Petition for Writ of Certiorari — Barry J. Cadden, Petitioner v. United States

Supreme Court briefJan 26, 2023

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NO._________________________________________________________________

In the Supreme Court of the United States

BARRY J. CADDEN,

Petitioner

UNITED STATES OF AMERICA,

Respondent

________________________________________

ON PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT

________________________________________

PETITION FOR WRIT OF CERTIORARI

OF BARRY J. CADDEN TO THE

UNITED STATES COURT OF APPEALS FOR THE FIRST CIRCUIT

________________________________________

Kelley A. Jordan-Price

HINCKLEY, ALLEN & SNYDER LLP

28 State Street

Boston, MA 02109

(617) 345-9000

January 11, 2023

_________________________________________________________________

QUESTIONS PRESENTED FOR REVIEW

Did the District Court clearly err in applying a four-point “vulnerable victim”

enhancement under U.S.S.G. § 3A1.1(b) to defendant’s sentence, absent a

showing that the victims were “unusually vulnerable”? More generally, does

this criminal sentencing enhancement require a showing that the victims

were “unusually vulnerable” in order to apply?

2. Did the District Court clearly err in applying a two-point enhancement for

“conscious or reckless risk of death or serious bodily injury” under U.S.S.G. §

2B1.16(b)(16), by applying the objective test for “reckless” established in the

Second Circuit in United States v. Lucien? More generally, does this criminal

sentencing enhancement require the courts to use an objective or subjective

concept of “reckless”?

STATEMENT OF RELATED PROCEEDINGS

This case arises from the following proceedings:

•

United States v. Barry J. Cadden, No. 14-cr-10363-2-RGS. U.S. District Court

for the District of Massachusetts. Judgment entered June 26, 2017.

•

United States v. Barry J. Cadden, Nos. 17-1694, 17-1712, 17-2062. U.S. Court

of Appeals for the First Circuit. Judgment remanding case entered July 9,

2020.

•

United States v. Barry J. Cadden, No. 14-cr-10363-2-RGS. U.S. District Court

for the District of Massachusetts. Amended Judgment after remand entered

November 30, 2021.

•

United States v. Barry J. Cadden, Nos. 21-1602, 21-2003. U.S. Court of

Appeals for the First Circuit. Judgment affirming sentence entered October

13, 2022.

iii

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED FOR REVIEW……………………………………….. ii

STATEMENT OF RELATED PROCEEDINGS…………………………………... iii

TABLE OF CONTENTS……………………………………………………………… iv

TABLE OF AUTHORITIES………………………………………………………….. vi

OPINIONS BELOW…………………………………………………………………… 1

BASIS FOR JURISDICTION………………………………………………………… 1

GUIDELINES PROVISIONS INVOLVED………………………………………… 1

STATEMENT OF THE CASE……………………………………………………….. 2

PETITIONER’S CONVICTION AND ORIGINAL SENTENCE……….. 2

II.

FIRST APPEAL………………………………………………………………… 2

III.

RESENTENCING………………………………………………………….…... 3

IV.

SECOND APPEAL………………………………………………………….…. 4

REASONINGS FOR GRANTING THE PETITION…………………………….… 4

THERE IS A SPLIT IN THE CIRCUITS OVER THE

CORRECT INTERPRETATION OF “RECKLESS” UNDER

U.S.S.G. § 2B1.1(B)(16)(A), THAT THE COURT SHOULD

RESOLVE ………………………………………………………………………. 4

II.

THE VULNERABLE VICTIM ENHANCEMENT UNDER

U.S.S.G. § 3A1.1(b) REQUIRES A SHOWING OF “UNUSUAL”

VULNERABILITY OF THE VICTIMS, CONSISTENT

WITH THE SENTENCING GUIDELINES COMMENTARY…………... 6

CONCLUSION………………………………………………………………………….. 9

APPENDICES

APPENDIX A

United States v. Barry J. Cadden, 965 F.3d 1 (1st Cir. 2020) ….………. A-001

United States v. Barry J. Cadden, 51 F.4th 32 (1st Cir. 2022) …... ….… A-035

APPENDIX B

United States v. Barry J. Cadden, Case No. 14-10363-RGS

Judgment in a Criminal Case ………………………………………............ B-001

United States v. Barry J. Cadden, Case No. 14-10363-RGS

Amended Judgment in a Criminal Case …………………………………… B-007

APPENDIX C

U.S.S.G. § 3A1.1(b) ……………………………………………………………. C-001

U.S.S.G. § 2B1.1(b)(16)(A) …………………………………………………… C-003

TABLE OF AUTHORITIES

Page

Cases

Farmer v. Brennan,

517 U.S. 825 (1994)……………………………………………………………. 4

United Stated v. Barry Cadden,

965 F.3d 1 (1st Cir. 2020)………………………………………………... 1, 3, 8

United States v. Barry Cadden,

51 F.4th 32 (1st Cir. 2022)………………………………………………….. 1, 4

United States v. Donnelly,

370 F.3d 87 (1st Cir. 2004)…………………………………………………… 7

United States v. Feldman,

83 F.3d 9 (1st Cir. 1996)…………………………………………….………… 7

United States v. Footman,

66 F. Supp. 2d 83 (D. Mass. 1999)…………………………………….…….. 7

United States v. Fosher,

124 F.3d 52 (1st Cir. 1997)……………………………………………….…… 7

United States v. Lucien,

347 F.3d 45 (2nd Cir. 2003)………………………………………………… 3, 5

United States v. Johansson,

249 F.3d 848 (9th Cir. 2001)…………………………………………….…… 5

United States v. Maestas,

642 F. 3d 1315 (10th Cir. 2011)………………………………………….…… 5

United States v. McCord, Inc.,

143 F.3d 1095 (8th Cir. 1998)……………………………………………….

United States v. Mohsin,

904 F.3d 580 (7th Cir. 2018)…………………………………………….…... 5

United States v. Singh,

54 F.3d 1182 7 (4th Cir. 1995)………………………………………………. 9

United States v. Stokes,

392 F. App'x 362 (6th Cir. 2010) (unpublished)………………………….. 9

United States v. Volkman,

797 F.3d 377 (6th Cir. 2015)………………………………………………… 8

Statutes and Guidelines Provisions

28 U.S.C. § 1254………………………………………………………………….….... 1

U.S.S.G. § 2B1.1(b)(16)(A)……………………………………………………. 1, 3, 4, 6

U.S.S.G. § 3A1.1(b)…………………………………………………………….. 1, 3, 4, 6

U.S.S.G. § 3C1.2…………………………………………………………………….…

vii

OPINIONS BELOW

United Stated v. Barry Cadden, 965 F.3d 1 (1st Cir. 2020), set forth at Appendix A.

United States v. Barry Cadden, 51 F.4th 32 (1st 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 October 13, 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.

GUIDELINES PROVISIONS INVOLVED

U.S.S.G. § 3A1.1(b)

(b)

(1) If the defendant knew or should have known that a victim of the

offense was a vulnerable victim, increase by 2 levels.

(2) If (A) subdivision (1) applies; and (B) the offense involved a large

number of vulnerable victims, increase the offense level determined

under subdivision (1) by 2 additional levels.

U.S.S.G. § 2B1.1(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.

STATEMENT OF THE CASE

PETITIONER’S CONVICTION AND ORIGINAL SENTENCE

Petitioner Barry J. Cadden [“Cadden”] was charged in an indictment with

thirteen others for a variety of offenses in an indictment returned in the United

States District Court for the District of Massachusetts on December 16, 2014. The

charges stemmed from the national outbreak of fungal meningitis in 2012 that was

eventually traced to an injectable steroid, methylprednisolone acetate [“MPA”],

compounded at the New England Compounding Center [“NECC”] in Framingham,

Massachusetts. Numerous recipients of the MPA compounded at NECC were

seriously injured, with some tragically losing their lives. Cadden was the founder,

part-owner, and president of NECC at the time that the company manufactured

and distributed the MPA.

Cadden was tried on ninety-seven separate counts and, following a ten-week

trial, was convicted on fifty-seven counts under RICO, RICO conspiracy, and

multiple counts of mail fraud. Cadden was acquitted of the most serious charges,

including all twenty-five second-degree murder racketeering charges, conspiracy to

defraud the United States charges, and all but three of the forty-one counts under

the Food Drug and Cosmetic Act. The district court sentenced Cadden to 108

months on June 26, 2017. App. B-001.

II.

FIRST APPEAL

The government appealed Cadden’s sentence, while Cadden cross-appealed

his convictions. On July 9, 2020, the First Circuit upheld Cadden’s convictions, but

overturned and remanded Cadden’s sentence, holding that the district court had not

properly analyzed enhancements under § 2B1.1(b)(16) and § 3A1.1(b) of the United

States Sentencing Guidelines [“Guidelines”]. United States v. Cadden, 965 F.3d 1

(1st Cir. 2020). App. A-001, C-001, C-003.

III.

RESENTENCING

The district court resentenced Cadden on July 7, 2021. Cadden argued that

the district court correctly declined to apply the two enhancements under U.S.S.G. §

2B1.1(b)(16) and § 3A1.1(b). During resentencing, the district court first turned to

the enhancement under U.S.S.G. § 2B1.1(b)(16), specifically, the “conscious and

reckless disregard of death or serious bodily injury” enhancement. The district court

noted that the “conscious” portion of the enhancement clearly did not apply and,

instead, focused on the “reckless” portion of the enhancement. The district court

elected to follow the Second Circuit’s interpretation of the enhancement as

articulated in United States v. Lucien, 347 F.3d 45 (2nd Cir. 2003), which

established an objective standard for “reckless” under the enhancement.

Turning next to U.S.S.G. § 3A1.1(b), or the “vulnerable victim” enhancement,

the district court offered briefly that the enhancement applied because the

recipients of the medical injections were “vulnerable” based on the location of their

injections. Ultimately, the district court applied the two sentencing enhancements,

raising Cadden’s sentence from 108 months to 174 months. App. B-007.

IV.

SECOND APPEAL

Cadden appealed the amended sentence on the grounds that the district court

incorrectly applied the two enhancements to his sentence under U.S.S.G. §

2B1.1(b)(16) and § 3A1.1(b). Specifically, the appeal focused on two primary issues

for the sentencing enhancements. First, the district court used the incorrect for

“reckless” under § 2B1.1(b)(16) and second, the district court failed to apply the

“unusually” vulnerable standard for § 3A1.1(b). The First Circuit issued the decision

on Cadden’s second appeal on October 13, 2022, affirming Cadden’s sentence.

United States v. Barry Cadden, 51 F.4th 32 (1st Cir. 2022). App. A-035. The Court

reviewed the sentence for plain error, and held that the district court’s reasoning for

applying the two enhancements was not in plain error. Id. at 39.

REASONINGS FOR GRANTING THE PETITION

THERE IS A SPLIT IN THE CIRCUITS OVER THE CORRECT

INTERPRETATION OF “RECKLESS” UNDER U.S.S.G. §

2B1.1(B)(16)(A), THAT THE COURT SHOULD RESOLVE.

Section 2B1 of the Guidelines provide for an upwards enhancement for

crimes involving fraud where the offense involved “the conscious or reckless risk of

death or serious bodily injury.” The Guidelines fail to establish a clear definition

and application for the term “reckless” in this context. The Circuit Courts are

divided as to the term’s meaning in this context.

Generally, federal courts have defined “recklessness” in the criminal context

by a subjective standard. In Farmer v. Brennan, 517 U.S. 825, 836-837 (1994), this

Court held that in the criminal context, courts “generally permits a finding of

recklessness only when a person disregards a risk of harm of which he is aware.”

(emphasis added). At least one other section in the Guidelines likewise applies a

subjective standard to the term “reckless.” See U.S.S.G. § 3C1.2.

The Seventh and Eight Circuits have adopted the definition of “reckless” as

taken from Application Note 1 to U.S.S.G. § 2A1.4, relating to involuntary

manslaughter. See United States v. Mohsin, 904 F.3d 580, 584 (7th Cir. 2018);

United States v. McCord, Inc., 143 F.3d 1095, 1098 (8th Cir. 1998). The Application

Note defines reckless as “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.” This definition effectively

establishes a subjective standard for determining whether a defendant acted

recklessly. See U.S.S.G. § 3C1.2.

In contrast, the Second, Ninth and Tenth Circuits have adopted a purely

objective standard, focusing instead on whether the defendant’s conduct created a

“conscious or reckless risk of death or serious bodily injury.” United States v. Lucien,

347 F.3d 45, 55 (2nd Cir. 2003); United States v. Johansson, 249 F.3d 848, 858 (9th

Cir. 2001); United States v. Maestas, 642 F. 3d 1315, 1322 (10th Cir. 2011). The

objective standard for recklessness in the criminal context allows defendants to

receive additional criminal responsibility, including incarceration, in situations

where they were not actually aware of the risk of harm. Id.

The principles of fairness and justice in the criminal context, where a

defendant’s liberty is at risk, mandate that “reckless” under U.S.S.G.

§2Bl.l(b)(16)(A) take into account the defendant’s actual state of mind, rather than a

standard more akin to a civil standard where only what a defendant “should have

known” is analyzed. There was no evidence presented at trial that Cadden had any

actual knowledge of the contamination of the MPA.

As such, the district court erred in applying the objective standard for

“reckless” under U.S.S.G. §2Bl.l(b)(16)(A) and applying the sentence enhancement,

rather than the subjective standard more properly applied to the criminal context.

The First Circuit also erred in upholding the enhancement. 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.

II.

THE VULNERABLE VICTIM ENHANCEMENT UNDER U.S.S.G. §

3A1.1(b) REQUIRES A SHOWING OF “UNUSUAL”

VULNERABILITY OF THE VICTIMS, CONSISTENT WITH THE

SENTENCING GUIDELINES COMMENTARY.

The Guidelines provide for a two-level enhancement under U.S.S.G. §

3A1.1(b) where “the defendant knew or should have known that a victim of the

offense was a vulnerable victim.” App. C-001. The Application Notes to the

Guidelines specifically note that this enhancement only applies to “offenses

involving an unusually vulnerable victim in which the defendant knows or should

have known of the victim’s unusual vulnerability.” U.S.S.G. § 3A1.1, Note 2.

The First Circuit has established a two-pronged test for this enhancement.

First, the victim must have been vulnerable, which requires that the victim had an

“impaired capacity … to detect or prevent crime.” United States v. Donnelly, 370

F.3d 87, 92 (1st Cir. 2004)(citations omitted). Second, the court must find that, “the

defendant knew or should have known of the victim’s unusual vulnerability.” Id.

Despite this clear guidance within the First Circuit, both the district court, and the

First Circuit on appeal, failed to apply this analysis. Neither the district court, nor

the First Circuit, analyzed properly whether the victims in this case were

“unusually” vulnerable nor whether Cadden knew or should have known of the

patients’ vulnerability. Rather, the district court held, without any substantive

analysis, that the mere fact the patients were receiving medical injections made

them vulnerable, and therefore the enhancement applied.

This conclusion is not supported by the facts or the law. The Guidelines make

clear that the purpose of the enhancement is to further punish defendants who

harm “unusually” vulnerable individuals. “’Unusual’ is plainly meant to identify a

select group different than the constituency who will be the ‘usual’ victims of the

specific offense.” United States v. Footman, 66 F. Supp. 2d 83, 94–95 (D. Mass.

1999), aff'd, 215 F.3d 145 (1st Cir. 2000). There must be a “special weakness that

the defendant exploited.” United States v. Feldman, 83 F.3d 9, 15 (1st Cir. 1996).

The analysis for the purposes of the enhancement also requires an individualized

assessment of each of the victim’s circumstances, not a generalized enhancement

based on assumptions about a group of victims. See United States v. Fosher, 124

F.3d 52, 56 (1st Cir. 1997) (reversing application of enhancement for elderly victim

of home invasion and remanding sentence to district court because court failed to

address individual characteristics that made victim unusually vulnerable).

The district court failed to conduct any type of individualized assessment of

the victims, which would be undoubtedly be required to properly assess whether the

enhancement applied. The evidence at trial clearly established that the victims

were from across the country, had different doctors, different medical conditions,

and had different treatment regiments. The examples of “unusually” vulnerable

victims from the Application Note in the guidelines references cancer patients and

handicapped individuals as examples of “unusually” vulnerable victims. The district

court conducted no individualized, or even generalized, analysis that demonstrates

the victims in the present matter came close to that level of vulnerability. Absent

that analysis, the enhancement could not be properly applied.

The second prong of the analysis—whether Cadden knew or had reason to

know that the patients were unusually vulnerable—was also not completed. A

major factor in determining whether Cadden knew or had reason to know about the

patients’ vulnerability is the fact that there were intermediaries, in the form of the

various clinics dispensing the injections, that removed Cadden from contact with or

knowledge of the specific identities or conditions of the patients. The First Circuit

suggested that the district court undertake this analysis, but the district court

failed to do so. See Cadden, 965 F.3d at 36.

Not even a doctor-patient relationship is sufficient, standing alone, to

warrant the “vulnerable victim” enhancement. See e.g., United States v. Volkman,

797 F.3d 377, 399 (6th Cir. 2015)(“The fact that a defendant is a doctor—and his

victim a patient—is insufficient for applying the vulnerable victim enhancement);

United States v. Stokes, 392 F. App'x 362, 371 (6th Cir. 2010) (unpublished) (“the

district court must find that the victim-patient was more vulnerable to the crime

than the average patient upon whom the doctor could prey”). “’All patients are

vulnerable to their physician to a certain extent, yet § 3A1.1 intends to punish a

criminal who [preys upon] victims that are especially susceptible to the

perpetrator's criminal design’....” Stokes, 392 F. App'x at 370–71 (quoting United

States v. Singh, 54 F.3d 1182, 1193 n. 7 (4th Cir. 1995) (notations in original)).

Here, where Cadden did not even have a doctor-patient relationship with the

victims, it is wholly unreasonable to determine that he knew or should have known

that the patients were vulnerable. The district court failed to analyze whether the

victims had the requisite “unusual vulnerability”, and therefore erred in assessing

the enhancement; and, the First Circuit erred in affirming that adjustment to

Cadden’s sentence. This Court should grant the petition for certiorari, make a

determination as to the proper construction and application of this enhancement,

and remand this case for resentencing based on such construction.

CONCLUSION

For the foregoing reasons, the petition for writ of certiorari should be

granted.

Respectfully submitted,

BARRY J. CADDEN,

By his attorney,

/s/ Kelley A. Jordan-Price

Kelley A. Jordan-Price

HINCKLEY, ALLEN & SNYDER, LLC

28 State Street

Boston, MA 02109

(617) 345-9000

kprice@hinckleyallen.com

Dated: January 11, 2023

APPENDICES

Page No.

APPENDIX A

United States v. Barry J. Cadden, 965 F.3d 1 (1st Cir. 2020) ……. A-001

United States v. Barry J. Cadden, 51 F.4th 32 (1st Cir. 2022) …... A-035

APPENDIX B

United States v. Barry J. Cadden, Case No. 14-10363-RGS

Judgment in a Criminal Case ………………………………………... B-001

United States v. Barry J. Cadden, Case No. 14-10363-RGS

Amended Judgment in a Criminal Case …………………………… B-007

APPENDIX C

U.S.S.G. § 3A1.1(b) …………………………………………………….. C-001

U.S.S.G. § 2B1.1(b)(16)(A) …………………………………………….. C-003

APPENDIX A

United States v. Cadden, 965 F.3d 1 (2020)

RICO Bus.Disp.Guide 13,365, 112 Fed. R. Evid. Serv. 1703

965 F.3d 1

United States Court of Appeals, First Circuit.

[6] district court did not abuse its discretion in denying

defendant's motion for new trial based on prosecution's

conduct in furnishing jury with binder of admitted evidence

without notifying court or defense;

UNITED STATES of America,

Appellee, Cross-Appellant,

Barry J. CADDEN, Defendant,

Appellant, Cross-Appellee.

[7] district court did not commit clear error in relying on value

of shipments that it could pin down with reasonable certainty

as fraudulent to determine loss amount;

[8] reach of vulnerable victim enhancement was not

necessarily limited to those hospitals that purchased

contaminated medications; and

Nos. 17-1694, 17-1712, 17-2062

July 9, 2020

Synopsis

Background: After jury convicted defendant of racketeering,

racketeering conspiracy, mail fraud, and violations of federal

Food, Drug, and Cosmetic Act (FDCA), the United States

District Court for the District of Massachusetts, Richard G.

Stearns, J., 2017 WL 2695289, denied defendant's motion for

judgment of acquittal or for new trial. Defendant appealed,

and government cross-appealed.

[9] forfeiture amount included funds that defendant's wife

deposited into joint account that were tainted by racketeering

activity.

Affirmed in part, vacated in part, and remanded.

Procedural Posture(s): Appellate Review; Trial or Guilt

Phase Motion or Objection; Post-Trial Hearing Motion;

Sentencing or Penalty Phase Motion or Objection; Forfeiture

Proceeding.

Holdings: The Court of Appeals, Barron, Circuit Judge, held

that:

West Headnotes (31)

[1] there was sufficient evidence to support defendant's mail

fraud convictions;

[1]

Postal Service

Nature and elements of

offense in general

To convict defendant of mail fraud, government

must prove beyond reasonable doubt: (1)

scheme to defraud based on false pretenses; (2)

defendant's knowing and willing participation in

scheme with intent to defraud; and (3) use of

interstate mail communications in furtherance of

[2] there was sufficient evidence that acts of mail fraud

committed by defendant were related to establish “pattern of

racketeering activity”;

[3] there was sufficient evidence of open-ended continuity to

support defendant's racketeering and racketeering conspiracy

convictions;

that scheme.

[4] district court did not abuse its discretion in permitting

jury to hear evidence related to persons who died, or fell

ill, from using contaminated medication from defendant's

compounding pharmacy;

[2]

[5] district court did not abuse its discretion in denying

defendant's motion for new trial based on prosecutor's refusal

to withdraw medical clinic director's apparently incorrect

testimony;

[3]

Criminal Law

18 U.S.C.A. § 1341.

Review De Novo

Court of Appeals' review of preserved

sufficiency-of-evidence challenge is de novo.

Criminal Law

Construction in favor of

government, state, or prosecution

Criminal Law

Reasonable doubt

A-001

United States v. Cadden, 965 F.3d 1 (2020)

RICO Bus.Disp.Guide 13,365, 112 Fed. R. Evid. Serv. 1703

In undertaking sufficiency-of-evidence review,

Court of Appeals must assess record evidence in

light most favorable to prosecution, and affirm

so long as body of proof, as a whole, has

sufficient bite to ground reasoned conclusion

that government proved each element of charged

crime beyond reasonable doubt.

[4]

Postal Service

[5]

[7]

[8]

Nature of scheme or device

activity.

18 U.S.C.A. §§ 1961(5),

1962(c).

18 U.S.C.A. § 1341.

2 Cases that cite this headnote

[6]

Racketeer Influenced and Corrupt

Pattern of Activity

Organizations

For there to be “pattern of racketeering

activity” under Racketeer Influenced and

Corrupt Organizations Act (RICO), there must

be at least two acts of racketeering activity, and

those predicate acts, each of which must have

occurred within ten years of one another, (1)

must be related to each other, and (2) must

amount to or pose threat of continued criminal

To secure mail fraud conviction, government

need not prove that decisionmaker actually relied

on falsehood, so long as falsehood that was made

is material.

Use of mails to defraud

18 U.S.C.A. § 1341; 247 Mass. Code Regs.

901(3).

18 U.S.C.A. § 1341.

Postal Service

in general

Postal Service

There was sufficient evidence that compounding

pharmacy owner misrepresented pharmacy's

compliance with state's United States

Pharmacopeia (USP) regulations governing

compounding of high-risk sterile medications

to support owner's mail fraud convictions, in

light of evidence that company's salespersons

and marketing materials touted its adherence

to regulations in their communications with

customers, that customers relied on pharmacy's

representations that it was producing quality

products that were USP-compliant, and that

pharmacy failed to comply with USP standards

when it used uncertified pharmacy technician.

Use of mails to defraud

There

was

sufficient

evidence

materiality of compounding pharmacy owner's

misrepresentations to support his mail fraud

conviction, in light of evidence that pharmacy

touted to its prospective customers its

“commitment to quality” and its use of “Certified

Technicians” to better ensure that products that

it produced would not be contaminated, that

pharmacy's communications to medical center

led center's pharmacy director to think that

technicians would be licensed while working

there, that use of unlicensed pharmacy technician

would have been “red flag,” and that unlicensed

pharmacy technician helped in compounding

cardioplegic solution that pharmacy sent to

center.

2 Cases that cite this headnote

Postal Service

in general

[9]

Nature of scheme or device

To satisfy relatedness requirement for

establishing “pattern of racketeering activity”

in prosecution under Racketeer Influenced and

Corrupt Organizations Act (RICO), government

must show that predicate acts have same or

similar purposes, results, participants, victims,

or methods of commission, or otherwise are

interrelated by distinguishing characteristics and

prove

materiality

defendant's

misrepresentation in mail fraud prosecution,

government need only show that false statement

had natural tendency to influence, or was

capable of influencing its target's decision.

U.S.C.A. § 1341.

Racketeer Influenced and Corrupt

Organizations

Continuity or relatedness;

ongoing activity

A-002

United States v. Cadden, 965 F.3d 1 (2020)

RICO Bus.Disp.Guide 13,365, 112 Fed. R. Evid. Serv. 1703

are not isolated events.

1961(5).

[10]

Conspiracy

through its sales staff and standard marketing

materials that it was in compliance with

standards when it was not, and that it routinely

represented to customers that it was using only

18 U.S.C.A. §

certified technicians when it was not.

Mail and wire fraud

Racketeer Influenced and Corrupt

Organizations

Continuity or relatedness;

ongoing activity

There was sufficient evidence that acts of mail

fraud committed by compounding pharmacy

owner were related to establish “pattern of

racketeering activity” required to support his

convictions for racketeering and racketeering

conspiracy, even though predicate acts of mail

fraud included both some that were based

on fraudulent representations about technician

licensure and some were based on fraudulent

representations that involved pharmacy's failure

to comply with state regulations, where

misrepresentations all reflected same crime,

same category of victims, same purpose, similar

fraudulent misrepresentations, similar methods

of communicating those representations through

marketing materials, similar participants, and

same method of commission, and they all

occurred within same time frame.

U.S.C.A. §§ 1341,

1961(5),

U.S.C.A. §§ 1341,

[12]

Conspiracy

1962(c).

Racketeer Influenced and Corrupt

Organizations

Continuity or relatedness;

ongoing activity

Racketeer Influenced and Corrupt

Time and duration

Organizations

Government may satisfy continuity required to

establish “pattern of racketeering activity” under

Racketeer Influenced and Corrupt Organizations

Act (RICO) by demonstrating either closedended continuity, which refers to closed period

of repeated conduct, or open-ended continuity,

which encompasses past conduct that by

its nature projects into future with threat

of repetition.

18 U.S.C.A. §§ 1961(5),

1962(c).

[13]

1 Case that cites this headnote

[11]

1961(5),

There are at least two types of racketeering

enterprises that, by their nature, extend

into future and therefore demonstrate openended continuity required to establish “pattern

of racketeering activity” under Racketeer

Influenced and Corrupt Organizations Act

(RICO): those that involve distinct threat of

long-term racketeering activity, either implicit

or explicit, and those where predicate acts or

offenses are part of ongoing entity's regular way

Mail and wire fraud

Racketeer Influenced and Corrupt

Organizations

Continuity or relatedness;

ongoing activity

There was sufficient evidence of openended continuity to support compounding

pharmacy owner's racketeering and racketeering

conspiracy convictions, in light of evidence

that pharmacy routinely violated regulatory

standards by sending out medications to

customers prior to testing them, “botching lots”

to mix old, testing medications with new,

untested ones and labeling mixture with old

label, shipping medications that used expired

ingredients, and sterilizing its compounded

medications for insufficient amount of time,

that pharmacy routinely advertised to customers

Racketeer Influenced and Corrupt

Organizations

Continuity or relatedness;

ongoing activity

of doing business.

18 U.S.C.A. §§ 1961(5),

1962(c).

[14]

Criminal Law

Evidence calculated

to create prejudice against or sympathy for

accused

A-003

United States v. Cadden, 965 F.3d 1 (2020)

RICO Bus.Disp.Guide 13,365, 112 Fed. R. Evid. Serv. 1703

District court did not abuse its discretion in

compounding pharmacy owner's racketeering

prosecution in permitting jury to hear evidence

related to persons who died, or fell ill,

from using contaminated methylprednisolone

acetate (MPA) that pharmacy had shipped

to its customers, notwithstanding danger of

unfair prejudice; record showed that deficient

means were used by pharmacy in compounding

contaminated MPA that led to deaths at issue,

that owner knew of alleged deficiencies with

pharmacy's compounding practices and directed

shipment of orders, that owner was aware of

type of risk that he was running by operating

pharmacy in unsafe manner, and evidence was

highly probative of owner's extremely reckless

behavior. Fed. R. Evid. 403.

[17]

Homicide

Intent or mens rea; malice

Under Michigan law, defendant must act with

malice to be guilty of second-degree murder,

which requires showing that defendant intended

to do act in wanton and wilful disregard of

likelihood that natural tendency of such behavior

is to cause death or great bodily harm.

[16]

[18]

Criminal Law

Testimony

Use of False or Perjured

Prosecutor may not knowingly use false

evidence, including false testimony, to obtain

tainted conviction regardless of whether

prosecutor solicits false evidence or allows false

evidence to go uncorrected when it appears, and

such conviction must be set aside if there is any

reasonable likelihood that false testimony could

have affected jury's judgment.

[19]

Criminal Law

Rulings on evidence

District court did not abuse its discretion in

compounding pharmacy owner's racketeering

prosecution in denying owner's motion for new

trial based on prosecutor's refusal to withdraw

medical clinic director's testimony that owner

instructed her to pull contaminated medication

five days before he notified other customers

of problem to prove owner's state of mind

for purpose of proving second-degree-murderbased predicate acts, even though it was likely

that director confused date of call, where jury

heard owner's competing evidence concerning

director's testimony, and did not find those

predicate acts proven, and it was unlikely

that director's testimony interfered with jury's

deliberations over other counts premised on mail

fraud.

Racketeer Influenced and Corrupt

Organizations

Admissibility

District court did not abuse its discretion in

compounding pharmacy owner's racketeering

prosecution in permitting jury to hear

evidence regarding pharmacy's failure to

comply with its standard operating procedures

(SOP), even though owner was charged

with misrepresenting pharmacy's compliance

with regulatory standards, not SOPs, where

government asserted as predicate acts second

degree murder of persons who received

injections of contaminated drug, and failure

to comply with SOPs was relevant to owner's

recklessness—mens rea standard it needed to

show to prove second-degree murder predicate

acts.

New Trial

Court of Appeals' review of district court's

denial of defendant's motion for new trial based

on prosecutorial misconduct is for abuse of

discretion.

1 Case that cites this headnote

[15]

Criminal Law

[20]

Criminal Law

general

Conduct of counsel in

In general, government misconduct alone is

insufficient to reverse conviction absent showing

of prejudice.

A-004

United States v. Cadden, 965 F.3d 1 (2020)

RICO Bus.Disp.Guide 13,365, 112 Fed. R. Evid. Serv. 1703

[21]

Criminal Law

Jurors

District court did not abuse its discretion in

compounding pharmacy owner's prosecution

arising from sale of contaminated medications

in denying owner's motion for new trial based

on prosecution's conduct in furnishing jury with

binder of admitted evidence without notifying

court or defense, absent showing of prejudice;

binder contained only documents that had been

admitted into evidence, prosecution flagged

existence of government-produced binder for

jury during closing argument and described

it as presenting its evidence, defendant failed

to object or to produce comparable binder of

defense evidence, and there was no indication

that jury relied on binder.

[22]

document narrower loss figure.

2B1.1.

Misconduct of or Affecting

Criminal Law

Review De Novo

Criminal Law

Sentencing

Court of Appeals reviews district court's

interpretation and application of sentencing

guidelines de novo, and factual findings,

including district court's calculation of amount of

loss, for clear error.

1 Case that cites this headnote

[24]

Sentencing and Punishment

or benefit

Risk of death

U.S.S.G. § 2B1.1(b)(16).

2 Cases that cite this headnote

[25]

Sentencing and Punishment

of victim

Vulnerability

In sentencing compounding pharmacy owner

for racketeering, racketeering conspiracy, mail

fraud, and violations of federal Food, Drug,

and Cosmetic Act (FDCA) based on his

misrepresentations regarding pharmacy's sterile

compounding practices, reach of vulnerable

victim enhancement was not necessarily

limited to those hospitals that purchased

contaminated medications in reliance on owner's

misrepresentations, but could plausibly include

patients at those hospitals who foreseeably

would use those contaminated medications.

Value of loss

District court did not commit clear error

in relying on value of shipments that it

could pin down with reasonable certainty

as fraudulent to determine loss amount in

sentencing compounding pharmacy owner for

racketeering, racketeering conspiracy, mail

fraud, and violations of federal Food, Drug,

and Cosmetic Act (FDCA) as result of

his misrepresentations regarding pharmacy's

sterile compounding practices, where pharmacy

produced number of products in separate areas

from area in which sterile compounding took

place, there was no indication that products

produced in those areas were fraudulently sold,

and government did not identify or attempt to

Sentencing and Punishment

or bodily injury

In determining whether to impose two-level

enhancement for offense involving conscious or

reckless risk of death or serious bodily injury

in sentencing defendant for mail fraud and

racketeering premised on mail fraud, district

court incorrectly focused on whether defendant

had committed predicate offense of seconddegree murder, which jury had rejected, instead

of whether his relevant conduct in commission

of his mail fraud offense carried with it requisite

risk of death under Guidelines, even though

mail fraud did not inherently involve such risk.

3 Cases that cite this headnote

[23]

U.S.S.G. §

U.S.S.G. § 3A1.1.

[26]

Forfeitures

Plenary or de novo review

Forfeitures

Questions of fact and evidence

In evaluating district court's forfeiture order,

Court of Appeals reviews pure questions of

law de novo, but, to extent factual issues are

intermingled, considers mixed questions of law

A-005

United States v. Cadden, 965 F.3d 1 (2020)

RICO Bus.Disp.Guide 13,365, 112 Fed. R. Evid. Serv. 1703

to forfeiture, even though amount he obtained

and fact under more deferential clear error

standard.

18 U.S.C.A. § 1963(a)(3).

was itself taxable.

18 U.S.C.A. § 1963(a)(3).

2 Cases that cite this headnote

[27]

Forfeitures

Tainted or untainted

determinations; commingled funds

[31]

When property interests are in racketeering

enterprise, they are subject to forfeiture in their

entirety, regardless of whether some portion

of enterprise is not tainted by racketeering

activity, but property interests outside enterprise

are subject to rule of proportionality, and are

only forfeitable to extent they are tainted by

racketeering activity.

(3).

Forfeitures

Tainted or untainted

determinations; commingled funds

Defendant “obtained” funds deposited in bank

account that wife jointly controlled with

defendant, and thus forfeiture amount in

defendant's racketeering prosecution was not

limited to proceeds that were attributable to

defendant, but included funds that wife deposited

into account, so long as funds in question were

18 U.S.C.A. § 1963(a)

tainted by racketeering activity.

§ 1963(a)(3).

1 Case that cites this headnote

18 U.S.C.A.

2 Cases that cite this headnote

[28]

Forfeitures

Tainted or untainted

determinations; commingled funds

In determining amount of forfeiture order in

compounding pharmacy owner's prosecution

for racketeering, racketeering conspiracy, mail

fraud, and violations of federal Food, Drug,

and Cosmetic Act (FDCA), district court

was required to determine specific amount

of compounding pharmacy's proceeds over

period in question that were tainted by owner's

racketeering activity.

(3).

18 U.S.C.A. § 1963(a)

1 Case that cites this headnote

[29]

Forfeitures

general

Money, funds, and accounts in

In general, word “proceeds” in Racketeer

Influenced and Corrupt Organizations Act's

(RICO) forfeiture statute refers to gross

proceeds, not net profits.

1963(a)(3).

18 U.S.C.A. §

2 Cases that cite this headnote

[30]

Forfeitures

Amount, particular cases

Gross amount of proceeds received by defendant

pursuant to his racketeering activity was subject

*6 APPEALS FROM THE UNITED STATES DISTRICT

COURT FOR THE DISTRICT OF MASSACHUSETTS,

[Hon. Richard G. Stearns, U.S. District Judge]

Attorneys and Law Firms

Bruce A. Singal, with whom Michelle R. Peirce, Lauren E.

Dwyer, and Barrett & Singal, P.C. were on brief, for appellant/

cross-appellee.

David M. Lieberman, Attorney, Criminal Division, Appellate

Section, United States Department of Justice, with whom

Andrew E. Lelling, United States Attorney, Amanda P.

Strachan, Assistant United States Attorney, George P.

Varghese, Assistant United States Attorney, Brian A.

Benczkowski, Assistant Attorney General, and Matthew S.

Miner, Deputy Assistant Attorney General, were on brief, for

appellee/cross-appellant.

Before Barron, Stahl, and Lipez, Circuit Judges.

Opinion

BARRON, Circuit Judge.

For years, the New England Compounding Center (“NECC”)

was a growing pharmacy business engaged in the practice

of “compounding,” which involves combining drugs with

other substances to produce specialized medications for use

A-006

United States v. Cadden, 965 F.3d 1 (2020)

RICO Bus.Disp.Guide 13,365, 112 Fed. R. Evid. Serv. 1703

by patients. In the fall of 2012, however, patients across the

country became seriously ill -- and many eventually died -after receiving injections of NECC-compounded medications

that had been contaminated by fungi and bacteria. A federal

criminal investigation into NECC's compounding practices

soon followed, which then led to the convictions and

punishments that are at issue in the two related appeals that

are now before us.

The first of these appeals is brought by Barry Cadden, who

was the founder and part-owner, as well as the president,

of NECC at the time that the company manufactured and

distributed the contaminated medications from its facilities in

Framingham, Massachusetts. He challenges his 2017 federal

convictions in the United States District Court for the District

of Massachusetts for one count of racketeering, see

U.S.C. § 1962(c); one count of racketeering conspiracy, see

id. § 1962(d); fifty-two counts of mail fraud, see id. § 1341;

and three counts of violating the Federal Food, Drug, and

Cosmetic Act, see 21 U.S.C. §§ 331(a), 333(a). He also

challenges the $7.5 million forfeiture order that the District

Court imposed on him. The other appeal that we address is

brought by the government. It takes aim at both the District

Court's forfeiture order against Cadden and the 108-month

prison sentence that he received.

We affirm each of the convictions that Cadden challenges

on appeal. We vacate and remand his prison sentence

due to the errors that the government correctly points

out that the District Court made in calculating Cadden's

recommended sentencing range under the United States

Sentencing Guidelines (“Guidelines”). We also vacate and

remand the forfeiture order *7 in consequence of separate

errors that Cadden and the government, respectively, identify

in the way that the District Court determined the amount of

the forfeiture.

arose throughout the United States that seemed to be tied to

the earlier ones.

A federal investigation into this unusual outbreak of

seemingly related illnesses ensued. It traced the outbreak's

cause to patients having been injected with a heavily

contaminated medication that NECC had compounded. That

medication was methylprednisolone acetate (“MPA”), which

is a steroid that is injected primarily into the backs or knees

of patients to help them to alleviate their pain.

At that point, federal investigators began looking into NECC's

compounding practices. The investigators discovered what

they determined were significant deficiencies in the clean

room where NECC had compounded the contaminated MPA

as well as in other aspects of NECC's operations. Among

the deficiencies were apparent violations of Chapter 797

of the “United States Pharmacopeia,” or, as it is otherwise

known, “USP-797,” which the Massachusetts Pharmacy

Board requires pharmacists to follow, see 247 Mass. Code

Regs. 901(3), and which regulates the compounding of “highrisk” sterile medications like MPA. Such medications are so

deemed due to the nature of the harm that can befall patients

who use them if they have not been properly prepared.

The investigation also revealed that NECC had employed a

pharmacy technician, Scott Connolly, who did not have a

license that the Massachusetts Pharmacy Board required in

order for him to be permitted to engage in the compounding

work that he performed for the company.

Based on the investigation, a federal grand jury indicted

Cadden on December 16, 2014, in the District of

Massachusetts for a broad range of criminal conduct. These

charges included fifty-three counts of mail fraud in violation

18 U.S.C. § 1341, one count of racketeering in

violation of

18 U.S.C. § 1962(c), one count of racketeering

conspiracy in violation of

18 U.S.C. § 1962(d), one count

of conspiracy to defraud the United States in violation of 18

U.S.C. § 371, and forty-one counts of Federal Food, Drug,

For years, NECC produced large volumes of compounded

medications and sold them without incident to hospitals

and other medical facilities throughout the United States. In

the early fall of 2012, however, patients across the country

started to fall sick with fungal meningitis, spinal or paraspinal

infections, and other seemingly related illnesses. Over time,

additional cases of patients suffering from these illnesses

and Cosmetic Act (“FDCA”) violations, see

331(a),

21 U.S.C. §§

333(a).

Many of the charges centered on fraudulent representations

that NECC representatives had allegedly made to customers

about the safety standards that the company followed

in compounding various medications -- including the

contaminated MPA -- that were shipped to customers between

A-007

United States v. Cadden, 965 F.3d 1 (2020)

RICO Bus.Disp.Guide 13,365, 112 Fed. R. Evid. Serv. 1703

March 25, 2010, and September 27, 2012. In particular,

each of the fifty-three mail fraud counts identified a specific

shipment of compounded medications that NECC sent to one

of its customers after having made inaccurate representations

to that customer about the standards NECC would adhere to

in preparing those medications.

The racketeering and racketeering conspiracy charges, too,

were based on a “pattern of racketeering activity,”

U.S.C. 1961(5), that centered on mail fraud, see

id. §

1961(1)(B) (defining mail fraud as a “racketeering activity”).

The racketeering *8 offense itself alleged seventy-eight

separate acts of racketeering as part of that pattern, of

which the lion's share -- fifty-three acts -- were mail

fraud acts that matched the alleged mail fraud acts set

forth in the corresponding counts that charged Cadden

with mail fraud as a stand-alone offense. The racketeering

conspiracy charge, moreover, alleged that Cadden conspired

with others to commit a racketeering violation involving a

pattern of racketeering activity consisting of predicate acts of

racketeering involving mail fraud, although it did not identify

any of those acts of mail fraud specifically.

Even though many of the charges against Cadden centered

on alleged misrepresentations about NECC's compounding

practices to its customers, the one for racketeering was not

based only on such allegations. And, as we will explain, a

number of the issues that Cadden raises on appeal concern

the fact that the racketeering charge alleged not only that

Cadden's pattern of racketeering activity involved fifty-three

predicate acts of mail fraud but also that it involved twentyfive predicate acts of second-degree murder, which is itself

a racketeering activity. See

id. § 1961(1)(A). Each of

these alleged predicate acts of second-degree murder was

associated with a death of a patient that allegedly had been

caused by that individual having been injected with the

contaminated MPA that NECC had compounded. (By the

time of Cadden's trial, 753 patients had been identified as

having been afflicted in the outbreak that had been traced to

NECC's contaminated MPA, of whom sixty-four had died in

consequence of having been injected with that medication.)

The indictment charged thirteen others along with Cadden

for their roles in alleged criminal conduct connected to

NECC's compounding operations. The District Court severed

Cadden's trial, however, from those for the others. Moreover,

near the end of Cadden's ten-week trial, the District Court

dismissed one of the stand-alone mail fraud counts that

Cadden faced, as well as the alleged predicate act of

racketeering involving mail fraud that corresponded to that

stand-alone mail fraud count.

The jury ultimately found Cadden guilty of the racketeering

and racketeering conspiracy counts, all fifty-two of the

remaining stand-alone mail fraud counts, and three of the

FDCA violations, each of which related to the introduction

of misbranded drugs into interstate commerce. Cadden was

found not guilty both of conspiring to defraud the United

States and of the other FDCA counts. In a special verdict

form, moreover, the jury indicated that, with respect to the

racketeering charge, it did not unanimously find beyond

a reasonable doubt any of the alleged predicate acts of

racketeering involving second-degree murder. The special

verdict form further indicated that the jury found fortyseven of the fifty-two alleged predicate acts of racketeering

involving mail fraud, and thus it was on the basis of those

mail-fraud-based predicate acts of racketeering alone that

the jury's finding that there was a “pattern of racketeering

activity” depended.

The District Court entered judgments of conviction and

sentenced Cadden to a prison term that was at the very high

end of the range that it had calculated under the Guidelines:

108 months' imprisonment. Based on Cadden's racketeering

and racketeering conspiracy convictions, the District Court

also imposed a forfeiture order on him in the amount of

$7,545,501. Cadden's appeal and the government's appeal

followed.

II.

Cadden first takes aim at the sufficiency of the evidence to

support the allegations *9 of mail fraud that underlie thirty

of his fifty-two stand-alone mail fraud convictions 1 as well

as his two convictions for, respectively, racketeering 2 and

racketeering conspiracy. 3 In challenging these convictions

on this ground, Cadden zeroes in on whether the evidence

sufficed to support, with respect to any of these convictions, a

finding beyond a reasonable doubt that the alleged fraudulent

representation by an NECC representative on which each

conviction depended in fact had been made. In the alternative,

he contends that the evidence did not suffice to show that the

representation -- even if made -- was material, as it must have

been for the government to prove the alleged mail fraud. Thus,

A-008

United States v. Cadden, 965 F.3d 1 (2020)

RICO Bus.Disp.Guide 13,365, 112 Fed. R. Evid. Serv. 1703

he contends on the basis of these arguments that each of these

convictions must be reversed.

We begin our analysis with the challenges that Cadden brings

to the stand-alone mail fraud convictions. We then turn to

the essentially identical challenges that Cadden makes to

his racketeering and racketeering conspiracy convictions. We

find no merit to any of them.

[1] For the thirty stand-alone mail fraud convictions at

issue, the government needed to prove beyond a reasonable

doubt: “(1) a scheme to defraud based on false pretenses; (2)

[Cadden's] knowing and willing participation in the scheme

with the intent to defraud; and (3) the use of interstate mail ...

United

communications in furtherance of that scheme.”

States v. Soto, 799 F.3d 68, 92 (1st Cir. 2015) (alteration

in original) (quoting

United States v. Hebshie, 549 F.3d

30, 35 (1st Cir. 2008)); see also

18 U.S.C. § 1341. 4

We start with the ten stand-alone mail fraud convictions

that concern, respectively, *10 ten separate shipments of

cardioplegic solution that NECC had made between March

25, 2010, and August 8, 2012, and that had been produced

with the assistance of the NECC pharmacy technician, Scott

Connolly, who lacked a license from the Massachusetts

Board of Pharmacy that Massachusetts law required him

to have to engage in the work that he performed for the

company. We then address the twenty other stand-alone mail

fraud convictions that Cadden challenges. Each of these

convictions is for a count that rests on alleged fraudulent

representations concerning other shipments that NECC made

to its customers between July 7, 2011, and September

27, 2012. These convictions were premised on allegedly

fraudulent representations that NECC's representatives made

to customers of the company that have nothing to do with

either Connolly's involvement in the compounding process or

technician licensure at the company more generally. Instead,

these convictions were premised on alleged fraudulent

representations about, among other things, the company's

compliance with USP-797.

Cadden's challenges to each of the ten Connolly-related

convictions rest on the contention that the evidence in the

record does not suffice to show that NECC had falsely

represented to the customer that received any of the shipments

associated with these convictions that only licensed pharmacy

technicians were involved in compounding them. Cadden

acknowledges that Connolly, who was not licensed, helped in

compounding the medications contained in those shipments.

But, he contends that there is no basis for finding that

each of the shipments had been distributed pursuant to a

scheme to defraud. That is so, he contends, because, by the

government's own account, the fraudulent scheme alleged

in these ten mail fraud counts involved as a necessary

component the company falsely representing to its customers

that only licensed technicians had been used in compounding

its medications.

[2] [3] Our review of this preserved challenge is de novo.

See United States v. Diaz, 300 F.3d 66, 77 (1st Cir. 2002). In

undertaking this review, though, we must assess the record

evidence “in the light most favorable to the prosecution” and

affirm so long as the “body of proof, as a whole, has sufficient

bite to ground a reasoned conclusion that the government

proved each of the elements of the charged crime beyond a

reasonable doubt.”

200 (1st Cir. 1999).

United States v. Lara, 181 F.3d 183,

[4] Cadden's sufficiency challenge plainly fails as to the

three Connolly-related convictions that were based on the

shipments of cardioplegic solution that NECC sent to Sunrise

Medical Center. The record includes the testimony of Wilson

Chu, the pharmacy director at Sunrise Medical Center.

Chu testified that NECC's use of an unlicensed pharmacy

technician would have been a “red flag” if he had known

about it and his employer would not have done business

with NECC in consequence. The record also includes Chu's

testimony that communications from NECC led him to

“[d]efinitely” think that such technicians would be licensed

while working there. No more was needed to permit a juror

reasonably to find the allegedly fraudulent representations

about technician licensure on which these three convictions

depend had been made.

Representatives of the customers who received the shipments

at issue in the seven remaining Connolly-related convictions

did not testify -- in the way that Chu had testified with

respect to the shipments to Sunrise Medical Center -- about

what *11 NECC had represented to them about technician

licensure. But, we conclude, the circumstantial evidence in

the record was strong enough to make up for that evidentiary

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United States v. Cadden, 965 F.3d 1 (2020)

RICO Bus.Disp.Guide 13,365, 112 Fed. R. Evid. Serv. 1703

gap. We thus reject Cadden's sufficiency challenges to these

convictions, too.

Kenneth Boneau, a salesperson for NECC, testified that

the company was keenly aware in making its pitches

to prospective customers that they might be reluctant to

purchase from a compounding pharmacy like NECC, due

in part to concerns about price and in part to concerns

about the need for every medication ordered from NECC

to be matched to a patient who would be receiving a

requested medication that the company would compound.

Thus, Boneau testified, an important part of NECC's pitch to

its prospective customers was that, as an outside pharmacy,

it had a “commitment to quality” that better ensured that the

products that it produced would not be contaminated than the

hospitals or medical facilities could ensure if they were to

make such products on their own. In fact, to that end, Boneau

testified, NECC presented itself to prospective customers as

“the Rolls-Royce of compounding.”

In addition, the government put forth evidence that directly

addressed the representations that the company made -- in

making this pitch about quality control -- to prospective

customers about pharmacy technician licensure. Here, the

government's case consisted not only of the testimony from

Chu described above but also of Boneau's testimony about

a particular exhibit that the government introduced at trial

and in which he described the exhibit as “our marketing

material ... for hospitals.”

The cover page of that exhibit was labeled with the NECC

logo and the word “Hospital,” and the material inside

indicated that it included a “Company Overview” of NECC.

Boneau also explained in his testimony that he personally

“would bring” this material with him on visits to potential

customers and that, over the course of his time working for

NECC, he “[l]eft it behind ... probably hundreds of times.”

He further testified that while “oftentimes” he left it at “an

ophthalmology department or a pain department within a

hospital ... most of the time” he left it at a hospital's “inpatient

pharmacy.”

Significantly, this marketing material, as part of the

“Company Overview,” made representations about the

qualifications of NECC's “Personnel.” Those representations

included the statement that NECC's personnel included

“Highly Specialized and Extensively Trained Compounding

Pharmacists and Certified Technicians.” (emphasis added).

The reference to the use of “Certified Technicians” permitted

the inference that those technicians, because they were

certified, would have had a license that a state pharmacy

board required them to have. Nor does Cadden dispute that the

customers who received the shipments on which these seven

convictions depended were “hospitals” within the meaning of

Boneau's testimony.

Thus, we conclude that a juror reasonably could find that there

was a sufficient circumstantial basis to draw the inference

that the allegedly fraudulent representations concerning

technician licensure had been made in each instance for

these seven convictions, notwithstanding the absence of

direct evidence to that effect. See United States v. Ridolfi,

768 F.3d 57, 61 (1st Cir. 2014) (noting that a jury may

make “reasonable, common sense inferences drawn from the

evidence”). Accordingly, Cadden's sufficiency challenge to

these seven Connolly-related convictions for the stand-alone

offense of mail fraud fails, just as it *12 fails as to the other

three Connolly-related stand-alone mail fraud convictions.

Cadden does separately contend that the evidence did not

suffice to show that any of the customers who received

shipments on which the ten Connolly-related convictions

depend -- Sunrise Medical Center included -- received

the supposedly fraudulent representation about technician

licensure after NECC had hired Connolly. But, Cadden

identifies no evidence to indicate that, once Connolly came

on board, NECC, through any of its representatives (including

Cadden himself), corrected any prior representation that

licensed pharmacy technicians would be used even though

Connolly was not licensed. A juror reasonably could

find, therefore, that NECC's decision to produce and ship

medications compounded by someone who was not a licensed

pharmacy technician after the company had represented

otherwise to its customers itself constituted a use of the mails

in furtherance of a fraudulent scheme.

Finally, Cadden shifts his angle of attack and focuses on what

he contends is the lack of record evidence sufficient to show

that any of the misrepresentations concerning technician

licensure induced any customer to make a purchase from

NECC. But, there is no force to this contention, which takes

aim at the evidentiary support for the materiality element of

mail fraud. See United States v. Prieto, 812 F.3d 6, 13 (1st Cir.

2016) (noting the existence of a materiality requirement).

[5] [6] To secure a mail fraud conviction, the government

“need not prove that the decisionmaker actually relied on

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the falsehood,” so long as the falsehood that was made is a

“material” one. Id. (first quoting United States v. Appolon,

715 F.3d 362, 368 (1st Cir. 2013)). To prove materiality,

the government need only show that the false statement

“had ‘a natural tendency to influence, or [was] capable of

influencing’ ” its target's decision. Id. (quoting Appolon, 715

F.3d at 368); see also

United States v. Berroa, 856 F.3d

141, 149-50 (1st Cir. 2017) (explaining that, under the mail

fraud statute, the defendant's fraud must be “the mechanism

naturally inducing” the victim to act (quoting

Loughrin v.

United States, 573 U.S. 351, 363, 134 S.Ct. 2384, 189 L.Ed.2d

411 (2014))).

Reviewing the sufficiency of the evidence of materiality

United States v. Sebaggala, 256 F.3d 59,

de novo, see

63 (1st Cir. 2001), we find that the evidence sufficed

here. Chu's testimony about the importance of pharmacy

technician licensure to his hospital's purchasing decisions

clearly permitted a reasonable juror to find the materiality

element satisfied as to the three Connolly-related convictions

that involved shipments of NECC medications to Sunrise

Medical Center. But, that same testimony -- in combination

with the emphasis placed on “Certified Technicians” in

the marketing materials that Boneau testified that NECC

routinely used to pitch its products to hospitals -- also

supported the reasonable inference that a representation about

pharmacy technician licensure would have mattered to such

NECC customers generally. Accordingly, we reject Cadden's

materiality challenge to these ten convictions.

Having rejected Cadden's challenges to the ten Connellyrelated convictions, we now come to his challenges to the

twenty other stand-alone mail fraud convictions that he

asks us to reverse for insufficient evidence. Here, too, his

contention is that the evidence did not suffice to show that the

fraudulent representations on which they depended had been

made. 5

*13 The government contends that our review is only for

plain error, but Cadden's reply below to the government's

opposition to the motion for judgment of acquittal raised these

same challenges. Thus, our review is de novo, although we

still must review the evidence in a verdict-friendly light. See

Diaz, 300 F.3d at 77;

Lara, 181 F.3d at 200.

[7] The government identifies a range of allegedly fraudulent

representations for each of these twenty convictions that it

contends were adequately supported by the record evidence.

But, we need not focus on what the evidence showed as to

whether each of those allegedly fraudulent representations

had been made. It is enough, as we will explain, that the

evidence sufficed to support a juror finding that the allegedly

fraudulent representations concerning NECC's compliance

with USP-797 had been made. And that is because, as Cadden

does not dispute, the mail fraud count for each of these

twenty convictions alleged that such a representation had

been made to the customer who received the shipments

referenced in each of those counts. See United States v. Gaw,

817 F.3d 1, 5 (1st Cir. 2016) (holding that where “alternative,

independently sufficient grounds” exist for upholding a

conviction, “adequate proof of one obviates any need for

proof of the other” and the conviction can be affirmed on

one ground alone (quoting United States v. Cruz–Arroyo, 461

F.3d 69, 73 (1st Cir. 2006))).

Specifically, the record shows that numerous NECC

salespersons testified that NECC touted the company's

adherence to the USP-797 standards in their communications

with customers, and that one salesperson, Boneau, even

testified that USP-797 compliance was “a big selling

point” for NECC that Cadden himself had emphasized. In

addition, the evidence contained NECC marketing materials

that highlighted the company's supposed compliance with

USP-797, and several NECC customers testified that they

received representations from marketing materials and

company representatives that indicated that NECC was

following the standards laid out in USP-797.

We thus reject Cadden's contention that the evidence failed

to suffice to permit a juror reasonably to find that a

fraudulent representation concerning USP-797 compliance

had been made to each of the customers, for each of the

referenced shipments, for these twenty stand-alone mail fraud

convictions. Instead, we conclude that the evidence sufficed

to permit a juror to draw such an inference in finding

Cadden guilty of each of the twenty counts on which these

twenty convictions were based. See Ridolfi, 768 F.3d at 61

(expressing approval of the jury's use of “reasonable, common

sense inferences drawn from the evidence”).

Cadden does also contend that these twenty convictions must

be reversed because the evidence did not suffice to show that

the false representation about USP-797 compliance -- even if

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made -- was material as to any of the shipments involved. But,

here, too, the record shows otherwise.

Many NECC customers testified that they relied on the

company's representations that it was producing quality

products *14 that were USP-compliant, and the evidence

made clear that such representations were a “big selling

point.” We thus have no trouble concluding that a juror

reasonably could find that the representations regarding

USP-797 compliance had a natural tendency to induce

NECC's customers to purchase its products, especially

given that this particular safety standard applied to those

compounded medications that -- if prepared improperly -posed such a risk of harm to patients.

That leaves only Cadden's sufficiency challenges to his

racketeering and racketeering conspiracy convictions, insofar

as these challenges also take aim at whether there was

adequate evidence that the fraudulent representations on

which these convictions depended -- given that they were

for a pattern of racketeering activity based on mail fraud

-- had been made. Cadden does not contend, however, that

the mail fraud alleged to support these racketeering-related

convictions is any different from the mail fraud alleged to

support the thirty stand-alone mail fraud convictions that we

have just addressed. Thus, because the only arguments that

Cadden makes to us as to why the evidence did not suffice to

support those allegations of mail fraud are without merit, we

must reject his sufficiency challenges to these two convictions

as well.

III.

Cadden has one last set of sufficiency challenges to his

convictions that we need to address. This set concerns only

his convictions for racketeering and racketeering conspiracy.

As to the racketeering conviction, Cadden contends that,

even if the evidence sufficed to support the predicate acts of

racketeering involving mail fraud that underlie it, it still must

be reversed because the evidence did not supportably show

that those mail-fraud-based predicate acts of racketeering,

taken together, formed a “pattern of racketeering activity.”

racketeering conspiracy conviction insufficiently supported.

But, we do not agree.

[8] For there to be a “pattern of racketeering activity” there

must be “at least two acts of racketeering activity.” Id. §

1961(5). In addition, those predicate acts, each of which must

have occurred within ten years of one another, see id., (1) must

be “related” to each other, and (2) must “amount to or pose a

threat of continued criminal activity.” H.J. Inc. v. Nw. Bell

Tel. Co., 492 U.S. 229, 239, 109 S.Ct. 2893, 106 L.Ed.2d 195

(1989).

Cadden argues that the evidence did not suffice to show that

the predicate acts of racketeering that the jury found satisfied,

when considered together, either the “relatedness” or the

“continuity” requirements. He thus contends his racketeering

conviction must be reversed because the evidence did not

suffice to satisfy the “pattern” element of that racketeering

offense.

We first address the proper standard of review. We then

consider, in turn, his contentions regarding what the record

shows about relatedness and continuity. We conclude, as we

will explain, that there is no merit to any of them.

The government contends that our review is only for

plain error because Cadden failed to raise his “pattern of

racketeering activity”-based challenge that he now presents

to us on appeal in the motion for acquittal that he made below

pursuant *15 to Federal Rule of Criminal Procedure 29.

But, Cadden's post-verdict motion for judgment of acquittal

incorporated by reference his challenge to “the lack of

relatedness or continuity of the remaining isolated mailings,”

which he had previously aired to the District Court in his

motion to dismiss each of these racketeering-related counts.

Our review of this challenge, therefore, is de novo, though, of

course, we still must consider the evidence in the light most

favorable to the verdict. See Diaz, 300 F.3d at 77;

181 F.3d at 200.

Lara,

18 U.S.C. § 1962(c). He then further contends that this

same weakness in the government's case also renders his

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representations that involved NECC's failure to produce these

drugs in compliance with USP-797. But, even if we assume

that it would not be enough for two or more of the predicate

[9]

[10] We begin with Cadden's arguments about acts within one of these distinct sets of predicate acts of mail

fraud to be related to one another, the argument that Cadden

the insufficiency of the evidence as to the relatedness

advances still lacks merit.

requirement. The test for showing relatedness, however,

...,,

Feinstein

“is not a cumbersome one.”

- v. Resolution

Tr. Corp., 942 F.2d 34, 44 (1st Cir. 1991). It merely

requires “[a] showing that predicate acts ‘have the same or

similar purposes, results, participants, victims, or methods of

commission, or otherwise are interrelated by distinguishing

characteristics and are not isolated events.’ ”

Id.

(quoting

H.J., 492 U.S. at 240, 109 S.Ct. 2893). We

conclude that the evidence sufficed to show that test was met

here.

Cadden argues otherwise, first, by pointing to what he

contends is an inconsistency in the state of mind of the

defendant that the government was required to prove for

second-degree murder compared to mail fraud. But, while

it is true that the indictment alleged both types of predicate

acts of racketeering activity in the racketeering charge, the

special verdict form makes clear that the jury did not rely

on the alleged predicate acts of racketeering activity based

on second-degree murder to find the requisite “pattern of

...,,

racketeering activity.” See

United

States

- v. Torres

Lopez, 851 F.2d 520, 523 (1st Cir. 1988) (using a special jury

form to determine which predicate acts the jury found for the

purposes of a federal racketeering conviction).

Thus, we do not see how the mere fact that predicate

acts of racketeering involving second-degree murder were

alleged bears on whether the evidence sufficed to satisfy the

relatedness test based on the predicate acts of racketeering

involving mail fraud that the jury actually found. Nor does

Cadden develop any argument as to how they might. As a

result, the key question for us concerns only whether the

evidence sufficed to permit a juror reasonably to find that

the predicate acts of mail fraud that the jury found were

themselves related to one another.

Cadden contends that the evidence did not so suffice because

those predicate acts of mail fraud included both some that

were based on fraudulent representations about technician

licensure -- mirroring the mail fraud allegations set forth

in the ten Connolly-related, stand-alone mail fraud counts

that we earlier addressed -- and some based on fraudulent

These predicate acts -- even though involving fraudulent

representations concerning technician licensure and

compliance with the USP -- all reflect the same crime (mail

fraud), the same category of victims (medical providers), the

same purpose (profit), similar fraudulent misrepresentations

(claims of compliance with regulatory schemes), similar

methods of communicating those representations (NECC

marketing materials), similar participants (employees of

NECC), and the same method of commission

*16

(medication sales through NECC). They also all occurred

within the same time frame. Thus, a juror reasonably could

find that they were related, despite their differences. See

...,,

Feinstein, 942 F.2d at 44 (recognizing that predicate

acts with the “same or similar purposes, results, participants,

victims, or methods of commission” or that are “otherwise ...

interrelated by distinguishing characteristics and ... not

- -

isolated events” are related (quoting

109 S.Ct. 2893)).

H.J., 492 U.S. at 240,

[11] We proceed, then, to consider Cadden's contention that

the evidence did not suffice to permit a juror reasonably to

find the continuity requirement met. Once again, though, we

are not persuaded.

[12] The government may satisfy the continuity requirement

by demonstrating either closed-ended continuity, which refers

to “a closed period of repeated conduct,” or open-ended

continuity, which encompasses “past conduct that by its

nature projects into the future with a threat of repetition.”

H.J., 492 U.S. at 241, 109 S.Ct. 2893. Cadden contends

that the evidence did not suffice on either score. But,

even assuming that it did not suffice to show closed-ended

continuity, we find that it did suffice to show open-ended

continuity.

[13] There are at least two types of racketeering enterprises

that, by their nature, extend into the future and therefore

demonstrate open-ended continuity: those that “involve a

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distinct threat of long-term racketeering activity, either

implicit or explicit” and those where “the predicate acts or

offenses are part of an ongoing entity's regular way of doing

Id. at 242, 109 S.Ct. 2893. The latter type not

business.”

only includes enterprises that are wholly criminal but also

those in which the predicate acts of racketeering “are a regular

way of conducting defendant's ongoing legitimate business.”

Id. at 243, 109 S.Ct. 2893.

The record suffices to permit a juror reasonably to find that,

at least as of 2012, it was “business as usual” at NECC to

distribute medications to customers by representing to them

that the medications had been compounded in compliance

with standards that the company was not meeting. Thus, the

record suffices to establish open-ended continuity.

Specifically, the record shows that NECC employees testified

that the company “[r]outinely” sent out medications subject

to USP-797 to customers prior to testing them, even though

USP-797 forbade that practice; that the practice of “botching

lots” to mix old, tested medications with new, untested ones

and labeling the resulting USP-797-covered mixture with the

old label was “prevalent” as of 2012 and occurred prior to

that time, even though USP-797 required otherwise; and that

“[i]t was kind of protocol” for NECC to ship even USP-797covered medications that used expired ingredients, despite

USP-797's contrary command. Evidence also showed that

NECC had sterilized its compounded medications subject

to USP-797 for an insufficient amount of time under that

standard since at least 2009, and that it had a practice of

failing to use biological indicators for those compounded

medications, when USP-797 dictated otherwise.

Moreover, these facts and others led the government's expert

witness to testify that he had concluded that NECC's method

for sterilizing large lots of MPA was “completely inconsistent

with the requirements of” USP-797. In addition, the evidence

sufficed to permit a reasonable juror to find, for the reasons

set forth above, see supra at 12–14, that, despite this evidence

of a pattern of NECC failing to adhere to USP-797, NECC

routinely advertised to *17 customers through its sales staff

and standard marketing materials that it was in compliance

with that standard when it was not.

As we also have explained, the record supportably shows

that, during this same time period, NECC had permitted

some of its products to be compounded by an unlicensed

pharmacy technician in violation of state law. Yet, the record

also supportably showed, as we have explained, that NECC

routinely represented to customers during this time that it

was permitting only certified technicians to engage in such

work, given the marketing materials that Boneau, the sales

representative for NECC, had described in his testimony.

A juror thus could reasonably find from such evidence that,

as of 2012, the mail fraud alleged in each of the predicate acts

of racketeering that the jury found was “part of an ongoing

entity's regular way of doing business.”

H.J., 492 U.S. at

242, 109 S.Ct. 2893. Accordingly, a juror reasonably could

find that the evidence demonstrated open-ended continuity.

Cadden does stress that, at least on his account of the record,

the company had regularly produced safe products prior

to 2012. But, because the evidence that it was a routine

business practice of NECC to market its medications through

fraudulent misrepresentations about the standards that its

operations met was strong, a juror reasonably could find that

the company's pattern of conduct as of 2012 would continue

into the future.

Cadden does also contend that his acquittal on most of

the FDCA counts and the conspiracy to defraud the United

States count indicates that the jury found him not guilty of

participating in an open-ended racketeering operation. To

make that case, he urges us to infer from those acquittals

that the jury necessarily found that Cadden lacked the mens

rea necessary to commit fraud. But, the jury necessarily

found that Cadden intended to defraud when it found that

he committed the mail fraud alleged in the mail-fraud-based

predicate acts of racketeering. And, Cadden does not dispute

that the evidence sufficed to permit a reasonable juror to

so find. Nor is there any inherent inconsistency in the jury

having made such findings while acquitting him of the FDCA

counts and the conspiracy to defraud the United States count,

given that the elements of those distinct crimes differ from the

elements of mail fraud. See 18 U.S.C. § 371;

331(a),

333(a)(2),

21 U.S.C. §§

351(a)(2)(A).

For these reasons, we reject Cadden's sufficiency-of-theevidence challenges to his racketeering conviction insofar

as he challenges the sufficiency of the evidence to support

the “pattern of racketeering” element of that offense.

And, because his sufficiency-of-the-evidence challenges to

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his racketeering conspiracy conviction rely on the same

unpersuasive arguments, we reject them, too.

IV.

We next consider a set of challenges in which Cadden takes

aim at each of his convictions, rather than only a subset

of them. Moreover, in these challenges, he seeks merely to

vacate -- rather than to reverse -- each of these convictions,

as he contends that each was tainted by a trial error that so

prejudiced the jury's finding of guilt in each instance that the

resulting conviction cannot stand.

Cadden's focus here is on what he contends was the unduly

prejudicial effect of certain evidence that the government

introduced at trial that related to the persons who died, or fell

ill, from using the contaminated MPA that NECC had *18

shipped to its customers. That evidence includes photographs

of patients who died after having been injected with the

contaminated MPA, which the government displayed during

opening and closing arguments, testimony given by three

family members of such patients, and graphic testimony and

photographs illustrating the harm that the MPA did to the

patients.

Cadden does not clearly spell out the legal authority that

grounds these challenges in his briefing to us. But, he does

appear to be challenging the admission of this evidence

under Federal Rule of Evidence 403. See Fed. R. Evid. 403

(“The court may exclude relevant evidence if its probative

value is substantially outweighed by a danger of ... unfair

prejudice ....”). Insofar as the government disputes whether

Cadden has in fact advanced this argument on appeal, we may

proceed on the assumption that he did. For, even if this Rule

403 challenge is properly before us and was preserved below,

such that our review is for abuse of discretion, see United

States v. Merritt, 945 F.3d 578, 586 (1st Cir. 2019), we find

no merit to it.

[14] Cadden argues that the patient-related evidence,

which he contends bore at most on the alleged predicate

racketeering acts involving second-degree murder, lacked

enough probative value to outweigh its obvious prejudicial

effect. In pressing this contention, Cadden at various points

actually goes so far as to assert that there was not enough

evidence of either the causation or mens rea elements of

second-degree murder to support a finding of that offense at

all and that the patient-related evidence could not itself make

up for those fatal evidentiary gaps in the government's case

on that score. Notably, that contention would suggest that

there was no probative value to the patient-related evidence,

such that there would be no need to engage in the traditional

weighing of the probative value of evidence against its

prejudicial impact. See Fed. R. Evid. 104(b) (“When the

relevance of evidence depends on whether a fact exists, proof

must be introduced sufficient to support a finding that the

fact does exist.”). But, as we will explain, that contention

is not supported by the record. In fact, it is evident that the

patient-related evidence was quite probative of at least the

mens rea element of second-degree murder. We then go on to

explain why, in light of the probative value of this evidence,

the District Court did not err under Rule 403 in permitting the

jury to hear it, notwithstanding the danger of unfair prejudice.

Although Cadden asserts that sufficient evidence to permit a

finding as to the causation element of second-degree murder

was lacking, we fail to see why. He concedes that the MPA

that NECC compounded caused the deaths associated with

the alleged predicate acts of racketeering involving seconddegree murder. In fact, he offered to stipulate as much and

then conceded that aspect of causation at trial. Cadden also

does not dispute that the record shows that deficient means

were used by NECC in compounding the contaminated MPA

that led to the deaths at issue in those alleged predicate

acts. Nor does he dispute that the evidence presented at trial

sufficed to permit a reasonable juror to find that the risks of

contamination associated with the poor practices that NECC

engaged in were high even compared to other non-USP-797compliant compounding pharmacies. 6

*19 Against that evidentiary backdrop, a juror could

reasonably infer that the deficient compounding practices

by NECC must have been the cause of such a singular

mass casualty outbreak as the one that occurred here. After

all, an official with the United States Centers for Disease

Control testified at trial that the outbreak caused by the

contaminated MPA compounded by NECC was a “public

health tragedy” that in his fifteen years of work investigating

outbreaks had only been matched by the Ebola epidemic

-- and was unmatched (at least at that time) in terms of

consequences within the United States. See United States v.

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O'Brien, 14 F.3d 703, 708 (1st Cir. 1994) (“[I]n ... choosing

from among competing inferences, jurors are entitled to take

full advantage of their collective experience and common

sense. There are limits to coincidence.” (internal citations

omitted)).

Cadden does contend that the evidence still failed to suffice

to show that he personally took any action that resulted in

the contamination of the MPA with which those patients

were injected. But, he does not dispute that he knew of the

alleged deficiencies with NECC's compounding practices. In

addition, the record supportably shows that Cadden claimed

to have “direct[ed] sales” for NECC and to have made “every

important decision [for the company] on a daily basis.” The

record further suffices to illustrate specific instances of his

directing the shipment of orders. Thus, a reasonable juror

could conclude that Cadden caused the deaths of patients by

directing the shipment of the deficiently prepared medications

that caused the deaths, even though a juror reasonably could

also find otherwise.

The evidence as to the mens rea element also sufficed,

contrary to Cadden's contention. Regarding this element, the

District Court provided the jury with seven different sets of

instructions on the state of mind necessary for second-degree

murder -- one for every state where a patient identified in

a murder allegation was located -- and asked the jury to

apply to each murder allegation the mens rea standard of the

state in which the patient had resided. Nevertheless, despite

the distinct language used in the seven separate instructions,

the District Court concluded that the mens rea standard was

functionally identical between the states, and neither party

on appeal identifies any material differences between the

standards.

[15] In fact, in its briefing to us, the government presents the

Michigan second-degree murder standard, applicable to eight

of the murder charges, as representative of the appropriate

mens rea standard for all twenty-five instances of seconddegree murder, and Cadden does not contend otherwise.

Under Michigan law, a defendant must act with “malice” to

be guilty of second-degree murder, which requires, for our

purposes, a showing that *20 the defendant “inten[ded] to

do an act in wanton and wilful disregard of the likelihood

that the natural tendency of such behavior is to cause death or

great bodily harm.”

579 N.W.2d 868, 878 (1998). We thus apply the Michigan

standard in reviewing Cadden's challenge to the sufficiency

of the evidence of mens rea, and we find that the evidence

sufficed to meet it.

In addition to the expert testimony described above

concerning the risks associated with not complying with

USP-797, other testimony indicated that in 2002, Cadden was

informed by an investigator for the United States Food and

Drug Administration of the risk that, if NECC's compounded

medications were contaminated, “people can get really sick

or die.” This testimony provided support for a finding that

Cadden was well aware of the type of risk that he was

running by operating NECC in an unsafe manner and then

permitting a high-risk sterile compounded medication like

MPA to be distributed under the false representation that it

had been compounded in accord with USP-797. So, too, did

the extensive number of people potentially endangered by

Cadden's conduct over a lengthy period of time, Cf. 2 Wayne

R. LaFave et al., Substantive Criminal Law § 14.4(a) (3d ed.

2019) (“[T]he situation may be such that the risk of death is

too slight for murder where only one person is endangered

by defendant's conduct, whereas the risk is sufficient where

several are thus hazarded ....”), and the vivid accounts of the

suffering endured by those who received injections of the

contaminated MPA, as those accounts permitted a juror to

assess Cadden to have been indifferent to the harm that such

fraudulent shipping of such a deficiently compounded, highrisk sterile compounded medication could have caused.

Cadden does point to evidence that showed that NECC had

produced MPA and other similar steroids in large quantities

since 2006 without problems. But, as Cadden concedes,

the evidence supportably showed that problems at NECC

had gotten significantly worse by 2012, as NECC increased

its production. For instance, an NECC employee testified

that the practice of mislabeling lots to cover up the use

of untested medications became much more prevalent in

2012, and cleaning became much less frequent. The evidence

also showed that, in 2012, NECC sent eye-block to a

hospital that contained insufficient anesthetic, leading to pain

and headaches. A juror thus would have been justified in

concluding from this evidence that NECC's record prior to

2012 was of limited relevance to Cadden's mens rea during

that year.

O_People v. Goecke, 457 Mich. 442,

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In finding that the evidence sufficed to permit a reasonable

juror to find the predicate acts of racketeering involving

second-degree murder, we in no way mean to second-guess

the jury's determination, made apparent on the special verdict

form, that the government did not prove them. Such a

determination by the jury was based on a consideration of

a wealth of evidence during an extensive trial that lasted

more than two months. It is also the final word as to whether

the government proved the serious allegations contained in

the racketeering count that sets forth the alleged predicate

acts involving second-degree murder. But, while there is

no question the jury's actual finding on that score was that

the government had not proved its case against Cadden,

that finding is not determinative of whether he is right in

pressing his Rule 403 challenge. For, in the aspect of that

challenge at issue, he contends that a juror would not have

had a sufficiently supportable evidentiary basis *21 for

finding second-degree murder on this record given the lack

of evidence of causation and mens rea and thus that the

patient-related evidence offered in support of it was simply

not probative at all because it could not itself fill in those

evidentiary gaps. The jury's finding does not speak to that

issue.

Similarly, we are aware that, at sentencing, the District

Court commented on the weakness of the government's case

for finding that Cadden's conduct constituted second-degree

murder. But, the District Court was not addressing whether

the evidence of the second-degree murder predicate acts was

so inadequate that it precluded a juror from finding them as

a matter of law. Thus, the District Court was not addressing

the contention that Cadden now makes in pressing his Rule

403 challenge about the probative value of the patient-related

evidence. 7

That the murder predicates were sufficiently supported,

and that the patient-related-evidence offered to prove those

predicates had probative value because of its capacity to show

his mens rea, does not, of course, determine in and of itself

whether the District Court violated Rule 403 by admitting that

evidence. There remains the question whether the prejudicial

impact of that evidence so outweighed its probative value that

it should have been excluded nonetheless. But, we conclude

that the District Court did not abuse its discretion in answering

that question as it did.

Cadden is right that he conceded at trial -- after offering to

make a stipulation -- that each of the twenty-five patients

tied to each of the alleged second-degree murder predicate

acts of racketeering was injected with MPA from one of the

contaminated lots compounded by NECC, that each of those

patients received at least one contaminated injection, and that

each of those patients died from receiving a contaminated

injection of MPA. We thus agree with Cadden that, in

consequence, the patient-related evidence could have at the

most only marginal probative value to the causation showing

that the government had to make to prove the second-degreemurder-based predicate acts of racketeering. Moreover, while

the government is right that the United States Supreme Court

has recognized that “the availability of alternative proofs of

[an] element ..., such as an admission” by the defendant that

the element exists, does not make direct evidence of that

element wholly irrelevant,

Old Chief v. U.S., 519 U.S.

172, 179, 117 S.Ct. 644, 136 L.Ed.2d 574 (1997), Cadden is

also right to point out that “a lack of dispute or concession

of a central allegation may significantly reduce the probative

value of particular evidence,”

United States v. Kilmartin,

944 F.3d 315, 335 (1st Cir. 2019); see also

Old Chief, 519

U.S. at 184, 117 S.Ct. 644 (concluding that “what counts as

the Rule 403 ‘probative value’ of an item of *22 evidence ...

may be calculated by comparing evidentiary alternatives”).

Indeed, given the “delicate balance between” the “probative

value” of evidence and “the risk that the evidence will inflame

the jurors' passions,”

Kilmartin, 944 F.3d at 336, we have

recognized that agreement between the parties on a key fact

might sometimes tip the balance against admissibility of

evidence of that fact, at least where the risk of unfair prejudice

is especially high, see United States v. Ford, 839 F.3d 94,

109-10 (1st Cir. 2016).

Nonetheless, largely for the reasons we have already

explained, we agree with the argument that the government

made in its opposition to Cadden's motion in limine

below, though, oddly, not in its brief to us on appeal: the

patient-related evidence was “highly probative” of Cadden's

“extremely reckless behavior.” See United States v. Brown,

669 F.3d 10, 21 (1st Cir. 2012) (“[W]e may affirm a district

court's evidentiary ruling on any ground apparent in the

record ....”). Testimony from the patients' family members,

for example, explained why the patients were reliant on the

drugs compounded by NECC and the pain and suffering

caused by the contaminated drugs that were injected into

their bodies. In contrast, the concession mirroring the barebones stipulation was not a complete substitute for one

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of the government's primary instruments for explaining the

danger that an experienced pharmacist like Cadden was

disregarding by operating his pharmacy in an unsafe manner.

F=l _ _

United States v. Balsam, 203 F.3d 72, 84 (1st Cir.

See

2000) (explaining that the government is usually entitled

to present “evidence creating a coherent narrative of [the

defendant's] thoughts and actions in perpetrating the offense

for which he is being tried” (quoting

Old Chief, 519 U.S.

United States v. Moralesat 192, 117 S.Ct. 644)); see also

Aldahondo, 524 F.3d 115, 120 (1st Cir. 2008) (“The court is

not required to scrub the trial clean of all evidence that may

have an emotional impact, where the evidence is ‘part of the

Government's narrative.’ ” (quoting United States v. Dean,

135 F. Supp. 2d 207, 209-10 (D. Me. 2001))).

To be sure, the District Court was obliged to take account

of the potential prejudicial impact of the patient-related

testimony, which was sure to pack an emotional punch.

But, the District Court was not insensitive to this concern.

In fact, it limited the government to presenting only three

family members of patients as witnesses and precluded the

government from introducing graphic autopsy photographs of

the patients to mitigate the risk of prejudice.

Thus, keeping in mind that “the district court must be ceded

considerable latitude in steadying the balance which Rule 403

demands,” United States v. Rodriguez-Estrada, 877 F.2d 153,

156 (1st Cir. 1989), we identify no abuse of discretion in the

District Court's balancing under Rule 403 of the probative

value of the evidence against its potential for prejudice. We

thus reject this ground for overturning Cadden's convictions.

Cadden next seeks to vacate his convictions based on another

claimed trial error -- the District Court's partial denial of his

pre-trial motion to “preclude [the] government from relying

on environmental monitoring requirements other than those

in USP 797.” 8 But, here, too, we find no error.

The motion at issue related to environmental monitoring data

that NECC collected *23 from its clean rooms during the

period that the contaminated lots of MPA were produced.

NECC gathered this data by measuring the level of microbial

growth in different parts of its clean rooms.

At trial, the government repeatedly compared the results of

this measuring to particular “alert” and “action” levels for

microbial activity laid out in NECC's Standard Operating

Procedures (“SOPs”). The government asserted that those

levels signaled the possibility of a “drift from normal

operating conditions” concerning the cleanliness of the clean

rooms.

For example, during closing argument, the government

presented a PowerPoint slideshow that highlighted each week

in 2012 in which either air or surface monitoring results

exceeded the action or alert levels in the SOPs. The evidence

supportably showed that NECC did not take responsive

action.

Cadden's motion below asked the District Court to preclude

the government from making arguments that relied on this

comparison between the environmental monitoring results in

one of NECC's clean rooms and the alert and action levels of

the SOPs. In support of that motion, Cadden contended to the

District Court -- as he contends to us -- that he was charged

with making fraudulent representations related to compliance

with USP-797, not the SOPs. Cadden thus argued below -- as

he does to us -- that he was not charged with falsely claiming

to comply with the SOPs in connection with any of the mail

fraud allegations underlying any of the counts he faced. He

also argues that, under the terms of the SOPs themselves, the

levels set out in the SOPs were not operative in 2012, given

that NECC had recently transferred many of its operations to

a new clean room and that it needed time before establishing

new levels specific to that clean room. Rather, he asserts

that, until NECC had gathered enough data to establish a

baseline tailored to its new facilities, the SOPs designated the

less stringent action levels outlined in the USP-797 as the

operative levels.

As a result, according to Cadden, the government's repeated

references to the triggering of the SOP “alert” and “action”

levels were problematic in two respects. They were irrelevant

to any material issue in the case and were unfairly prejudicial,

and they also were likely to mislead the jury into thinking

there was a failure to comply with the SOPs when, because

they were not operative, there was not.

At oral argument, Cadden's attorney characterized his

challenge to the denial of the motion as one that concerned

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the relevance and unfairly prejudicial nature of certain of

the evidence that had been admitted. But, Cadden's motion

to the District Court was styled as a motion to “preclude

the government from relying on” certain “environmental

monitoring requirements,” not one to exclude any evidence.

As we read Cadden's brief to us, moreover, he does not

appear to be challenging the admission of evidence regarding

the SOPs or the environmental monitoring results. Rather,

he challenges the government's repeated references to, and

reliance on, the SOPs, particularly in opening and closing

argument.

We need not resolve the precise nature of the challenge,

though. The government does not dispute Cadden's

contention that we should review the District Court's denial

of the motion as if it had been properly preserved or that we

should review its denial, as Cadden contends we must, for

an abuse of discretion. We thus proceed on the basis of that

shared view in reviewing Cadden's challenge as, even if we

do, it fails. The reason is that, as we will explain, the challenge

-- however it is best characterized -- rests on a fatally mistaken

premise *24 about what the government was trying to prove

by referencing the deviations from the SOPs.

[16] In front of the District Court, the government

argued that the comparison between NECC's environmental

monitoring results and the standards outlined in the SOPs

was probative not just of Cadden's commission of mail

fraud, but also of his “extreme recklessness” -- the mens

rea standard it needed to show to prove the second-degree

murder predicate acts. And, notably, even on Cadden's own

account, the action and alert levels set forth in the SOPs

were the ones used in NECC's old clean room. Thus, even

if we accept Cadden's contention that the SOPs were not

formally in effect in 2012, the District Court did not err in

permitting the government to make the case to the jury that

those levels set a reasonable benchmark by which to assess

the cleanliness of a compounding facility, that Cadden himself

was well aware of them at the time NECC made the fatal

shipments of contaminated MPA, and thus that deviations

from them were probative of his reckless state of mind. For,

even if NECC had not yet collected enough data to determine

baseline measurements for the new facility, it was entirely

reasonable for the government to turn to the action and alert

levels that NECC had relied on for its old clean room to make

the case to the jury that Cadden was aware its new one was

unsanitary.

As the government put it to the District Court,

Cadden's failure to properly monitor

his clean room or come up with

a plan for doing so effectively,

as he was required to do by

the USP, should hardly be the

basis for an order excluding the

[environmental monitoring] results

showing contamination in his clean

rooms from evidence; he simply

should not be allowed to pretend that

his consistent violations of his own

policies, especially beginning in early

2012, did not happen.

Nor does Cadden develop any argument to the contrary,

as he makes no contention that the content of the SOPstandards reference was so obviously misleading as a measure

of the state of NECC's new clean room as to require the

District Court to exclude all mention of those standards

even if they could have been probative of the second-degree

murder predicate acts. Thus, his challenge necessarily fails.

United

States

See

-- v. Zannino, 895 F.2d 1, 17 (1st

Cir. 1990) (“[I]ssues adverted to in a perfunctory manner,

unaccompanied by some effort at developed argumentation,

are deemed waived.”).

VI.

[17] Cadden's final set of challenges to his convictions

targets the District Court's denial of his motion for a new trial

based on allegations of prosecutorial misconduct at trial. In

seeking to vacate his convictions on this basis, Cadden first

argues that, in several instances, the government presented

false evidence to the jury that suggested that he had failed to

take adequate action even after he learned about the existence

of the contaminated MPA that caused the 2012 outbreak. He

next takes issue with a binder of evidence that the government

gave to the jury without either his or the District Court's

knowledge. Our review of the District Court's denial of his

motion for a new trial on these grounds is for abuse of

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discretion, see United States v. Casas, 425 F.3d 23, 39 (1st

Cir. 2005), and we see none.

[18] We have held that “a prosecutor ‘may not knowingly

use false evidence, including *25 false testimony, to obtain

a tainted conviction regardless of whether the prosecutor

solicits false evidence or ... allows false evidence to go

uncorrected when it appears.’ ”

United States v. FloresRivera, 787 F.3d 1, 31 (1st Cir. 2015) (alteration in original)

United States v. Mangual–Garcia, 505 F.3d 1, 10

(quoting

(1st Cir. 2007)). Such a conviction “must be set aside if there

is any reasonable likelihood that the false testimony could

have affected the judgment of the jury.”

United States v.

Bulger, 816 F.3d 137, 158 (1st Cir. 2016) (quoting

United

States v. Agurs, 427 U.S. 97, 103, 96 S.Ct. 2392, 49 L.Ed.2d

342 (1976)).

The most troubling allegations concern the testimony of

Wendy Huffman, the director of an entity -- the South Bend

Clinic -- that purchased medications from NECC. We thus

begin with those allegations. We then consider two other

alleged uses of false evidence by the government that Cadden

identifies.

Huffman testified at trial that, on September 21, 2012, she

received a call from Cadden, in which he allegedly told her

that she should pull the MPA that NECC had sold to the

South Bend Clinic from its shelves. The government put forth

Huffman's testimony to show that Cadden had known about

the contamination on September 21 and thus well before

September 26, when other evidence showed that he notified

his other customers of the problem.

The Huffman testimony was potentially damning. It

suggested that Cadden attempted to conceal evidence of

the contamination from his other customers, which in turn

supported the government's theory that he possessed the state

of mind necessary for second-degree murder.

On February 5, 2017, shortly after Huffman testified, Cadden

moved to strike Huffman's testimony on the ground that it was

clearly false. Cadden based his motion, in part, on telephone

records that indicated that Huffman had not received a call

from Cadden on the date that she testified she had and on what

he contended was the inconsistency between her testimony

and other evidence about NECC's response to the outbreak.

The District Court denied that motion on the ground that

it was the jury's responsibility to sort through the parties'

factual dispute on the issue. On March 3, 2017, however,

near the close of the government's case, the District Court

held a conference with counsel. At the conference, the

District Court asked counsel for the government whether

it “shouldn't consider withdrawing [Huffman's] substantive

testimony about a call on the 21st of September,” as “[n]one

of your other evidence is consistent with” Huffman's receipt

of a recall notice on that date.

In response, on March 7, the government filed a brief

that opposed Cadden's earlier motion to strike the Huffman

testimony and requested that the District Court strike

Cadden's evidence on this point. On March 8, the District

Court again concluded that “whatever its private opinion may

be, contested issues of fact are for the jury” and declined to

strike any of the contested evidence.

At the close of the defense's case on March 13, though,

Cadden once again moved to strike evidence relating to

the Huffman call. Again, the District Court denied the

motion, noting to Cadden that “[y]ou have an awfully strong

argument, I think, on the point to the jury,” but concluding

that “it's a factual issue that I don't think I have the power to

shape at this point.”

*26 Finally, Cadden in his post-verdict motion for judgment

of acquittal moved for a new trial based on the government's

putting forth the Huffman testimony despite the evidence

indicating that it was false. This time, the District Court

rejected Cadden's argument on somewhat different grounds.

It held that any misconduct that the government committed

did not prejudice Cadden and so did not warrant a new trial.

Before reaching that conclusion, however, the District Court

found that it was “clear that ... [Huffman] had confused a call

from a patient advocate inquiring about an appointment ...

with the warning call she did receive from Cadden the

following week.” And while the District Court did not

make an express finding of misconduct by the government

in relying on the evidence despite the indications that it

was false, it stated that the government's “persistence in

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defending the Huffman testimony,” in spite of Cadden's

repeated objections and its own explicit suggestion that the

government retract the evidence, was “perplexing at best, and

at worst, inconsistent with the obligation of the government

to serve the higher interest of justice.”

[19] We share the District Court's concern about the

government's conduct. In fact, the government does not

attempt on appeal to rebut the substance of Cadden's

objections to the accuracy of Huffman's testimony. The

government notes instead only that it “is not forbidden to

call witnesses whose reliability in one or many particulars is

imperfect or even suspect.” United States v. McGovern, 499

F.2d 1140, 1143 (1st Cir. 1974). But, the leeway afforded the

government to present flawed testimony does not sanction

its “knowing reliance upon false evidence.” Id. Nonetheless,

like the District Court, we may resolve this challenge without

deciding whether the government's conduct was proper,

because Cadden has not shown the requisite prejudice.

Huffman's testimony was introduced to prove Cadden's

state of mind for the purpose of proving only the seconddegree-murder-based predicate acts of racketeering. The

government made no argument that her testimony was

otherwise probative. Yet, the jury, after having heard all

the competing evidence that Cadden relies on concerning

Huffman's testimony, did not find those predicate acts of

racketeering proved.

At the very least, then, we find no indication in the jury verdict

that the jury disagreed with what we read the overwhelming

weight of the evidence to indicate about Huffman's testimony

-- it was inaccurate. We thus have no reason to be concerned

that, despite having been extensively rebutted, her testimony

influenced the jury with respect to the only issue for which it

was put forward by the government.

Nor is the Huffman testimony the sort of evidence that in

its nature is likely to spill over and interfere with the jury's

deliberations over the other counts (or predicate acts), such

as those concerning mail fraud, that it was not put forward

to prove. The straightforward testimony of Huffman, about

a phone call that she allegedly received, was not likely -at least after having been so thoroughly undermined -- to “

‘evoke an improper emotional response’ and distract[ ] ‘from

careful consideration of the relevant issues.’ ”

Kilmartin,

944 F.3d at 335 (quoting United States v. Fulmer, 108 F.3d

1486, 1498 (1st Cir. 1997)). That being so, it would be too

speculative to conclude, contrary to the District Court, that

the Huffman testimony so tainted the trial that the verdicts for

which the evidence was not presented must be overturned.

*27 Cadden contends that his ability to introduce evidence

that Huffman's testimony was false does not wipe away

the possibility of prejudice. He points out that much of

the evidence supporting his rebuttal of Huffman's testimony

only came out six weeks later during the presentation of his

evidence. Cadden presents no support, however, for the notion

that a delay between the government's case and the defense's

case -- a standard feature of criminal trials -- prejudices

defendants by making their case less persuasive in the eyes of

the jury. We thus decline to base a prejudice finding on such

an assertion.

The two other incidents in which Cadden alleges that the

government relied on false testimony are less concerning. We

consider each in turn.

First, at trial, Annette Robinson, an NECC employee, testified

that Cadden instructed her to do fungal testing, a request he

had not made before, “a few weeks before the outbreak.”

Cadden contends that the testing records show that testing

only began on September 27, 2012, however, which could

suggest that Robinson was wrong that testing had begun

earlier than the date of the outbreak.

But, it was not clear precisely when “the outbreak” occurred

or how long “a few weeks” might be. There was also a lack of

evidence about how long it took NECC to ship medications to

the testing facility. We thus cannot conclude that Robinson's

testimony was false, let alone that the government relied on

it while knowing that it was.

Second, two witnesses from another clinic that had purchased

medications that NECC compounded -- Michigan Pain

Specialists -- testified at trial that Cadden had failed to

notify their clinic on September 26, when he recalled the

contaminated MPA from NECC's other customers. The

testimony suggested that there was a gap between when

Cadden was aware of the contamination -- even assuming that

he first became aware of it on September 25 -- and when he

took action to notify at least one of his customers.

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Contrary to the witnesses' testimony, however, a document

admitted at trial showed that NECC had faxed over a recall

notice to Michigan Pain Specialists on September 26. Cadden

contends on that basis that the testimony from the Michigan

Pain Specialists witnesses was false and that the government

committed misconduct by advancing it at trial.

But, Cadden concedes that, at trial, his attorney succeeded in

“surpris[ing]” one of the clinic's witnesses with a copy of the

fax. There is no indication that the government knew of this

document when it presented the witness, thus making it hard

to see how there is a basis for finding that the government

engaged in misconduct.

In any event, the jury heard the same evidence that would

allow us to conclude that the government's evidence was false.

The special verdict form also shows that the jury did not

accept the government's theory of second-degree murder. Yet

the contested testimony was admissible to prove the alleged

predicate acts of racketeering based on that racketeering

activity. Thus, for substantially the same reasons that lead us

to find that the admission of Huffman's testimony does not

provide grounds for a new trial, we reject Cadden's challenge

regarding the Michigan Pain Specialists testimony as well,

given the minimal inherent risk of prejudice that it posed once

undermined.

Cadden also brings a misconduct-based challenge to his

convictions because the *28 prosecution gave the jury,

without his knowledge or the knowledge of the District Court,

a binder of admitted evidence that the government assembled.

It is troubling that this binder, which was not itself admitted

into evidence though the exhibits within it were, made its way

to the jury for deliberations unbeknownst to Cadden or the

District Court until after the jury had rendered its verdict. The

District Court acknowledged as much. But, we conclude that

the District Court did not err in determining that, due to a lack

of prejudice, there was no ground for a new trial.

The binder compiled evidence that had already been

introduced throughout the trial, and it purported to prove

deficiencies in the medications that corresponded to many

of the stand-alone mail fraud counts and predicate acts of

racketeering involving mail fraud. The binder was divided

into three parts. Each part related to a different set of the

stand-alone mail fraud counts that Cadden was charged with

committing. Each part also contained admitted exhibits that

related to test results that indicated that shipments that were

at issue in each of those mail fraud counts were nonsterile

or subpotent. The binder did not include evidence that

Cadden had introduced at trial to prove that, contrary to

the government's allegations, some of the shipments at issue

contained medications that were in fact sterile.

The first mention of this binder at trial occurred during

closing argument. That is when the government highlighted

the existence of a government-created binder to the jury by

describing it as “a binder that we put together for you where

we've collected the test results that are in evidence for these

[fraudulent] shipments.”

Cadden apparently did not notice or object to the binder when

the government referred to it, even though no such binder had

been admitted into evidence or had otherwise been approved

to go the jury. The government then provided the binder to

the court clerk, who transmitted it to the jury room without

giving any additional notice to Cadden or the District Court.

On the third day of jury deliberations, the jury requested

exhibits that related to ten of the predicate acts of racketeering

involving mail fraud, some of which the binder contained. At

the District Court's request, the parties assembled responsive

exhibits. The District Court organized these exhibits and

submitted them to the jury.

On the same day, during a conversation between counsel and

the District Court about a response to a different jury question,

Cadden's counsel objected to the government's transmission

of the binder and the jury's reliance on it. By then, he

apparently had learned that the jury had obtained a binder

filled with exhibits of government-friendly test results.

In response, counsel for the government claimed not to

be aware of the location of the binder. The District Court

relied on that representation in mistakenly concluding that the

binder had not been sent to the jury and declining to take

additional action at the time.

After the jury returned its verdict, however, it became clear

that government attorneys had, in fact, provided the binder to

the jury. The government later conceded the same.

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Cadden now argues, as he did to the District Court in a motion

for a new trial, that the government's provision of the binder to

the jury and denial that it had done so constitutes misconduct

that warrants a new trial. The District Court denied Cadden's

motion.

the binder.” The jury's request strongly suggests that it did

not rely on the binder to the exclusion of other evidence, or

assume, as Cadden's argument for prejudice would imply, that

the government's binder contained the only exhibits about

testing relevant to the mail fraud counts in question.

*29 The District Court conceded that the binder's presence

in the jury room without court approval was a “mistake.”

However, the District Court did not find that it was the

product of intentional misconduct by the government. Rather,

the District Court bypassed a definitive ruling on that issue

and found that the binder, even though received by the jury

without the knowledge of Cadden or the District Court, was

not so prejudicial as to require a new trial. Among the District

Court's reasons for so finding were that all of the documents

contained in the binder had been admitted into evidence and

that the District Court would have admitted the completed

binder into evidence if the government had requested that it

do so.

Moreover, the very title of the binder that Cadden complains

of implies, not, as he suggests, that the binder includes

all test results that relate to the shipments at issue in the

mail-fraud-based counts, but rather, that it includes only

all “Nonsterile and Sub/Super-Potent Results” that relate to

those counts. Cadden's evidence of competing test results,

however, was also introduced. Those results purported to

show that the shipments contained medications that were

sterile. It would be too speculative to conclude that the jury

would have assumed a binder explicitly labeled as including

“Nonsterile ... Results” would have been the sole place to look

to find the non-trivial number of exhibits that showed that the

medications were sterile, especially when Cadden repeatedly

had highlighted those exhibits at trial and when the *30

jury requested exhibits concerning test results that were in the

binder.

[20] In general, government “misconduct alone is

insufficient to reverse a conviction absent a showing of

prejudice.” United States v. Gentles, 619 F.3d 75, 81 (1st

Cir. 2010); see also

United States v. Best, 939 F.2d

425, 429 (7th Cir. 1991) (en banc) (asking, in a similar

situation, whether “there was some prejudice or substantial

right affected by the presence of the binders in the jury

room during deliberations”). Nor does Cadden argue that the

provision to the jury of a government binder that had not itself

been admitted into evidence is presumptively prejudicial to

the defendant, let alone that one that contains only documents

that themselves have been admitted into evidence is. 9 See

Best, 939 F.2d at 430. Instead, he contends that the binder

presented the evidence that it contained in a manner favorable

to the government's position and, for that reason, caused

prejudice that necessitates a new trial.

To support this challenge, Cadden highlights the title of

the binder, “Nonsterile and Sub/Super-Potent Results.” He

contends that title could be read to suggest that the binder

included all the relevant test results, rather than only the

government's preferred evidence concerning testing.

[21] As the District Court itself noted, however, the jury

specifically requested “exhibits already allegedly included in

We note, too, that the government flagged the existence of

the government-produced binder for the jury during closing

argument and described it as presenting its evidence. Thus,

the jury was on notice that it would have access to a binder

produced by the government that contained evidence of test

results introduced to prove the instances of mail fraud alleged

in the indictment. In fact, the binder had the United States

Department of Justice seal on the front cover, and the District

Court reasonably found the presence of the seal “would have

made it clear to the jury that the exhibits had been assembled

by the government.”

Further supporting the District Court's no-prejudice finding

is the fact that Cadden, when faced at closing argument with

the government's assertion that it intended to present the

jury with a binder full of government evidence regarding

the fraudulent shipments of medications, neither objected nor

took the opportunity to assemble a comparable binder of

defense evidence. Cadden asserts that his counsel believed

that the government was alluding to other binders that had

been admitted into evidence during trial. But, he identifies

no other binders that match the description offered by the

government. The silence by Cadden's counsel at that moment

thus accords with the District Court's assessment that the

binder was not of a sort that would cause prejudice merely by

having been given to the jury for its deliberations.

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The District Court's determination as to prejudice also

accords, as the government contends, with the most analogous

precedent:

Best. There, a sharply divided Seventh Circuit

held en banc that, under somewhat similar circumstances,

improper entry of a binder of admitted evidence into the jury

939 F.2d at 430-31. In fact,

room was not prejudicial. See

the record here reveals, if anything, less prejudice than was

present there.

VII.

We have, to this point, addressed and rejected all the

challenges that Cadden brings to his convictions. We thus now

turn to the challenges that concern his punishment. We begin

with the challenges to his prison sentence, which are brought

solely by the government in its appeal. We then turn to the

challenges that Cadden, in his appeal, and the government, in

its, bring to the order of forfeiture.

Best were understandably concerned

The dissenters in

that the binder at issue there was “a roadmap to a guilty

verdict,”

id. at 433 (Posner, J., dissenting), and we see

much force in their views. But, this binder was different. It

merely grouped the admissible evidence that it contained by

shipment and thus deployed a commonsense -- rather than

a tendentious -- organizational scheme. In fact, the District

Court itself expressed concern about “the confusion that the

erratic numbering of government and defense exhibits caused

during the trial,” urged the parties to organize the evidence

into binders, and indicated that, notwithstanding the structure

of the binder, it would have allowed it into evidence anyway.

Best also emphasized that the record

The dissenters in

there strongly suggested that the jury relied heavily, although

perhaps not exclusively, on the government's binder of

evidence. Id. at 432-35. But, nothing in the record suggests

comparable reliance on the binder by the jury in this case.

In fact, the jury's request for exhibits that related to each

of several counts addressed by the binder suggests the exact

opposite.

To be sure, Cadden was deprived of knowing that the binder

went to the jury and thus of choosing how to respond to

that fact. But, he has not explained, and we do not see, what

responsive action he could have taken that would show that

he was so prejudiced by being denied the chance to take it that

the District Court acted beyond its discretion in denying the

motion for new trial. In fact, the record shows that the jury

was aware that the binder was produced by the government

and contained its evidence and that his *31 counsel made

no objection to the jury being provided the binder when the

government first stated its intention to provide it. 10

The District Court determined that Cadden's total offense

level under the Guidelines was twenty-nine. Based on that

determination and Cadden's lack of any prior criminal history,

the District Court calculated a sentencing range under the

Guidelines of 87-to-108 months' imprisonment and handed

down a sentence at the top end of that range.

[22] The government contends that the District Court erred

by understating the loss attributable to Cadden's offenses,

see

U.S.S.G. § 2B1.1(b)(1), and by failing to apply

two enhancements that would have increased Cadden's total

offense level, see

id. §§ 2B1.1(b)(16),

3A1.1(b). We

review the District Court's “interpretation and application

of the sentencing guidelines” de novo,

United States v.

Flores-Machicote, 706 F.3d 16, 20 (1st Cir. 2013), and factual

findings, including the District Court's “calculation of the

amount of loss, for clear error,” United States v. Ihenacho,

716 F.3d 266, 276 (1st Cir. 2013).

The District Court calculated the loss attributable to Cadden's

offenses as $1,427,000, which led to a fourteen-level

increase in Cadden's total offense level. See

U.S.S.G. §

2B1.1(b)(1)(H). The calculation was based on the “[a]ctual

loss” suffered by victims, which refers to “the reasonably

foreseeable pecuniary harm that resulted from the offense.”

See

U.S.S.G. § 2B1.1 cmt. n.3(A)(i).

*32 The District Court limited the loss calculation to

the total value of shipments of medications that had been

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identified as deficient in some manner and that were

listed in five trial exhibits. These shipments were deficient

either because the medications were expired, contaminated,

nonsterile, sub-potent, super-potent, or compounded by an

unlicensed technician.

The government contends, however, that all NECC sales

of medications during the period in question constituted

pecuniary harm suffered by NECC's customers. For that

reason, the government contends that the loss amount should

have been at least $75.6 million. If the loss amount were

that high, then the loss enhancement would have increased

Cadden's total offense level an additional ten levels from

id. § 2B1.1(b)(1)(M). That

twenty-nine to thirty-nine. See

increase would have shifted his Guidelines sentencing range

upward dramatically. See id. ch. 5, pt. A. 11

Insofar as NECC sold a product using a fraudulent

representation, there is a strong argument that the entire value

of the product constituted a “loss” for Guidelines purposes.

U.S.S.G. § 2B1.1 cmt. n.3(F)(v) (“In a case involving

See

a scheme in which ... goods for which regulatory approval

by a government agency was required but not obtained ...

loss shall include the amount paid for the property ...

with no credit provided for the value of those items ....”);

United States v. Gonzalez-Alvarez, 277 F.3d 73, 80 (1st

Cir. 2002) (“[C]onsumers here who reasonably believed

they were purchasing milk compliant with all government

health regulations, but in fact received a different product

of unknown safety, were denied the benefit of their bargain

and suffered an actual loss.”). But, trial evidence showed that

NECC produced a number of products in a separate area from

the area in which NECC's sterile compounding took place.

The government makes no developed attempt to explain how

conditions were such in other areas in NECC's facilities that

sales of all the products produced in those areas also were

fraudulently sold. Thus, we do not see how the District Court

erred in finding that not all products sold by NECC were sold

fraudulently.

The government separately appears to argue that, even

if some of NECC's sales were not made via fraudulent

representations, those sales would still constitute a “loss.” The

government's theory is that if these customers had “known

that NECC's production methods violated the USP and

NECC's safety assurances, they would have never purchased

the drugs.” But, the cases that the government relies are

ones in which the buyer did not receive the benefit of the

anticipated bargain. See Gonzalez-Alvarez, 277 F.3d at 80

(“Where a product has a value of zero as a matter of law, but

consumers pay for the product as if it had value, the buyers

have been robbed of the benefit of their bargain.”); United

States v. Bhutani, 266 F.3d 661, 670 (7th Cir. 2001) (“[T]here

was indeed loss to consumers because consumers bought

drugs under the false belief that they were in full compliance

with the law.”);

United States v. Marcus, 82 F.3d 606,

610 (4th Cir. 1996) (“Given the unchallenged finding that

consumers would not purchase a drug of unknown safety and

efficacy at any price, the district court correctly concluded

that [the company's] gross sales were the appropriate measure

of the actual loss suffered by consumers *33 ....”). Those

precedents provide no support for finding that a customer has

experienced a pecuniary loss when, as here, he gets exactly

what he was told he was paying for from the seller but he

might have reconsidered the choice to become a customer

at all if he had been aware of the seller's other fraudulent

sales. See

U.S.S.G. § 2B1.1 cmt. n.3(A)(iii) (“ ‘Pecuniary

harm’ means harm that is monetary or that otherwise is readily

measurable in money.”).

The government also contends that the District Court's loss

amount fails to account for even all of the medications

that NECC shipped that, at a minimum, were made with

false representations concerning compliance with USP-797.

The District Court perhaps could have swept up additional

sales in its calculation of loss for this reason, just as

the government contends. But, the record shows that the

government only advanced at sentencing its flawed theory

that all NECC sales in the relevant period should be included

in the loss calculation, even including those that were not sold

fraudulently. The government did not identify or attempt to

document a narrower loss figure that would reflect the actual

losses suffered by fraud victims but that would have been

greater than the loss amount that the District Court calculated.

[23] Thus, given the information presented to the District

Court, it did not commit clear error in relying on the value

of the shipments that it could pin down with reasonable

certainty as fraudulent to determine the “loss” amount. 12

See

U.S.S.G. § 2B1.1 cmt. n.3(C) (“The court need only

make a reasonable estimate of the loss .... [T]he court's loss

determination is entitled to appropriate deference.”); United

States v. Flete-Garcia, 925 F.3d 17, 28 (1st Cir. 2019) (“[A]

loss calculation need not be precise: the sentencing court need

only make a reasonable estimate of the range of loss.”). We

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note in this regard that, even on appeal, the government still

has not identified that amount. Nor has it explained how it

was denied a fair opportunity to provide that amount below.

We thus reject the suggestion that the government made

in its briefing to remand Cadden's sentence for the District

Court to redo the loss calculation to account for potential

additional fraudulent sales. See United States v. MayendíaBlanco, 905 F.3d 26, 34 (1st Cir. 2018) (applying plain error

review to a challenge to a loss calculation not made below);

Zannino,

- 895 F.2d at 17 (“It is not enough merely to

mention a possible argument in the most skeletal way, leaving

the court to do counsel's work, create the ossature for the

argument, and put flesh on its bones.”).

We next take up the government's challenge to the

District Court's refusal, at sentencing, to apply a twolevel enhancement because Cadden's “offense involved ...

the conscious or reckless risk of death or serious bodily

U.S.S.G. § 2B1.1(b)(16). 13 The District Court

injury.”

reasoned that this enhancement was only based on “the

offense of conviction” and *34 not “on acquitted or even

relevant conduct.” Thus, to find the enhancement applicable,

the District Court concluded that, given the nature of the

offense of mail fraud, it would have to find that Cadden had

committed second-degree murder, and although Cadden may

have been “negligen[t]” or “even gross[ly] negligen[t],” the

evidence did not “c[o]me close to establishing ... that he acted

with [the] state of knowledge that a conviction for seconddegree murder under relevant state law requires.”

[24] The government now challenges that determination

on the ground that the District Court incorrectly focused

on whether Cadden had committed second-degree murder,

instead of whether his “relevant conduct” in the commission

of his mail fraud offense carried with it the requisite risk of

death under the Guidelines. See

We agree.

U.S.S.G. § 2B1.1(b)(16).

For the purpose of determining whether Cadden's “offense”

§ 2B1.1(b)(16), the

involved the requisite risk under

District Court should have looked at not only Cadden's

“offense[s] of conviction” -- which included mail fraud

and racketeering premised on mail fraud -- but also at all

of his “relevant conduct” as defined by the Guidelines.

Id. § 1B1.1 cmt. n.1(I) (defining “offense”). Under the

Guidelines, the “relevant conduct” for which Cadden is held

accountable includes “all acts and omissions committed,

aided, abetted, counseled, commanded, induced, procured, or

willfully caused by the defendant ... that occurred during the

commission of the offense of conviction.” Id. § 1B1.3(a)(1)

(A). The Guidelines base a defendant's sentence on a range of

actions that may extend beyond those the government must

prove to secure a conviction because “[t]he focus [of the

Sentencing Guidelines] is on the specific acts and omissions

for which the defendant is to be held accountable ... rather

than on whether the defendant is criminally liable for an

offense ....” Id. § 1B1.3 cmt. n.1.

Thus, if Cadden's acts during the commission of mail fraud

-- for instance, by directing the shipment of medications he

knew to be substandard and highly dangerous in consequence

-- “involved ... the conscious or reckless risk of death or

serious bodily injury,”

id. § 2B1.1(b)(16), then the District

Court should have found that the enhancement applied. 14

That is true even if, as the District Court apparently found,

his “offense of conviction” did not itself inherently involve

that risk.

We also cannot accept Cadden's contention that we may

treat the District Court as having concluded that the relevant

conduct associated with the mail fraud did not involve a

“conscious” or “reckless” risk of death or serious bodily

injury. The District Court did state that the evidence did

not establish that Cadden had the requisite mens rea for

second-degree murder. But, in so concluding, the District

Court stated that Cadden did not act “with actual knowledge

that his acts, or more accurately his failures to act, were

almost certain to result in the death of another.” (emphases

added). As the government points out, the District Court in

doing so at no point directly addressed in sentencing whether

a preponderance of the evidence nonetheless established

that Cadden's relevant conduct associated with the mail

fraud involved a “conscious or reckless risk of death or

serious bodily injury.”

U.S.S.G. § 2B1.1(b)(16); Cf.

United States v. Lucien, 347 F.3d 45, 56-57 (2d Cir. 2003)

(concluding *35 that a conscious risk is one “known to the

defendant” while a reckless risk is “the type of risk that is

obvious to a reasonable person and for which disregard of

said risk represents a gross deviation from what a reasonable

person would do”). To be sure, the District Court found that

the government was not “close” to showing the mens rea

required for second-degree murder. But, here, too, the District

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Court did so without directly referencing the Guidelines

standard in connection with Cadden's relevant conduct in

committing the mail fraud.

Thus, we remand for the District Court to do what it has

not yet done: directly address the narrow issue of whether

Cadden's actions warranted the application of the riskof-death enhancement based on the appropriate mens rea

standard and scope of relevant conduct. In doing so, we pass

no judgment on whether Cadden did in fact possess the state

of mind necessary for the enhancement to apply, or whether

any other barriers to the application of the enhancement might

exist. 15

We come, then, to the government's last challenge to the

sentence imposed by the District Court. It concerns another

enhancement that the District Court declined to apply: the

“vulnerable victim” enhancement. This enhancement bumps

up the offense level by two “[i]f the defendant knew or

should have known that a victim of the offense was a

U.S.S.G. § 3A1.1(b)(1), and raises it

vulnerable victim,”

by another two if “the offense involved a large number of

[such] vulnerable victims,”

id. § 3A1.1(b)(2).

The District Court declined to apply the enhancement. It ruled

that, for the purposes of the Guidelines provision in question,

“the victims at issue, given the nature of the jury's verdict,

were the purchasers of the drugs,” rather than the patients who

received the drugs.

The Guidelines do not define the word “victim” as it is used

in the vulnerable victim enhancement. But, they do make

clear that a “victim” means “a person ... who is a victim

of the offense of conviction and any conduct for which the

defendant is accountable under § 1B1.3 (Relevant Conduct).”

U.S.S.G. § 3A1.1 cmt. n.2.

[25] We have previously read this language to indicate that

“[t]o come within the guidelines' definition” of “victim,” “one

need not be a victim of the charged offense so long as one

is a victim of the defendant's other relevant conduct.” United

States v. Souza, 749 F.3d 74, 86 (1st Cir. 2014). As we have

previously explained, Cadden's “relevant conduct” included,

among other things, any actions that he took to direct the

shipment of contaminated medications to hospitals during the

commission of mail fraud. 16 The “victims” of that conduct

could plausibly include the patients who foreseeably would

use those contaminated medications. Thus, we agree *36

with the government that the District Court committed an

error of law in holding that, due to the nature of Cadden's

convictions, the reach of the vulnerable victim enhancement

is necessarily limited to those “victims” who were defrauded

-- namely, the customers of NECC itself. See United States

v. Sidhu, 130 F.3d 644, 655 (5th Cir. 1997) (“[A] physician's

patients can be victimized by a fraudulent billing scheme

directed at insurers or other health care providers.”).

Cadden argues that, in any event, we may affirm the

District Court's determination on the alternative ground

that the patients, even if “victims,” were not “vulnerable.”

But the District Court determined that the patients were

necessarily not “victims” at all. So, it has not yet passed

on the question of their vulnerability. We thus decline to

do so in the first instance. Instead, we leave it for the

District Court to determine, on remand, whether, for example,

Cadden is comparably situated to a defendant who “market[s]

an ineffective cancer cure” and who would warrant the

enhancement,

U.S.S.G. § 3A1.1 cmt. n.2, and what effect,

if any, the presence of the intermediary medical facilities who

purchased the medications on behalf of their patients should

have on the assessment of the patients' vulnerability.

Because we find that the District Court's reasons for declining

to apply two enhancements were legally erroneous, the

District Court may on remand find that the enhancements

should have been applied and that the Guidelines range it

originally calculated requires modification. If it updates the

Guidelines range to account for the application of one or

both of these enhancements, it should of course consider

the parties' updated arguments for what Cadden's sentence

should be in light of the modified range. The District Court

may not, however, reconsider on remand other enhancements

or aspects of its initial sentencing calculation beyond those

issues narrowly required by its reconsideration of the two

enhancements that we have identified.

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We turn, finally, to the challenges that are before us that

concern the forfeiture order of $7,545,501 that the District

18 U.S.C. § 1963(a)(3).

Court imposed pursuant to

That provision requires defendants convicted of racketeering

offenses to forfeit “any property constituting, or derived from,

any proceeds which the person obtained, directly or indirectly,

from racketeering activity.” The District Court determined

the forfeiture amount based on “the total amount of NECC

proceeds that were paid to Barry Cadden personally during

the life of the racketeering enterprise, that is, from March 26,

2010 to October 31, 2012.”

[26] We start with the government's challenges and then

consider Cadden's. “[W]e review pure ‘questions of law

de novo, but, to the extent factual issues are intermingled,

consider mixed questions of law and fact under the more

deferential clear error standard.’ ”

United

States

v. Ponzo, 853 F.3d 558, 589 (1st Cir. 2017) (quoting

United

States

- v. Ferrario-Pozzi, 368 F.3d 5, 8 (1st Cir.

2004)).

[27] Cadden contends that the District Court erred in

finding that all NECC proceeds obtained during the relevant

period were “obtained” “from racketeering activity.” When

property interests are “in a” racketeering enterprise, they are

subject to forfeiture “in their entirety, regardless of whether

some portion of the enterprise *37 is not tainted by the

racketeering activity.”

United States v. Angiulo, 897 F.2d

1169, 1211 (1st Cir. 1990). Property interests “outside the

enterprise,” on the other hand, are “subject to a rule of

proportionality,” and are only forfeitable “to the extent they

are tainted by the racketeering activity.”

Id. at 1211-12.

We have held that “proceeds or profits” of racketeering

activity are “outside interests ... subject to a rule of

proportionality.” 17

Id. at 1212. Thus, their treatment “is

in contrast to the treatment of interests in an enterprise, which

are forfeitable regardless of percentage of taint.”

Id.

The government suggests, based on

Angiulo, that

Cadden's proceeds may constitute interests in the racketeering

enterprise rather than interests outside of it. But, the

government offers no support for this broad definition

of interests in an enterprise, particularly given that the

government's authority to seek and obtain “interests in” the

enterprise arises from a distinct statutory provision that the

government did not rely on in seeking a forfeiture order

18 U.S.C. § 1963(a)(2)(A) (requiring

against Cadden. See

the forfeiture of “any interest in ... any enterprise which

the person has established, operated, controlled, conducted,

or participated in the conduct of, in violation of

section

1962”). Nor does the government explain how we may ignore

the clear command of

Angiulo that “proceeds ... are only

subject to forfeiture to the extent they are tainted by the

racketeering activity.”

897 F.2d at 1212.

In the alternative, the government contends as follows. Even

if a proportionality rule should have been applied, as Cadden

argues, it was harmless not to apply it. The government argues

that all the medications that NECC manufactured during the

relevant period were subject to forfeiture, as they were all

tainted by racketeering activity.

[28] In making this argument, the government contends

that all of NECC's medications were produced fraudulently

and that, even if they were not, customers would not have

purchased the legitimately produced medications had they

known about NECC's history of fraud. As we have already

explained, however, the District Court supportably found at

sentencing that the government failed to prove that all of

NECC's sales over the period in question were generated

by fraud. The government likewise presents no authority

for the proposition that profits from non-fraudulent sales

of NECC could be considered “proceeds which [a] person

obtained, directly or indirectly, from racketeering activity.”

18 U.S.C. § 1963(a)(3). Given that these profits were not

obtained from the racketeering activity of mail fraud that

formed the basis of Cadden's convictions, *38 but rather

from legitimate, non-racketeering activity, we see no reason

to adopt the government's expansive reading of the forfeiture

statute. Nor did the government develop an argument below

for why all the proceeds of Cadden's from NECC were

tainted by racketeering activity, and thus the District Court

made no findings on this precise point. Accordingly, while

we do not make a finding about what specific amount of

Cadden's proceeds were tainted by racketeering activity, we

cannot agree with the government on the basis of this record

that all of them were, and we are thus unable to affirm the

District Court on this alternative basis. We therefore vacate

and remand for the District Court to assess in the first instance

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the arguments of Cadden and the government, based on this

record, about the portion of Cadden's earnings from NECC

over the relevant time period that were tainted by racketeering

activity and therefore subject to forfeiture.

Next, we consider Cadden's contention that the District Court

erred in calculating the forfeiture amount without deducting

the amount in taxes that he paid on those proceeds. We

disagree.

[29]

Finally, Cadden points to Seventh Circuit cases that, he

contends, “used a net proceeds approach when the relevant

figures were readily ascertainable.” See

United States

v. Genova, 333 F.3d 750, 761 (7th Cir. 2003) (defining

“proceeds” as “profits net of the costs of the criminal

business”);

United States v. Masters, 924 F.2d 1362,

1369-70 (7th Cir. 1991) (“[T]he proceeds to which the statute

refers are net, not gross, revenues ....”). We have previously

recognized, however, that in this respect, the Seventh Circuit's

precedent is in conflict with our own. See

United States v.

Iacaboni, 363 F.3d 1, 4 (1st Cir. 2004). Because these cases

reach a different conclusion than what our own precedent

[30] In general, the word “proceeds” in the forfeiture requires, they are of no assistance to Cadden. 18

United

statute refers to gross proceeds, not net profits.

States v. Hurley, 63 F.3d 1, 21 (1st Cir. 1995). In addition,

per the statute, “property should be regarded as ‘obtained’ ...

when it has merely been held in custody” before being

“passed along to its true owner.”

Id. Cadden clearly

“obtained” the amount of funds subject to forfeiture before

they were subject to taxation. We thus do not see why that

gross amount is not subject to forfeiture, even though the

amount he obtained was itself taxable.

Cadden does argue that the ease of calculating Cadden's net

proceeds, because of the clear evidence of his tax liability,

renders this case one in which his forfeiture should be based

on net proceeds instead of gross proceeds. But,

Hurley

did not merely establish a fallback procedure for estimating

the value of proceeds in the face of a messy factual record. It

purported to interpret the words “proceeds” and “obtain[ ]” in

a statute,

18 U.S.C. § 1963. See

63 F.3d at 21. Thus,

while

Hurley noted the concern that net proceeds would

be difficult to calculate, we read it to have based its reading

of the statute on other rationales -- including the legislative

history indicating Congress's desire to give the statute a broad

reach, among others -- that are no less relevant when applied

to the circumstances of Cadden's gains. See

63 F.3d

at 21; see also

Clark v. Martinez, 543 U.S. 371, 380,

125 S.Ct. 716, 160 L.Ed.2d 734 (2005) (“It is not at all

unusual to give a statute's ambiguous language a limiting

construction called for by one of the statute's applications,

even though other of the statute's applications, standing alone,

would not support the same limitation. The lowest common

denominator, as it were, must govern.”).

*39 3.

The government, for its part, takes issue with another

aspect of the District Court's forfeiture calculation. Cadden's

wife Lisa, like Cadden, was a part-owner of NECC, and,

like Cadden, she received proceeds in consequence of her

ownership stake in the company. These proceeds were

deposited in a bank account that Lisa Cadden jointly

controlled with Cadden. The District Court declined to require

Cadden to forfeit the amounts attributable to his wife's

earnings, however, reasoning that the sought-after forfeiture

order would impermissibly claw back from Cadden gains that

were properly attributable to someone else -- his wife.

[31] So long as the proceeds in question were tainted by

racketeering activity, we agree with the government that the

forfeiture amount should not have been limited to the NECCderived proceeds that were attributable to Barry rather than

Lisa Cadden. While Barry Cadden may not have personally

earned any of the tainted proceeds stemming from his

wife's involvement in NECC, he “obtained” them “from

racketeering activity” within the meaning of

1963(a)(3).

18 U.S.C. §

The key preliminary question is whether Cadden “obtained”

the NECC earnings that Lisa Cadden deposited in their joint

account at all. And, on this point, we see little doubt. The

Supreme Court has noted that, during the time period in which

§ 1963(a)(3) was enacted, “the verb ‘obtain’ was defined

as ‘to come into possession of’ or to ‘get or acquire,’ ”

and “[t]hat definition persists today.”

Honeycutt v. United

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States, ––– U.S. ––––, 137 S. Ct. 1626, 1632, 198 L.Ed.2d

73 (2017) (quoting Random House Dictionary of the English

Language 994 (1966)). And, we have held that a person

obtains property even when the property is merely “held

in custody” before being “passed along to its true owner.”

of this, and he does not contend otherwise. Thus, it was a

direct and foreseeable consequence of Barry Cadden's mail

fraud activity that some NECC earnings attributable to that

fraud would pass on to Lisa Cadden and into the bank account

she shared with him, such that any proximate cause limitation

Hurley, 63 F.3d at 21. Given Barry Cadden's status as

a party to the joint account he shared with his wife, he had

“the right to withdraw all the funds” from the account, “or any

portion of them,” and therefore could “effectively exercise

control over the entire interest, or any part of it, and divest

imposed by the forfeiture statute is satisfied here. See CSX

Transp., Inc. v. McBride, 564 U.S. 685, 701, 131 S.Ct. 2630,

180 L.Ed.2d 637 (2011) (discussing different definitions of

proximate cause).

totally or partially, the interest of” his wife.

United States

v. U.S. Currency, $81,000.00, 189 F.3d 28, 34 (1st Cir. 1999)

(quoting

Heffernan v. Wollaston Credit Union, 30 Mass.

App. Ct. 171, 567 N.E.2d 933, 937 (1991)). 19 This was more

than sufficient for acquisition purposes.

It is true that a racketeering offender is not required to forfeit

all of the “proceeds” he “obtained,” but only those that he

“obtained, directly or indirectly, from racketeering activity.”

Cadden's arguments to the contrary are not persuasive. He

contends that a party to a joint account does not necessarily

“own” the account. But, the test is whether he “obtained” the

funds, and, as noted, a party does not need to have owned

property to have obtained it for the purposes of

(3). See

§ 1963(a)

Hurley, 63 F.3d at 21. He also contends that, in

line with

Honeycutt, forfeiture under

§ 1963(a)(3) “is

limited to property the defendant himself actually acquired

18 U.S.C. § 1963(a)(3). It is also true that the racketeering

activity itself must have led to the acquisition of the proceeds.

as the result of the crime.”

137 S. Ct. at 1635. Because

Lisa Cadden was an “innocent” party, he argues that it would

unfair to penalize him on the basis of her earnings. Even

See

Angiulo, 897 F.2d at 1213 (noting that “defendants'

racketeering *40 activities must be shown to be ‘a cause

in fact of the acquisition or maintenance of [forfeitable]

assuming that this holding of

Honeycutt applies to

1963(a) -- and is not limited to the statute at issue there,

interests,’ ” including proceeds (quoting

United States v.

Horak, 833 F.2d 1235, 1243 (7th Cir. 1987))). But, even

accepting, favorably to Cadden, that the forfeiture statute

imposes not merely a but-for causation requirement but a

proximate causation requirement as well, we do not see how

this additional limitation would support the District Court's

holding.

The District Court has not yet determined what amount of

the NECC proceeds Lisa Cadden obtained were tainted by

racketeering activity -- an issue that, as noted, it will need to

resolve on remand -- but we may assume that at least some of

her earnings can be traced to fraudulent NECC sales. Insofar

as that is the case, the record shows that Cadden would have

been well aware that the mail fraud would generate profits

that would accrue to him via his wife's ownership share in

NECC. Lisa Cadden had been a co-owner of the company

since its inception in 1998, and the record shows that over

that time period, she deposited the shareholder distributions

that she received into bank accounts she jointly owned with

her husband. There is little doubt that, as her husband and

the head of NECC, Barry Cadden would have been aware

21 U.S.C. § 853 -- it provides no support for Cadden's

position, however, because as a party to the jointly controlled

account, Cadden himself “actually acquired” the funds at

issue. Because we hold that Cadden “obtained” the NECC

“proceeds” that Lisa Cadden deposited in the couple's joint

bank account, we remand for the District Court to consider

what amount of Lisa Cadden's earnings should be included in

Barry Cadden's forfeiture order because they were tainted by

racketeering activity.

VIII.

This case was extremely complex. The District Court was

faced with a number of novel issues and emotionally fraught

evidence concerning the most serious type of allegations.

We commend its handling of this difficult case, and, for the

reasons stated above, affirm Cadden's convictions, though

we vacate and remand Cadden's sentence, and vacate and

remand the forfeiture order entered against him.

A-030

United States v. Cadden, 965 F.3d 1 (2020)

RICO Bus.Disp.Guide 13,365, 112 Fed. R. Evid. Serv. 1703

All Citations

965 F.3d 1, RICO Bus.Disp.Guide 13,365, 112 Fed. R. Evid.

Serv. 1703

Footnotes

The federal criminal statute outlining the crime of mail fraud reads as follows:

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 the purpose of

executing such scheme or artifice or attempting so to do, places in any post office or authorized depository

for mail 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

interstate carrier, or takes or receives therefrom, any such matter or thing, or knowingly causes to be

delivered by mail or such carrier according to the direction thereon, or at the place at which it is directed

to be delivered by the person to whom it is addressed, any such matter or thing, shall be fined under this

title or imprisoned not more than 20 years, or both.

18 U.S.C. § 1341.

The provision of the racketeering statute that Cadden was alleged to have violated states that

[i]t shall be unlawful for any person employed by or associated with any enterprise engaged in, or the

activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in

the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful

debt.

18 U.S.C. § 1962(c).

The racketeering conspiracy statute states that “[i]t shall be unlawful for any person to conspire to violate any

of the provisions of subsection (a), (b), or (c) of this section.”

to have conspired to violate

This text is long and has been trimmed here. Open the source document for the complete record.

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