of the case on the cover page. A list of

all parties to the proceeding in the court whose judgment is the subject of this

petition is as follows:

TABLE OF CONTENTS

OPINIONS BELOW

JURISDICTION

CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED ...............................

STATEMENT OF THE CASE ..........................................................................................

REASONS FOR GRANTING THE WRIT ........................................................................

CONCLUSION.......................................................................................

INDEX TO APPENDICES

APPENDIX A

APPENDIX B

APPENDIX

Decision of United States Court of Appeals for

the First Circuit

Decision of the United States District Court,

District of New Hampshire, on "Motion for

Pre-trial Ruling Regarding Jurisdiction"

Decision of the United States District Court,

District of New Hampshire, on "Motion for

Pretrial Ruling

Intent"

Factual Trial Stipulations

APPENDIX

APPENDIX F

Order of United States Court of Appeals for

the First Circuit Denying Petition for

Rehearing and Petition for Rehearing en banc

Full Text of Statutory Provisions Involved

TABLE OF AUTHORITIES CITED

CASES

PAGE NO.

American Sch. of Magnetic Healing v. McAnnulty 187 U.S. 94 (1902) .......16

Bulova Watch Co. v. United States 365 U.S. 753 (1961) ....................12

Busic. v. United States 446 U.S. 398 (1980) .........................6,10,11

Dowling v. United States 473 U.S. 207 (1985) ............................10

Free Enterprise Fund v. Public Co. Accounting Oversight Bd.

561 U.S. 477 (2010) ......................................................9

Garrett v. United States 471 U.S. 773 (1985) .............................12

Harrison v. United States 201) F. 662 (6th Cir., 1912) ...................16

Holloway v. Bristol-Meyers Corp. 485 F.2d 986 (D.C. Cir., 1973) .....8,9,11)

John P. Viliano Inc. v. CBS Inc. 176 F.R.D 130 (S.D.N.Y. 1997) ..........20

Kar-Ru Chemical Co. v. United States 264 F. 921 (9th Cir., 1920) ........16

Morton v. Mancari 417 U.S. 535 (1974) ....................................11

Neder v. United States 527 U.S. 1 (1999) ................................19

SEC v. Capital Gains Research Bureau, Inc 375 U.S. 180 (1963) ...........19

Townsend v. Little 109 U.S. 504 (1883) ...................................12

United States v. Daniel 329 F.3d 480 (6th Cir., 2003) ...................18

United States v. Davis 2017 U.S. Dist. LEXIS 122643 .....................18

United States v. Fernandz292.F.3d 500 (7th Cir., 2001) ................18

United States v. Huthceson 312 U.S. 219 (1940) ..........................13

United States v. Jabar 2017 U.S. Dist. LEXIS 159559 .....................18

United States v. Jimenez 77 F.3d 95 (5th Cir., 1996) ....................18

United States v. Kenrick 221 F.3d 19 (1st Cir., 2000) (en banc) ......19,21)

United States v. Lamoreaux •422 F.3d 750 (8th Cir., 2005) ................18

United States v. Rabinowitz 327 F.3d 62 (6th Cir., 1964) ................16

United States v. Raza 876 F.3d 604 (4th Cir., 21)17) .....................18

United States v. Regent Office Supply Co. 421 F.2d 1174 (2nd Cir., 1970).16

United States v. Saade 652 F.2d 1126 (1st Cir., 1981) ....................11

United States v. Starr 816 F.2d 94 (2nd Cir., 1987). ....................18

United States v. Tagliaferri 820 F. 3d 568 (2nd Cir., 2016) ..............19

United States v. Takhalov 827 F.3d 1307 (11th Cir., 2016) .............18,19

United States v. Welch 327 F.3d 1081 (10th Cir., 2003) .....................18

Wall v. Alaska 451 U.S. 259 (1981) .......................................11

STATUTES AND RULES

15 U.S.C.S. 52-57......................................................passim

17U.S.C.506 .............................................................10

18 U.S.C. 1343 .......................................................passim

18 U.S.C. 2314 .............................................................10

28 U.S.C. 1254(1) ........................................................2,4

28 U.S.C. 1291 ...............................................................4

28 U.S.C. 3231 .............................................................4

LEGISLATIVE HISTORY

H.R.Rep. 75-1613, p.-5-7(1938) ........................................13,14

OTHER

Antonin Scalia & Bryan A. Garner, "Rading Law" 69 (2013) ................19

David F. Cavers, "The Food, Drug and Cosmetic Act of 1938:

Its Legislative History and Substantive Provisions,"

6 Law and Contemporary Problems, 2-24 (Winter 1939) .......................8

Earl W. Kinter, "Federal Trade Commission Regulation of

Food, Drug and Cosmetic Advertising," 16 The Business

Lawyer, 81-97, 86 (Nov. 1960) ..............................................9

IN THE

SUPREME COURT OF THE UNITED STATES

PETITION FOR WRIT OF CERTIORARI

Petitioner respectfully prays that a writ of certiorari issue to review the judgment below.

OPINIONS BELOW

[x] For cases from federal courts:

The opinion of the United States court of appeals appears at Appendix

the petition and is

II 11 reported at

; or,

[X] has been designated for publication but is not yet reported; or,

[ ] is unpublished.

The opinion of the United States district court appears at Appendix B & C to

the petition and is

[X] reported at 2016 USTDjt.: LEXIS 126162 & 139flR

[] has been designated for publication but is not yet reported; or,

[ ] is unpublished.

[ ] For cases from state courts:

The opinion of the highest state court to review the merits appears at

Appendix

to the petition and is

[1 reported at

; or,

[1 has been designated for publication but is not yet reported; or,

[ ] is unpublished.

The opinion of the

appears at Appendix

court

to the petition and is

[ 11 reported at

; or,

II] has been designated for publication but is not yet reported; or,

[ 11 is unpublished.

JURISDICTION

[x] For cases from federal courts:

The date on which the United States Court of Appeals decided my case

was ()7/18/2018

[II No petition for rehearing was timely filed in my case.

[x] A timely petition for rehearing was denied by the United States Court of

Appeals on the following date: 0 8/17/2018

, and a copy of the

order denying rehearing appears at Appendix E

[] An extension of time to file the petition for a writ of certiorari was granted

to and including

in Application No.

(date) on

(date)

A______

The jurisdiction of this Court is invoked under 28 U. S. C. § 1254(1).

[ I For cases from state courts:

The date on which the highest state court decided my case was

A copy of that decision appears at Appendix

[] A timely petition for rehearing was thereafter denied on the- following date:

and a copy of the order denying rehearing

appears at Appendix

[] An extension of time to file the petition for a writ of certiorari was granted

to and including

Application No.

(date) on

________________

(date) in

A______

The jurisdiction of this Court is invoked under 28 U. S. C. § 1257(a).

CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED

15 U.S.C.S 52-57

18 U.S.C. 1343

Full text of provisions reproduced in Appendix F, due to their

length.

STATEMENT OF .THE CASE

This case involves a federal Wire Fraud prosecution that precipitated in

the United States District Court, District of New Hampshire, where petitioner

entered a conditional plea of guilty to one count of Wire Fraud while

specifically reserving the right to appeal to pretrial legal rulings made

by the court reproduced in Appendix B and C. The rulings were made as a

matter of law in light of a stipulated set of facts reproduced in Appendix

D. The United States First Circuit Court of Appeals affirmed the rulings

in an opinion reproduced in Appendix A and also denied a petition for

rehearing en banc (Appendix E). The appellate court had jurisdiction under

28 U.S.C. 1291, the trial court under 28 U.S.C. 3231 and this Honorable

Court has jurisdiction under 28 U.S.C. 1254(1).

As per the agreed facts, petitioner was in the business of selling nonprescription health remedies of the naturopathic and homeopathic schools

of medicine through a number of internet websites he created and operated.

In order to induce the purchase of the remedies from consumers, the websites:

depicted that the effectiveness of the remedies had been verified by

certain 'clinical studies', when in reality none of these studies were done

contained testimonials that were from fictitious, not actual, customers

and endorsements that were not actually from impartial third parties as said

employed 'mail forwarding' addresses in various western countries to

make potential customers 'more comfortable' buying the remedies while the

business was actually run from the eastern country of Pakistan

However, as the government conceded and the trial court ruled, there was

no claim whatsoever that the remedies sold were not actually effective as

depicted by the advertising nor that their physical contents or non-FDA

approved licensing status was misrepresented. The sole contention was

whether as a matter of law the deliberate employment of said advertising

practices to sell the remedies constituted the felony of Wire Fraud.

The trial court rejected the argument that the government could not charge

the matter under the Wire Fraud statute because Congress specifically

intended the precisely drawn statutory scheme of 15 U.S.C. 52-57 to be

the sole avenue for prosecuting such allegations of false advertising of

non-prescription drugs, including when the conduct. was alleged to be willful.

The trial court ruled that the strong judicial policy against implied repeals

of statutes required that prosecutos be .bte. to elect at their discretion

whether to proceed under the terms of the special law of 15 U.S.C. 52-57

or under the more general Wire Fraud statute (Appendix B

pages 7 to 10).

The First Circuit further emphasized the need for such discretion by adding

the view that "[t]he FTCA penalties for first or second offendors would

hardly have been an adequate deterent for such egregious conduct. Crime

must be made not to pay." (Appendix A- page 16).

The trial court also rejected, as a matter of law, the argument that where

petitioner's purpose in the advertising was to convince customers of an

efficacy he truly believed to exist in the remedies then the 'intent to

defraud' element of Wire Fraud could no.t be met. The court's ruling reemphasized that therewas 'no allegation that petitioner sold remedies "that

did not work as intended" nor that he engaged in "harming his customers"

(Appendix C

page 10). Rather, the court explained that it was enough to

offend the Wire Fraud law that customers were not made to buy the remedies

based only on truthful advertising statements (Appendix C

pages 10 to 16).

The appellate court affirmed the trial court's ruling (Appendix A

pages

16 to 20).

A petition for rehearing en banc, also treated as a petition for rehearing

.5.

before the original appellate panel under First Circuit local rules, was

filed by petitioner's counsels. It argued that the appellate court's ruling

on the first argument was plainly at odds with controlling Supreme Court

precedent of Busic v. United States, 446 U.S. 398, 399 (1980) which held

that absent affirmative Congressional expression of intent the compehensive

and graduated criminal penalty terms of astatute specifically addressing

àeonduct cannot be negated by allowing prosecution under a more general

statute, regardless of the temporal sequence of the statutes' enactment.

The petition for rehearing was denied on 8/17/2018 (Appendix E).

REASONS FOR GRANTING THE PETITION

INTRODUCTION

The food, non-prescription drug and cosmetic industry is one of the most

significant and vibrant sectors of the American economy. It is an area of

special interest to the American public and where, as will be illustrated

below, Congress has been particularly sensitive to public and industry

sentiment about the appropriate form and extent of governmental control

over advertising claims. As will also be shown below, in deciding what the

First Circuit recognized as an issue of first impression the Honorable

appeal's court did nothing but entirely negate the carefully drawn comprehensive statutory framework embodying long-standing Congressional policies

governing the veracity of advertising claims in the industry. The supervisory

role of the Honorable Supreme Court is called for an urgent rescue of

Congressional policy in this vital public matter and to serve a reminder

that legislation be interpreted while giving hospitable scope to Congressional

purpose and defining crime and prescribing its punishment remain a purely

congressional perogative. In addition, regardless of industry area, businesses

have a fundamental right to a clear legal demarcation capable of uniform

applicationin courts on the vital issue of when advertising misstatements

cross the line into a serious federal fraud felony. The ruling of the First

Circuit contradicts every other circuit to have ever addressed the matter

and for the first time in judicial history makes an act of deceptive advertising, notwithstanding its condemable nature, in and of itself a Wire Fraud

crime. Finally, the case squarely presents an opportunity to resolve a burning

and important circuit split over whether the !intent to defraud' element of

the Federal Mail and Wire Fraud statutes incorporates the requirement of an

'intent to harm'. The divergent views of federal circuit courts on the issue

are now leading to frequent and significant inconsistencies in the application

of federal fraud law.

In sum, all three of the questions presented in this petition independantly

merit the granting of a writ of certiorari by the Honorable Supreme Court.

A more detailed discussion on each question follows.

QUESTION 1: Whether petitioner was wrongly prosecuted under the Wire Fraud

statute because Congress intended such allegations of false advertising of

non-prescription drugs to be prosecuted only under 15 U.S.C. 52-57?

It is well documented that in 1938 Congress comprehensively revised the food

and drug laws of the country. A thorny issue that kept halted this entire

legislative overhaul for many years prior to 1938 was how and by which

governmental body should false advertising of food, drugs and cosmetics be

governed. (See-geierail

Holloway v. Bristol-Meyers Corp., 485 F.2d 986, 992:

(DC Cir., 1973), also David F. Cavers, "The Food, Drug and Cosmetic Act of

1938: Its Legislative History and Its Substantive Provisions," 6 Law and

Contemporary Problems, 2-24 (Winter 1939)). The final legislation embodying

Congressional solutions to these questions was 15 U.S.C. 52-57, a detailed

and comprehensive statutory scheme specifically drawn for governing the

veracity of advertising in the food, drug and cosmetic industry. Despite

being an integral part of the food and drug legislation of the country the

scheme was deliberately not made part of the Food, Drug and Cosmetic Act

("FDCA"), the enabling legislation of the Food and Drug Administration ("FDA"),

but -was engrafted on to the Federal Trade Commission Act ("FTCAIt) in order

to give the FTC exclusive control over false advertising in the food, drug

and cosmetic industry. See, Holloway at 993:

As in prior Congresses the House was unwilling to accede to the

advertising controls embodied in the Senate Food & Drug bill.

Instead of merely striking these offending provisions from S.5

the House Committee took the further step of revising these paragraphs and grafting them on to the Trade Commission Act amendments,

thus placing in the hands of the FTC exclusive control over food,

drug and cosmetic advertising." (Emphasis Added)

See also, Earl W. Kinter, "Federal Trade Commission Regulation of Food Drug

and Cosmetic Advertising," 16 The Business Lawyer, 81-97, 86 (Nov. 1960),

(The primary issue resolved by Congress in 1938 concerning food, drug and

cosmetic advertising was whether or not:regulation and control of false

advertising should be with an executive agency or a quasi-judicial independant regulatory body of the government.)

Amongst an array of enforcement options, 15 U.S.C. 52-57 lays out various

potential penalties for false advertising. It saves criminal penalties for

the most serious offendors whose conduct evinces an "intent to defraud" or

whose products are "injurious to health" (see, 15 U.S.C. 54(a)). But even

in this area of heightened concern the penalties are studiously graded

depending upon the persistence of the offendor, with a fine of not more

than $5,000!- and imprisonment of not more than 6 months for a first

offense and a fine of not more than $10,000!- and imprisonment of not more

than one year for any subsequent offense. In addition, all civil and criminal

enforcement actions are required to follow specific statutory procedures

under 15 U.S.C. 56 that contemplate prior consideration and 'certification

of facts'by the FTC to the Attorney Generalito establish probable liability.

See, Holloway at 994 "Under §16 1.5 U.S.C. 56], these punitive measures were

conditioned upon FTC certification to the Attorney General of probable

liability." (Emphasis Added). See also,Free Enterprise Fund v. Public

Company Accounting Oversight Bd, 561 U.S. 477 (2010) "Generally, when

congress creates procedures designed to permit agency expertise to be

brought to bear on particular problems, those procedures are to be exclusive."

Further, under 15 U.S.C. 54(b) various parties, such as advertising mediums,

are provided immunities from criminal prosecutions. Finally, the entire

scheme is premised in the definition of false advertisements in 15 U.S.C. 557

with its own statutory exemptions, and whose administrative refinement is

solely the FTC's perogative. See Holloway at 995;

"Congress voiced approval of the Commission's record in shaping

the fluid contours of generalized statutory policy pronouncements

into meaningful and coherent rules of business conduct, and it

felt that the agency's experience in making concrete the proscriptions of the 1914 Act against "unfair methods of competition"

rendered the FTC particularly well suited to the responsibility

of giving life to the broad standard of "deceptiveness" as applied

to advertising. Until such an administrative refinement of definition could take place, Congress pointedly rejected any effort to

hold business accountable to judicially imposed liability."

(Emphasis Added)

Hence, the statutory text, structure and underlying Congressional policies

make clear that if without any affirmative expression of intent from Congress its enactment of the Wire Fraud statute in 1952 is treated as an

alternate grant of authority to theprecise; and specifically drawn terms

of 15 U.S.C. 52-57 then Congressional purpose in legislating 15 U.S.C. 52-57

will be substantially negated. Most obviously it would render -nugatory:

the specific refusal of Congress to vest investigative and enforcement

authority over false food, drug and cosmetic advertising in any executive

branch agency in favor of FTC as an independant quasi-judicial body

the congressional design and purpose in graduating and proportioning

the criminal penalties for fradulent advertising under 15 U.S.C. 54(a),

(See, Busic v. United States, 446 U.S. 398, 399 (1980) holding that criminal

penalty enhancements of specific statute cannot be negated by applying a

broader statute, regardless of the statutes' temporal sequence and absent

affirmative Congressional intent. Also, Dowling v. United States 473 U.S.

207, 225 (1985) holding that the'tt'ibursly graded' penalties of the

intend the National Stolen Property Act, 18 U.S.C. 2314, to cover the conduct)

the enactment of specific civil and criminal enforcement procedures (15

U.S.0 56) contemplating 'certification of facts' from the FTC for:-. -prosecution

10.

the statutory exemptions from criminal libility (15 U.S.C. 54(b)) (See

United States v. Saade (652 F. 2d 1126, 1132(1st Cir., 1981) (Refusing to

recognize a broader statute as an 'alternate delegation of power' where it

would nullify a more specific statute's 'limited protection' for a certain

class of potential offendors, citing Busic v. United States 446 U.S.398;

(1980) and its 'elementary principle' that specific trumps. over, general)

the delegation to the FTC of refining the definition of what constitutes

false advertising in the first instance as per the FTC's expertise

Wherefore, holding the Wire Fraud statute as an alternate avenue to 15

U.S.C. 52-57 for prosecuting false advertising of non-prescription drugs

works an implied repeal of the precisely drawn terms of 15 U.S.C. 52-57.

See Wall v. Alaska, 451 U.S. 259, 281 (1981):

"The maxim that repeals by implication are disfavored has force

when the argument is made that a general statute, wholly occupying a field, eviscerates an earlier and more specific enactment

of limited coverage but without an indication of congressional

intent to do s. In such a case, it may not be reasonable to

presume that Congress had not anticipated that its broad pronouncement would have serious implications ma peripheral, or even

quite different area and had it recognized that a specific earlier law would be rendered meaningless by a new enactment, it

would have expressly indicated its intent to repeal or amend."

See also, Busic at 407-4.08 ("were the government correct then we would be

forced to conclude that with regard to firearms cases 924 (c) impliedly

repealed all pre-existing enhancement provisions.")

The most contradictory aspect of the appellate court's ruling was that it

approved this implied repeal of 15 U.S.C. 52-57 in a ruling emphasizing

the strong judicial presumptions against implied repeals.. This selfcontradiction was the result of the appellate court ignoring the often

stressed canon of giving precedence to the precisely drawn terms of a

statute more specifically addressing a conduct over a more general law,

regardless of the temporal sequence of the statutes' enactment. See Morton

11.

v. Mancari 417 U.S. 535, 550 (1974), "Where there is no clear indication

otherwise, a specific statute will not be controlled or nullified by a

general one, regardless of the priority of enactment." (Emphasis Added)

Similarly, Bulova Watch Co. v. United States 365 U.S. 753, 758 (1961), "It

is familiar law that a specific statute controls over a general one "without

regard to priority of enactment". Also, Townsend v. Little 109 U.S. 504,

512 (1883), "General and specific provisions, in apparent contradiction,

whether in the same or different statutes and without regard to priority

of enactment, may subsist together, the specific qualifying and supplying

exceptions to the general."

Ignoring these canons the appellate court assumed that the answer in instant

case lied somewhere in the temporal sequence of the statutes. The court

then struggled long to establish this sequence to ascertain its solution

(Appendix A

pages 7 to 9).

The appellate court then made another major mistake by immediately resorting

to the Blockburger rule and concluding that the two statutes, Wire Fraud

and 15 U.S.C. 52-57, could not conflict because they were addressing

different conduct as the Wire Fraud statute required proof of an element,

the use of 'wires', that the other statute does not necessarily require

(Appendix A

page 10). Here, the Blockburger rule was totally unwarranted.

The Blockburger rule could not be used to ignore the conflicts obvious

from the statutory text and structure of the statutes, as previously

explained. See Garrett v. United States 471 U.S. 773, 779 (1985) "The

Blockburger rule is not controlling when the legislative intent is clear

from the face of the statute or the legislative history." Here, the application of the rule was even more problemetic because apart from ignoring

the conflicts obvious from the statutes the appellate court affirmatively

declined to even conduct a careful review of the legislative history of

12.

the statutes involved (Appendix A

page 10, footnote 5). The appellate

court misapplied the rule that where the text of a statute is clear

resort to legislative history is not necessary to interpret the meaning

of the text. The appellate court ignored the basic point that ambiguity

concerning the ambit of statutes does not just arise from the meaning

of their texts but also because of the interaction of the statutes with

other statutes enacted elsewhere. See e.g. United States v. Hutcheson

312 U.S. 219 1 229 (1940)"[A]n indictment may validly satisfy the statute

under which the pleader proceeded., but other statutes not referred by him

may draw the sting of criminality from the allegations".

Here, a basic review of the concise, Yet comprehensive, committee report

H.B.Rep. 75-1613, p.5 (1938) that accompanied the version of the bill

adopted into law would have confirmed the conclusion that Congress quite

clearly intended 15 U.S.C. 52-57 to be the sole legislation available

to the government for prosecuting claims of false advertising of nonprescription drugs such as brought against petitioner. H.R.Rep. 75-1613,

P-5 (1938) defines, the scope of the legislation as:

"[b]road enough to cover every form of advertisement deception

over which it would be humanly practicable to. exercise governmental control. It covers every case of imposition on a purchaser

for which there could be a practicable remedy. It reaches every

case that of inadvertent or uninformed advertising to. that of. the

most subtle as well as the most vicious types of advertisement."

After defining 15 U.S.C. 52-57 as comprehensively covering the entire

area of false food, drug and cosmetic advertising, the report unambigiously

consolidates all enforcement and penalization powers to be exercised

within the terms, procedures and penalties established under this

statutory scheme. On this point the report says:

"The Federal Trade Commission has the machinery and trained

personel to investigate in a proceeding against false advertising

of all industries and all commodities. The common motive of false

13.

advertisement is the same in every line of industry, to gain_

an economic, advantage by defrauding or misleading the purchaser.

This method of protecting the public should be harmonized and

unified under one organization with consistent and uniform

methods of enforcement and penalization. Efficiency, uniformity

and economy suggest this course. This legislation is framed with

that purpose in mind.

The Federal Trade Commission as an independant quasi-judicial body,

has a procedure better calculated to handle multitudiniou's types

of advertising and to do its work to the greater confidence and

satisfaction of the public than any purely adiministrative body.

Its work carries with it the combined elements of searching

investigation, orderly procedure, prevention rather than penalization in minor cases, and that judicial fairness that is essential

for the enlistment of confidence by the public." (Emphasis Added)

Hence, the statutory text, structure, broad Congressional policy perogatives

and the clear legislative history leave no doubt that by allowing the

government to proceed outside the framework of 15 U.S.C. 52-57 the

First Circuit has violated Congressional intent and rendered superfulous

many years of legislative efforts. The First Circuit also did not take

any caution from the 80 year history where such claims of advertising

misconduct in the consumer drug field have consistently been proceeded

against only within the framework of 15 U.S.C. 52-57 without any hint

from the Department of Justice that they warrant wire fraud prosecutions.

It may be noted here that prescription drug cases are inapposite as

prescription drug advertising control has been transfered to the FDA in 1962.

Thevast public importance of the issue and the potential damaging impact

that can flow from the First Circuit's ruling merits that the Honorable

Supreme Court grant a writ of certiorari to address the question presented.

QUESTION 2: Whether petitioner's advertising practices in themselves

constituted Wire Fraud despite his honest belief in the efficacy of his remedies and where there was no claim that the remedies were not actually

effective as advertised nor their physical contents or licensing status

14.

misrepresented?

Advertising is the backbone of the American consumer economy. To state the

obvious, most advertising is the work of fiction involving actors, mock

testings and grand.

statements of capacity, performance and results.

Courts that have considered the matter have uniformly held that such

statements can only enter the boundries of fraud under one condition. That

is when the promoter is knowingly peddling a product or service that

inherently, or as a matter of its substantial identity, fails to bear a

reasonable resemblance to what the advertising promises. Such occurs when:

a)... the product or service's:: basic legal identity is misrepresented, such

as a non-FDA approved drug is promoted as FDA approved etc

the product's basic physical constituency is substituted, such as if

chalk powder is sold in place of salt etc

the product or service inherently fails to perform or function as should

reasonably be expected from the advertising

In the instant case it was conceded that there was no claim or allegation

that the products sold differed in any of these aspects from what the

advertising promised. In reality, this was to concede that the basic value

proposition promised by the advertising was not false, but merely that the

proposition had been made via the use of excessively fictitious statements.

But such dissatisfaction could at most give rise to a deceptive advertising

cause of action but not by a far margin to an actual fraud claim. There

was no claim in this case of what these products are in terms of their

physical composition, why such products should inherently fail to perform

or what petitioner knew or believed in this regard. The entire case was

missing in this regard of what has always been considered the very heart

of an enquiry into whether fraud has occured and instead the case was

15.

invariably focused on a distaste with petitioner's advertising methods.

See/ American School of Magnetic Healing v. McAnnulty 187 U.S. 94 (1902)

(Fraud cannot be found when the inherent effectiveness of the healing

techniques at issue were merely a matter of opinion), Harrison v. United

States 200 F. 662 (6th Cir.,1912) (The essence of a scheme is a plan to

deceive as to the substantial identity of the things customers are to

receive in exchange), Kar-Ru Chemical co. v. United States 264 F. 921, 927

(9th Cir., 1920) t'[I]f you find that the defendant has only used in its

several preparations homeopathic remedies for the alleviation of ailments,

then- your verdict should be not guilty, and you will not be called to

consider any other question in the case." (Emphasis Added), United States

v. Rabinowitz 327 F.2d 62 (6th Cir., 1964) "[T]he inherent utility of the

knitting machine removed it from the ordinary run of mail fraud prosections"

(citing Harrison, supra), also Rabinowitz at 66:

"The article sold here was not a worthless stock. The defendants

were not running a bucket shop under the pretense of doing real

trading; they were not running a 'fake' marriage bureau; they were

not consignments with no intention of remitting. Here, the defendants through their companies were selling a sturdy, well designed

and well constructed device with unusual cpabilities for the fashioning of useful and artistic items of apparel."

Also, United States v. Regent Office Supply Co. 421 F.2d 1174, 1180 (2nd

Cir., 1970) "[C]laims or statements in advertising may go beyond mere

puffing and enter the realm of fraud where the product must inherently

fail to do what is claimed for it." (Emphasis Added)

Hence, by affirmatively disclaiming any allegation in this case that the

basic promise of the advertising was false, i.e. that the products advertised

were not in fact highly effective remedies of a certain composition and

licensing status as claimed, it wa.s wrong 'to suggest that this was a fraud

case under the criminal fraud statutes. By failing to even allege any

16.

'we

such misrepresentation and affirmatively disclaiming it, the Appellate

Court was wrong to say that there was a misrepresention of the "essence

of a bargain" (Appendix A

page 19) and was also wrong to say that custo-

mers were deprived of "facts obviously essential in deciding whether to

enter the bargain." (Appendix A

page 19) Such language was applied out

of context here.

By conflating a case that at most could be argued as 'deceptive advertising'

with that of 'wire fraud', the First Circuit has become the first appellate

court to ever validate such a theory from a lower court. If the ruling

stands, then it has the potential to open the flood gates of criminal

litigation and subject innocent businesses whose agressive advertising

practices may be violative of the law but were nonetheless a distant cry

from amounting to a mail or wire fraud crime. To rectify such sanctioning

by the appellate court, the supervisory role of the. Honorable Supreme

Court is called for. The following words in a ruling by any appellate court

validating a Wire Fraud theory should never be left standing undisturbed:

"The trial judge accurately ruled that Arif was not being charged

"with selling drugs that did not work as intended.., or for harming his customers." Rather, he was charged with "making misrepresentations on his websites," which were designed to give false

comfort to buyers, in order to induce their purchases." (Appendix

page 17)

QUESTION 3: Whether an 'intent to harm' is a necessary part of the 'intent

to defraud' element of Wire Fraud, as held by a majority of appellate courts

but disputed by the First Circuit which also dispensed away with any such

requirement in petitioner's case?

The dispute over the requirement of an 'intent to harm' under the mail and

wire fraud statutes between federal appellate courts has now developed into

a critical situation of fundamental and frequent inconsistency in the

application of federal fraud law in courts. Cases that would not even merit

17.

an indictment in the majority of federal circuits are leading to long

prison sentences in a minority of circuits, such as the instant case.

The very meaning of the word 'defraud' is now disputed. Just in the year

2017 in New York federal courts alone two published rulings were made

granting post trial motions for acquital due to the failure of proof of

an 'intent to harm' under the mail and wire fraud statutes. See United

States v. Davis, 2017 U.S. Dist. LEXIS 122643 and United States v. Jabar,

2017 U.S. Dist. LEXIS 159559 (found guilty of making 'material false

statements' but innocent of Wire Fraud as no 'intent to harm')

The majority of appellate courts that require a finding of an 'intent to

harm' include the second, fourth, fifth, sixth, eighth and eleventh United

States circuit courts of appeal. See United States v. Starr 816 F.2d 94, 98

(2nd Cir., 1987) (intent to deceive not enough, 'intent to harm' or 'contemplated harm to victim' also required), United States v. Raza 876 F.3d 604,

623 (4th Cir., 2017) (acknowledging the requirement of 'intent to harm'),

United States v. Jimenez 77 F.3d 95, 97 (5th Cir.., 1996) "Intent to defraud

requires inéntto(A)deceive and (2)cause some harm to result from the

deceit.", Unitd States v. Daniel 329 F.3d 480 (6th Cir., 21)03) (Intent to

harm is required), United States v. Lamoreaux 422 F.3d 750 (8th Cir.., 2005)

"The essence of a scheme to defraud is an intent to harm the victim."

United States v. Takhalov 827 F.3d 1307, 1313 (11th Cir., 2016)"[I]f there

is no intent to harm,:therecan only be a scheme to deceive, but not one to

defraud" (Emphasis in Original).

On the other hand, the first, seventh and tenth circuits take the opposite

stance. See United States v. Fernandez 282 F.3d 51)1), 507 (7th Cir., 2001)

"This circuit has never required the government to establish a "contemplated

harm to the victim", United States v. Welch 327 F.3d 1081 (10th Cir., 2003)

(Asserting the correctness of the First Circuit's en banc ruling of

United States v. Kenrick 221 F.3d 19, 29 (1st Cir., 2000) (en banc)

and declaring that "the intent necessary to a mail or wire fraud conviction

is not the intent to harm").

In the en banc decision of Kenrick the First Circuit Court of Appeals

asserted that at common law the intent required for fraud was an 'intent

to deceive' and there was no requirement of an 'intent to harm'. The First

Circuit held that

Neder v. United States 527 U.S. 1 1 20-23 (1999)

explained that 'materiality' of falsehood was a required finding under the

mail and wire fraud statutes because such finding was required at common

law. Therefore, the First Circuit held that because an 'intent to harm' was

not required at common law so it should not be required under the general feder:al fraud statutes.

Contradicting the above, the Eleventh Circuit, in endorsing the position

long championed by the Second Circuit, went in elaborate detail on the

issue in United States v. Takhalov, supra. Takhalov explained that ordinary

usage makes clear that there is a difference between deceiving and defrauding

and cited numerous dictionary definitions. It also cited Antonin Scalia

& Bryan A. Garner's "Reading Law" 69 (2013) "[t]he ordinary-meaning rule

is the most fundamental semantic rule of interpretation".

In United States v. Tagliaferri 820 F.3d 568, 572 (2nd Cir., 2016) the

Second Circuit also casted doubt over the First Circuit's premise that

fraud at common law did not require an intent to harm, mentioning SEC V.

Capital Gains Research Bureau, Inc 375 U.S. 180, 195 (1963).

Petitioner respectfully asserts that the minority position endorsed by the

First Circuit appears to be the weaker view. Firstly, the First Circuit in

Kenrick appeared to derive its understanding of common law fraud from

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treatise discussing the "tort of deceit". The analysis appears to overlook

the fact that tort law's transposition in a criminal context does not

usually come at the expense of ignoring the fundamental premises that

distinguish the two kinds of laws. The purpose of tort law is to make

whole the wronged, as opposed to a crime made to punish a wrongdoer. Hence,

constructive fraud with its lesser requirement of constructive intent

is incompatible with criminal fraud, as is well established. The positive

or actual fraud requirement of criminal fraud has by definition always

incorporated a requirement of detriment to the victim1 beyond the victim's

mere subjection to a falsehood,to be specifically intended.

Secondly, the First Circuit in Kenrick either overlooked or failed to

address whether at common law the terms 'deceit' and 'defraud' carried

the same precise and identical meaning, the very heart of the instant

dispute.

Thirdly, makitn'kjfbaud merely tricking someone into a transaction that

involves money would render any deliberate unfair sales practice into

a felonious fraud crime. Such a draconian expansion of fraud law should

require some affirmative clarity from Congress, as a matter of lenity.

The long practice of maintaining a distinction between an unfair sales

practice or false advertising on the one hand and claims of fraud on the

other without any counter action from Congress also impliedly indicates

the correctness of the majority position. See e.g. John P. Villano Inc.

v. CBS, Inc. 176 F.R.D. 130, 131 (S.D.N.Y. 1997) "[A] claim of false

advertising under the Lahman Act... is not identical to a claim of fraud.

Fraud requires not just a making of a statement known to be false but

also, inter alia, a specific intent to harm the victim and defraud him.. . "

20.

The instant case presents the question in a most square and "matter of law"

fashion. The trial court was presented the issue for decision on stipulated

facts (Appendix D) and the court made a purely legal ruling upholding a

theory of wire fraud while affirmatively disclaiming any intent to harm,

see Appendix C

page 10. A resolution of the conflict between the appellate

courts would not only serve justice to petitioner but will surely bring

much needed uniformity in the application of federal fraud law.

21.

CONCLUSION

The petition for a writ of certiorari should be granted.

Respectfully submitted,

Mustafa Hassan Arif

Date:

30/08/2018

22.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.