Petition for Writ of Certiorari — Glenn A. Chin, Petitioner v. United States
Supreme Court briefSep 1, 2022
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3ln tbe ~upreme QCourt of tbe Wntteb ~tate~
GLENN A. CHIN,
PETITIONER
v.
UNITED STATES,
RESPONDENT
ON PETITION FOR WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT
PETITION FOR A WRIT OF CERTIORARI
OF GLENN A. CHIN TO THE
UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT
JAMES L. SULTAN
Counsel ofRecord
RANKIN & SULTAN
1666 MASSACHUSETTS A VENUE, P-16
LEXINGTON, MA 02420
(617) 720-0011
SEPTEMBER 2022
QUESTIONS PRESENTED FOR REVIEW
1.
Did the District Court clearly err in finding that the defendant's conduct involved a
reckless risk of death or serious bodily injury, triggering a sentencing enhancement
under U.S.S.G. §2Bl. l(b) (16) (A), absent proof that the defendant was subjectively
aware that his conduct involved such a risk? More generally, does this criminal
sentencing enhancement contain a mens rea requirement, or does the civil standard
for reckless conduct apply?
2.
Did the Court of Appeals for the First Circuit err in holding that the portion of the
defendant's gross salary which was withheld and paid for federal and state income
taxes constituted "proceeds" which he "obtained" and were thus subject to forfeiture
pursuant to 18 U.S.C. §1963 (a) (3)? More generally, can criminal defendants be
ordered under this statute to forfeit to the government money which they have already
paid to the government in taxes?
11
STATEMENT OF RELATED PROCEEDINGS
This case arises from the following proceedings:
•
United States v. Glenn A. Chin, No. 14-cr-10363-2-RGS. U.S. District Court for the
District of Massachusetts. Judgment entered Jan. 31, 2018.
•
United States v. Glenn A. Chin, Nos. 18-1263, 18-1310, 18-1500. U.S. Court of
Appeals for the First Circuit. Judgment remanding case entered July 9, 2020.
•
United States v. Glenn A. Chin, No. 14-cr-10363-2-RGS. U.S. District Court for the
District of Massachusetts,. Amended Judgment after remand entered Nov. 30, 2021.
•
United States v. Glenn A Chin, No. 21-1574. U.S. Court of Appeals for the First
Circuit. Judgment affirming sentence entered July 15, 2022.
111
TABLE OF CONTENTS
QUESTIONS PRESENTED OR REVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii
STATEMENT OF RELATED PROCEEDINGS ..................................... iii
TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv
TABLE OF AUTHORITIES
.................................................... vi
OPINIONS BELOW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
BASIS FOR JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
STATUTORY AND GUIDELINES PROVISIONS INVOLVED ........................ 1
STATEMENT OF THE CASE ................................................... 2
I.
PETITIONER'S CONVICTION AND ORIGINAL SENTENCE .................. 2
II.
THE FIRST APPEAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
III.
RESENTENCING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
IV.
THE SECOND APPEAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
REASONS FOR GRANTING THE PETITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
I.
THERE IS A SPLIT IN THE CIRCUITS OVER THE CORRECT
INTERPRETATION OF U.S.S.G. §2Bl.l(b)(16)(A), WHICH THIS
COURT SHOULD RESOLVE ............................................. 5
II.
THIS COURT SHOULD HOLD, CONSISTENT WITH ITS DECISION
IN HONEYCUTT V. UNITED STATES AND FUNDAMENTAL FAIRNESS,
THAT MONIES WITHHELD FROM AND PAID BY CHIN AS FEDERAL
AND STATE TAXES DO NOT CONSTITUTE "PROCEEDS" "OBTAINED"
BY HIM WHICH ARE SUBJECT TO FORFEITURE UNDER
18 U.S.C. §1963(a)(3) .....•...........................•..........•....... 8
CONCLUSION .............................................................. 10
IV
APPENDICES
APPENDIX A
United States v. Glenn Chin, 965 F.3d 41 (1 st Cir. 2020) ................. A-1
United States v. Glenn Chin, 41 F.4th 16 (1 st Cir. 2022) ................. A-19
APPENDIXB
United States v. Glenn Chin, Docket No. 14-10363-RGS
Memorandum and Order on Forfeiture of Property ...................... B-1
United States v. Glenn Chin, Docket No. 14-10363-RGS,
Amended Judgment in a Criminal Case .............................. B-19
APPENDIXC
18 U.S.C. §1963 (a)(3) ........................................... C-1
U.S.S.G. §2Bl.1 (b) (16)(A) ....................................... C-1
V
TABLE OF AUTHORITIES
Caplin & Drysdale, Chartered v. United States,
491 U.S. 617 (1989) ...................................................... 8
Farmer v. Brennan,
517 U.S. 825 (1994) ...................................................... 7
Honeycutt v. United States,
_U.S._, 137 S.Ct. 1621 (2017) ...................................... 8, 9
United States v. Cadden,
965 F.3d 1 (2020) ..................................................... 3n., 4
United States v. Christensen,
828 F.3d 763 (9 th Cir. 2015) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
United States v. DeFries,
129 F.3d 1293 (D.C. Cir. 1997) ............................................. 9
United States v. Genova,
333 F.3d 750 (7th Cir. 2003) ................................................ 9
United States v. Glenn Chin,
965 F.3d 41 (1'' Cir. 2020) ............................................... 1, 3
United States v. Glenn Chin,
41 F.4th 16 (1'' Cir. 2022) ............................................. 1, 3, 5
United States v. Hurley,
63 F.3d 1 (1s t Cir. 1995) ................................................... 9
United States v. Johansson,
249 F .3d 848 (9th Cir. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
United States v. Lizza Indus., Inc.,
77 5 F .2d 492 (2d Cir. 1985) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
United States v. Lucien,
347 F.3d 45 (2d Cir. 2003) ............................................... 4, 6
United States v. Maestas,
642 F.3d 1315 (10th Cir. 2011) ............................................. 6
vi
United States v. Mateos,
623 F. 3d 1350 (11 th Cir. 2010) ............................................. 6
United States v. McCord, Inc.,
143 F.3d 1095 (8 th Cir. 1998) .............................................. 6
United States v. Mohsin,
904 F.3d 580 (7th Cir. 2018) .............................................. 6
United States v. Sams,
810 Fed. Appx. 738 (11 th Cir. 2020)(unpublished) .............................. 6
Voisine v. United States,
_U.S._, 136 S.Ct. 2272 (2016) ........................................ 7
Statutes aud Guidelines Provisions
18 u.s.c. §1962 ............................................................. 1, 8
18 U.S.C. §1963 (a) (3) .................................................... 1, 8, 10
18 U.S.C. §3231 ............................................................... 2
21 U.S.C. §853 (a) (1) .......................................................... 8
28 U.S.C. § 1254 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
U.S.S.G. §2Al.4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 7
U.S.S.G. §2Bl.l (b) (16) (A) ............................................. 1, 3, 5, 7, 8
U.S.S.G. §3Cl.2 ............................................................. 6, 7
vii
OPINIONS BELOW
United States v. Glenn Chin, 965 F .3d 41 (1 '' Cir. 2020), set forth at Appendix A.
United States v. Glenn Chin, 41 F.4th 16 (1 st Cir. 2022), set forth at Appendix A.
BASIS FOR JURISDICTION
The United States Court of Appeals for the First Circuit entered final judgment affirming the
petitioner's sentence after remand on July 15, 2022. This petition is filed within 90 days of that date.
This Court has jurisdiction to review a final judgment of a United States court of appeals pursuant
to 28 U.S.C. § 1254.
STATUTORY AND GUIDELINES PROVISIONS INVOLVED
18 U.S.C. §1963 (a) (3),
Whoever violates any provision of section 1962 of this chapter shall be fined under this title
or imprisoned not more than 20 years ( or for life if the violation is based on a racketeering
activity for which the maximum penalty includes life imprisonment), or both, and shall forfeit
to the United States, irrespective of any provision of State law-(3) any property constituting,
or derived from, any proceeds which the person obtained, directly or indirectly, from
racketeering activity or unlawful debt collection in violation of section 1962.
U.S.S.G. §2Bl.1 (b) (16) (A).
(b) Specific Offense Characteristics. (16) If the offense involved (A) the conscious or reckless
risk of death or serious bodily injury. . . increase by 2 levels.
1
STATEMENT OF THE CASE
I.
PETITIONER'S CONVICTION AND ORIGINAL SENTENCE.
Petitioner Glenn A. Chin ["Chin"] and 13 other defendants were charged with multiple
offenses in an indictment returned in the United States District Court for the District of Massachusetts
on December 16, 2014. That court had original jurisdiction pursuant to 18 U.S.C. §3231.
The
indictment addressed a national outbreak of fungal meningitis in 2012 involving hundreds of medical
patients in various states who were injected with a contaminated steroid medication
[methylprednisolone acetate or "MPA"] produced by the New England Compounding Center
["NECC'] in Framingham, Massachusetts. More than 60 patients died. Chin was a salaried
employee at NECC who had compounded the contaminated MPA in his capacity as chiefpharmacist.
After the district court ordered a severance of defendants, Chin proceeded to trial alone before
a jury. He was convicted of racketeering, racketeering conspiracy, and multiple counts of mail fraud,
introducing adulterated drugs into interstate commerce, and introducing misbranded drugs into
interstate commerce. The district court sentenced him to 96 months of imprisonment and entered a
forfeiture judgment of $175,000, App. C-1 Y, and an order of restitution.
The government did not prove (or even claim) at trial that Chin knew that any of the MPA
compounded at NECC and subsequently distributed to health care facilities was tainted. Moreover,
the government was unable to prove precisely how the MPA was contaminated, at what stage of the
manufacturing/distribution process the contamination occurred, or what specific acts or omissions
by Chin (if any) caused the contamination. On a special verdict form, the jury did not find Chin liable
ll
Citations to the Appendices to this petition are abbreviated as "App. [letter]-[page
number]."
2
for any of the charged predicate racketeering acts of second degree murder.
II.
THE FIRST APPEAL.
Both Chin and the govermnent appealed. Chin challenged his RICO convictions, and the
government challenged the sentence. On July 9, 2020, the Court of Appeals for the First Circuit
issued a decision on the cross-appeals. United States v. Chin, 965 F .3d 41 (1 st Cir. 2020). App.
A-1. Chin's convictions were affirmed. With respect to sentencing, the court took issue with the
district court's analysis of three Guidelines enhancements sought by the government and remanded
'
for further consideration of those enhancements, including whether Chin's offenses
involved a
conscious or reckless risk of death or serious bodily injury [U.S.S.G. §2Bl.l(b)(16)(A)].
The court of appeals also vacated the district court's forfeiture and restitution orders. With
respect to forfeiture, the court rejected Chin's argument that the amount of his salary that had been
withheld for federal and state income taxes was not subject to forfeiture and held that the district
court erred in failing to order Chin to forfeit the gross, pre-tax salary he earned ($473, 584.50) during
the period of racketeering activity. Accordingly, the court directed the entry of a forfeiture order in
that amount. The case was remanded for resentencing. Y
III.
RESENTENCING.
On remand, Chin argued that the district court's prior rulings on the three sentencing
enhancements sought by the government remained correct. He contended, inter alia, that the
conscious or reckless risk enhancement did not apply.
He also asserted (to preserve the issue) that
the First Circuit's ruling respecting the forfeiture of pre-tax earnings was erroneous and inconsistent
Y On the same date, the First Circuit decided a companion case, United States v. Cadden,
965 F .3d 1 (2020), where it addressed some of the same sentencing issues addressed in Chin.
Cadden was also remanded for resentencing.
3
with recent Supreme Court precedent.
Cadden's resentencing hearing took place the day before Chin's and addressed some of the
same Guidelines issues. With respect to the conscious or reckless risk enhancement, the district
court noted at Cadden's sentencing hearing that the First Circuit had apparently adopted in Cadden
the definition of"recklessness" articulated by the Court of Appeals for the Second Circuit in United
States v. Lucien, 347 F.3d 45 (2d Cir. 2003), which the district court characterized as "more a
should-have-known standard than it really is an assessment of a defendant's actual state of mind."
The court then found that enhancement applicable to Cadden pursuant to "the new First Circuit test."
At Chin's sentencing hearing, the district court referred to the findings it had made during
the Cadden sentencing hearing regarding the conscious or reckless risk enhancement. It reiterated
its assumption that the First Circuit was "adopting or at least embracing the Second Circuit's view
of how 'recklessness' would be defined in this case" and applied the enhancement over objectionY
With respect to forfeiture, the court indicated it had no choice but to enter the amount directed by
the court of appeals - - $473,584.50. Based on its revised Guidelines calculation, the district court
sentenced Chin to 126 months of imprisonment, two years of supervised release, forfeiture in the
amount of $473, 584.50, restitution of $82,022,335.68, jointly and severally with Cadden, and a
special assessment of$5,450. Amended judgment entered on November 30, 2021. App. B-1.
IV.
THE SECOND APPEAL.
Chin appealed his sentence on the grounds that the district court had erroneously applied two
upward Guidelines adjustments, including the conscious or reckless risk of death or serious bodily
21
Neither the government nor the district court relied on the "conscious" risk prong of
that Guidelines provision. The dispute was about the meaning of the phrase "reckless risk" and its
application to Chin.
4
injury enhancement. On July 15, 2022, the Court of Appeals for the First Circuit issued a decision
affirming Chin's sentence. United States v. Chin, 41 F.4th 16 (1 st Cir. 2022). App. A- . The court
held that the term "reckless"in U.S.S.G. §2Bl .1 (b) (16) (A) embodies "the traditional common-law
understanding of the term in the civil context," rather than an "actual, subjective awareness of a risk"
as generally employed in criminal law. Id. at 25. The court recognized that at least two circuits had
ruled otherwise, but disagreed. Id. at 23.
REASONS FOR GRANTING THE PETITION
I.
THERE IS A SPLIT IN THE CIRCUITS OVER THE CORRECT
INTERPRETATION OF U.S.S.G. §2B1.l(b)(16)(A), WHICH THIS COURT SHOULD
RESOLVE.
Section 2B I of the Sentencing Guidelines pertains to crimes involving larceny, theft,
embezzlement, and fraud. Section 2B 1.1 (b)(16) provides:
If the offense involved (A) the conscious or reckless risk of death
or serious bodily injury; or (B) possession of a dangerous weapon
(including a firearm) in connection with the offense, increase by 2
levels.
Neither §2B 1.1 (b )(16) itself nor any application note to that provision of the Guidelines defines the
term "reckless". This Court has not had occasion to define that term, as set forth in U.S.S.G.
§2Bl.l(b)(16)(A), either.
As the First Circuit recognized in its decision affirming Chin's sentencing on direct appeal,
there is a split in the circuits regarding the correct meaning of that Guidelines provision. United
States v. Chin, 41 F.4th at 23.
At least two circuits have adopted the definition of
"reckless"contained in Application Note 1 to the involuntary manslaughter guideline, U.S.S.G.
§2Al.4, which states:
5
"Reckless" means a situation in which the defendant was aware of the
risk created by his conduct and the risk was of such a nature and
degree that to disregard that risk constituted a gross deviation from
the standard of care that a reasonable person would exercise in such
a situation.
See United States v. Mohsin, 904 F.3d 580,584 (7th Cir. 2018); United States v. McCord,Inc., 143
F.3d 1095, 1098 (8 th Cir. 1998).
The Eleventh Circuit appears to have followed a similar approach. In United States v.
Mateos, 623 F. 3d 1350 (11 th Cir. 2010), a decision written by Retired Justice O'Connor, the court
upheld the application of such an enhancement to a defendant nurse who worked in a clinic where
HIV patients were unnecessarily injected with saline or diluted drugs in order to generate fraudulent
Medicare payments. The court noted that the defendant nurse would have been "well aware" of the
"specially high" risk of infection or other complications in providing such injections to these
particular patients. Id. at 1371. See also United States v. Sams, 810 Fed. Appx. 738, 742(11 th Cir.
2020) (unpublished) (applying same standard under U.S.S.G. §3Cl .2).
By contrast, the Second, Ninth, and Tenth Circuits have applied a strictly objective standard
in determining whether or not to apply the "reckless" risk enhancement. United States v. Maestas,
642 F.3d 1315, 1321 (10th Cir. 2011) Lucien, 347 F.3d at 56; United States v. Johansson, 249 F.3d
848, 858 (9th Cir. 2001). These courts require only that the risk would have been obvious to a
reasonable person; actual awareness of the risk is not required.
The term "reckless" also appears in another Guidelines provision, §3Cl.2 (Reckless
Endangennent During Flight). That provision provides for a two-level increase in offense level "[i]f
the defendant recklessly created a substantial risk of death or serious bodily injury to another person
6
in the course of fleeing from a law enforcement officer." Application Note 2 to §3Cl.2 defines
"reckless" as in the application notes to §2Al .4.
The mens rea for "recklessness" has been defined in substantive federal court decisions, as
well. In Farmer v. Brennan, 517 U.S. 825, 836-837 (1994), this Court distinguished between civil
recklessness and criminal recklessness as follows:
The civil law generally calls a person reckless who acts or [if the
person has a duty to act] fails to act in the face of an unjustifiably
high risk of harm that is either known or so obvious that it should be
known [citation omitted]. The criminal law, however, generally
permits a finding ofrecklessness only when a person disregards a risk
of harm of which he is aware.
See also Voisine v. United States, _U.S._, 136 S.Ct. 2272 (2016) (describing reckless conduct
as "acts undertaken with awareness of their substantial risk of causing injury" and "with conscious
disregard of a substantial risk of harm"). The Court added: "The harm such conduct causes is the
result of a deliberate decision to endanger another .... " Id. at 2279.
Chin contends that the term "reckless" as set forth in U.S.S.G. §2Bl.l(b)(16)(A) should
properly include a sci enter or mens rea requirement which takes into account the defendant's actual
state of mind, rather than considering only what the defendant "should have known." Where an
individual's constitutional liberty interest in the fonn of additional years of imprisonment hangs in
the balance, the Court should be loath to adopt a standard which more appropriately sounds in tort
than in the criminal arena.
Since there was no evidence that Chin knew the MP A he compounded was contaminated or
was aware that any particular act or omission by him was likely to cause such contamination, the
district court erred in assessing a two-level upward adjustment in offense level under
7
§2B 1. 1(b)(16)(A). By the same token, the Court of Appeals for the First Circuit erred in affirming
that upward adjustment and Chin's resulting sentence. This Court should grant the petition for
certiorari, resolve the split in the circuits over the proper construction of that Guidelines provision,
and remand this case for resentencing based on such construction.
II.
THIS COURT SHOULD HOLD, CONSISTENT WITH ITS DECISION IN
HONEYCUTT V. UNITED STATES AND FUNDAMENTAL FAIRNESS, THAT
MONIES WITHHELD FROM AND PAID BY CHIN AS FEDERAL AND STATE
TAXES DO NOT CONSTITUTE "PROCEEDS" "OBTAINED" BY HIM WHICH
ARE SUBJECT TO FORFEITURE UNDER 18 U.S.C. §1963(a)(3).
The RICO forfeiture statute, 18 U.S.C. §1963 (a) (3), provides, in pertinent part, that a
defendant convicted of racketeering under 18 U.S.C. §1962 shall forfeit " ... any property
constituting, or derived from, any proceeds which the person obtained, directly or indirectly, from
racketeering activity .... " In Chin's case, the district court initially ruled that the portion of Chin's
salary withheld and subsequently paid as federal or state income taxes should be deducted from
"proceeds" subject to forfeiture under that statute. The First Circuit disagreed and ordered that Chin
be required to forfeit his entire gross salary during the period he engaged in a pattern of racketeering.
That order was adhered to by the district court on remand for resentencing.
While this Court has never directly addressed this issue, it did explicate the scope of criminal
forfeiture in the context of a nearly-identical statute, 21 U.S.C. §853 (a) (1 ), in Honeycutt v. United
States, -
U.S. -
, 137 S.Ct. 1621 (2017). There, the Court noted that criminal forfeiture serves
a number of important governmental interests, including "separating a criminal from his ill-gotten
gains." Id. at 1631, quoting Caplin & Drysdale, Chartered v. United States, 491 U.S. 617, 629
(1989). The Court stated that such forfeiture was limited to "tainted property" and that the statute
"defines forfeitable property solely in terms of personal possession or use." Honeycutt, 137 S.Ct.
8
at 1632. The Court proceeded to define "obtain" as "to bring into one's own possession," adding
that "neither the dictionary definition nor the common usage of the word 'obtain' supports the
conclusion that an individual 'obtains' property that was acquired by someone else." Id.
In reversing the district court's ruling that monies withheld from Chin's paycheck for taxes
were not subject to forfeiture, the First Circuit relied on its prior decision in United States v. Hurley,
63 F.3d 1, 21 (1995). Several other circuits have also held that forfeiture applies to gross income,
not net income. E.g. United States v. Christensen, 828 F.3d 763, 821-823 (9 th Cir. 2015); United
States v. DeFries, 129 F.3d 1293, 1314-1315 (D.C. Cir. 1997); United States v. Lizza Indus., Inc.,
775 F.2d 492,498 (2d Cir. 1985). Significantly, all of these appellate decisions predated Honeycutt.
Moreover, there seems to be a split in the circuits on this legal question, as well. See United States
v. Genova, 333 F.3d 750, 760-763 (7 th Cir. 2003) (holding that RICO forfeiture applies only to net
proceeds obtained by defendant).
Chin contends that he never actually received, acquired, or "obtained" monies withheld from
his salary by his employer and subsequently paid as federal or state income taxes, so those sums are
not subject to forfeiture. Indeed, since that portion of Chin's salary has already been paid to the
government, the government would be collecting double if Chin was required to pay it again in the
form of forfeiture. To make matters worse, he would presumably be compelled to use completely
untainted funds to meet that forfeiture allegation, which would totally contravene both the language
and the intent of the criminal forfeiture statute.
This is one of numerous cases requiring lower courts to apply the RICO forfeiture statute.
In order to resolve an imp01iant, recurring legal issue, resolve a split in the circuits, and rectify a
miscarriage of justice in this case, the Court should grant the petition, hold that monies withheld
9
from a defendant's salary and previously paid as federal or state income taxes do not constitute
"proceeds" "obtained" by that defendant subject to forfeiture under 18 U.S.C. §1963, and remand
this case for resentencing.
CONCLUSION
For the foregoing reasons, the petition for a writ of certiorari should be granted.
Respectfully submitted,
GLENN A. CHIN
By his attorney,
/s/ James L. Sultan
James L. Sultan
COUNSEL OF RECORD
RANKIN & SULTAN
1666 MASSACHUSETTS AVENUE, P-16
LEXINGTON, MA 02420
(617) 720-0011
DATED:
September 1, 2022
10
APPENDICES
Page No.
APPENDIX A
United States v. Glenn Chin, 965 F.3d 41 (1 st Cir. 2020) ............. A-1
United States v. Glenn Chin, 41 F.4th 16 (1'1 Cir. 2022) . . . . . . . . . . . A-19
APPENDIXB
United States v. Glenn Chin, Docket No. 14-10363-RGS
Memorandum and Order on Forfeiture of Property . . . . . . . . . . . . . . . . B-1
United States v. Glenn Chin, Docket No. 14-10363-RGS,
Amended Judgment in a Criminal Case ......................... B-19
APPENDIXC
18 U.S.C. §1963 (a) (3) ....................................... C-1
U.S.S.G. §2Bl.1 (b) (16) (A) .................................. C-1
WESTLAW CLASSIC
R OrlgJnol lmaga of966 F,3d 41 (PDF)
965 1•.3d 41
Unlted Stntos Court of Appm1ls, First Ch~u(t.
Unltod Stat•• v. Chin
Urd!ed Slates Court of Appeals, Ftrot Circuit, ! July 91 2020 ] 965 F.3d 41
I RICO 13U8:,0l$p.Gulde 13,304 (A(Jprox. 23 pagM)
v.
Glenn A. CHIN, Defendant, Appellant, Cross-Appellee.
No~. 18~1263, 18~1310, 18~1500
July 9, 2020
Synopsis
Background: Defendant was convicted In the United States District Court for the District of
Massachusetts, Richard G. Stearns, J,. of raoi<eteerlng, racketeering conspiracy, and other
offenses, was sentenced to a 96-month p1·lson term, and, 2018 WL 1399297, was ordered
by pay restitution. Defendant appealed, and government cross-appealed.
Moldlngs: The CouIt of Appeals, Barron, Circuit Judge, held lhat;
1 evidence was sufficient lo support convictions:
2 sentenolng court's loss amount calculation was proper;
3 defendant could be subJeot to. sentencing lnorease for offense Involving oonsclous o,
reol<less risk of death or serious Injury;
4 sentencing increases for vulnerable victims could apply to defendant:
6 lorreiture amount would not be reduced by federal Income taxes owed by defendant: and
6 forfeiture order In amount of defendant's salary would not be excessive.
Affirmed In part, vacated In part, and remanded.
W<ist Headnote& (28)
Change View·
1
2
Racketeer Influenced and Corrupt Organlaatlons 'h Weight and .
sufficiency
Evidence. was sufficient lo prove that pharmaceutical manufacturer for which
defendant was employed engaged In a regular business practice of fraudulently ·
representing to Its customera that the medications that It was shipping to them
had been produced In anoord wm, certain safety standards when In fact they had
not been, demonstrating a pattern of racl<eteerlng activity, as required to support
convictions for racketeering and racketeering conspiracy; testimony from
manufacturer's employees Indicated that manufacturer, on at least 12 occasions,
shipped customera medications that It had falsely represented w,,re produced In
compliance with required safety sl!lndards without fh~t obtaining testing results,
from which It could be ressonably Inferred lhat such practice was continuing, 18
u.s.c,A. § 19s2(c).
Rack~teor lnfluencod and Corrupt Organliatlons ~ Tin(• and duration
Individual predicate acts of racketwrlng that occur within ten years of one
another must be related to one another it1 order to meet the pattern element of a
racketeering convtollon. 18 U.S.CA § 1962(c).
1 Case that cites this headnote
APPENDIX A
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3
Rookoteor lnfluonoed and Corrupt Orgonl%atlons ~ conllnulty or
relatedness; ongoing aotlvlty
Predicate acts of racketeering must amount to or pooa a threat of oontlnued
criminal activity to constitute a pattern of racketeering activity, as required to
support racl<etoerlng convlcllon. 18 U,8.C.A. § 1962(0). ·
·
1 Case that cites this headnote
4
Racl<atoor lnflue_noed and Corrupt Organizations !@-,]Ill Time and' duration
The continuity requirement to establish ~ pallern of rocl<eteerlng activity, as
necessary to support a racketaeI:lng conviction, may be satisfied by showing
"clooed•ended" continuity, which depends on a showing that the related
predicated acts ooourred dt1ring a oloood period of repeated oonduct. 18
U.S.C:A. § 1962(0),
6
Rackoleer lrilluonc•d and Corrupt Orgonl1.otlons ..~ Time .and duration
Closed•anded continuity to establish a pattern of racketeering actlvtly, aa
necessary to support a racketee~ng conviction, may be demo~straied by· proving
a series of related predicates extending over a substantial period of time that Is·
nonetheless finite. 18 U.S.C.A, ~ 1962(0).
6
Racl,ateer lnlluericed and Corrupt Organlzatlono ~ - Coniinuliy or
. relatedness: ongoing activity
Th~ continuity requirement to establlsli a pallern of racketeering activity, as·
necessary to support a racketeering convlotlon, may be satisfied by showing
"open-ended" continuity, which· depends on a showing that the related predicate.
acts oonatltuted pasf conduct that by lta nature projecto_lnto the future with
threat of repetition. 18 U.S,C,A. § 1962(ci
a:
7
Raok&teer Influenced and Corrupt Orga1ii1.atlons . ~ Continuity or
relatedness; ongo[ng activity
Related predicate acts may reflect'1ho kind of "open-en.dad continuity" that ..
suffices to show a pattern of racketeering activity, as necessary to support a
· racketeering conviction, when they Involve a distinct lhreat of long-term
racketeering activity, as whon a criminal's extortionary demand Is accompanied
by a promise, lmpllolt or·expllclt, to regularly rnake lllmllar Illegal requests In the
Mure, 18 U.S.C.A. § ·I962(c).
1 Case that cites this headnote
8
Raol<0teor Influenced nnd Corrupt Organizations ob Continuity or
relatedness; ongoing aoilvlty
Related predicate acts may be found to r<aflect open-ended continuity -Iha!
suHlcas to show a pattern of racl<eleering aollvlty,.as necessary lo support a .
racketeering conviction, whan 1hey an, part of an o~golng eritl(y!ll,n,gular way of.
doing business, when the entity's business Is, at leastin part,.'laglUniate.·18
U,S,C:A. § 1962(c),
9
Crhnlnal Law if,, Review De NoYo.
Crlmlnat'Law if,, Sentenolr,g
Tho Court of Appeals reviews th• district court faclflndlng at sentencing for clear
error and affords de novo consideration to Its Interpretation and application of the
Sentencing Guidelines, u.s.s.G. §.1 B1 .1 et aeq.
1 Caso that cites !his headnote
'10 Sentonclng and Punlahmont ob Value of loss or benefit
Caloulallon of loss amount by ldonUfylng specific shipments of medication that
pharmaceutloal manufacturer fraudulently represented to Its customers was
produced In accord with certain safety stan·dards when. In fact It had not been
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and using manufacturer'• revenue from those shipments, rather than using
manufacturer's total sales during the relevant time perloo, was proper, In
determining total offense level In sentencing defendant, manufaoturor's
employee, for racketeering and racl<elearlng conspiracy, absent showing Iha! all
manufacturets products were sold pursuant to a fraudulent scheme. 16 U.S.C.A.
§ 1962(0): U.S,S.G. § 2B1.1 (b)(1),
11
Sentencing and Punishment l@':ll' Risi< of death or bodily lnjuoy
Defendant convicted of racl<etoerlng and raclMeerlng conspiracy, In connection
with his employment for pharmaceutloal manufacturer that fraudulently
represented to Its customers that medtoatlons II was s111pplng to them had been
produced In aooord with certain safely standards when In fact they had not bean,
could be subject lo sentencing Increase for an offense Involving conscious or
reckless risk of death or serious ln)u,y, even though direct victims of the
fraudulent soheme were hospitals and medical providers, rather than patients
who were at-risk of being harmed by medication, If defendant's relevant conduct
Involved conscious or reckless risk of death or serious bodily ln/t11Y, U.8,S.G. §
2B1.1(b)(16).
12 Santenotng and Punishment ~ Vulnerabll/ly of victim
Sentencing lncreas.es for vulnerable victims could apply to defendant convicted
of racl<etee~ng and racketeering conspiracy, In conneotlon with his employment
for pharmaceutical manufacturer that fraudulently represented to tts customers
that medications It was shipping to them had been produced In accord will;
certain safety st,mdards, notwithstanding that dlract targets of the fraudulent
scheme wore hospitals and madlaal providers, rather tlian patients who were al
rlsl< of being haImed bytha medication. U.S.S.G. §§ 3A1.1(b)(1), 3A1.1(b)(2).
13 Sent.onolng and Punishment ~ Vulnerability of vlcijm
To come within !he definition of victim under the vulnerable victim sentencing
guldaJ1nes provisions, one need not be. a vfctlm of tlia charged offense so !olig as
one Is a vtctlm ·of the defendanfs otherrolevanl conduct, U.S.8.G. §§ 3A1.1(b)
(1). 3A1.1(b)(2).
14 Criminal L.aw th> Judgment, sentence, and punishment
The Court of Appeals may affirm the district court's ap'pllcatlon of an Increase
under the sentencing guidelines where It can Infer the tower oourrs reasoning
based on what waa argued by the parties or oontalhed In tt1e pro-sentence
report. U.S.S.G. § 181 .1 et saq.
15 Forfoftui·os ~ Amount, particular cases
FoIfeltura amount that defendant convicted of raol<eteerlng and racketeering
oonaplracy In oonnectlon with his employment for pharmaoeutlcal manufacturer,
a11slng from scheme of fraudulently representing that medications l'/Ora
produced in· accord with certain safety standards_ when In fact they were nol, was
required to pay was full amount of salary that defendant received from
manufacturer during the time period of the offenses, rather than the net Income
defendant would receive after payment of federal income taxes. 18 U.S,C.A. §
1963(a)(3),
1 Case u,at cites this headnote
16 Forfeitures th> Plenaoy or de novo review
The Court of Appeals reviews questions of law in oonnectlon with a forfeiture
order de novo.
17 Fo1•foltures ~ Questions of fact and evidence
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Tho Court of Appeals considers mixed qu.esllons of law and fact regarding
fo,fellure orders under the deferential clear error standard,
1B. Forfaltures t'.lll' l'unds and property held by \hi.rd party .
A defendant convicted of racketeering must forfeit propo11y even when It has
merely been held lri custody by that lndlvldual and ha• been passed along to Its
true owner,
'
19 Po1folturee ~ Llmltallon of amount In. general
. .
Fact that a defendant convicted of• racketeering offenae ·In connection with his
employment Is required to pay a certolri portion ·of his s~l~ry to the fed~ral
government •• taxes does not affect Iha fact that he obtained that portion, for
· purpose of calculating folfalture amount.
·
·
·
1 Caso that cites this headnote
20 Fin&• ~ Excessive ftnes
Forfeitures I@,;;,, Particular forfeitures
Forfeiture order In the amount of $473,584.50 was not axoesslve fine In violation
of Eighth Amendment for defendant convicted of raoketeerlng and racl<etoorlng
conspiracy In connecllon with his employment.for pharrnaqeutlcai manufacturer,
arising from scheme ofiraudu/enlly reprasenting·that ·medications ware
.
produced In accord with certain safety standards when In fact they
not;
amount represented defendant's salary.dµrlni;(the rel~va,it t!m•perl~d, .·· .·, : ...
defendant had net worth of aboot $423,00Q, and defendant and his wWe spent
almost $700,000 In 16 months prior .to entry of /o;Felture order, U,S, _Const. .
Amend. 8; 18 U.S,C.A, § 1963(a)(Sf
. . ..
ware
i1
Forfeituroo ..., Questlo11s of.fa cl and evidence
The /actual findings made b{ihe district.courts In conduct!rig the Eighth ·
Amendment excessiveness Inquiry m'!st be:~ccepted upoh.appollajo reyliw/ of a
foiielture order unlas& clearly arronSciu·s, iJ.s." ConSt,,A~eilC'i. 8.
22 Forfettur••· ~ Plenary or de novo· review
The Court of Appeals reviews the question of whethe,· the amount of a forfeiture
order violates Jhe Eighth Amendment prohlbl.Uon against excessive .ff.nes de .·.
novo. U.S. Const. Amend, 8.
23 l'lnes ~ Excessive lines
A defendant's Inability to satisfy a forfeiture at the time of oonvlollon, In and of
ltseff, is not al all sufficient to render a forfeiture an unconstitutional excessive .
fin.o. U.S. Const. Amend, 8.
24 Forfeiture• ~ Excessiveness and Proporllonallty · ·
The bar for a forfeltuIe order to be unconatltutlonally axoesslve~n gi'ound that
the defendant may be deprived of his future ablllty to earn a·11v1nii.Is·• high one,,·
U.S. Const. Amend, 8,
----·----------------------25 Crlmhial I.aw <h> Raqulsltas and sufffclenoy of Judgment or sentence
· The appellate r.ourt treats a restitution order as an appealablo flnal Judgment
even when It does not Indicate the amount o/,estltutlon. 18 U.S.C.A. § 3664(0).
1 Case that cites this headnote
In
26 Sentencing and Punishment ~ Cause of loss general
The analysis of the reslltullon amount under the Mandatory Victims Reslltullon
Act (MVRA) focuses on the causal relationship between the conduct and the
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loss, not between the nature of the statutory offense and the loss, 18 U.S.C.A. §
3683A(a)(2),
---------,~····. · . --.--.--27
Sentenotng and Punishment @-7,0 Nexus to offense of conviction
In assessing wI1ether the proximate oause requirement under the Mandatory
Victims ResUtullon Act (MVRA) has been satisfied, an appellate court reviewing
a resHlutlon order asi<S whether the harm alleged has a sufficiently close
connection to the oonduot at Issue. 18 U.S.C.A, § 3663A(a)(2),
1 Case that cites this headnote
28 Sentencing and Punishment ~ Nexus to offense of conviction
Reetltutlon under the Mandatory Vlothns Restitution Aot (MVRA) Is warranted If
the harm Is a foreseeable raault of defandant'a conduot, 18 IJ,S.CA § 3663A(a)
(2).
'44 APPEALS FROM THE UNITED STATE:S DISTRICT COURT FOR THE DISTRICT OF
MASSACHUSETTS, [Hon. Richard G..steams,
Dlstrlot Judg!l]
u,s,
Attorneys and Law Firms.
James I.. Sultan, with whom Kerry A. Haberlln and Rankin & Sultan were on brief, for
appellanUcross-appal/ee.
r,avld M. L/ebenman, Attorney, Criminal Division, Appellate Section, United States
Department of Justice, with whom Andrew E. Lolling, United States Attorney, Amanda P.
Strachan, Assistant United States Attorney, George P. Varghase,Aaalstant United States
Attorney, Brian A. Benczkowsld, Assistant Altomey Genaro/, and Matthew S. Miner, Deputy
Assistant Attorney General, ware on brief, for appal/eo/oross•oppellant.
Before Barron, Stahl, and Llpez, Circuit Judges,
Opinion
BARRON, Circuit J(ldge.
Thoso consolidated appeals, 11/\e those we also decide today In Unllad States,,~.
- · F.3d-, 2020 WL 3868247 (1st Cir. 2020) [Nos, 17•1694, 17s1712, 17-2062],
concern convlollons '45 that stem from e 2012 scandal Involving the Massachusetts-based
New England Compounding Center ("NECC'), The scandal broke afte1· federal lnves\igators
traced the cause of a deadly nationwide outbreal< of fUngatmenlnglUs and other Illnesses to
medications that Nf:CC had produced at Its facl/ltles. Federal.criminal charges were then
brought against a number of NECC employees, Including the dofendarit In this case, Glenn
c1,111, who was NE:CC's supervising pharmao/st at the Hine. Por his role In the scandal, ha
was convicted In 2017 of numerous federal mimes, and, In consequence, sentenced to a
lengthy term of Imprisonment, subjected to an order of forfeiture, and ordered to pay
restitution.
Chin now challenges two of those convictions, for rocl<eteerlng and racl<eteel'ing
conspiracy, raspectJve/y. He contends that they must be reversed because the evidence did
not suffice to support them. Ha also oontends that, In consequence, his prfsoo sentence
must be vacated. If he Is right about the lack of evidence to support his convictions, then
the order of forfeiture also must be reversed.
The government, for Its part, brings Its own appeal. It challenges the prison sentence that
Chin received as well as bolh the $175,000 order of forfeiture that the District Court
lmposad on him and its award of restftut1011 of an as~yet~unspeclfled amount.
We efftrm both of Chin's federal racl<eteering-related convictions. flowever, we vacate and
remand the prison sentence, the forfeiture order, and the restitution order.
I.
Our opinion I n ~ addresses the conso/fdated appeals In the criminal case against
Chin's boas and alleged co•consplrator at Nf:CC, Barry Cadden. He was charged In 1110
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same Indictment ea Chin but his Mal on those charges was severed /rpm Chin's, ~
~ . 96\l F.3d at 8. The Issues that we confront here ovarlap' In many respects with
lho;,e that we address In our opinion In Caddan's case. We thus re/er to our reasoning
there throughout Iha analysis that follo1:11s, We also refer tha reader to that opinion for
additional details about NECC's preotlces and the federal cirmlnal Investigation Into them.
Briefly stated, however, the facts relevant to the appeals In Chin's case are the following.
The practice of conipoundlng lnvolvea oombl~lng dr~gs with oiher substances to produce
medications, As a compounding pharmacy, NECC ,: which was based In F·ra,iilhgham,
Massachusetls •· p,~pared specialized medications, otherwise unavailable In the wider
markat, to hospitals and other. medical providers upon their request
a
Chin was a trained pharmacist who seived as supervisor at both of NECC's clean rooms.
The oompany'o compounding operations lhat produced the medications tied to the outt,realc_
tool< placa In one of these clean rooms,
On December 16, 2014, following an extensive federal criminal Investigation Into NECC's
role In the outbreak, Chin waa·oharged, along with -Cadden and twelve other Individuals
affiliated wllh NECC, In o 131-cou'nt Indictment in the United States District Court for the
District of Massachusetts. The lndlotment ch~rged Chin With racketeering in vli.ilation 18
U.S.C, § 1962(0); racr,ateerlng conspiracy In violation of 18 U.S.C, § 1962(d); forty-lhrea ·
counts of federal mall fraud In violation of 18 U.S.C. § 1341; and thirty-two counts of
violating tho Federal Food, Drug, and Cosmetic Act ('FDCM'), see 21 LJ,s,c, §§ 331(a),
33S(a).
of
•46 The racl,ataerlng charge alleged sixty-eight predicate acts of raot,eteerlng to support
the allegation lhat Chin participated In the conduct of IIIECC thrOLigh a ~pattern of
,.,;cl<eteerlng activity." Jlfill ·is u.s.c. § 1962(0), Th~~~ ailagad predjcate aols of
raol<eteetlng Included fo1'1)'-threa that ware premised .on mall fra~d allegailons, as mall fraud
la a racketeering activity. ~ kl, § 1961 (1)(8), Thooa allega1lone corresponded to ihe .mall
fraud allegations sat forth In forty,,thrae ofth; stand~eJdne mall flauq ~qunts. ·
·
The alleged mall fraud entailed NEC.C mlsrepresenllng Its various safely protocols lo
customers who· pt1rohased Its medication•. Those medications Included Iha contaminated
"high-risk" sterile madloatlon, methylprednlsolona ')C~tata ("MPA"), that NECC had ·
compounded during Chln'a tenure as Ilia supervising pharmacist th.ere and that had given
rise to the outbreak. In particular, NECC was alleged to have misrepresented that It had
. compiled with the safety stanclards sat forth fr, Ct)apter 7»7 of the United. states
,
Pharmacopela ("USP-797''), which applies fo high0ri,i'K sterile ooriipoundod mddlcatlons.
including MPA.
.
.
.
The slxty.. eight alleged predicate acts of nicketiierlng also1ncll1dli.d twenty;five that were : .
premised on allegations of second-degree inu·ruer, which _Is ltialf a racketeering aotlvlty. ·.· ·
~kl,§ 1961 (1)(A). Tha allegations of seccnd-d~gree murder ware tied lo tlii<lnly•ffv• •.
patients who had died from having been inje~ied \'Jllh tho contaminated MPA the\ NECC
had compounded.
· .. ·
[
..
Tho racketeering conspiracy charge did not Identify specllic predicate acts of iacketeerlng
that It alleged that Chin conspired to commit. firu,\ll:\, § 1962(d), Rather, the Indictment
.alleged that Chin oonsplred to commit a racketeering violation through a pattern of
raoketeo1·lng activity that Involved only unspeolfled lniltancaa of mall'ft•aud. ··.
The District Court severnd Chin's case from Cactdan's and the other defendants'. Chin's
case proceeded to trial, and the jury found hlm·gullty on all counts, A.speolal-verdlcl form
Indicated that, for the purpose• of the racketeering offense, the Jury found that. the
government had proved twelve of the sixty-eight alleged predicate acts of raol<etaerlng,
each of which concerned only mall fraud. The-.peclal verdict form expressly made oiear
that the Jury did not find any of the lwanty..ffva alleged predicate acts of seeti·nd:dagree .
murder, which, again, were relevant only to Iha racl<eteerlcig counl, nol theraokeleerlng
conspiracy count. As to the FDCA counts, the special verdict form showed t~at tile jury ·
/0<,nd that Chin acted with an "Intent io defraud or mlsiaad," an' aggr,;vatlng faotor, on two of
the counts. Sae 21 U.S.C, § 333(a)(2). It did not so find for t11e other thli'ly FDCA counts.
The District Court calculated Chin's sentencing range under1he·Unlted S!atea Sentencing
Guidelines ("Guidelines") lo be seventy-eight to· nlnety-severi"mpntl1s' lmprlson'me~t. The
District Court then sentenced Chin lo ninety-six months' Imprisonment. The District Court
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also lsoued a forfeiture order against Chin In the amount of $175,000. Finally, tho Dlstrlot
Court rulod on Iha government's motlon for reslltullon, 11 ordered that II would "ca/oulale tho
total rostllullon award as the toss ·suffered by Irie hospitals and ollnlos that purchased lots of
degraded or defective d~gs during the fife or the racketeering enterprise," but stated that It
would await the trial or Chin's co-defendanw before apportioning the restltullon amount
among those found guilty and so did not Identify a dollar amount for the award of restitution,
*47The government Issued a notice of appeal, and Chin followed suit,
II,
We b"9in with Cl1fn's appeal, In which he challenges his convictions for racketeering and
raoketeerlng conspiracy, §ll§. 18 U,S,C, § 1962(c), (d), 1 He contends that eaoh must be ,
reversed duo to Insufficient evidence, His sufficiency challenges focus safely on what the
record shows•· or, more preotsely, falls to show - about whether a Juror reasonably could
find satisfied Iha "pattern of raol<etearlng actlvlty,".kl.. § 1961(5), element that fs common to
each or the underlying offenses, mkl.. § 1962(c), (d),
As we will explatn, the challenges to these convictions turn on whether the evidence
sufficed to show f11at NE:CC wa• •· as of 2012 -engaged In a regular business practice of
fraudulently represenllng to Its customers that the medications that It was shipping to them
had been produced In accord with certain safety standards when In fact they had not been,
For, If th• evidence did support that conclusion, then a rea$onabla Juror supportably oould
have found not merely Isolated aots of racl,eleerlng activity but a "pattern" offt.
We begin with Chin's challenge to tho racketee~ng conviction, We then briefly consider his
racketeering conspiracy conviction,
A,
Congress has provided little guidance as to the meaning of th·• "pattern of raol,eteertng
activity" element ror the offense of racketeering, fu!tl kl.,§ 1961 (5), It has made clear that
there. must boat least two predicate acts of racketeering within ten years of one another for
there to be a 'palletn of racl,eteerlng activity." §ll§.(!t But, the relevant statutory text Is
otherwise silent as to what makes a pair ••.or more·- or)ndlvldual pn,dloate acts of
1·acl,etearlng a "pattern of raoketeertng activity,•
2
3 The United Stales Supreme Court haa fleahad out this "pattern" element In the
following ways, First, the Court has made clear that the ln.dlvldual predicate acts of
racketeering thal occur within ten years of one another must have been "related" lo one
anothor,l:WJ.ru2. V. NW, UellT~. 492 u.s, 229, 239, 109 s.ct, 2893, 106 L.Ed.2d 196
(1989). Second, the Court has made clear that the pn,dfcate acts must "amount lo or pose
a threat of continued criminal activity" to oonsUtute such a "pattern." lit (emphasis added),
As we have noted, the special verdict form revealed that the Jury based Its finding of guilt on
the recl,eteerlng charge on twelve of sixty-eight alleged predloate aots of racketeering and
that each or the twelve Involved mall fraud, 2 ·Chin does not dispute *48 that the evidence
sufficed to prove those twelve alleged predicate aots of raol,eteerlng·or that 'they were
"related" to one another, But, Chin do•s contend that the evidence did nofsufflce lo permit
a Juror reasonably to find that they could satisfy the requirement or conllnuily. For that
reason alone, he contends, his racketeering conviolfon must be reversed fa~ Insufficient
evldance of a "pattern of racketeering activity." We thus turn our allenllon to the oontlnulty
requirement and what !he evidence shows regarding ll In Chin's case,
a.
4
5 There are \Wo distinct means by which the continuity requlramenl may be
satisfied. The first requires a showing of"closed-ended" continuity, which depends on a
showing lhal the related predtaaled acts occurred during "a closed period of repeated
conduct." ll,1,, 492 U.S. at 241, 109 s,ct, 2893. Such olosed-ended continuity may be
demonstrated "by proving a series of related predicates extending over a substantial period
of tlme"that is nonetheless flnlt0, Jg, al 242, 109 8,Ct, 2893,
6 The second type of continuity requires a showing of "open-ended" contin(1fty. jg, at
241, 109 S.CI. 2893. That type of conllnu!ly depends on a showing that the related
predicate acts constituted "past conduct tllat by Its nature proJeols Into tho future with a
threat of repetition," jg,
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711 a
7
O Tho Supremo Court has provided two examples of )Vhat oonsUlutes evldenoa
of opan:,anded continuity, In the first example, related predicate acts may reflect the kind of
open-ended oontlnully that auffloes to show a "pattarn of t'OOl1ateerlng activity'' beoaueo they
'Involve a distinct threat of long-term racketeering activity," as when a criminal's ~tortlonary
demand Is aooompenlad by a promise, Implicit or expllolt, to regularly make slmllat' Illegal
requasts in the future. Jg. at 242, 109 S.Ct. 2893 ..tn the seoond eJ<ample, related predicate.
acts may ba found to ,•aflect open-ended continuity when they 'are part of an ongoing
entity's regular way of doing business." kl. The Court has made clear that the entlt{·
referenced In the second eJ<ample may have been, at least In part, a "legitimate business,'
Jg. at 243, 109 S,Ct, 2893,
.
c.
Chin. contends that the evidence did not suffice to support a finding of either closed.ended
or open-anded continuity, But,' even assuming that Chin adequataly prese(Ved this
challenge, despite tM government's contention to the co.ntrary, and thus that ou,· review Is
de novo, m United States v. Tanoo-Baaz, 942 F.3d 7, 15 (1st Cir. 2019),we disagree, As
we will explain, • Juror could reasonably find on this record that, by the fell ol 2012, It had
become a regttlar buslnese practlca of NECC to ship m~dlcatlons that had not baen .
prepared In line with the requirements of USP-797 despite. representing to customers that ·
they had been,
· ·
'49 Slgnlffcantly, the twelve predicate aots of racketeering lhat the Jury found lnvolvecj·
NECC having shipped custom era medications that It had falsely told them the company )lad
produced In compliance with USP-797, and Chin does not dispute thal the evidence
sufficed to supp6rl the finding that such a'fraud had been perpe~ated In each Instance via
that particular false roprasentatlon, Moreover, those twelve predicate ~cis concerned
dfstln<>l shipments of medications that had been sent to. distinct custom era. And while they
were all sent within discrete time period, a Juror reasonably could find on this record that
the company's piaotlce of fraudulently shipping l)l•dloatlons ;.. if they had bean· p·roduoed ·
In compliance with USP-797 had no naturat endpoint. · ·
·
a
In accord with this ooncluslon, we noti that a former lab te<:hnlclan at· NEcc: Jos~ph
Connolly, tootlfled that U10 company "routinely se11l madloations out prior to getting results.·
back from testing' for sterility, notwllhstandlng that U8P·797 called (or NEOCito wait foithe··
results of such tooting before shlpmenCln addlilon: another company_~mployee, Nlohol!IS
Booth, tesmled lhat It wa• not necessarily 1•a oommo~ pracllc,,•·when he started foiihe .
company to ship medications wlthoui iastlng the111 In. the mariner.that USP-797 required,
but that, as· P"'duotlon ramped up, "oomera were cuf'. and 'It started happening more· and.
more." Booth further testmod that, the ialf of 2012, ihe company was sending shlpm~nts
·of unteste.d modloatlone to oustomero under ~Id ·1abels,Jir med[oations the:ftiad been.. . . .
tested, "quite a bit" and that Cadden ondoi'Sed th~ prn~tloe, 3..
by
Chin argues In response that NECC operat~d ~aielylor ~o~e UU)n a d~ca~e b~fore cutting .
corners In response to a brief surge In dem'and In 20"12, Based ·on .the much 1.~ng~r petiod .
of safe conduct, he appears to argue, a Jurorcould nofreasqnably:find:tha\ mail fraud· via
false representations of usp.797 compliance waspart and ·pare~! of a iegular NEcc·
business practice, such that the proollce would b·• ong~ing one: .
.
an : . .
. ., .
'.
The jury was tasked, however, with deoldl~g whetherthe· parted· o/ fraudulent ocllvlty at
NECC was of a nat\tre that there was "a realistic prospect of coiitlnulty over en ·open-ended
period yet to come," l:!ill!:!JiLQi:opedlcs Corp, v. f.'l.QdJ:lQ!MlZ, 78ff.3d 621, 631 {1st Cir. · .
2015) (quoting Feinstein v, Bllll9lutlon Tr. Corr2., 942 F:2d 34, 46 (1st Cir, 1991)). At the.
very least, the evidence sufficed to permit a Juror to find. that NECC's .regular practlce·was
to engage In similar acts In lhs faoe of high dem~n.d and.ihat demand pressu1·e y,ould have
conilnued to be high going forward.
Chin points to evidence that shows that NECC tried to address the problems In Its clean
rooms In arguing that NECC's fraudulent scheme was lll1elytcf come to an end after the
production surge in 2D12, But, es Chin himself concedes, some oflhese efforts ware
"Inadequate," some were "short-lived," and they all "ultimately failed,"
Chin also argues that It would have been Illogical for NECC to continue fo produce '50
medications in a substenderd manner lndeflnltaly, given that Its business model depended
on customers' trust In the safety of Its products.· But, Chin does not dispute that lhe twelve
predicate aots of mall fraud ocou1red despite the obvious business risk that they --11110 any
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fraudulent aotlvlty, ff discovered·· posed lo NECC, Thus, a Juror reasonably could ftnd Iha~
to whatever extent NECC was lncentlvlzed to comply with safety protocols, those Incentives
were lnsufffolent lo cause the company to refrain from fraudulent conduct In the face of high
demand from oustomers. 4·
Finally, Chin lnvol1es various precedents that have vacated findings of llablllty for
racketeering based on Insufficient evidence of open-ended continuity. But, those cases
elt11er Involve a defendant's attempt to maintain a single contract, ll!lJl.§Y~91ll1,.lrul. v.
~ . 303 F.3d 100, 106 (1st Cir. 2002), ora circumstance In whloh the defendant's
alleged fraudulent scheme waa limited to a "handful of victims" and was "Inherently
terminable," Cofac,ed/1. S.A,,Jrul. v. Windsor p1umblqg..§!IRRIY..QQ.. 187 F.3d 229,244 (2d
Cir. 1999), Thay are thus readily distinguishable from Chin's oase,
In sum, the reoord falls to support Chin's sufflcl1enoy challenge to his oonvlctlon for
racketeering. Rather, th~ evidence sufficed to show that NECC's fraudulent schema of
shipping medications as ff they had been produced In compllanoe with USP-797 was an
ongoing business practice as of 2012 that showed no signs of abating.
tl.
There remains Chin's sufficiency challenge to his conviction for racketeering conspiracy,
Sul, the only arguments that ha makes In support of that challenge are Identical to the ones
that we have Just re/acted. We thus must re/aot this challenge as well.
Ill.
We now turn to the government's challenges In Its appeal. They concern, respoctlvely, tho
prison sentence that the District Court Imposed and the ordera of forfeiture end restitution
tliat It Issued. We begin with the governments arguments that the District Cou,i erred In
calculatlng the appropriate range for Chin's sentence under Iha Guidelines. We then tal<e
up the government's challenge to the District Court's forfeiture order. We .conclude by
considering the government's challenge to the District Court's ruling on re~tltullon.
A.
g The government argues that the District Court mlscafculated the amount of loss
attributable to Chin's Illegal conduot under the Guidelines and Ilia! the District Court
erroneously failed to apply several enhanoernents underlhe Guldall~es, In assessing these
challenges, we review the Dlstrtot Court's "factflndlng for cleai· error and affo(d de novo
consideration to tts Interpretation and application of the sentencing gllldellnes/ J.J.a!Wi
ll.l!!lfill v. Bepltez-Bellran. 892 F.3d 462,469 (1st Cir. 2◊18) (quoling Unit~cl Statos v.
Elores-Machlcote. 706 F,3d 16, 20 ('Isl Ctr. 2013)). ·
1,
Chin's total offense level was based, In par~ on the amount of "toss" attributable '51 to lhe
underlying fraudulent scheme In which he was found to have been engaged, llJll! u.s.s.G.
§ 281 .1(b)(1); ~ k l . § 281.1 cmt. n.3(A)(i) (explaining that "lossls the greater of
actual loss or Intended loss," where "'[a]ctual loss' means the reasonS:blyforeseeable
pecuniary harm that resulted from the offense"). The. District Court fixed· that loss amount at
$1 ,4 million •· a figure that required the District Cou'rt to Increase Chin's offense level under
the Guidelines by fourteen levels, full!ll!. § 2B1 .1 (b){1 )(Ii). Tho government contends,
however, that the District Court erred because It substantially understated the loos amount.
The District Court arrived at the $1.4 mllllon amount by adding up the revenue that NECC
had generated In the relevant period from whet the District Court described as "every
potentially contaminated or degraded d1~g shipped by NECC from tl1e period beginning In
March 2011 to the demise of the company In 20·12." The District court's method for
calculating the !oss amount was appatefltly 1he same one that it osed at Cadden1s
sentencing, and the parties make no argument to the contrary. We thus understand the
District Court lo have arrived at Iha loss amount of $1 .4 million by, as It had done In
Cadden's case, adding up the lotal NECC revenue generated from sales of medlcallons
that were Identified as expired, contaminated, nonsterllo, sub-potent, super-potent, or
co01pounded by an unquallftad technician.
The government takas Issue with that approach, as It did In Cadden's case, and cohtands
that the District Court erred by not calculating the loss amounl In Chin's case based on the
total amount of NECC's sates during the relevant time period, Bui, tho government has
failed to show that all of NECC's sales over tliat period ware based on fraudulent
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representations, just as the government failed to mal1e that showing In .C.llll!!rul, .S.W. 965
F,3d al 32. N~r. as we explaln•d I n ~ . Is the government right that revenue !hat
Necc. generated from v9n-fraudulent sales during the relevant time porlod may be
Included In !he loss amount booauae customers would not have made th• purchases from
NECC hail they known about NECC's fraudulant sales even If thay had not been dlreotly
defrauded themselves, l,M I!!. at 32-33,
To be sure, shfpments In addition to those that the District Court relied on to oslculale the
loss amount In Chin's case could, perhaps, ha\le been supportably found lo have been
made fraudulently In their own right. Thus, such shipments could perhaps have bean
Included In the loss amount oalculatton, thereby generating a flgura greater 1han $1.4
mllilon, Tho govo,•nmant did not present the District.Court In Chin's o.aso, however, with a.
figure for the loss amount tha1 wolIld hove reflected Its view. of the actual amount that
customers paid for the fraudulent shipments.made by N~CC that would have been less
than the.greatest loss amount that.It sougt,t but more lhan the,$1.4 mill Ion amount. At ..
Chin's sentencing, the government merely advancad Its sweep.Ing claim that any NECC
sales during 1he relevant period neoossa1ily constituted "loss: That was so, we note, even
though the governniant was on notice that the District Cou,t was aware of the argument
tha1the government had failed to prove that all NECC products were sold pursuant to a
fraudulent schema from the arguments made at Cadden's·sen!enclng, whl6h' preceded
Ohln 1e.
1o Accordingly, much as we concluded when facing 1he slmtlar Issue In Cadden's case,
.tlllJl. !,',ru;jQfill, 965 F,3d at 33--34: we hold that the Dletrlo1 Court acted well within Its ·
discretion In Identifying specific '62 shipmen!• that were showh lo bi.:iraudulent and using
NECC's revenua from those shipments to ground Its loss oaloulatloh: The blstric-t Couri was
riot obliged to speculate on the extent to whl~h ·NEC.C'• revenua, also'reiiected other
fraudulent aales lhat ware not specifically Identified ·by ihe governrnent.·~ U.S,S.G, §
2Bi.1 cmt. n.3(0) ('Tho court need only make i, 'reasonable estimate oi Iha loss: ,,:LT]he
court's Joss determlnallon Is entitled to approprlaie defo;ence,"): United Stata, V, ~ - .
~ . 925 F,3d 17, 28 (1st Cir, 2019) ("[A] loes calculation oaed.not be preolsa:°ths
sentencing court need only rnake a reasonabla·aetimate of th~ range of loss,'.): 1!n!l!i.\t .
!ill!!ll!ll V, Blvera,Rodrlgy!l.,, 489 F,3d 48, 53 (1sibir, 2007) ('In arriving ai an appropriate .
sentence, a district court enjoys 'broad dlscl"Otlon in. the lnforrn~tion It may rsoolve a1id
conal~ar regarding [a] defendant and his 0011duct' '. ·(altaratlon in orlg.ioai) (q.,iotlng
~ v. Curran. 926 F,2d 59, 61 (i st Cir. 1991 ))), We lhu; decline Iha govarmnant's ,
request to vacate and remand Iha sentenoe so that tharil.strl6t Court may undsrtal<e the
l<lno of calculation that tho government /ailed to request be made at sentencing,
lJ.nilllll
2,
Tho goveI·pment next tal,as Issue with the .District Court'e refusal under1he Guideline& to
apply the two-level enhancamenl that kicks. when an "offense .lnv.olvod ,.. the con~olous ..
or reckless rial, of dealh or serious bodily l~jury.' U.S,S.G, §.2SU(b)(16), 5 The, Dlst;i~i
In
Court found tl1e enhancement Inapplicable because Chin. had r.iol. committed ~n o/fenoe .
that cet~ed with It !he requisite rlsl< ldentrnect. In 1he •nhanooment The Dlstrlot Courts .
oonoluslon res1ed on en Interpretation of the Guidellneo,.and so we review ltc!e.noim. §J>.il
&mftez-Beltr~n, 892 F.3d at 469. 'l'le agree with the govamment that ttie District Court
erred.
The Dlstrlol Court appeara to have concluded that, as a. ma~er ol Jew, .the enhance111ent
cotlid only apply If Chin had comrnlttod a criminal olfense•that, by I.ts nature, hwotved .the
conscious or reckless risk of death or serious bodily lnJu.ry. The Dlslrlct Cotut then found
th al tho nature of his offenses did not pose the requisite kind of risk. According lo 1ha
DisIrleI Courl, this was so because, with respect'to tho;. ,olfenso~. the ''.vloUma that w.e.r•
ldenllfiod were the clinics and Iha l1ospltals who purc.hased 1he drugs," not the patients who .
wore aclually put at rlsl<, as those patients "were not recipients of Ni:::CG's [fraudulent]
rapresentaUons.,.
The District Court did go on to oonilder whether t! oould find, contrary to the jury, that ·chin
had commltlsd oeoond,degree murder. The District Court appears to have lhought that
offense might carry with It the oonsclous or reckless risk identified In the enhancel)lant. Bnt,
the District Court concluded, 'the evidence did not establish a reckless and .knowing
disregard of a reasonable certainty of causing death pr great bodll~ harm." Thus, consistent
with tho Jury verdict, it found that Chin had not committed second-degree murder.
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1·1
The problem with !he District Court's reasoning Is !he following. As we explained In
Qru;Wan, J!M 966 F,3d al 34, In o,molderlng the nature of Ille rial< Involved In Chin's
"offense,' U,S.S,G. § 281, 1(b)(16), Ille District Court needed lo evaluate ihe "relevant
conduct" tor·whlch the Guidelines hold him accountable '53 In relation to the offenses for
which he was convicted, kl.§ 161.1 cmt. n, 1(1) (defining "offense'). That "relevant conduct"
Includes, among other things, "all acts and omissions" that Chin "committed, aided, abetted,
counseled, commanded, Induced, procured, or willfully caused ,.. that occurred during the
commission of Iha offense of conviction," kl,§ 1B1.3(a)('l)(A), Thus, Chin was subject to
the enhancement so long as his conduct during the commission of Iha offen,os for whloh
he was convicted•· whether federal mall fraud, or racketeering and racketeering conspiracy
based on pradlcate acts of raolmtaerlng Involving mall fraud 8 •• carrlad with It the rtsk
Identified In Ille enhancement.
Thus, It ts not necessarily determinative•· as the Otstrlot Court appeared to conclude •·· that
the direct targets of the mall-fraud-based offenaes that be was convicted of commltllng
were hospitals and medical p,ovlders and not the patients who were et rlsl( of being hurt
downstream, Chin's participation In a scheme to distribute medloetlons that are subject to
USP-797 •• lt1oludlng high-risk sterile ones llke_MPA •· but that are hot compounded_ In
compliance with It despite representations to the contrary oould potentially constitute
"relevant conduct" that "Involved ... the conaolous or reckless risk of death or serious bodily
Injury." jg.§ 2B1 .1 (b)(16), Thus, It was legal error for Ille District Court to conclude that
such a finding could not trigger the enhancement simply because the patients who might
_Inject those medications ware not themselves defrauded and only NECC'a direct customers
ware.
Chin argues that we can nonetheless afftrm the District Court. Chin bases that contention
on a finding that the District Court made In tho course of addressing the Jury's determination
that Chin did not commit the predicate acts ol rackateerlng actlVl!y Involving second-degree
murder, The finding was that Chin did 11at act with "a reckless and knowing disregard of a
reasonable certainty of causing death or groat bodily harm,"
Chin asserts that, by finding that he did not have that state of mind, the District Court
necessarily found that ha did not act, as the enhancement requires, with a "conscious or
,·ecl<lesa risk of death or serious bodily Injury." Thus, he argues, the District Court
necessarily found that this Guidelines enhancement did not apply,.
Hero, too, the District Court's analysis turns on an Interpretation of ff1e Guidelines and thus
presents a question of law that wo review do novo. fu)e Benljez-Bettnl,n, 892 F.3d at 469.
And, here, again, we agree with the government.
The District Couot found that Chin did not act with a "reckless ll!l!l knowing" state of mind In
disregarding a "reasonable certainty of ... death or groat bodily harm," Tho sentencing
anhanoement, however, describes the requisite ment~I state using dlsJunative language:
the enhancement applies so long as tho defendant acted- in spite of either a "conscious ru:
ract<less risk." U,S,S.G. § 2B 1. 1(b)(16)(A) (emphasis added), Thus, the District Court's
finding does not foreclose the possibility that Chin's offense Involved the mental state
necessary for the enhancement's applicatlon. We therefore vacate and remand the
sentence for tho DlstIiot Court to assess whether any of Chin's relevant conduct, as defined
under U.S.S.G. § 1131.3(a), "Involved ... the conscious orreoldess risk of death or serious
bodily Injury." ]J!. § 281 .1(b)(16).
'543.
12 We next consider the government's challenge to the District Court's refusal to apply a
two-level enhancement that the government requested based on Its contention that Chin
"knew or should have known t11at a victim of the offense was a vulnerable victim." U.S.S.G.
§ 3A1.1 (b)(1). We also consider the government's related challenge to the District Court's
refusal to apply an additional two-level Increase, Insofar as that vulnerable victim
enhancement appllad, based on tile government's contention that ''the offense Involved a
large number of" those "vulnerable victims," Jl!. § 3A1.1(b)(2).
13 The District Court ruled that the harmed patients were not "victims" within the
meaning of either enhancement. It did so because It determined - seemingly as a matter of
law - that they could not consutute "victims" because they were n9t the direct targets of the
false representations to company customers on which Iha mail fraud-based convictions
depended, Bu!, reviewing this question of Guidelines' Interpretation de novo, Jll!ll ~
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fl;!lJJM, 892 F.3d at 469, we ogree with the government tl)ot, juot as we explained In
Qad\!ruj, '"[!Jo come within the guldellnas' definition' of 'vlcllm,' 'one need not be a vlollm of
the charged offense so Jong es one Is a vlotlm of the defendant's otherrelevent oonduot,'"
966 F.3d at 35 (altarallon tn original) (quoting United States v. ~ . 749 F.3d 74, 86 (1st
Cir. 2014)).
,
The "relevant conduct" that the Guidelines hok1 Chin accountable for engaging In Jnoludes.
as noted, any aotlon he tool< during the commission oi mall fraud, If, for lnsfun~e, ci1ln
failed to comply with approp,•late safety procedures In. compounding the fatal .lots of MPA,
the patients who died from being Injected with those lots could potentially be "victims" of hi•.
offense. Thus, the District Court erred In conciudlng 1hat only lndMdualsWho received ·
fraudulent representations from NECC could b.i "vulnerablE> victims" for the purpose of the
enhancements at Issue, .
Chin nonetheless urges us to affirm the Dlstrlot Cow't's deolslon noilo apply lhese
enhanoemerrts on an alternative ground. He argues that the patients, eve·n lf"vlctlms,' are
not "vulnerable" ones. But, becauso the Dlslrlot Court ruled that the patients could not be
victims at all, ti has not ye1 addressed the ql,estloh,:Thus, ·as In ·cad<je11,
leave It for the
District Court to address the Issue In ihe ffrst lnstan.oo on remand. llft!i 966 F,3d at 36.
we
In doing so, we pass no Judgment on whether Chin's relevant conduct actually.JustlMed the
application of the enhancement. We thus leave It t.o the Dlatrlot Court In the first Instance 10 ..
address, among other things, whether his eotloris ware analogous to thooa of a t-audsler
wtio "m!irliet[s] an lnaffacuve cancer cure,' who the Guidelines Indicate would merll the
enhancement, U.$.S.G. § 3A1 .1 cmtn.2, andwhather the fact !hat medical providers, not
the patients themselves, deell with NECC directly offeats the patients' status as
"vulnerabJe." 7
··:4;
'
1
The government'a last challenge to Chln
Court's
. ' s. p1:lsoil sehtenoe Concerns tha.Distriot
.
refusal to apply the enhancement set forth In u:s.s.G, § 381 .1, That enhancement
Increases the offense level of the defendant ba~ad on the defendant's "ro_le In the offenss." .
Jg_,
•c,o At'sentenclng, the government ari)ued that Chln was. "•n. organizer oneader of a·
criminal activity that Involved live or more participants" Md that his offense level thus ,·
should be.Increased by four levels.
381 .1 (a). The Dlstrtcf Court found at sentencing,
however, that Chin was only "a supervisor o~ 01anage~': of sur:h 8n' aotMty1 ·".b~t n6t an
organizer or leader." Sfill.lJt § 3B1:I (b). Acoordlngiy; It lnorea~ed his offense level by'only ·. ·
throe.
ht§
The District Court reasoned as follows:
The organizer and leader of tho enterprise was Barry Cadden. Consequently, l1e was·'
given tho full four.point upward adjustment. TM\ description does not, h~wever, apply 1o
Mr, Chin. RBt11eI; the evidence established at ti'laJ; as the government accurately states
on page ·12 of Its sentencing memorandum, that Mr, Chhi'Was "the supervisory·
pharmacist at NECC who managed both of NECC's cleanroorns.''·
The government contend• that tho District Court erred by concludln_g that Chin could not
have been a "loader" or "organlzaI' because Cadden.had already filled such a role and
•because of Chin's tttle as "oupar'ltsoiy phannaclst." Our review Is de novo. Sfill. ~ .
Be!lriln. 892 F.3d at 469,
The government Is right that "[1Jhere can ... be more .than one person wl10.quallfl0s as a
leader or organizer of a criminal association or conspiracy." U. s.s.G. § 3Bt 1 cmL n.4., The
government Is also correct that, In conducting jhe leaqer0 organlzai' anaJY•.ls, "titles such as
'kingpin' or 'boss' are not ccntrolllng." kl,. Thus, to the extant thatthe.Dlstr.lct C,ourt relied ..
only on Chin's illle and Cadden'• laaderohlp role at NE.CC.In. determining thid Chin was,
neither a. "feader'' nor an "organlze1~11 we agree with the government that llia District Court1s
approach wits erroneous.
14 Chin uo·ges us to conclude, however, that 1he District Court In. 11\o relevant passage at
ssntenclng was referring to "evidence" olhar than Chin's title and Cadden's pJeca at the top
of the NECC hierarchy, But, while we may affirm 1he District Court's application of an
enhancement where we can lnfor Its reasoning based on ''what was arg.ued by lhe parlles
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or contained In 1110 pre-sentence report," United stataa· v. Slcher, 676 F.3d 64, 71 (1st Cir.
2009) (quoting United States v. J:!rulx, 608 F.3d 687,694 (fol Cir. 2007)), we are unable to
do so here.
The District Court did not lndloata Its agreement with the theory that Chin advances on
appeal, which Is that Chin "had no ultlmate dsclslon-maldng authority" becauoe he tool< all
of his actions "at Cadden'• direction," The record also Includes evidence supportably
showing that Chin directed 011,er NECC workers to prepara medications In ways that the
government alleges were Incompatible with representations made by NECC, !JM Ulll.tal!
~ v. Carrero-Hernande;, 643 F,3d 344,360 (1st Cir. 2011) ("!TJhe defendant must
have exercised some degree of con11·0I over others Involved In the oommlsslon of tho
ofl'Gnse or he must hove been responsible for organizing othare for the purpose of carrying
out tho crime," (quoting United Slates v. EltlJru:, 897 F.2d 1217, 1220 (1st Cir, 1990))), The
District Court's description of Chin's conduct as "supervisory" In nature, moreover, ta not
Itself precluslve of a finding that, In performing his supervisory duties, Chin took on the role
of an "organizer' within the meaning of the enhancement, Nor does tho pre-sentence report
prepared by Iha United States O!ffce of Probation and Pretrial Services shad any light on
the District Court's thinking; that report concluded that Chin~ either an organizer or a
leader,
'56 Thus, "[g]lven the Impact that a possible error WoUld have had on the sentence and the
need for fuIiher olarlfloallon before we can determine whether an error occurred," lltJ!k1
~ v. Laoouture. 835 F.3d 187, 191-92 (1st Cir, 2016), we decline to affirm the District
Court's ruling on Iha ground Chin proposes, Instead, "we thlnl< the wisest course hers Is to
foll~w our occasional practice• of vacating and. "'remanding the matter to the district couri' In
light of the laol< of clarity about the basis for tho District Court's iullng: )ll
·
6.
In light of tho Issues we have Jdantifled with the treatment of ttiree enhancements, the_
District Court may /Ind on remand that appllcatl_on of one or more of these oohanooments Is
warranted and that reoaloulaUon of Chl_n's sentencing iange Is neoossary. If It does, then
the Dletrtct Court may ct course In Imposing a final sentimoo consider Iha parties' ·
arguments about how the traci/ll011al concerns of sentencing pl~y out given 'the modified
rang~. Even If Iha Dlslrlct Court must reoonsldel' Its_ analysis ·111 these respects, though, we
are ,oot thereby Inviting tho. District Court to revisit oth_eJ' oonoluslons It reached In .
calculating Chin's sentencir,g range under U\e Guldeflnes that are not aifected by our
decision today. Thus, aside from Iha three enhancements the District Court fulled io give a
legally. adequate rationale for deollnlng to apply, the District Court may not ori remand
reconsider Its lnltlal determlnetlons about whether any adjustments to Chin's total offense
level are or am not applicable,
B.
We next consider the government's challongo to the forfeiture order, The government does
so on tho ground thatlt rested on en unduly limited view oflhe amount a/funds that could
be subject to forfeiture.
Due to his raol<eteerlng and racketeering conspiracy convictions, Chin was required to
forfeit "any property conatltullng, or derived from,. any proceeds which [he] obtained, ~lractly
or Indirectly, from racketeerlng aotlvlty," 18 U.S.C, § 1963(a)(3), At sentencing, th& District
Court agreed with the government's contention that Chin's salary from NECC provided an
appropriate starting point for the forfeiture calculation and held that Chin's eamlrigs from
March of 201 Oto October of 2012 ware subject to forfeiture. That was 1110 period duI·lng
which NECC, according to the District Court, was operating•• a "cr·lmlnal enterprlse,• 8
Chin earned $473,684.60 In salary over this period of time, The District Court did not
reqt1ire Chin to forfeit this full amount, howeveI·, Instead, the District Court limited the
forfeiture order to $175,000. The government contends that neither of the two reasons that
the District Court gave for limiting the forfeiture order In that way •• one of which was
statutory, and one ofwbioh was constltutlonal .. Is sustainable, We agree.
N
1.
15 The District Court first explained that Chin could not be required to forfeit his full
salary because he twver "obtained" pmceads that were pald as taxes to tha United States
Treas\1ry within the meaning of 18 U.S.C, § 1963(a)(3). The District '57 Court Indicated
that, If this reason had been the sole one lot reducing the size of Chin's forfeiture order,
htlps://1.naxt.west/aw.com/DocumenUlfd299f30c26a 11ea85aa9413f18443e9AteJ1i3u11Text,html?transltlonTYpe0 UnlqueDooltem&conlextData~(so,D.,, 13/18
then It would have reduced the forfeiture ,amount from $473,684.60 to $348,084,60 rather
than to the amount of $176,000 to which It ulllmalely reduced It.
16 17 To the extenttt1ls question presents one of law, ourrevlew Is de novo.l:lfil).
United Slates v. l:!ln.Q, 853 F.3d 568, _689 (1st Cir. 2017). But, "to the extentfact,ial Issues
are lntemilngled, [we] consider mixed questions of law and fact under the more deferential ..
clear error standard." .Ill.
18 19. As we explained I n ~ . §.!il.!!966 F,3d et 38, a defendant convicted of
racl1at0enng must fcrfelt property even when "It has merely been held In custody by that
Individual and has been passed along to Its true ownar," l.!nlt~ v:l:l!i®Y., 63 F,3d 1,
21 (1st Cir. 1996). Thus, the fact!hat the offender Is required .to pay certain portion ·of his
salary to the fed oral govomnient es taxes does not allect ttia iaot ii;at ha "obtained" ihat
porUon,
a
Tho Dlatnct Court expressed concern that, because Chin was forced to forfeit money that ·
he had already paid In federal taxes, he was "being esl,ed, In affect, to piy his taxes twice."
But, the purpose of criminal fo1felture -· unlike a federal tax•• Is to punish a racketeering
olfonde1~ Ssl!l United Stale~ v, fu)jl1k!)JIWJ, 524 U,8, 321, 332, 118 S,ot. 2028, 14'1 L.Ed.2d
314 (1998) (noting that "In personam, o,·lrnlnal fcrfeltures ... ~ave hlslorlcally been treated
as punitive"); l:fllrl!lx, 63 F.3d at 21 (viewing "orlmlnal forfeiture (for racketeering] as a kind
of shadow fine," where "the size of the amount transported Is some. tneasc,re of tlie. .
potential hami from the transaotlon'), Under our established preiced·ent, ·111 porson~rri.
forfeiture order against a racketeering offendor•ls bas.ad on the gross aniount of proceeds
he acquires, oven temporarily, and It Is th.us. enllrsly (1nren1arkalii,ithat such forfeiture .
order may exceed the not amount of the offsiider'sin-iiottengalns: l:lfill. HurleY., 63 F.3d at .
21. Thus, the District Court's taxes.. based reason for reducing the amount oi.Chln's
.
"pmcae·ds1i 1s· not $Ustarnable. ·
an
a
2;·
20 . The District Court's other reasQll for ~d~cl~g ih'.i size of Chin;•·forfeltura oid~r was
to avokf an "excessive flne'''ln vlolatron of the Elghfii Amendment ,itbe federal .
constitution. llil U.S:Const. amend. Viti ("El\Cesslvo· ball sh~li n~t be reqcilred, n~r' ..:
excessive fines Imposed, nor cruel and unu.sual punls.hm~nto lnillcied,"). Tlia Dist.rim Court
acknowledged lhat Chin and his wife had riot worth of about $423;000 and:that tr,e eoupl.•
had spent almost $700,000 In the sixteen months prior lo the entry of th~ fortaiture o!der.
Nevertheless, tho District Court noted tho costs ih~t Chih J..ourd face Iii raising his. two
young children and also concluded that Chin had litile· prospoct.otearnlng a professional•
level salary again, given his lacl< of 811 eduoatlori'ouislde i>f th~ pl;aimaceutlo~f Industry.
The District Court on '11,et basis found that lmposlng'.ihe nearty half-a-million: dollar forie.lture
would unconstlMlonally deprive Chin of lho ability to earn a llv~llr,ood In violation of the
Excessive Fines Clause,~ fil1llnill1)l!ln, 624 U,$, at 335-36, 1'18 $.Ct. 2028 (1998), .·
a
'.
21
22 "The factual ftncilngs made by the distrtct courla lh co~ducling Iha
excessiveness Inquiry ... must be accepted uniess cleo~y ·e,rorieous.' Jil.,at 331in, 10, 1·1s
S.Ct. 2028. Bui, we review the question of whethar those fools add up to a conslltutlonal
violadm
. de nova. !Ii.
.
'
does
The government offers a variety of argumenls io,:.~hi' the Eighth Am~n,frneni·•5d
·not·.
require the cap Imposed by the Dl•lrlct Court. We need loo.us on· oniy Its flnal ~ne, In ·which·
It contends that the District Court's findings Jo not
to sh~ that the full forfelt~ra
amount sought by tho government would deprl~e Chin of the· ability.to earn~ livelthood that ..
the Eighth Amendment llmltatlon on excessive fl~es
s~mce
·proiects.
.
In United Stales v. l.mfill!Jl2, 546 F,3d 78 (M Cir. 2008), we considered a challenge to a
forfeiture order of more than $3 million by a defendant who claimed to have "11o!hlng of ·
value feft to forfeit." )Ii. at 80, Without suggesting that ihe defendant herself might have a
meritorious Eighth Amendment challenge· to the size of her forfeltllre 'i>1·der, Wi> staied ihal It
was nol "h,concelvable that a forfeiture could be so onerous as to deprive•· dalondani of
his or her future ability to earn a living, thus impllcallng tha historical concerns underlying
the Excessive Fines C/ause1" and remanded forfuitherprocee~ings, ld. at 85,
23 As Iha District Court Itself noted, however, ~!Jl2 made olear that"• defendant's
lriabllily to satisfy a forfeiture at the lime of convlclioi,, In arid of Itself, Is not at ell sufflolenl
to render a forfeiture unconstitutional." 546 F.3d i,t 86. Lavesg!Jj\ also stressed ·111at, "even If
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there Is no sign th al the defendant C<)Uld .satisfy the forfeiture In the future, there Is always a
poaslblllly that she might be fortunate enough to legltlmalely come Into money." 1l!.
(quotations omitted).
24 As ~ l l i l recognizes, U1e bar For a forfellure order to be unconstllutlonally
excessive on Jlvellhood-deprlvatlon grounds Is a high one. The District Court's findings
about Chin's net worth, laml/lal obligallons, and lnablllly to earn a professional-level salary
simply are not sufficient to ground a d_elermlnatlon that Iha full forfeiture order SOUlJhl by the
government would constitute the type of "ruinous monetary punishment[]" that might
ooncelvably be "so onerous as lo deprive a defendant of his or her Mure ablllty to earn a
living" and thus violate the Eighth Amendrnanl's Excessive Fina Clause, kl at 84-85. Nor
has Chin Identified any authority to suggest otherwise. Qt. United Stales v. ~ll.l!oo!ru!:
Hernande;;. 752 F.3d 22, 37 (1st Cir. 2014) (re)eotlng a challenge to a $1 million forfeiture
order on plain eIror review): Unl¼d States v. e,guasylvms•Castmo, 668 F.3d 7, 16•17 (1st
Cir, 2012) (reJeoUng a challenge ta a $20 tnllllon order on plain error review): United States
v. J:!lgg, 666 F,3d 13, 17'.20 (1st Cir. 2011) (reversing a Dlotrlot Court's determination that
Issuing a $264,000 forfeiture order to a defendant who was daoply In debt would be
unconstltullonal), Accordingly, we vacate the forfeiture order and direct the Dlolrlol Court lo
enter a Forfeiture order In the full amount sought by the government.
c:.
We oome, then, to the last of the government's challenges, Here, the government takes aim
at a conclusion reached by the District Court In calculatlng Chin's rasutulion obllgaUon,
Chin was oo,wlctad of an offense "commllled by Fraud or deceit." 18 U.S.C. § 3663A(c)(1)
(A)(li), The Mandatory Victims Resdtutlon Act ("MVRA") thus required the District Court to
order Chin to "make restllutlon to the vlotlm[s] of the offense or ... [their] estata[sJ." 1l!. §
3863A(a)(1).
.
.
In a preliminary order, the District Court found U1at the only "victims• entltlad to restitution
ware the "rnedloal facilities ,yho purchased drugs from NECC," but that "the patients who
were adversely affected by NECC's drugs" we,,. "not 'victims' 'liQ ... under the MVRA's
statutory deffnltlon." The District Court noted lhat the "sine qua non of mall fraud" Is a
scheme to "obtain[ Jmoney or property by mean_s of false or fraudulent prate~••••
representations, or promises" transmitted to some recipient,~ 18 U.8.C_. § ·1341, and
reasoned the! NECC's "mlsraprasentattons" were made "to the hospitals and ollnlos tliat
purchased t11a drugs," not to 'end•users and patients." Thus, the .District CouIt deolfned .to
require Chin to pay restitution to patients or Insurance companies. It Instead deferred
oalculatlon of the final restiluffon amount and thus the Imposition of a final order containing
that amount until the completion of the trials of Chin's co-defendahts. The District Court did
Indicate, howav_er, as part of Chin's criminal Judgment, the! restitution to hospitals and
clinics would be mandatory,
25 The government challenges the District Court's narrow construction of who counts as
a "vlotlm." 9 We review factual findings underlying a restitution order for clear error and
legal ooncluslons de novo, llruillJl!Q, 799 F.3d at 97. The final order Is reviewed for abuse
of discretion. kl,
The MVRA deH11as "victim" as "a pe,~on directly and proximately harmed as a result of tho
commission of an offense for which reatltutlon may be ordered," 18 U,S,C. § 3663A(a)(2),
When an offense ~involves as an element a scheme, conspiracy, or pattern of criminal
aotlvlly," like Chin's mail fraud ancl rackotaorlng_-ralatad convictions, fil!!I Ill, §§ 1341,
1963(0), 1963(d), "any person directly harmed by the defendant's criminal conduct in the
course a/the scheme, oonsplraoy, or pattern" i. a victim. Ill,§ 3663A(a)(2).
26 We disagree with the District Court's conclusion that patients and Insurers were, as a
matter of law, not "victims" within the ocope of the MVRA. The reelltutlon analysis focuses
on Ille causal relationship "between lhe ll!llli!!Jct and the Joos," not between the nature of
the statutory offense and the loss. United Slates v. .QJJJtru:, 313 F.3d 1, 7 (1st Cir. 2002)
(emphasis added) (quoting Unjted states v. l,\,Jmlu, 112 F:3d 579,690 (1st Cir. 1997)): fill!!.
i!.lfill.&l!lfilll v. United States, 572 U.S. 639,645, 134 S.Ct. 1854, 188 L.Ed.2d 885 (2014)
(focusing on the relatlonship between "the harm alleged" and the defendant's "conduct"
(quoting L.axmarl< lnl'I•. Ul.Q. v. static Contcol QompoMll!J,,.1!]£,, 672 U.S. 118, 133, 134 s.Ct.
1377, 188 ~.Ed.2d 392 (2014))), Tills appmach to the "victim" analysis tracks the language
of the statute, as II focuees on whet11er the victim was "harmed as a result of the
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commission of an offenaa" or "by lhe defendant's orlmlnol J.QOOU!!! In Iha course of [aJ
scheme, oonoplraoy, or paltorn [of orlmlnal '60 aotlvlty]," 18 U.s,c. § 366AA(a)(2)
(emphasis added),
27 28 Chin nonelheless argues that we rnust affirm the Dlslrlcl Court's ruling for the ·
following reason. The "directly and proximately' language of the MVRA lnoorpoMes "a
·
proximate cause requirement." llllllw:,., 672 U,S, at 645,134 $,Ct. 1854 (dlscuoslng 18
U,S.C, § 3663A(a)(2)), In assessing whether that requlremenl has been.sallsfte~, we ask
"'whether the harm alleged has a sufflolenlly close conneotlon to the oonducrat Issue." kl.
(quoting l,exmarl< lnJ'I. il!Q., 572 U,S, at 133, 134 s.ct. 1377); _.lliJ11.er, 313 F,3d at 7
("[Rjestltullon Is l11appl'Oprlate If the conduct underlying the conviction Is too far removed,
either factually or temporally, from the loss."), Pul otherwise, the statula asl<S, "was the
harm foreseeable?" ll9JQ, 799 F.3d at 98,
Chin ·contends that the District Court made .a fac.tua_l finding about \ha lack of.proximate
. causation, which he would have us review.under the delerenllal 'lcleai· armr"standard ·anct'
sustain. We sea no Indication, however, that tho Dlstrl9f6ourt l)lade.,uch·a proximate
oat1se finding, It rooted Its conclusion that the patients were .not "vlotlr~s• ori !ts reading of ·
the mall fraud statule, and determination that the ,;sine
noi{ot_inaU fraud Identified
the direct recipients ol fraudulent representation• as the sole "vloUms" ·01 suoh fraud. It thus .
did not attempt to evaluate the "factual[] or temporal[ I' link between 'the conduol
underly.Ing tho conviction" and "the loss."· l,.YJ!ru:,..313 F,3d at 7.
Its
qua
The Dlstr/ot Court did at one point state:
To the extentthat patients may have lmpUolliy• r~lled oii NECC's
I·epresentellons by relying on their dootor~·•• leamed Intermediaries, this
additional layer of Insulation between NECC and the pallent (urther rend.eI·,
any such reliance Htoo attenuated" 10 satisfy tha ''~lreot oaul?ation!'.standard •
of the MVRA..fulll.Q.lal!ru:, 313 F,3.d ol.7.
But, the District Court lnvol,ed this attenuallo~ con00rn dnly iJ respo,ld°io the.govemment's
contenllon that the patients Indirectly re/led on NEQC'siepresentallons ·such that they · .
themselves were defi,ouded. We thus do not iaKe the blstrlot Cou'rt 1otiave engaged In a
proximate cause analysis of whethe1' the harm that 'wo'uld flo;., :fu. the· patients from Chin's
conduct was foreseeable, Acccrdlngly, WO vacate and .remand the restltulloh order,
..
·IV.
We affirm Chin's convictions and YAtUlift and !!ill1filld_hfs sentence,. f0rtelture orde1·, arid
restitution order,
All Citations
965 F,3d 41, RICO Bua,Dlop.Gulde 13,364
[Footnotes
1
,,.,._,._____
-------,~
The racketeering conviction at·lssue was based ·on 18 u.s.c; § 1962(0),
whloh slates that
(l]t aha/I be unlawful for any pers~n 'employed. _by o_r associated with any
enterprise engaged In. or the.activities of whJch affect, .Interstate or foreign
commerce, to conduct or participate, directly ;r l~dlre~tly, ln·the·oon.duci of
such ente1pI·!se's affairs through a patterri ·of racketeering activity ·or
·
collectlon of unlawful debt.
The raclcateerlng conspiracy conviction was based on. 18 U.$,C. § 1962{d),
which states that "[lit shall be unlawful for any person oonspir<> to violate
any of the provisions of subsection (a), (b), or (o) of this .seotion," The
government alleged that Chin conspired to violate§ 1,96,.(o),
to
2
The mall fraud provision under Which Chin was convloted and on which his
predicate acts were based reads; In relevant part, as follows:
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Whoever, having devised or Intending to devise any scheme or artifice to
defraud, or for obtaining money or property by means of false or fraudulent
pretenses, representations, or promises,., for tha purpose of executing
such scheme or artmce or attempting so lo do, places In any post office or
authorized depository for mall matter, any matter or thing whatever to be
sent or delivered by the Postal Service, or deposits or causes to be
deposited any matter or thing whatever to be sent or delivered by any
private or commercial lntet"state oarrlar, or taltes or receives therafrom, any
such matter or thing, or knowingly causes to be delivered by mall or such
carrier according to the dlreotlon thereon, or at Iha place at which It Is
directed I<> be delivered by the person to whom II ls addressed, any such
matter or thing, shall be ffnad under this title or Imprisoned not more than
20 years, or both.
18 u.s.c. § 1~41.
3
Because our analysis ·Is based only on evidence that relates to the. twelve
predicate acts found by Iha Jury, Chin's argument, to the extant he makes It,
that we may not rely on evidence that relates to other predicate acts not
found by the Jury Is beside the point. In any event, our precedent does not
support the proposition on whloh he relies. fut!l United States v. QQru)Q!Jy, 341
F,3d 16, 26 (1st Cir, 2003) (finding continuity of a racketeering entarprlse
based In part on "evidence of the existence of the enterprise apart li'Om the
specified racketeering acts"): 9f. United $fates v•.Qmngl, 378 F.3d 71, 93 (1st
Cir. 2004) ("The evidence re la ting to those acts that were found 'unproven' by
tha Jury was sllll available to the Jury In 11• evaluation of the overall
[racketeering] charge."),
4
We note that the Jury necessarily concluded In finding that Chin oommllled
twelve predicate acts of recketeerlng Involving mall fraud that ho was a
"krowlng and willing partlclpa(nt] In [NECC's mall fraud] scheme with the
Intent to defraud," United Stato~ v. §.Q!.Q, 799 F.3d 68, 92 (1st Cir. 2016), and
Chin does not dispute that a.Juror could Infer he would have continued to be a
l<nowlng and willing participant In that fraudulent schema If there were a
supportable besl• for finding that NECc would continue to perpetrate It.
6
At the time the District Court handed down Chin's sentence In 2018, the
enhancement was codified at U,S,8.G. § 281 .1(b)(15).
6
The government does not argue lhal actions associated with any or the FDCA
convictions could servo to make the enhancement applicable,
r
The government does not argue that any conduct associated only with his
convictions on the FDCA counts could require the application of the
vulnerable victims enhancement.
s
The government had requested that Chin be requlrad lo foIfelt his salary over
a longer period of time, stretching bacl< to 2006. On appeal, the govern111eI1t
does not challenge the District Court's finding that. the relevant period was
from March of 2010 to Ocloberol 2012.
9
Linder our established precedent, we treat a restitution order as an
appealable final Judgment even when It does not Indicate Iha amount of
restitution. fut!l United States v. Qruiat, 389 F.3d 35, 51 (1st Cir, 2004) (citing
18 U.8.C, § 3664(0)). Two Supreme Court precedents have subsequently
addressed the appealablllty of a rea!ltutlon calculation In a deferred restitution
sconario such as this ono, §.@!! M.rulr!(JUg v. !inl.!ru;l.filll!M, - U.S.--, 137
s. Ct. 1266, 1270-72, 197 L.Ed.2d 699 {2017); QQkm v. Unltod States. 560
U.S. 605, 616-18, 130 s.ct. 2533, 177 L.Ed.2d 108 (2010), but neither of
them purports to make a holding about the JuIisdlction of appellate courts lo
hoar appeals of preliminary reslllutlon orders, !,gJl Mfillrlglfil, 137 S. Cl. al
1271; Dolan, 560 U.S. at 617--18, 130 S.Ct, 2533. No party, however, asl<s us
to conclude from the subsequent Supreme Court precedent that this Is the
rare case in whrch we may depaii from prtor Circuit precedent based on new
developments. We thus stick to the Jaw of the circuit as artloulated by Chea!,
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under which we have Jurisdiction to consider the government's appeal,
notwithstanding that the amount of reelllutlon haa not been specified,
End of
Oooument
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WESl'LAW CLASSIC
41 F,4th 16
United States Court of Appeals, Fil'sl Circuit.
Unltod States v, Chin
United Statoe Court cf Appaals, First Clroolt. ! July 16, 2022 l 41 F.41h 16 (Approx. 1f3pagao)
Glenn A. CHIN, Defendant, Appellnnt.
No.21-.1574
Jttly 15, 2()22
Synopsis
Background: Defendant, a former pharmacist, was convicted In the United States Dlsb'lct
Court For the District of Massachusetts, Richard G, Stearns, J., of racl<eteerlng,
·
racl1eteeIing conspiracy, mall fraud, and vlolaUon of the Federal Food, Drug, and Cosmetic
Act (FDCA), In connection with compounding pharmacy's shipments of contaminated
drugs, was sentenced to a 96-month prison term, and, 2018 WL 1399297; was ordarad by
pay restitution, Defendant appealed, and government cross-appealed, The Unlled Slates.
Court of Appeals For the First Circuit, 966 F,3d 41, affirmed In part, vacalad In part, and
remanded for 1'esentenclng. On remand, Iha United States District Court for the District of
Massachusetts, Richard G. St0'1rne, J., defendant was resentenced to a 126--month prison
term. Defendant appealed,
Moldings: The Court of Appeals, Barron, Chief Judge, held that:
1 as a matter of apparent first lmproeslon, sentencing guideline far reckless and knowing
_dlsrngard of a reasonable certainty of causing death or great bodily harm could apply If
defendant shQuld have been aware that conduct Involved rial< of death or serious injury;
and
2 Imposition of sentencing Increase for reckless and knowing disregard of reasonable
certainty of ca1Jslng death or great bodily harm was warranted: and
3 sentencfng increase for vulnerable vlcUms was warranted.
Affirmed,
West Headnotes (12)
Change View
j
2
Criminal I.aw ~ Review De Novo
Criminal Law ~ Sentencing
The Court of Appeals reviews the District Cornt's faotflndlng at sentencing for
clear error and affords de nova consideration to Its Interpretation and application
oftha Sentencing Guidelines.' U.S.S.G. § 1B1,1 et seq.
Criminal Law ~ Review De Novo
Criminal· Lew ~ Sentencing
Sentencing guldellna provldfng for lwoRleve/ sentencing Increase based on
defendant's racl<loss and knowing disregard of a reasonable certainty of causing
death 01· great bodily harm could apply If preponderance of the evidence showed
that defendant should have been aware that his offense, Including his relevant
conduct, involved rlsl< of death or serious bodily Injury, and did not require
showing lhat defendant had actual, subjective awareness of1he rlsl<. U,S,S.G. §
281.1 (b)(16)(A),
ht1ps://1,next,we:ilaw.com/DocumenUlcdd7b550048911ed80e6ec4bb8ec5e7"#'17ilJ;!FullText,html?docFamllyGuld=loffd2d600489·11eda2e39ef56b06 .•.
1112
3
C1·imlnal Law ~ Criminal Intent and Malice
WIiifui blindness servos as an alternate theory on which the government may
prove lmow!edge.
4
Crhnlnol Law ~ Elements of offenses In general
The mens roa element of a criminal offense must be proved beyond a
reasonable doubt.
5
Sentencing and Punishment @,;I Factors enhancing sentence
A sentencing enhancement Is subject only to the preponderance ofthe evidence
slandard lhat applies In the civil context,
6
Sontonclng and Punishment ~ Drugs and narcotics
Imposition of two-level sentencing Increase for reok!ess and knowlng·dlsregard
of a reasonable cetialnty of cal!slng death or great bodily harm was warranted
for defendant, a former pharmacist, convicted of racketeering, racketeering·
consplraoy, mall fraud, and violation of the Federal Food, Drug, and Cosmetic
Act (FDCA), In connection with oompound pharmacy.'• shipments of ·
contaminated drugs, which causad'aeadiy fungal meningitis autbreal,; evidence
ah owed that defendant presided over high"risk •·nterprlse at pharmacy, and that
despite Incomplete testing and falslflootlon of drug ia!) cleaning reports; Iha
.appearance of mold and other oontan1inants In IM clean ;,om, dotendant
permitted drugs to ship. Federal Food, Drug, end cio.smetlo Act§§ 301, 303; 21 :
U.S,C.A. §§ 331\a), 33$(a); U.S.s.G..'§ 281,1(b)(16)(A).
'
. ,
7
Crlmlnai I.aw ~ Sentencing ·
The Court of Appeals may tool< to Iha record of the oentenclng hearing to
oaoartaln the District Court's reasoning In Imposing a particular se~tonce.
_.,..,,,...,,,.,,,,,,,,,,,,,,
_______
,
8
Sentencing and Punishrnonl it;., VulrerabUity of vlollm ·..
lmposltlo~ of vulnerable-victims sentencing Increase was y,arrantod for
defundant1 a former ph~rmaclst, oonvlctad.of .raoketeertng, r.acketea11ng
conspiracy, mallfralld, aildvlolatlon oftha Federal.Food, Drug, and.Cosmetic
Act (FDCA), In oonnaotlon with compound pl;ann~oy's sli_lpments of.· ·
contaminated drugs, which caused deact!yfungal meningitis outbreal;;· patients
who were harmed by the contaminated· drugs were unusually vulnerable
because their medical conditions led them jo entrustmedlcal personnol to Inject
drugs Into tltelr spines. Fadet-al Food, Drug, end CosmatloAat §§ 301,303, 21
U,S,C.A.§§ 331(a), 333(a); U.S.S.G, § 3A1.1(1>)(1). ,
9
Sent•nclng artd Pun.Jshment it,;,, Vufno1·ablllty of victim
To apply the vulnerable victim sentencing Increase, the eentenclng court must
determine that (1) Iha victim of the crime was vulnerable, that Is, the victim had
an Impaired capacity to dateot or prevent crlrne: and. (2) th• defendant knew or
should have known of the victim's unusual vulnerab!llty. U,S.S.G. § 3A1.1(b)(1). ·
1o Son(-.nclrig and l'unlshment · ~ Vulnerablllty of victim
Sontenolng Increase for offense Involving vulnerabla victims could apply to
clofendant convicted of racketeering and rackatae11ng conspiracy, In connection
with his employment for compound pharmacy that shipped contaminated drugs
to medical facllltles, notwithstanding that direct recipients of contaminated drugs
were hospitals and medical providers, rather than patients who were actually
harmed by the contaminated drugs, U.S.S,G. § 3A 1.l(b),
11
Sontonclng and Punishment
itll'1 Vulnarablllty of vlollin
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Appllcalion of vulnerable victim sentencing guideline, requiring that defendant
knew or should have lmown of victims' vu/narab/1/(y, did not necessitate proo(
that defendant lntondad to defraud Ns victims. U,S,8.G. § 3A1 .1(b).
12 Sontsnclng and Punlshmerit @'Si> Vu/narablllty of victim
Appl/cation of vulnerable vlclim sentencing guideline, requiring that defendant
knew.or should have know11 of victims' vulnerability, did not necessitate proof
that defendant a former pharmeclst, convicted of racketeering, racketeering
conspiracy, mall fraud, and violation of the Federal Food, Drug, and Cosmetlo
Act (FDCA), In connection with compound pharmacy's shipments of .
contaminated drugs, which caused deadly fungal meningitis outbreak had
lndlvlduallzed, actual lmowladge of victims' unusual vulnarablllty. U,S,S.G, §
3A1,l(b).
'18 APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
MASSACHUSETTS [Hon. Richard G, Stearns, J,Ul. Dfsk(ct Judg!l]
Attorneys and Law Firms
James L. Sultan, with whom Rankin & Sultan was on bNef, for appellant.
Christopher R. Loo11ey, Assistant United States Attorney, with whom Rachael S, Roi/Ins,
United States Attorney, was on brief, for appellaa,
Before Barron, Chief Judge, Lipez and Howard, Circuit Judges.
Opinion
BAl,RON, Chief Judge.
This appeal roqul1'8s us to revisit the sentence that Glenn Chin, a former suporvlslng
pharmacist at the New England Compounding Center ("NECC'), received for his
convlcttons In connection with th~ o/lmlnal lnvestlgatlon Into the deadly nationwide outbreal<
of fungal meningitis In 20·12 that was traced lo the oompany's shipments ofoontamlnated
drugs. When wo last considered Chin's sentence,.we vacated and remanded It, ~!.l.r!l!fil!
filll!fill v. Qb]o, 966 F,3d 41, 60 (1st Cir. 2020) ("QilJD..l"). The United States District Court for
the Dlstrtct oi" Massachusetts resentenced Chin while applying two sentencing
·
enhancements under the United States Sentencing Guldel_lnes (:'\,llldel/nes"). U.S. Sont'g
Guidelines Manual§§ 2B1 ,1(b)(16)(A), 3A1 .1(b)(1)[herelnafter U.S.S.G]. Chin contends
that neither E.'lnhancement applies and thus that l1ls s.enten.ce m.ust be v_i~catad once a~ali:i.
We affirm.
,.
11,e events at NECC have already been the subject of several reported deolslons by this
Court. We t11us will rehearse only the facts relevant to Chin's current challenge to certain
aspects of his rasentenclng. We refer tho reader to Chin's first appeal, !To!tt.!, 965 F.3d al
45•46, and to tl1e appeal of Barry Cadden, Chin's boss at NECC. United states v. QfillJ1!ill,
965 F.3d 1, 7-8 (1st Cir. 2020), for• more detailed discussion of the underlying facts.
NECC was a pharmacy based In Framingham, Massaohusetts, that specialized In high-risk
drug compo,mdlng, which rafors to a process In which non-sterile Ingredients are oomblnod
to oreate sterile drugs that are prepared at the request of hospitals and other healthcare
providers. Chin won,ed ass 1/cenaed pharmacist at NECC fi·om April 2004 to October 2012.
'19 In January 2010, Chin was promoted to the role of supervising pharmacist at NECC, In
which ha oversaw all drug production In NECC's two "clean rooms," In the fall of 2012, a
number of patients who had received epidural Injections of methylprednlsolono acetate
("MPA") •·asteroid for pain relief ... contracted rare fungal Infections that were ulUmately
traced back to contaminated drugs produced at NECC under Chin's supervision. A number
of those patients died.
A federal criminal lnvastlgatlon Into NECC's practloes ensued, and In connection with It
Chin was charged In December of 2014 with "racketeering In violation of 1B U,S,C. §
1962(0); racl<eteerlng conspiracy In violation of 18 U.S.C. § 1962(d); forty-three counts of
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federal mall fraud In violation of 18 IJ,S,C, § 1341; and thlrly,-two counts of violating Iha
Federal Food, Dr\I9, and Cosmetic Act ('FDCN), l!lll! 21 U.$.C, §§ 33.1(a), 333(a)," Qh!n l,
·eas F,3d at 46. After a /wy trial, Chin was round guilty on all oounw. kl. at 46.
Evldenoe w~• Introduced at trial that showed that Chin was famlllar w_llh Chapter 797 of the
United States Phermaoopela ("USP-797"), whloh sets forth standards governing sterile
compounding that pharmacists llcensed In Massachusetts must follow, Evldenoe Introduced
at trial also supportably showed that, despite NECC olelmlng lo be USP•797 compliant,
Chin !<now that NECC was sailing MPA that had· not been property s¼rlllzed ~r tested for
sterility In accordance with USP-797, And, evidence was lntro:duoad at trial that showed tl)at
NECC'a clean room became grossly oontemln.ated· with mo·ld a~d bacteria after Chin .
Instructed clean room staff to Ignore clean Ing protocols, and that Chin !mew of this
contamination.
At Chin's sentencing In January 2018, the government, among other things, requested that
the District Court apply the two Guidelines that set forth the enhancements lhat are the
aub/ect of Chin's present appeal. Thaffrst enhancement Is u.s.S.G. § 2B1.1(b){16)(A),
which Imposes a two-level Increase In the base ol!ens,i"lev<il of those ii>nvlcted of certain
01imes "[l]f the offense Involved •.• the conscious or reol<less rial< o( death ·or se~ous bodily ..
Injury." The second enhancement Is U.S.S.G. § 3A1 .1 {b), whloh Imposes a two-level
Increase In the base offense level "[l]f the do/en cfant l<new or should have known that a
victim of the offense was• vulnerable victim" and an additional two,level Increase If that
enhancement appllos and "tho offense Involved a large number vulMrable victims."
of
The District Court dsollnad lo apply either enhanooment In sentencing "Chin to a term of .
Imprisonment of 96 months, to be foilow•d by two years of supervised release, Tu~ District
Court determined at Chin's ffrst sentenolng that lh~ "qon_scl_QIJ.S or.reoltl_oss rlsl<". ·.
enhancement did not apply beoause "the ei/Jdence dfd··not'esiabllsh a re\ll(less and khowlng
disregard of a reasonable cerlalnty of causing.death or great bodily harm." The District
Co11rt determined that the "vul.nerable victim" enhancement did not apply because "here the
vlollms that were Identified were the .cllnlcs and the liospltals who purchased the drugs,"
and "becauae we construe 'vlotlm' differently for purposes of seritonclng, the enhancements
do not apply on a pro~lmate c,m·•• theory to pers~ns who were not recipients ofNECC's
representations" •.. that Is, Jhe Individuals who were ultimately harmed by lnjecltons of
tainted pharmaooutlcals from NECC.
.
.
.
.
The government appealed the sentenceitiat the Dl~trlot Cou!t had l~po.,ed. lt,dld so, I~
part, on th~ ground that the District Court erred ·111 not ~pplylnti"emw_1• enhancement. .
'20 On appeal, this Court rejected the DistilcfCourt"• besls"fur determining tliai the.
"consol~us or reckless risk" enhancement did not apply. Qtlln}, 965 ·F,3d afil3, We first
explained Iha! the District Court failed lo consider "'"ether Chin's "rerevarit conduct," rather
than the nature o/ his "offense" alone, carried with It the 11sk of d~~tt, or serious bodily
Injury, !ii. at 62-63. We further explained that the District Court errod because It
allli
found that Chin did not act with a "racklesa
lmowlng" state. ofmind in ·disregarding a
"reasonable cerlalnty of.,, doatl,- or greslbodlly harm." Tho sentencilni{enfiancement,
however; describes the requisite mental slate u·s,ng dls);1nct1v.i language; Iii~.
enhancement applies so long as ihe defendant acted In spite of either a ,;conscious iii:"
1'ecldess risk," U.$,S.G, § 2B1, 1{b)(16)(A) (omph~sls ·•dded). Thi1s, ihe D16trlci
finding goes not foreclose the posslbl!lty that .Chin's offense _l_nvolve<f ths menn,I state ·
necessary for the enhancement's appHoa~lon_.. We. the;refore va_cata and i:en:ia,n!:f the
·sentence for the District Court lo assess wheth.er any of Chin's relevant conduct, as .
defined under U.S.S.G. § 1a:i.3(a), "Involved, .. the con;cioua or rockless-lisk of death or
serious bodily Injury." Ji;L § 281.1 (b)(·J6).
Court';.
!ii. at 53 (omissions In original)'.
.QfJ!oJ was published on t110 same day as Cadden. and It ref~renced t h e ~ opinion In
Its analysis of the 'conscious or reckless rl$k" losue. J:lfill Qb!nJ, 965 F.3ct al 62. Oaaden
similarly vacated the Dlstrlol Court's rofuoal to apply this enhancemeni to Cadden ·and
remanded for the court to consldor the proper mens rea for the§ 2B1, 1(b)(16)(A)
enhancement. We explalnod th>lt
the District Court ... at no point directly addressed In senionclng whether a
preponderance of the avidonce .. : established that Cadden's relevant conduct assodated
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with the mall fraud /nvolved o "conscious. or reokless risk of death or serious bodily
Injury.' u.s.s.G. § 2B1, 1(b)(16); .Qf. ~ v. !.llci§o, 347 F.3d 45, 56-67 (2d Cir.
2003) (concluding that a conscious risk la one l'lmown to Iha defendant" while a rec/doss
rlsl< Is 'the type of rlsl< that Is obvious to o reasonable person and for whloh disregard of
said rlsl< represents a gross deviation from what a reasonable poison would do").'
965 F,3d 1, 34-36.
In QjJJJJJ, this Court olso rejected the District Court's basis for determining !hat !he
"vulnerable vlcttm" enhancement did not apply. We explained In doing so that, "'[tjo oome
within the guidelines' deflnlllon' of 'vlotlm,' 'one need not be a victim of Iha charged offense
so long as one Is a victim of the defandanrs other relevant conduct.'" 965 F.3d at 64
(alteration In original) (quoting~. 986 F.3d al 35), MoI~over, In .Qblnj, with respect to
whether Chin's particular conduct warranlod the enhanoamant, we framed !he question on
remand with reference to commentary In the Ouldel/nes. Speclfloally, we stated, "[wJ• ...
leave It to the Dlstrlcl Court In the first Instance to address, among 'other things, whether
[Chin's] actions were analogous to those of a fraudster who 'marl<et[s] an lneffaotlve cancer
cure,' who the Ouldellnes Indicate would merit the enhancement, U.s.s.o. § 3A1.1 omt.
n.2." .Q.b!n.!, 965 F,3d at 54.
Following tl1is Court's decisions I n ~ and l,b!Qj, Cadden was resenteriood on July 7,
2021. Chin was rasantenoed the next day by the same Judge who had resentenood Cadden .
and who had previously sentenced both men,
At Cadden's resentenclng; the District Court observed thal, at the first sentencing, It had
treated the applicable mens rea '21 standard as "not recklessness In the tort law sensr but
In the appreciably stricter c11I11lnal law sense, requiring actual knowledge of an Impending
harm ""slly preventable," But, the District Court noted In resentenclng Cadden, "lilt's clear
rather from the decision In Mr. Cadden's caee that U1e First Circuit has adopted the second
Circuit's definition [In !.llil!sm, 347 F.3d at 56..fi7], whlqh Is a quite different definition of
recklessness.' The District Court !hen quoted the deflnl,tion of recl<lessnoss from~: .
"the type of risk that Is obvious to a reasonable person and for which disregard of said risk
represents a gross deviation from wl1at a reasonable person would do," IJlQ!rul, :i4/F.3d ·a(
66-67,
In assessing whether the enhancement applied to Cadden, the Dlstriot Cooit found that
Cadden "praslde[dJ over" a "high-risk enterprise" at NECC and did so
despite warnings, signals, ... Incomplete tasting, falslfloatlon of drug lab
cleaning reports, ... the appearance or mold and other contaminants In !he
clean room, and his superior knowledge of the risk Involved[,] t have to
oonolude that (Cadden'sj conduct did and does fit Within Iha definition of
urecklessness,"
The District Court then applied Ille enhanceman_t to Cadden.
Chin was resonlenced by Iha Dlstrlot Court the day after Cadden was. Th• Dlstrlct Court
dec.larod In resentonclng Chin, "I do not want to reJread ground that I covered yesterday.....
I assume [the First Circuit's quotation of 1Jl£l.w In Q§~ meant !hey wore adopllng or at
least embracing the Second Circuit's view of how 'recklessness' would be defined in this
case." The District Court then held Iha "conscious oneoklass risk" enhancement applicable
to Chin,
In addlf1on, at Cadden's resentenclng, tho District court noted that, In fight of Iha First
Circuit's ruling in Caddon's first appeal, "'victims' [are] defined ... by the larger plcturn of [an
offender's] conduct as a whole," and that "any pers~n who entrusts medical personnel to
In/eel a foreign subs~ance Into their spine by dafli1/tlon nts what I would thlnl<, and ordinary
people would think, Is a definition of being In a vulnerable position," Tho Dlslrlct Court then
applied the 'vulnerable victim" enhancement to Cadden.
At Chin's resen!enclng, the District Court observed that the "First Clrcui!['sl ... expansive
view of what conaUtutas a 'victim' under the Guidelines was pretty Clear to me." and that
"vulnerability can ,.. refer to one's ,.. lnabUlty to protect one's self under the circumstances.''
Tho District Court then held Ille "vulnerable victim" anhancement applicable to Chin as well.
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After applying both the "conscious or rsckless risk" and "vulnerable victim"
enhancements to Chin, the District Court determined that Chin's total offense level was 34.
Given that the District Court determined that Chin's Criminal History Category was I, the
District Court caloolated his Guldetlnes Sentencing Range to be a term ol lmprls_onment of
151-188 months. The District Court thereafter Imposed a 126-monlh term.of Imprisonment
and two yearn of supoivtoed release, Chin timely appeals, "[W]e review the Dlstlict Court's
'factflncllng for clear error and afford de novo consideration to Its Interpretation and
application of the sentencing guldetlnes.' "Qb)nj, 965 F,3d at 60 (quoting UJJU•d States v.
eenflez-Beltmn. 892 F.3d 462, 469 (1st Cir. 2018)).
·
·
·
ti.
We slarl with Chin's challenge to the District Court's applloatlon of the two.level
enhancement set forth In '22 u.s.s.G, § 2B1.1(b)(16)(A), Wo are not'persuacled by It.
.
\
A..
2 Cbln ftrst argues that the District court a,red In Interpreting § 281 .1(b)(16)(A), He
contends that Is so because the District Court held the enhancement to apply so long as
there Is proof that the offense, lnctudlng the ·defendant's relevant conduct, lnvdlved a risk of
death, or serious bodily Injury ofwhlcll the defendant should have been aware and thus t~
apply even In the absence of proof by a p1·eponderance of the evidence that the defendant
In fact lmew of that risk.
Chin contends In suppdrl of that argument !hat the Dlstrtot Court based Its "should have
Im own" Jriterpretallon of !ha onhancament aololy- on· our Invocation In tho course of
construing that ••me provision of the Gulclollnes rn Qfil!Qlm of the Second Circuit's declslon
In !JJ.lll!ln, Ho goes on to contend, however. that '.II Is not atoll clear from this Courts 'ill:·,
citation to kY.G!rul that II was adopting that perllcular deflnltfon. o("reckless rl~k.'" · ·
Chin further argues that, given that we did no\ hold I n ~ that ~ controls; )Ve .mus.t ·
construe the enhancement afresh. And, he conlends,.by vlrtua of.the use.of Ille word
"reckless" In § 281, 1(b)(16)(A), the enhancement rs pr~perly cionstrued to ~quire proof that .
a defendant was aware that his relevant conduct ln.comml!Ung his olf~nse.;roated a rlsl,
death or serious bodily Injury and not merely that he should· h~ve knov.:n of.th.at risk. He
then contends that, In cansequanca, the enhancement ·cannot be applied to him, b•cause
tho govem111ent did not prove by a p1·eponderanoo of tho evidence that Chin was aware of
any such .risk In engaging In th_• conduct relevant to·hls offen~e. ·
;1
We agree with Chin that the "Qt." citation to I.JJQlim In o u r ~ deolslori, 965 F.3d at 34~·
35, does not resolve how thls enhan6emant must be oonstrusd. Wa did not have ocoasion
In Cadciet1 to address the moaning of the word "recl<less" Irr the enhencernent.. Our focus
there was solely on lhe District Court's failure to address Oadden's "relevant conduct' In
applying the enhancement as§ 1B·I: 1 cmt. n.1(1) of the Guidelines requires, glvan-Uiat the
Dlsll'lc! court appeared to focus In assessing whether1h<i enhancement applied the ·
nature oftlie offenses of which Cadden had been convloted&®~de!.1, 965 P.3d at 34;
U,$,S,G, § •JB1 .1 cmt. n.1(1) (defining "offense"); fl!.§ ·101 .3(a){1)(A)(setting forth "relevant
conduct" for purposes of computing base offense level, oifense oharnoter_lstlcs, and
adjustments). But, even though~• Invocation of l.iJQlim Is not controlling of the
question pt'esan•ed here 1 we nonetheless conclude th~t t~e enhancem~nt ls.be~t construed
es \Jld.<m construed It.
on
The Guideline refers to a "conscious .Qf. reckless risi,." U.S.&G. § 281 .1 (b)(i6)(A).
(emphasis added), If we were to read "reckless" In this Guideline Itself to reqlili'O ·a
defendant to be aware of the risk of death or substantial bodily Injury, as Chlii contends we·
must, the use of the words "conscious or" rn that same Guldelfna would ba supe1iluous.
~ United States v. ~ 17 F,3d 6, 10 (1at Cl1'.1994) C' '[A]!I woids and provisions of
Statu~es a)'e lntendad to have meaning and -are to be given effect, ar'ld no construotlo.n
should be adopted which would render statutory words or phrases mO!lnlngless, redundant
or superfluous.' We thlnl< that this pnnolple Is fully applicable to the sentencing guidelines
...." (Internal citations omitted) (quollng l,,!i!Jl!OOl v. Im, 977 F.2d 713, 7·1&-17 (1st Cir.
1992))),
3 "23 Nor can this redundancy be avoided, as Chin suggests, by '.'requiring Iha
government lo prove, at the very least, what amounte to willful blindness" to prove
recklessness, "WIilfui blindness serves as an alternate theory on which the government
may prove knowledge." Unlted States v, ~ 599 F.3d 31, 41 (1st. 01" 20·10),
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In construing tho Guldeilna to require proof only that tha risk would have bean obvious to a
reasonable person In Chin's position, we align ourselves not only with the Second Circuit
decision In ).ygjjm, but with Iha Ninth and Tenth Circuits loo, .!;l!w United S!;!t~~ v, ~ .
642 F.3d 1315, 1321 (10th Cir, 2011) ("[Al defendant's conduot Involves a consolousr/sk If
the defendant waa subjectively aware that nls or her conduct created a risk of serious
bodily Injury, and a defendant's conduct Involves a reckless rial; If the risk of bodily Injury
would have been obvious to a reasonable parson."): United Stal;!s v. Johansson. 249 F.3d
848,859 (9th Cir. 2001) ("We do not believe that a defendant can escape the applioatlon of
Iha serious risk of Injury enhancement by claiming that he wss not aware that his conduct
created a serious r/sl<, that Is, a defendant does not have to subjectively know that his
cond\lCt created the rlsl,."), And while Chin /s right that two courts of appeals have ruled to
the contrary and Interpreted § 281, 1(b)(16)(A) lo require actual, subjective awareness of a
risk,~• United states v. MQ.hsln, 904 F,3d 580, 586 (7th Cir. 2018); United state~ v.
M.9.QQuL.l!JQ., 143 F,3d 1095, 1098 (8th Cir. 1998), noHher of those courts explains how that
Interpretation accords w/111 Iha enhancement's use the words "conscious or" before
"reckless." !,ea Johansson; 249 F.3d at 868 1'0ur concern. with the Eighth ·c1rcull's
Interpretation of 'reokl'ess' [ I n ~ , ,• .fs that there Is no meaningful d/sllnotlon between
an offense that Involves the 'conscious' risk of lhjttry, and.an offense that Involve, the
'reckless' risk of Injury, ~ under either prong the defendant must have been aware of the
risk In the first place."); aocor,;[.Milrullfil!, 642 F.3d al 1320-21. 1
of
Chin does point out that, allhough nalth.er § 281 .1 (b)(16)(A) nor Its application notes define
the ta,·m "reckless," a deflnltlon of that word does appear elsewhere In Iha Guidelines. Ha
then argues that we thus must apply that definition of"re<:/<less" here.
Chin has In mind the definition of "reckless" that appears In the apptloallon notes to the
Guideline that concerns Involuntary manslaughter. 8ll!l u.s.s.c;, § 2A 1.4. That Guida/Ina
sets different base offenee levels for Involuntary manslaugr1tar dspendlng on whether "the
offense Involved or/m/nally negligent conduct; or ,,, the offense Involved reckless conduct;
or,,, tl1e offense Involved the reckless operation of a means. of t/'ansportation." jg. The
appiloatlon note to that Guideline, In turn, defines "rnokless" follows;
as
1
' Recklees" means a situation In whlch the defendant wciS tiware of the. risk
created by his c,,nduot and the risk was of such a nature and·degres that to
*24 dle,,,gord that rlsl< constituted a gross deviation from tho standard of
care that a reaaonab/e per-so11 woufd exerclse In such a situation.
Jg.§ 2A 1.4 omt. n, 1, The application note also explains that• '[c]rlmlnally negligent' means
conduct that Involves a. gross deviation from the stahdard of ca1·0 that a reasonable pEirson
would exercise under the oh·cuinstances, but which ls not 1·0ck!ass." Mt
But, the application note that sets forth !his definition of "reckless" In connection with the
Guideline that concerns Involuntary manslaughter does not p\,rpo,i to apply throughout the
Guidelines, Nor does It even purport to apply to the Guideline at Issue hare In particular,
which applies to fi'l;lud and certain related oflenees, Thus, the application note does not, by
Its terms, require us to apply tho dsfinltlon of "reckless" that It sots forth here.
Moreover, It Is problematic to apply that delinltlon hare as a textual matter. The definition of
"recldoss" In the Involuntary manslaughter Gulde/Ina refers to a "risk.' See U,S,S.G, §
2A 1.4 amt, n.1. It Is thus hard to see how that definition could have bsen Intended to apply
to this Gulde/Ina, because this Guldoline Itself uses the word "recl<less" to modify the word
"risk," No such awkwardness arises under the Involuntary manslaughter Gulde/Ina; It uses
the a~Jectlvs "recl<lass" to describe a defendant's portduct either "reckless conduct'' or
"reol<less operation of a means of transportation," U.S,S,G. § 2A1 .4. llllft Mll.1lfi!M, 642 F.3d
at 1321 (observing the dist/notion between the two Guidelines' respective uses of "reckless
conduct" and "rock/ass risk"); Johansson, 249 F.3d at 859 ("The. Guideline describes a
H ..
'reokl0as risk/ not a reckless disregard ofa known rlsk.u). 2
Chin separately argues thst •· the definition of "reok/ees" elsewhere In the Guidelines aside
M" the term as It appears in the enhancement at Issue ~ere is b_est construed to require the
defendant to be aware of the risk of death or serious bodily Injury. He relies fur this
contention In part on other Instances in which recklessness has been defined to require a
defendant's subjective awareness of a rtsk. See Voisine v. United Stafll§, 579 U.S. 686,
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694, 699, 136 S.Ct. 2272, 19~ L,Ed.2d 736 (2016) (describing reol<loss conduct as "aots
undertal<on with awareness of their aubstantlal rial< of causing Injury' and 'with oonsolous
disregard ofa subslantlal risk of harm"); Eru:t:uru: v, Jilrru:i.niln, 611 U.s, 826, 836-37, 1'14
S.Ct. 1970, 126 L,Ed,2d 611 (1994) ("The oiimlnal law .: .. gen.orally i2s permlls a finding of
recldeoeness only when a person dloregards a rlsl< of harm of which he Is awore. '),
4
6 But, In lhoeo Instances, the te1m defines tho mens rea element of a criminal·
offense, rui.~Volslne, 579 U,S, at 691, 136 S.Ct. 2272; E.il!:rill1J:, 6'11 U.S. at 036-37, 114 ·
s,Ct. 1970, which must be proved beyond a !'e.asonebto doubt, 3 Here, however, the term
appears In a $@ntenolng enh.ancement, which ts subject only to the lower preponderance o'f .
the evldance standard that also applies In the olvll cciniext. !;ll)e United
v,
Hern~ndoz-NegrQ!l, 21 P.4th 19, 26-26 (1st Cir. 2021). Thus, the eimmpies of.,'reckless•
.
being given lhe stl'loter meaning on which Chin relies .fall to show that this Guideline Is best
construed to lnco1•porate a meaning of "r'\'Cldess" that ls us.ad to define an element of a ..
crlme,rathei than a meaning of,'reckloss" that Is traditionally used. In the olvll context, ·whlo,h.
Is the one the Second Clroultottrlbutea lo ltln l,yQ!@J), 347 P,3d at.66•67.
$¢eco Ins. ·
Qlwlf;',m,, V, !a11L 551 U.S. 47, 68, 127 S.Ct 2201., 1~7 L.Ed,2d 1045 .(2007) ("Whtie .'the
term reoklessnoss ·Is not self.defining,' the common law has ganarally .understood It In the ·
sphere of clvll llablllty as oonduct violating an objective atijndard: action entailing 'an
un)ustlffably high risk of harm that la either known or so obvious 1hat It should be known.' ''
(quoting Farmer, 511 U,$, at 836, 114 s,ct. 1970)); M~Jr!. at 68 n.18, 127 s,ct, 2201
("Unlike civil recklessness, orlmlnal recklessness also requires sub)ectlve.knowtedga on t~e.
PWt olthe offender,"), ·
.
.
s1~ias
S§e
We do not mean to suggest that the word "r~okless' In aGuldellna necessarily lnco.rpoiatee·
the ~adltlonal oommon-iaw understanding of the term In the civil context. But,,glven the use
of the words "consolous·or reckless" to modify risk In§ 281, 1(b)(16)(A), the:ie~treq~lre,; u/
to c<>nstrue "reol<i•••" here to refer to that. sianda,v.. .
· ·
·
~.
..
,...
·..
6 Chin argues In the alternative that therncord falls to shOw by a prepohd.eranoe.·of the
evidence that his releva11t conduct satisfied th,i ol1Jactive standard foriocklessness, evan If ..
that standard Is the appllcabla one under this Guideline. Specific.ally, he ~ontend• that
"[W]hlle [he) was aware that there were deficiencies I~ testing and th.a.condition of tho,·
compounding lab ..., It would hava required rank speculallon to foresee lhat.lhose
shortcomings would cause !ho vials oi MPA to b~come oont~rriin,i\Mwlth fui1gusileadlng
to a scourge of serious illnees and death." vile are not pe;.uaded, ·
.. ,:. ·
7 The District Court did not expressly ·s~t forth findings about the nature of the rlsl< of
which Chin shot1ld have been aw.are from his relevant.oonduct In co.mmltllng his offe.nso ..
However, we may look lo the rai:ord of the se111<,nclng h.earlng tp.asc,maln the Plstrlct
Court's reasoning. Q[. United States v, Montem:Monterg. 817 ~;3ci 35, 37 (1st Cir; 2016)
("lb ba sure, a sentencing court's rationale somellmes may be. Inferred fromlhe sentencing
colloquy ,md the parties' arguments (oral or written) In connection with senteli.clng,"), ·
•2& Notably, bafore applying the§ 2.81, 1(ll)(16)(A). enhancement to Chin,' Iha District Court .
explained that It "d[ld] not want to retread grnund thal [11] covered yesterday.' It te thus
evident that Iha District Court was rolylng on the same rationale for. applying.Ihle
enhancement to Chin that Ii had relied on the ·day before In applying the.enhancement to
Cadden. And, at Cadden's resentenclng, it hatl explained that the enhanoemeht applied to
Cadden because Cadden "proslde[d] ova~• a "high-risk enterp1foe" at NECC :
d0$plte warnings, signals, ,.. lncornpioto'tosilng, lolslflcatlon'~f .drug lab ·,..
oleanlng reports, ,.. the appearance of mold .and other contaminants In the
clean room, and hie superior lmowledge of the risk lnvolV<Jd ..
Of course, the record In Chin"s case must provide suppoit for the tllstrlot Courrs daolslon lo
apply the enhancement to him based on this satn~ rationale, But, reviewing Jhe District
Courl'a factflndlng for clear c,rror, .Qblnj, 965 F.3d. at 1;9, we conclude that the record here
supportably shows that Chin knew In 2012 that NEC C's clean room was grossly . .
.
contaminated after his staJrs failure to adhere to cleaning piotocols/thai he know that
NECC was selling MPA that was not properly sterilized or tested. for sterility despite
olalmlng that It was USP-797 compliant, and that ha instructed NECC technicians to . .
.
.
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mislabel untested drugs with the lot numbers of older lots that NECC had tested. And, as
the government points out, the record also supportably shows that Chin was required to
follow USP-797 standards, the purpose of which "Is to describe conditions and prac!lces lo
prevent harm, Including death, to patients that could result from ... mloroblal contamlna!lon:
Thus, the District court did not clearly err In finding that'ch1n should have been aware of
the risk of death or serious bodily Injury that his conduct In committing his offense posed,
given the evidence supportably showing th~t he breached USP-797 standards that oXlst In
part to "prevent ••. death ... to pa11ents."
Ill.
8
9 We next address Chin's contention that the District Court erred In applying an
enhancement to his sentence that provides for a two-level Increase "ll]f the defendant knew
or should have known that a victim of the offense Was a vulnerable vlotlm," U.S.$,(),§
3A1, 1(b)(1), 4 Th<i applloatlon note furlher explains that the enhancement "applies to
offenses Involving an unusuafly.vulnerable victim."!![,§ 3A 1,1 cmt, n.2. To apply the
"vulnerable victim" enhancement, "the sentencing court must determine that (1) 'the victim
of the crime was vulnerable, thatls, ,.. the victim had an "Impaired capacity ... to detect or
prevent crime:"' and (2) 'the defendant knew or should have known of the victim's unusual
vulnereblllty.' • United States v. S!filll!, 591 F.3d 23, 29 (1st Cir. 2009) (quoting !Jni!fill
~ v. ~ . 370 F.:id 87, 92 (1st Cir. 2004)),
Chin does not dispute that the patients who were administered NECC drugs are ''victims" In
the relevant sense,~ United Statos v, ~ . 644 F,3d 1~13, 1288 (11th Cir. 2011)
(concluding thal "recipients of recycled blood-darlvatlvos are 'vulnerable victims'" where
owner of pharmaceutlcal '27 wholesalers fraudulent bllllng scheme caused AIDS and
hemophilia pailents to bo treated with recycled blood dertvat1ves1:· United Stat~ v. Mlilll!lln,
401 F.3d 53, 74 (2d Cir. 2005) (affirming appltcatlon of "vulnerable victims" enhancement
where defendant "dlsMbute[d] counterfeit and misbranded.drugs to doctors, pharmacists,
and pharmaceutical wholesalers, knowing that those customers would dlstrtl>uta the drugs
to women with fertiltty problems and to Parkinson'• disease patients"): !l!liU!IAA J.!.nllElrt
Slittes v. llJ/Jhl!, 130 F.3d 644, 655 (5th Cir. 1997)(~[A] physician's paflents c.an be
victimized by a fraudulent billing scheme directed at Insurers or othel' health care
providers,'). But, he still argues that neither prong of the enhancement Is satisfied here.
Reviewing the District Court's (actfindlng for clear erro,' and It~ Interpretation of the
Guidelines de nova, Qhlnj, 965 F.3d at 60, we do not agree,
A,
Chin contends that the victims here - I.e., the patients harmed by contaminated NECC
drug$ .... 1'were not •unusually vurnerabte'" merely because they were members of~a
genorlo olass of all medical patients.'' He further contends that suoh a finding would be
Inconsistent with the Intent and purpose of tho Guideline, which he says Is m~nt to punish
"defendants who exploit the particular weaknesses of society's most vulnerable members,"
To tho extent Chin contends that the District Court erred in its Interpretation and application
of the Ouldellne, we disagree under de nova review. To the extent he challenges the District
Court's factual finding thet the victims at Issue were In fact "unusually vulnerable," we
discern no claar ert'or,
The District Court did not find, as Chin suggests, that these victims vrore unusually
vulnerable merely because they belonged to "a generic class of all msdlcal patients,"
Rather, the Dlstrtct Court supporlably found that they were unusually vulnerable because
their pain led them to "entrust medical personnel to Inject a foreign substance Into their
splne[s]," recognizing that "vulnerability can· equally refer to one's .•. Inability to protect one's
seff under the clrcumstancea." Applying the enhancement based on particularized class
characteristics such as these Js consistent with our precedent. Although vro have said that
the sentencing court should focus "on the victim's Individual characteristics" in applying this
enhancernent 1 uabovl!! and beyond mere membership In a large class,"~ United Slate$ v,
Erui:lt:rJM, 83 P,3d 9, 16 (1st Cir. 1996), we have also made clear that "this Is In no way a
fixed rule," united Stejes v. l,IJI, 99 F.3d 484, 486•87 (1st Cir. 1996). Indeed, "[l]n some
cases the Inference to be drawn from the class characteriatlcs may be so powerful that
there can be little doubt about unusual vufnerablllty of class members within the meaning or
section 3A 1.1." k!, at 487 (citing United States v. Eolievarrje. 33 F.3d 175, 180-81 (2d Cir.
1994) (upholding enhancement as applied to unlicensed doctor based on group
determination of vutnerablllty of medical patients), lllJP.•Wlded b~ regulation 011.!l.lb.!l!
grounds as stated In Unlled States v. Hussey, 254 F,3d 428,433 n.3 (2d Cir. 200·1), and
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Uoitad St•t•• v. lilMllYWY., 949 F,2d 722, 735 (5th Cir, 1991) (same, as applied to
physician making false diagnoses)), Thus, revlewlno de novo, we conclude lhal Iha District
Court did not arr In Jnlarprallng the Guldellna.
Nor do we find any o/ear error In Iha District Court's appllcallon of the·GLIldellne to Chin,
Indeed, we have upheld the appllcatlon of the enhancement In· similar circumstances: In
Slrulli., we held that victims' "Illnesses" oan distinguish lheni from •~s member• of the . ·
"general public" for purpoees of Iha vulnarable•vlcllm·anhancemant, Insofar as their need
for medication vitiates !heir ability to "help themselves" or 'to d.etect or prevent against the
(relevant harm].' 591 r•,3d at 30 (quoting the sentencing court's findings), .Ql.~Y., 644
F.3,d al 1289 (concluding that victims "were vulnerablo duo to their.medical condition-·
AIDS and hemophilia'.); M!WllJo, 401 F.3d at 74 (oonoludlng that "women with farlllity
problems and .. , Parkinson's disease patients" constituted vulnerable vlct1111s) ..,Here, the
patients receiving MPA ln)oollons Into their spine were In a similarly "unusually vulnerable'
position, fillll U.S.S.G. § 3A1.1 cmt. n,2, by virtue oflhelr .physlc_al condit19n and the..
clroumalanoee of ttie procedure. Thus, we discern. no.e.rror In the District Court's applloat1011 .
of the enhancement:
B, .
10 Chin also argues that Ille record falls to show that Chin knew or should have known
of the victims' unusual vulnerability, In support of this contention, Chin appears 1o argue that
tho "knew or should have known" requlrementln § 3A1,1(b) per se.preoludes the
enhancement's applloatlon lo him because he was merely a suppllor of med.lcal products lo
health oare facllUles and thus stoo~ at a remove from \ne. patlenis Whci were h.armed by tile
contaminated drugs that NECC compounded. Bui, lnsofw as Chtn in pressing this .
contention Is maldng a legal argument about the proper constr.uctl~ti' of the ·Guhjollne; .,lch
that our review Is do novo, me. .Q.b!n..l, 965 F.3d. 50, we mtl$l
contention.
·
at
hl)e~iu,~
Nothing In the text of the provision supports the per so oxoluslon <if medical suppliers,
Thuo, nothing In lhe text bars the application of the enhancement to a riieciica(suppller who·
knew or should have I,nown that he vies dlsb'lbutilig unsafe clnigslhatwould be used by
vulnerable patients, full! fl.i:Mk!X, 644 F.3d at 1289;Jill.lmlil.,401; F.3d at74; ~
l;Jpj!ed States v; M.Qroo, 778 F.3d 942, 952-53, 978-79 (1'I th Clt'.·i0.15) (~pplyltig .
"vulnerable victim" enhancemetJl to defandant CF-0 61 medical faollltywhil was not ftlreotly
Involved in patient care), Rather, the text merely provides that th·e etiharieemeht applies to·
an offender who "lmew or should have known that a victim ofthe ortense was e·vulnerable
victim.' U,S,S.G. § 3A1 .1(b),
11 Chin nexl argues that the enhancement may not b,rapplled lo him by refetenolng the
application note to It. The application note explains that "LtJh-e adJuslnietJt would apply; for .
example, In a fraud oaoa In which the defandantniarketed a.n lrieffeotlva oaticer cure,"
U,S.S.G. § 3A1 .1 cmt. n.2. Chin oomendsthat, In addition toih.e .factthat h<iWas not
hlmaalf "a health care provider." he also Is not analogo,ie to a fl•audsfor who marketed an.
Ineffective cancer o\ire, And that Is so, Chlti contends; beca~s~·NECC had previously said
lots of MPA without Incident, and Uie· record· fails to show by a proponderance'of the.
evldenoo that 'he "kn[ejw that any of the drugs he ·compounded were contaminated." ile
thus appears lo be contending tl1al, absent a showing by a preponderance of the evidence
ol his Intent to aefraud the vtoUms, there can ·b• no finding th.at Chin knew .or should have .
known that tho vlotlms were vulnerable,
But, even If we understand lhls argument to be a contention about .the proper way to
construe the Guideline, such that our review Is de novo nsth<ir than for clear error,..Qtlltl.J,
965 F,3d et 50, we reject It. The text of tho Guldelii10vrovliles no basis for conclUdlng that·
tho "knew or should have known" standard may be satisfied only'by a ffndliig that the
defendant Intended to defraud his victims. No,·does 'l.9 the apptloatlon note, In giving en
example of how the Guideline could be satisfied, puiport lo sul)gest that there Is a ·
requirement to prove on Intent to defraud. lnatoad, the Guldelln·e merely requires iharlt be
ehown by a preponderance of U,e ovldenca that, In engaglni) In tl1e conduct relevant to his
offense, Chin lmaw or should have known that' vulnerable patients would. be using the
unsafe drugs he produced at NECC,
·12 Finally, Chin appears to be arguing lhat, even II the Guideline may be appllecl to a
medical supplier Who was not defrauding patients, tho District Court. clearly erred In finding
that he 1'lmew or should have lmownn that the vlctti:ns were yulnerable, Hern, his assertlo_n Is
that there is an absence of record evidence of his lndivlduall~ed knowledge of both who !he
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and users of NECC drugs would ba and that Iha drugs that NECC shipped ware
oontamlnated, But, we cannot agree,
The Dlslrlot Court supportably found that "[ejvldanoe Introduced al trial, Including Internal
NECC emails, brought home Iha certainty that Chin and other of the cooonsplrators were
MIY aware of the risks lnvo1V0d In the distribution of defective drugs," Chin's resume
advertised his "[k]nowledga of USP(-]797," and the flrst sentence of the Introduction to
USP-797 reads, "[tjhe objective of this chapter Is to describe conditions and praotlces to
prevent harm, Including death, to patients that could rasull from .. , microbial contamination
....' And, Chin himself ooncadee In his brief to us that he 'was aware that there ware
deRclencles In testing and the condition of the compounding lab and that all the USP-797
protocols were not being strictly adhered to." Indeed, evidence was presented at lrlal tl1at
tended to show that Chin was aware of the particularly grave risks associated wllh lnjecllng
oontamlnatad medication Into a patlenrs spinal fluid, as opposed to other routes of drug
administration. 6 Thus, the DJ$!rlot Court did not clearty err In concluding that Chin lmew or
should have known lhat downstream recipients of MPA from NECC were particularly
vulnerable,
IV.
For the foregoing reasons, wa l!ffftln Chin's sentence,
All Citations
41 F.4th 16
F_o_o_t_n_o_te_s______________________. ~ ·
'-I
Chin does also point to tho Eleventh Cimult's decision In United StatE!ll v,
MfilligJ!, 623 F.3d 1350 (11th Cir. 2010), Which applied the enhancement on
the ground that the sentencing court had "f[ound) that a !reined nurse, such
aa [the dafandant] "" would be well aware" of lhe rlilks assootated with her
criminal activity, kl. at 1371, But, as the government obseNes, this standard
more oJosaJy resembles a should-have-lotown standard t11an an actual
awareness standard, Moreover, lnsofa,• as the Eleventh Circuit meant to
ambraoe an actual-awareness-of-risk requirement In Mru!lru!, ll.'lll kl. ("the
Guidelines provision focuses on the defendant'• disregard of risk''), It, too,
made no attempt to explain how such a requirement could ba raoonollad w"ah
the Guideline's text.
2
Chin draws our attention to a oase In which U1ls Court railed on the definition
of "reokless" from the Involuntary manslaughter Guida II no when Interpreting a
third Guideline's use of that word, §fl!! Unlti,d State§ v. l'.,arrero-l-lernanda,g,
643 F.3d 344, 348-50 (1st Cir. 2011). There, this Court was tasked with
Interpreting a Guideline lhat provided for an Increased offense level "If the
defendant reok!essly created a substar1tial risk of death or serious bodily
lnju,y to another person In the course of lloelng from e law enforcement
officer," U.S,S.G, § 3C1.2, whose application note expressly Imported the
definition of "reckless" from the Guideline on lnvolunta,y manslaughter, kl.
cmt. n,2; filll!Jlli.Q.Qll!r.ero+lorn$ndez, 643 F,3d at 348, But, even setting
aside the fact that In that case•· unlike this one - the Guideline in question
expressly Incorporated the definition of 'reckless" set out In the applloatlon
note to§ 2A1.4, Carrero-Hernandez Illustrates why the text of Chin's
enhancement compels a different construction of the word "reckless," The
provision at Issue In CarreroriHemiuide,;:, like the Involuntary manslaughter
Guideline, used "reckless[]" ta describe llQ'!t an offender engaged In risky
conduct, See U.S.S.G. § 3C1 .2 ("If tho defendant reckleosly created a
substanllal rial, ... "); l!;!. § 2A1 .4 ("If tho offense Involved reckless conduct .. ,").
By contrast, as we have explained, "recldess" In§ 281 .1(b)C16)(A) descrtbes
expressly a ~rlsk,'.1 not the way an offender conducted himself with respect to
that rlsl<, §ll!ll!;!. § 2BU(b)(16)(A),
3
El!!lllf!J: was a civil Bivens action In which the Court held that "deliberate
lndlff0r011ce," for the purposes of defining a violation of the Eighth
Amendment, filll!l:/Qlllr!Q V, ~ Y . . 609 U.S. 25, 32, 113 S.CI. 2475, 125
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L.Ed.2d 22 (1993), required ectual lmowiedga and disregard ·of a risk, rather
111an merely an objective risk. 511 U,S, at 837, 839-40, 114 S.Ct, 1970. The
Court explained In so holding, however, that II was 'adopt[lng]" what II called
'subJacffve reolilassnass used In the orlmlnal law," Ith at 639-40, 114 s.ct.
1970,
a•
4
L/,S.S,G. § 3A1, 1(b)(2) provides, '[l]f (A) subdivision (1) applies; and (B) the
offense Involved a large number of vulnerable victims, Increase Iha offense
level determined under subdlvlalon (1) by 2 addltlonal levels,' The District •
Court applied this enhancement at Chin's resentenolng. Chin does not argue
lhat tl1e Dlstrlol Court erred In.applying tl,e additional enhanoe111ant In§
3A 1, 1(b )(2) If the Dlstrlot ·court properly applied the enhancement In §
3A1,1(b)(1),
5
An NECC compounding teohnlolan ·t••tlfle~ that Chin, when training him. In
. olaan-room sanitation practices, "stressed that wftl1 the ln]eclE)ble drugs
~hare] was even more a need lo be vigilant In terms of cleanliness because
yoll'ro bypassing the Immune system, basloally Injecting It right Into the
cerebral spinal fluid, whatever It Is, and It's going to go straight up into their
brain." Addltlonally, ·the second sentence of tl1e lntroduotlon to'USP-797
explains that '[o]ontamlnated [compounded starlle preparations] are · ..
potentially most hazardous to patients when administered Into body cavities,
central nervous and vascular systems, eyas, andjolr'lts and whan used as
baths for live organs and tissues.".
End of
Document
@ .2022 Thomaon Reuters, No clalm to orlglnal U.S. Government Work$.
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Case 1:14-cr-10363-RGS Document 1448 Filed 02/23/18 Page 1 of 18
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
CRIMINAL ACTION NO. 14-10363-RGS
UNITED STATES OF AMERICA
v.
GLENNCHIN
MEMORANDUM AND ORDER
ON FORFEITURE OF PROPER1Y
February 23, 2018
STEARNS, D.J.
Following Glenn Chin's conviction for mail-fraud racketeering,
conspiracy, mail fraud, and violations of the federal Food, Drug, and
Cosmetic Act (FDCA), the government sought the forfeiture of the entire
$611,774 that Chin was paid in salary as a pharmacist at New England
Compounding Center (NECC) between 2006 and October 2012, when NECC
ceased doing business. See Dkt #1391 (Motion for Order of Forfeiture). Chin
filed an opposition, see Dkt #1423, and the court heard oral argument on
February 15, 2018. 1 For the reasons to be stated, the government's motion
will be allowed in part.
1
In that saine hearing, the court heard argument on the government's
Motion for an Order of Restitution. See Dkt # 1400. The question of
restitution will be the subject of a separate Order.
1
APPENDIX B
B-1
case 1:14-cr-10363-RGS Document 1.448 Filed 02/23/18 Page 2 of 1.8
The government is correct that a forfeiture in this case is virtually ·
'.
mandated by 18 U.S.C. § 1963. See Alexander v. United States, 509 U.S. 544,
562 (1993) (noting that "a RICO conviction subjects the violator not only to
traditional, though stringent, criminal fines and prison tern1s, but also
mandatory forfeiture under § 1963.''}. TI1e court also agrees that Chin's
salary, paid for his work as NECC's Supervisory Pharmacist during the
period of time in which NECC was operating as a criminal enterprise, is
forfeitable. See United States v. DePries, 129 F.3d 1293, 1313 (D.C. Cir.1997)
(holding that salaries received by former union officials after their tampering
with union elections were subject to forfeiture because "but for the elections,
which the district court found to be tainted by appellants' racketeering
activity; they would not have received their salaries."). Here, but for Chin's
participation in conduct "tainted by ... racketeering activity,'' he would not
have earned the salary that he did from NECC. See United States v. Angiulo,
897 F.2d 1169, 1213 (1st Cir.1990) (endorsing the "but for" teS't).
Where the court parts company with the governrnent is over the
proposition that NECC operated as a crimi1:1,al enterprise from its inception,
thus exposing the entirety of Chin's earnings from 2006 through 2012 (the
statute oflimitations period) to forfeiture. As I observed at Chin's sentencing
(and at the sentencing of codefendant Barry Cadden), the weight of the
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evidence, as corroborated by an analysis of the jury's verdict, is that NECC
originated as a legitimate business, but under mounting pressure to
maximize profits, degenerated into a criminal enterprise in March of 2010,
and operated as such until its collapse in October of 2012. 2 Consequently,
only the salary that Chin received during that period of time falls within the
precincts of forfeitable gains.
According to the government's calculations, as corroborated by Chin's
tax returns, the total of Chin's potential salary exposure can be calculated as
follows. Chin earned $171,837 at NECC in 2011, and $163,805 during the
ten months in 2012 during which NECC re1nained viable. Chin was paid
$165,531 by NECC in 2010 (at a monthly salary of $13,794.25), Prorating
2010 over ten months from March to December yields $137,942.50.
Combining the three figures {$137,942.50 + $171,837 + $163,805) yields a
total of$ 473,584.50.
Chin advances three arguments in support of a lesser mnount. The
first, and most radical, is the contention that he should only forfeit the
As I noted in a separate order, see Dkt # 1433, correcting a dating
1niscue on 111y part at Chin's sentencing hearing, "[a] RICO enterprise is
defined by a minimum of two related predicate acts occurring within ten
years of one another. Here, in Chin's case, as in the Cadden trial, the earliest
predicate act found by the jury is the fraudulent mailing of March 25, 2010
(Predicate Act 69). All parties agree that the enterprise [thereafter] endured
until the shuttering of NECC in October of 2012."
2
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portion of his salary associated with the specific shipments of drugs the jury
found to have been part of the mail fraud scheme. See Chin Opp'n, Dkt #1423
at 5 (arguing that "a reasonable method" of calculating forfeiture would be
"to determine what percentage of NECC's gross revenues" during the
racketeering period "was comprised of products that were tainted by the
fraud proved at trial, and find the forfeiture amount to be the corresponding
percentage of Mr. Chin's compensation for that period.").
There are legal, as well as concephial difficulties, with this argun1ent.
As the government points out, 18 U.S.C. § 1963(a)(3) provides for the
forfeittire of "any property constituting, or derived from, any proceeds which
the person obtained, directly or indirectly, from racketeering activity." In
Chin's case, the entire salary he earned at NECC during the relevant time
period constitutes "proceeds ... obtained, directly or indirectly"_ from his
participation in the racketeering enterprise. Moreover, as a practical matter,
there is no realistic means of calculating the actual value added by Chin to
any specific batch of drugs shipped by NECC.
Chin's second argument is that his gross salary is an improper starting
point for any calculation of a forfeitable amount because it includes
payments for federal and state taxes, as well as other benefits, tha:t were
deducted fro1n his paycheck. The government counters (accurately) that
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First Circuit precedent generally holds that forfeitable proceeds in a RJCO
context are to be measured in gross, rather than net, terms. See, e.g., United .
States v. Hurley, 63 F.3d 1, 21 (1st Cir. 1995) (rejecting defendant's argu1nent
that "proceeds" means "net proceeds" or "net profits" under § 1963 (a)(3)).
This precedent is consistent with Congress's intention that RICO's forfeiture
provisions be "broadly interpreted." Id.
The "gross proceeds" approach is further supported by the obvious
difficulty involved in calculating "business expenses" in the 1nine run of
RICO cases, in which the enterprise is constituted from the outset as an
illegal entity for which, deliberately, no accurate records are kept in order to
conceal the underlying activity from law enforcement. NECC, however, is an
exception. The company was not initially constituted as an illegal enterprise, ·
and it kept detailed and accurate records during its corporate existence.
Consequently, it is no difficult matter to segregate the portion of Chin's salary
.
.
that was deducted for federal and state taxes, health benefits and retirement
accounts. Not surprisingly, there is support in circuit case law for using a net
approach where the relevant figures are readily ascertainable. See United
States v. Genova, 333 F.3d 750, 761 (7th Cir. 2003);
A recent Supreme Court recent ruling, Honeycutt v. United States, 137
S. Ct. 1626 (2017), offers important guidance. .Honeycutt stands for the
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proposition that a RICO forfeiture is to be "limited to property the defendant
himself actually acquired as the result of the crime." Id. at 1635. As the
government points out, Honeycutt" makes clear that property "received" can
include benefits obtained "indirectly" from a RICO enterprise. See Gov't's
Reply, Dkt # 1432 at 5 ("For example, if a criminal participated in a fraud
scheme and the victim paid the criminal's mortgage or car loan for him, the
value of that payment would be ill-gotten gains that the crin1inal obtained
indirectly."). Consistent with this reasoning, the portions of Chin's salary
that were deducted to cover health care benefit payments and retirement
account contributions constitute property "obtained" indirectly by Chin
because he was tl1eir ultimate beneficiary.
The money deducted frmn. Chin's salary as federal incoi:ne tax
payments do not, however, fit within this analysis. The counter-argument,
made by government counsel at the forfeiture hearing, that the federal tax
.deductions were paid for Chin's "benefit" (presumably because in a larger
sense he and his family were recipients of government services), is not one
that n10st taxpayers, however zealous in their filings, would find compelling.
While there 1nay be a flush of civic pride in paying taxes, it is difficult to see
how money paid into the U.S. Treasury can be characterized as proceeds
"obtained" by a defendant. There is also a double counting issue arising from.
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the fact that forfeited proceeds escheat to the Treasury, meaning that Chin is
being asked, in effect, to pay his taxes twice.s These two considerations lead
me to conclude that Chin's federal income tax payments should be deducted
from the forfeiture figui:e,4
According to Chin's tax returns, his tax bracket varied between 25%
and 28% during the tax
years in question. The court will use the mean of.
.
26.5% as an appropriate estimate for Chin's effective tax rate during this
period. This results in an adjusted, post-federal tax figure of $.473 158
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