Petition for Writ of Certiorari — Randell v. United States

() | Supreme Court, U.S.

No. - FILED

OCT 25 1985

IN THE

JOSEPH F. —s JR.

Supreme Court of the United |Siated“"<

October Term, 1985

JACK RANDELL, PATRICIA RANDELL,

a/k/a ““PATRICIA PEARL”, and

MARVIN MANSFIELD,

Petitioners,

against

UNITED STATES OF AMERICa,

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Respondent.

Stotnick & Cutter, P.C.

Marx M. Baker

Of Counsel

Barry Ivan SLoTNICK

Attorney for Petitioner

Jack Randell

Bruce Cuter

Attorney for Petitioner

Patricia Randell

225 Broadway, Suite 2100

New York, New York 10007

(212) 964-3200

GerraLp M. Lasuse

Attorney for Petitioner

Marvin Mansfield

401 Broadway, Suite 1808

New York, New York 10013

(212) 966-5897

AD abt

emt Ph Aa epchon all NS oe

Question Presented for Review

In a prosecution for the specific intent crimes of mail

and wire fraud, where the defense was that petitioners

always believed in good faith that the purported ‘‘victim”’

pharmaceutical companies had been aware of the true

material facts allegedly misrepresented, yet in concert with

petitioners had willingly violated the Robinson-Patman

Act, did the trial court commit reversible error and preclude

any chance of acquittal by effectively instructing the jury,

under strong protest, that regardless of petitioners’ beliefs,

if the companies’ high officials had not specifically made

such Robinson-Patman violations into company policy, con-

victions must be returned?

IIt

TABLE OF CONTENTS

Question Presented for Review

Table of Authorities

Parties to the Proceedings Below

Jurisdiction

Statutes Involved

SE ES occ cs sieccss cvicocceusecccccens leech

A. Indictment and Trial... gt Prial dein b)

I I oc oss sasvasoncesacasmnnvennes

C. Post-Verdict Proceedings .............................. :

MS MII oa Sevens kvcisacnnessass eR ns bate

Reasons for Allowance of the Writ

SLES eS ie ee

APPENDICES

Appendix A—Order eae! Judgments of Con-

Se dN a awactiins

Appendix B—Order Denying Petition for Re-

a Ra ES A RAMEE 8 Reese BO ee EON

Appendix C—Excerpts from Court’s Charge ......

Appendix D—Excerpts from Exceptions to Charge

Appendix E—Affidavit of Charles L. Weintraub,

PAGE

lV

TABLE OF AUTHORITIES

PAGE

Cases:

Steiger v. United States, 373 F. 2d 133 (10th Cir.

WN i ee eee)

United States v. Andreadis, 366 F. 2d 423 (2nd Cir.

1966), cert. denied, 385 U.S. 1001 (1967) eee |

United States v. Barta, 635 F. 2d 999 (2nd Cir. 1980),

cert. denied, 450 U.S. 998 (1981) 17

United States v. Bohonus, 628 F. 2d 1167 (9th Cir. ),

cert. denied, 447 U.S. 928 (1980) . 18

United States v. Cederquist, 641 F. 2d 1347 (9th Cir.

WO Th. haces 18

United States v. Gamble, 737 F. 2d 853 (10th Cir.

lie nN ea en ee 18

United States v. Gelb, 700 F. 2d 875 (2nd Cir. ‘ cert.

Gemed, 104 B. Ct. 167 (39GB) .........cc...00.....5cn 17, 18

United States v. London, 753 F. 2d 202 (2nd Cir.

EER Re Beh 9s b= AR tN om lor ROE 17,18

United States v. Pearlstein, 576 F. 2d 531 (3rd Cir.

NR ee ere ee eter an ee ae 17

United States v. Regent (ffice Supply Co., 421 F. 2d

1174 (2nd Cir. 1970) ........ a 17

United States v. Siegel, 717 F. 2d 9 ( ond Cir. 1983) 17

United States v. Williams, 728 F. 2d 1402 (11th Cir.

earl sun cting iad selec ieancact raven ee uc ees: sag

Statutes:

eS ia. facaea exch capaanaal 2, et seq., 9

RE RRR ee Yave Pen aN 6, 9

Bk ee > Se erener Ieee eee eae SMe Ss cc tees

I eo oi 22s cass ak bial Coa aaabealc baat aa denane ee 7,9

Be RG 6 io coapis cnceonsinhovasss si nbinbalan acta ncaa 8,9

28 U.S.C. § 1254(1) ....... REPS Fee ELIAS ogre Ri 2,8

Fe I TE oo ae 8, 14, 15

Miscellaneous:

Sup. Ct. Rules, Rule 17.1 (a) .................cccssssseeseerseeseensen 19

——

No.

IN THE

Supreme Court of the United States

October Term, 1985

Jack Ranpei, Patricia RanpeL, a/k/a ‘‘ Patricia PEARL”’,

and Marvin MANSFIELD,

Petitioners,

against

Unirep States or AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO

THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Parties to the Proceedings Below

JacK RanpeELx, Patricia RanpeLtt and Marvin Mans-

FIELD* petition for a writ of certiorari to review an order of

the United States Court of Appeals for the Second Circuit,

which affirmed respective judgments of conviction entered

in the United States District Court for the Southern District

of New York (Hon. Constance Baker Motley, Chief Judge).

* Codefendants Jack Schneider and Louis A. Garrvto were also

named in the indictment. Schneider was severed for health reasons

and was later granted a nolle prosequi order. Garruto, who was also

convicted, elected not to appeal.

Jurisdiction

The unpublished summary order of the Court of Ap-

peals affirming the judgments of conviction was entered

on July 22, 1985 (Appendix ‘‘A’’). The order of the Court

of Appeals denying the petition for rehearing was entered

on August 27, 1985 (Appendix ‘‘B’’).

Jurisdiction is conferred upon this Court pursuant to

28 U.S.C, § 1254(1).

Statutes Involved

15 U.S.C. §13. Discrimination in price, services, or facii-

ities—Price; selection of customers

(a) It shall be unlawful for any person engaged in com-

merece, in the course of such commerce, either directly or

indirectly, to discriminate in price between different pur-

chasers of commodities of like grade and quality, where

either or any of the purchases involved in such dise:imina-

tion are in commerce, where such commodities are sold for

use, consumption, or resale within the United States or any

Territory thereof or the District of Columbia or any insular

possession or other place under the jurisdiction of the

United States, and where the effect of such discrimination

may be substantially to lessen competition or tend to create

a monopoly in any line of commerce, or to injure, destroy,

or prevent competition with any person who either grants

or knowingly receives the benefit of such discrimination, or

with customers of either of them: Provided, That nothing

herein contaired shall prevent differentials which make

only due allowance for differences in the cost of manufac-

. |

ture, sale, or delivery resulting from the differing methods

or quantities in which such commodities are to such pur-

chasers sold or delivered: And provided, however, That the

Federal Trade Commission may, after due investigation

and hearing to all interested parties, fix and establish

quantity limits, and revise the same as it finds necessary, as

to particular commodities or classes of commodities, where

it finds that available purchasers in greater quantities are

so few as to render differentials on account thereof unjustly

discriminatory or promotive of monopoly in any line of

commerce, and the foregoing shall then not be construed to

permit differentials based on differences in quantities

greater than those so fixed and established: And provided

further, That nothing herein contained shall prevent per-

sons engaged in selling goods, wares, or merchandise in

commerce from selecting their own customers in bona fide

transactions and not in restraint of trade: And provided

further, That nothing herein contained shall prevent price

changes from time to time where in response to changing

conditions affecting the market for or the marketability of

the goods concerned, such as but not limited to actual or

imminent deterioration of perishable goods, obsolescence of

seasonal goods, distress sales under court process, or sales

in good faith in discontinuance of business in the goods

concerned.

Burden of rebutting prima-facie case of discrimination

(b) Upon proof being made, at any hearing on a com-

plaint under this section, that there has been discrimination

in price or services or facilities furnished, the burden of

rebutting the prima-facie case thus made by showing justi-

fication shall be upon the person charged with a violation

q

of this section, and unless justification shall be affirmatively

shown, the Commission is authorized to issue an order ter-

minating the discrimination: Provided, however, That

nothing herein contained shall prevent a seller rebutting

the prima-facie case thus made by showing that his lower

price or the furnishing of services or facilities to any pur-

chaser or purchasers was made in good faith to meet an

equally low price of a competitor, or the services or fa-

cilities furnished by a competitor.

Payment or acceptance of commission, broerage or other compensation

(c) It shall be unlawful for any per on engaged in com-

merce, in the course of such commerce, to pay or grant, or

to receive or accept, anything of value as a commission,

brokerage, or other compensation, or any allowance or dis-

count in lieu thereof, except for services rendered in con-

nection with the sale or purchase of goods, wares, or mer-

chandise, either to the other party to such transaction or to

an agent, representative, or other intermediary therein

where such intermediary is acting in fact for or in behalf,

or is subject to the direct or indirect control, of any party

to such transaction other than the person by whom such

compensation is so granted or paid.

Payment for services or facilities for processing or sale

(d) It shall be unlawful for any person engaged in com-

merce to pay or contract for the payment of anything of

value to or for the benefit of a customer of such person in

the course of such commerce as compensation or in consid-

eration for any services or facilities furnished by or

through such customer in connection with the processing,

5

handling, sale, or offering for sale of any products or com-

modities manufactured, sold, or offered for sale by such

person, unless such payment or consideration is available

on proportionally equal terms to all other customers com-

peting in the distribution of such products or commodities.

Furnishing services or facilities for processing, handling, etc.

(e) It shall be unlawful for any person to diserim-

inate in favor of one purchaser against another pur-

chaser or purchasers of a commodity bought for resale,

with or without processing, by contracting to furnish or

furnishing, or by contributing to the furnishing of, any

services or facilities connected with the processing,

handling, sale, or offering for sale of such commodity so

purchased upon terms not accorded to all purchasers on

proportionally equal terms.

Knowingly inducing or receiving discriminatory price

(f) It shall be unlawful for any person engaged in com-

merce, in the course of such commerce, knowingly to induce

or receive a discrimination in price which is prohibited by

this section.

15 U.S.C. § 13a. Discrimination in rebates, discounts, or

advertising service charges; underselling

in particular localities; penalties

It shall be unlawful for any person engaged in com-

merce, in the course of such commerce, to be a party to, or

assist in, any transaction of sale, or contract to sell, which

discriminates to his knowledge against competitors of the

purchaser, in that, any discount, rebate, allowance, or ad-

6

vertising service charge is granted to the purchaser over

and above any discount, rebate, allowance, or advertising

service charge available at the time of such transaction to

said competitors in respect of a sale of goods of like grade,

quality, and quantity; to sell, or contract to sell, goods in

any part of the United States at prices lower than those

exacted by said person elsewhere in the United States for

the purpose of destroying competition, or eliminating a

competitor in such part of the United States; or, to sell, or

contract to sell, goods at unreasonably low prices for the

purpose of destroying competition or eliminating a com-

petitor.

Any person violating any of the provisions of this sec-

tion shall, upon conviction thereof, be fined not more than

$5,000 or imprisoned not more than one year, or both.

15 U.S.C. §13c. Exemption of non-profit institutions from

price discrimination provisions

Nothing in sections 13 to 13b and 21a of this title, shall

apply to purchases of their supplies for their own use by

schools, colleges, universities, public libraries, churches,

hospitals, and charitable institutions not operated for

profit.

18 U.S.C. § 1341. Frauds and swindles

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, repre-

sentations, or promises, or to sell, dispose of, loan, ex-

change, alter, give away, dictribute, supply, or furnish or

procure for unlawful use any counterfeit or spurious coin,

7

obligation, security, or other article, or anything repre-

sented to be or intimated or held out to be such counterfeit

or spurious article, 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 takes or receives therefrom, any such matter or

thing, or knowingly causes to be delivered by mail accord-

ing to the direction thereon, or at the place at which it is

directed to be delivered by the person to whom it is ad-

dressed, any such matter or thing, shall be fined not more

than $1,000 or imprisoned not more than five years, or both.

18 U.S.C. § 1343. Fraud by wire, radio, or television

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, repre-

sentations, or promises, ransmits or causes to be trans-

mitted by means of wire, radio, or television communica-

tion in interstate or foreign commerce, any writings, signs,

signals, pictures, or sounds for the purpose of executing

such scheme or artifice, shall be fined not more than $1,000

or imprisoned not more than five years, or both.

18 U.S.C. § 1962. Prohibited activities

(c) It 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 racketeer-

ing activity or collection of unlawful debt.

8

26 U.S.C. § 7201. Attempt to evade or defeat tax

Any person who willfully attempts in any manner to

evade or defeat any tax imposed by this title or the pay-

ment thereof shall, in addition to other penalties provided

by law, be guilty of a felony and, upon conviction thereof,

shall be fined not more than $10,000, or imprisoned not more

than 5 years, or both, together with the costs of prosecution.

28 U.S.C. § 1254. Courts of Appeals; certiorari appeal;

certified questions

Cases in the courts of appeals may be reviewed by the

Supreme Court by the following methods:

(1) By writ of certiorari granted upon the petition of

any party to any civil or criminal case, before or

after rendition of judgment or decree.

% * *

Fed. R. Cr. P. Rule 33. New Trial

The court on motion of a defendant may grant a new

trial to him if required in the interest of justice. If trial

was by the court without a jury the court on motion of a

defendant for a new trial may vacate the judgment if en-

tered, take additional testimony and direct the entry of a

new judgment. A motion for a new trial based on the.

ground of newly discovered evidence may be made only be-

fore or within two years after final judgment, but if an

appeal is pending the court may grant the motion only on

remand of the case. A motion for a new trial based on any

other grounds shall be made within 7 days after verdict or

finding of guilty or within such further time as the court

may fix during the 7-day period.

.©

Statement of the Case

A. Indictment and Trial

Petitioners and their two co-defendants were jointly

charged in a multi-count indictment alleging mail fraud (18

U.S.C. § 1341), Wire Fraud (18 U.S.C. § 1343) and one

count of violating the Racketeer Influenced and Corrupt

Organizations Act (RICO) (18 U.S.C. § 1962 [c]) which,

for the most part, was based on those alleged frauds, in

addition to alleged violations of the New York state bribery

statutes. Petitioners Jack RanpELL and Marvin MansFIELD

were each also indicted and later convicted of several counts

of tax evasion (26 U.S.C. § 7201).

In substance, the indictment charged petitioners along

with their co-defendants with participating in a scheme

through which several named pharmaceutical companies

were alleged to have been fraudulently induced into selling

pharmaceutical products at discount prices to various en-

tities controlled by petitioner Jack Ranpgeuu.* According

to the indictment, such entities were fraudulently repre-

sented to nave been charitabie or not-for-profit institutions

which, if true, would have permitted special pricing under

the specific exceptions contained within the Federal anti-

trust laws, the Robinson-Patman Act (15 U.S.C. § 13, et

seq.).

In essence, that act provides that it is unlawful for a

seller of merchandise to discriminate in price between pur-

* There were essentially two alleged schemes. One dealt with the

alleged fraudulent use of facilities purportedly associated with the

New York City Health and Hospitals Corporation, and the other

with the United Cancer Institute (UCI).

10

chasers of like products, where such discrimination would

substantially lessen competition. An exception to the

Robinson-Patman Act exists, however, for purchasers that

are either ‘‘charitable institutions’’ or ‘‘not-for-profit or-

ganizations’’ where the merchandise is purchased for use

by the organization and not for resale. Accordingly, as to

the pharmaceutical industry, charitable, governmental, or

not-for-profit organizations are entitled to receive substan-

tial discounts from manufacturers, who, as the evidence at

trial established, are nevertheless eager to sell vast quan-

tities of their products to these organizations, despite the

greatly reduced price and despite what at first glance may

appear to be a substantially reduced margin of profit.

In light of these realities, it became a well known and

widely practiced circumvention of the Robinson-Patman

Act—of which, the government argued, the petitioners took

advantage in order to carry out their alleged fraudulent

scheme—for a purchaser to represent to manufacturers that

it is entitled to special pricing as a not-for-profit organi-

zation which is purchasing the products for its own usage,

and not for resale. On the other hand, by that same prac-

tice, it was contended and proved by petitioners that the

drug companies, who in fact are injured by the Robinson-

Patman Act’s restrictions, willingly sell at discount to

purchasers such as petitioners under a charade, all the

time knowing that petitioners and others like them—of

whom there are many—will thereafter resell the products

(or ‘‘divert’’ them) back into the marketplace at large

profits. The reason for the manufacturers’ complicity, it

was shown, was that by this arrangement the companies

are able to unload heavy inventories of products that,

inter alia, lost their domination of the market and hence

i ney Beekiaws ons Nast

con

11

their competitive edge by virtue of their going off patent,

thereby opening the way for other and much cheaper generic

brands.

In the course of pre-trial proceedings and all through

the six week trial, it was continually stated to the court

that the nature of the defense would be that the ‘‘victim’’

pharmaceutical companies had always been aware of the

petitioners’ true status as wholesalers, as opposed to chari-

table institutions, when they had agreed to sell their prod-

ucts. It was thus continually contended that petitioners

always believed that the sales personnel with whom they

had dealt, as well as the companies whom such personnel

represented, had always known that petitioners were profit

making diverters. Hence, there was no fraud and there

were no ‘‘victims’’, but only a mutually satisfactory ar-

rangement whereby the manufacturers were always know-

ing and willing participants in the scheme charged—and

thereby co-conspirators with petitioners in merely violating

Robinson-Patman— as a means through which all concerned

were able to circumvent the anti-trust law to their respective

advantages.

Through cross-examination of all the companies’ repre-

sentatives and the testimony of defense witnesses, peti-

tioners continually demenstrated to the jury what their

beliefs had been based upon. Thus, it was brought out at

the trial that diversion was a wide-spread and rampant

practice in the industry; the pharmaceutical companies

greatly benefited from such resales since diverters provided

markets that otherwise might not exist; petitioner Jack

RanpDELL had been a weil-krown wholesaler/diverter who

was certainly known not to be involved in charitable insti-

12

tutions; a physical inspection of all of Jack RanpELu’s

facilities—which sales representatives who sell to charitable

institutions are required to undertake—made it readily ap-

parent that RanpeLt obviously ran profit-making opera-

tions; the absent avalanche of bureaucratic paperwork

which otherwise attends all purchases made by the New

York City Health and Hospitals Corporation—with which,

it was alleged, petitioners had misrepresented that they

had been affiliated—clearly demonstrated that petitioners

could not have been so connected; and lastly, the enormous

amounts of pharmaceutical products ordered—in one in-

stance, enough to satisfy the needs of the ‘‘State of Cali-

fornia’’—made it unmistakable that the purchases could

not have been for petitioners’ own use. In short, the de-

fense at trial, which was always known to the court, the

government and the jury, was that petitioners had harbored

no intent to defraud since, in light of all the realities at-

tending the pharmaceutical industry and discount purchases

made by true charitable institutions, petitioners had con-

tinually believed that those who represented the companies

were going along with the charade* for their own benefit,

and, hence that the companies had always been aware of

Petitioners’ true status.

B. The Court’s Charge

In line with this long established and much argued de-

fense, the Court initially instructed the jury as follows:

If you find that the manufacturers referred to in the

indictment were not intended by defendants to be the

* Each manufacturer’s representative testified at trial to the

heavy penalties that would be imposed if a company were to be

caught violating Robinson-Patman. The need for such a charade was

thus explained.

13

victims of fraud because defendants and the manufac-

turers both understood that UCI and the clinics were

not purchasing discount drugs for their own use and

that they were not bona fide non profit organizations,

then, of course, you must return a verdict for defend-

ants on the mail fraud and wire fraud counts since co-

schemers are not persons intended to be deceived.

(Appendix ‘‘C’’).

Nonetheless, in the very next breath—and with the full

understanding that petitioners’ reliance on their defense

was predicated, for the most part, on dealings with sales

representatives—the court added the following:

However, the fact that a salesman, without the knowl-

edge or approval of his company, was a co-schemer

with defendants or anyone or more of the defendants

does not make the company a co-schemer. You must

find that it was company policy, determined by those

who had power to make company policy, to violate the

Robinson-Patman Act before you may find that a com-

pany, as opposed to its salesman, was a co-schemer.

(Id.)

The defense took vociferous exception to such instruc-

tion on the ground that it was ‘‘a little bit unfair’’ to pre-

clude salesmen from binding the company for purposes of

the proferred defense, ‘‘ because nobody that came into this

courtroom, even the government’s witnesses, could right-

fully by themselves tell anyone what company policy was

or was not.’’ (Appendix ‘‘D’’ at pp. 6a, 7a). Hence, it was

argued that such a determination was never called for by

virtue of the true issues at trial.

Following deliberations by the jury, it ultimately found

petitioners guilty, inter alia, of most of the mail and tax

14

frauds charged.* As to those counts dealing with one com-

pany, however, 2.e., Astra Pharmaceuticals, the jury ac-

quitted the petitioners.

C. Post-Verdict Proceedings

Pursuant to Rule 33 of the Federal Rules of Criminal

Procedure, Petitioners sought a new trial, inter alia, based

on the alleged error of the Court’s charge regarding the in-

struction on co-schemers. In furtherance of that applica-

tion petitioners submitted an affidavit of Charles L. Wein-

traub, Esq., an attorney for severed co-defendant Jack

Schneider. Mr. Weintraub averred how, after the trial, he

had fortuitously encountered a juror in this case named

Norman Freimark. Mr. Freimark had informed him that

although the jury had credited the defense on the fraud and

RICO violations, it ‘‘was obligated to follow the Court’s in-

structions that the pharmaceutical companies were not

bound by decisions of their salesmen.’’ (Appendix ‘‘K’’,

pp. 9a-9b). The Astra acquittals were explained because

there the jury believed that high company officials had

testified.

The Court denied the motions and thereafter sentenced

petitioners as follows: Petitioner Jack RaNDELL was sen-

tenced to concurrent teras of imprisonment, the largest of

which was five years. Parricta RaANDELL and Marvin Mans-

FIELD were each sentenced to suspended terms of imprison-

ment and placed on probation. As to each, fines were im-

posed as well as judgments of forfeiture as to Jack

RanpDELL and Marvin MANSFIELD.

* Petitioner Patricia RANDELL was acquitted of those counts

arising out of the alleged fraudulent use of the name “United Cancer

Institute”.

D. The Appeal

On appeal to the United States Court of Appeals for the

Second Circuit, it was argued, inter alia, as it had been in

the earlier Rule 33 motion, that the Trial Court’s instruc-

tions to the jury on the need for a finding of co-schemer

status by high company officials literally precluded the jury

from determining the true issues at trial, viz., did Peti-

tioners’ actual beliefs as to what the companies as a whole

had known about their true status preclude Petitioners’

ability to have harbored any intent to defraud? The Court

of Appeals thereafter affirmed, stating in part that,

{t]he further contention that the charge precluded the

Jury from finding that appellants believed the com-

panies’ salesmen had authority to bind the companies

was not raised below . . . and the omission did not

amount to plain error... (Appendix ‘‘A’’, p. 2a).

A petition for rehearing which sought to demonstrate

the Court of Appeals’ misapprehension as to Petitioners’

actual contention, in that the subject charge had indeed been

appropriately protested* and that it had clearly and effec-

tively directed a verdict of guilty, was thereafter denied by

the Court on August 27th, 1985 ( Appendix ‘‘B’’).

Reasons for Allowance of the Writ

It is Petitioners’ argument in seeking a writ of cer-

tiorari from this Court, that the Second Circuit, in affirm-

ing the judgments of conviction entered by the District

Court based on verdicts which, in turn, had been ren-

* It had been earlier noted, in light of Mr. Weintraub’s attestation

that the jury had reportedly credited the defense, that even were

a specifically pointed exception lacking, the charge, which wholly

pre-empted the defense, was unquestionably plain error.

16

dered by a jury that had admittedly credited the defense

and that, under appropriate instructions, would have surely

acquitted the Petitioners, had so far departed from the ac-

cepted and usual course of judicial proceedings as to war-

rant the exerese of this Court’s discretion.

Specifically, on the record before the Court of Appeals,

Petitioners had demonstrated beyond question, from an in-

dividual juror, that the jury had indeed accepted the fact

of Petitioners’ actual beliefs and would have therefore

acquitted but for the trial judge’s charge regarding who

had authority to make company policy. The Court of Ap-

peals unmistakeably erred, therefore, in light of the actual

‘*good faith belief’’ defense to the specific-intent crimes

charged, since the challenged portion of the charge, being

totally irrelevant to the trial issues before the jury, pat

ently prejudiced Petitioners by absolutely pre-ordaining

the consequent convictions.

In this regard, it had been demonstrated on appeal, as

well as in the petition for rehearing, that the defense had

never been concerned with who bound the companies, but

only that whoever had represented the companies were

always believed by Petitioners to have been aware of

Jack RaNpDELL’s true status. Hence, the Court’s charge

on irrelevant agency principles—which would only have

been appropriate had the companies themselves been

charged as co-schemers—made it ‘‘literally impossible’’

for the jury to accept the defense based on Petitioners’

good faith beliefs alone, which had been strenuously, care-

fully and successfully demonstrated. As counsel predicted,

therefore, the charge as given, in fact ‘‘. . . directed [a]

verdict of guilty’’ (Appendix ‘‘D’’, p. 7a).

17

Clearly, in a specific-intent prosecution such as this,

where Petitioners were alleged to have defrauded certain

pharmaceutical companies, a charge that simply stated that

che same companies could not have been ‘‘co-schemers’’

absent the assent of company policy makers, was completely

alien to and destructive of the controlling issue before the

jury, viz., what did the Petitioners themselves intend, and

hence, what did they actually believe? For as the Second

Circuit itself has recently recognized, *‘only a scheme to

defraud and not actual fraud is required for conviction

under the wire and mail fraud statutes .. . United States

v. Andreadis, 366 F. 2d 423, 481 (2nd Cir. 1966), cert. de-

nied, 385 U.S. 1001 (1967)’’. United States v. London, 753

F. 2d 202, 205 (2nd Cir. 1985). What the companies, by

their policy makers, actually assented to, therefore, had no

relevance to the question of the Petitioners’ mens rea—the

sole issue for the jury to consider.

Indeed, because all that is required to be shown is that

some actual harm or injury was contemplated by the

schemer (United States v. London, supra; United States v.

Siegel, 717 F. 2d 9 [2nd Cir. 1983] ; United States v. Regent

Office Supply Co., 421 F. 2d 1174, 1180 [2nd Cir. 1970]),

where it cannot be shown that an accused either knew of an

alleged fraud, or believed that his conduct in fact amounted

to fraudulent representations, a scheme to defraud is

simply not sufficiently established. United States v. Pearl-

stein, 576 F. 2d 531 (3rd Cir. 1978). Stated differently, a

specific intent to defraud is the touchstone of an actionable

wire or mail fraud indictment. United States v. Gelb, 700

F. 2d 875, 879 (2nd Cir.), cert. denied, 104 S. Ct. 167

(1983); United States v. Barta, 635 F. 2d 999 (2nd Cir.

1980), cert. denied, 450 U.S. 998 (1981).

18

In the final analysis, therefore, if a good faith reliance

by a defendant on his perception of the alleged victim’s

knowledge of the truth, based in part on his understanding

of the victim’s enthusiastic participation in the customary

practice of the victim’s industry, can be properly estab-

lished to the fact-triers’ satisfaction, an intent to defraud

has not been sufficiently proven and a complete defense lies.

United States v. Williams, 728 F. 2d 1402, 1404 (11th Cir.

1984); Umted States v. Cederquist, 641 F. 2d 1347, 1351

(9th Cir. 1981); Steiger v. United States, 373 F. 2d 133

(10th Cir. 1967). On this unassailable view, it is completely

irrelevant what the victim himself actually knew or spe-

cifically assented to, as long as it is clear, from analysis of

the specific intent of the accused, what he believed the vic-

tim knew. For as noted, actual fraud is of no consequence,

since only the intent of the defendant gives rise to action-

able criminality (United States v. London, supra, United

States v. Gelb, supra; see also, United States v. Gamble,

737 F. 2d 853 [10th Cir. 1984]).

The controlling standard, therefore, is that a scheme to

defraud, if prosecutable, is one designed to deceive persons

of ordinary prudence and comprehension. United States

v. Bohonus, 628 F. 2d 1167, 1172 (9th Cir.), cert. de-

nied, 447 U.S. 928 (1980). Thus, if an accused is found by

a jury to have believed in good faith that he neither de-

ceived nor intended to deceive anyone—especially a cor-

poration which he believed to have more than ‘‘ordinary

prudence’’ in being fully aware of and enthusiastically en-

gaging in a widespread industry practice—then a sufficient

scheme to defraud is simply unproven. United States v.

Cederquist, supra, Steiger v. United States, supra,

—

19

For all the reasons stated, therefore, the trial court’s

charge so deviated from the controlling issue at trial and

so removed the case from the jury, that unmistakable preju-

dice resulted. In affirming, therefore, the Court of Ap-

peals obviously approved of this result and hence ‘‘so far

departed from the accepted and usual course of judicial

_ proceedings’’, or at le. ., ‘‘so far sanctioned’’ such a de-

\ parture by the lower court as to call for an exercise of this

Court’s power of supervision. Sup. Ct. Rules, Rule 17.1(a).

It follows, tltat since the Supreme Court has yet to spe-

cifically and firmly grapple with how such a good faith de-

fense affects the ‘‘specific intent’’ element of the wire/mail

fraud statutes, and since we have unequivocally demon-

strated, through the Weintraub affidavit, that the jury had

in fact accepted the defense, and but for the highly preju-

dicial and duly protested instruction would have acquitted,

the conviction ultimately rendered was the product of gross

judicial error which this Court should now review. Because,

it is respectfully submitted, the Court of Appeals, based on

the expressed rationale for its decision, has not fully ap-

preciated this point, it is prayed that this petition be

granted, and the relief requested ordered.

20

Conclusion

The petition for a writ of certiorari should be

granted.

Dated: New York, New York

Octoker 23, 1985

Respectfully submitted,

Barry Ivan SLotnick

Attorney for Petitioner

Jack Randell

Bruce Cutler

Attorney for Petitioner

Patricia Randell

225 Broadway, Suite 2100

New York, New York 10007

(212) 964-2200

Stotrnick & Cutuer, P.C.

Mark M. Baker

Of Counsel

GeraLp M. Lasusu

Attorney for Petitioner

Marvin Mansfield

401 Broadway, Suite 1808

New York, New York 10013

(212) 966-5897

APPENDIX A

Order Affirming Judgments of Conviction

UNITED STATES COURT OF APPEALS

For THE Seconp CrrcvitT

At a stated Term of the United States Court of

Appeals for the Second Cireuit, held at the

United States Courthouse in the City of New

York, on the 22nd day of August one thousand

nine hundred and eighty-five.

Present:

HonoraBLeE LAWRENCE W. PIERCE

HonorRaBLeE GeorcE C. Pratr

Circuit Judges.

HonorasBieE Cuartes EK. Stewart, Jr.

District Judge.*

85-1150/85-1152

a a

Unirep States or AMERICA,

Plaintiff-Appellee,

Vv.

JacK Ranpa.u, Parricia RanpAuL, a/k/a ‘‘ Patricia Pearl,’’

and Marvin MANSFIELD,

Defendants-Appellants.

eS

Jack Randall, Patricia Randall and Marvin Mansfield

appeal from a judgment of conviction of the United States

* United States District Judge sitting by designation.

2a

District Court for the Southern District of New York, Con-

stance Baker Motley, Chief Judge. Following a jury trial,

appellarts were convicted of violations of Title 18, United

States Code Sections 1341 (mail fraud) ; 1348 (wire fraud) ;

and 1962(c) (RICO). Appellants Jack Randall and Mans-

field were also convicted of violations of Title 26, United

States Code, Section 7201 (income tax evasion). For the

reasons stated below, we affirm the judgment of the district

court.

Appellants’ convictions arose out of a four year scheme

to defraud pharmaceutical manufacturing compauies into

selling drugs to appellants at discount prices available only

to non-profit institutions, see 15 U.S.C. § 13(a) (Robinson-

Patman Act); 15 U.S.C. §13(¢c) (Nonprofit Institutions

Act). In actuality, appellants reaped large profits by sell-

ing these drugs as wholesalers. To execute their scheme,

appellants set up false non-profit clinics which they repre-

sented were distributing the drugs.

Appellants introduced evidence at trial to support their

defense that they lacked the intent to defraud the pharma-

ceutical companies because the companies were aware of

appellants’ scheme. Appellants contend that the jury

charge on the co-schemer status of the drug companies’

sales representatives precluded the jury from considering

appellants’ main defense. We find that the district court

correctly charged the jury on the co-schemer defense, see

Joint Appendix at 3607-09. The further contention that the

charge precluded the jury from finding that appellants be-

lieved the companies’ salesmen had authority to bind the

companies was not raised below, id. at 3664-69; see Fed. R.

Crim. P. 30, and the omission did not amount to plain error,

3a

see Umited States v. Roglieri, 700 F.2d 883, 888 (2d Cir.

1983).

Measured by the standards of United States v. Martino,

759 F.2d 998, 1002 (2d Cir. 1985) and United States v. Soto,

716 F.2d 989, 991 (2d Cir. 1983), we find ample evidence to

conclude that the evidence was sufficient to convict appel-

lants. The arguments relating to the denial of motions to

sever are unpersuasive. See United States v. Potamitis,

739 F.2d 784, 790 (2d Cir.), cert. denied, 105 S. Ct. 332

(1984). Apropos the court’s ruling, we find no abuse of

discretion in declining to grant the motion to sever. Nor

are we persuaded that the indictment lacked sufficient spe-

cificity to define the forfeitable interest.

We therefore affirm the judgments of conviction.

/s/ LAWRENCE W. PIERCE

HonoraBLeE LAWRENCE W. PIERcE

/s/ Grorce C. Pratt

HonoraBLE Georce C. Pratt

Circuit Judges.

/s/ Cuarues EK. Stewart, Jr.

HownorasB_e Cuarues EK. Stewart, JR.

District Judge.

4a

APPENDIX B

Order Denying Petition for Rehearing

UNITED STATES COURT OF APPEALS

For THE Sseconp Circuit

At a stated Term of the United States Court of

Appeals for the Second Circuit, held at the

United States Courthouse in the City of New

York, on the 27th day of August one thousand

nine hundred and eighty-five.

Present:

HonorasLteE Lawrence W. PIERcE

HonoraBLe Grorce C. Pratt

Circuit Judges.

HonoraBLeE Cuartes E. Stewart, JR.

District Judge.*

No. 85-1150

eR ne

Unitep Stares or AMERICA,

Plaintiff- Appellee,

v.

Jack Ranpauu, Patricia RanpDALL, a/k/a ‘‘ Patricia Pearl,’’

and Marvin MANSFIELD,

Defendants-Appellants.

—_—_—eEel- eee

A petition for a rehearing having been filed herein by

defendants-appellants, Jack Randell and Patricia Randell,

Upon consideration thereof, it is

Ordered that said petition be and it hereby is Dentep.

/s/ Evatne B. GotpsmitH

Exaine B. GoipsmirH

Clerk

* United States District Judge sitting by designation.

APPENDIX C

Excerpts from Court’s Charge

* * sf

The Court: If you find that the manufacturers referred

to in the indictment were not intended by defendants to be

the victims of fraud because defendants and the manufac-

turers both understood that UCI and the clinics were not

purchasing discount drugs for their own use and that they

were not bona fine nonprofit organizations, then, of course,

you must return a verdict for defendants on the mail fraud

and wire fraud counts since co-schemers are not persons

intended to be deceived.

However, the fact that a salesman without the knowl-

edge or approval of his company was a co-schemer with de-

fendants or any one or more of the defendants does not

make the company a co-schemer. You must find that it was

company policy, determined by those who had power to

make company policy, to violate the Robinson-Patman Act

before you may find that a company, as opposed to a sales-

man, was co-schemer.

6a

APPENDIX D

Excerpts from Exceptions to Charge

* . *

The Court: All right. Now, Mr. Brafman?

Mr. Brafman: Yes. Most respectfully, your Honor, in

part two of the court’s charge dealing with mail fraud, at

page 43, your Honor, the section which the court read con-

cerning co-schemers not fraud victims, most respectfully,

I take exception to the second paragraph which reads as

follows: ‘‘However, the fact that a salesman without the

knowledge or approval of his company was a co-schemer

with defendants or any one or more of the defendants does

not make the company a co-schemer. You must find that it

was company policy determined by those who had power

to make company policy to violate the Robinsoa-Patman

act before you may find that a company as opposed to its

salesmen was a co-schemer.”’

Your Honor, most respectfully, that one, I think it’s just

a little bit unfair under the facts of this case to limit it to

salesmen, because at varying times salesmen, district man-

agers, regional sales managers were used interchangeably

by the witnesses, and to suggest that if a sales rep who is

an authorized agent on behalf of the corporation who could

bind the corporation for a variety of different types of civil

liability could simply be ignored for purposes of this case,

and that under the court’s charge the jury must find that it

was company policy, I don’t know whether in the context

of this case that has any meaning, because that would re-

quire the president and the board of directors to have a

formal meeting adopting it as corporate policy and then

pass by a resolution in order for us to be able to interject

that defense to the charges.

7a

I think more correctly, your Honor, the defense con-

tended by the defendants was that if the jury were to find

that the corporation either knowingly or tacitly either was

aware or ignored the obvious, then the jury could conclude

that the company wasn’t defrauded. And I think it’s a

little bit unfair for the jury to be instructed that they must

find that it was company policy, because nobody that came

into this courtroom, even the government’s witnesses, could

rightfully by themselves tell anyone what company policy

Was or was not.

I mean, the salesmen who said ‘‘I am Dorsey Labor-

atories,’’ for example, was saying to this court and this

jury that ‘‘what I do is on behalf of the company I work

for, that it speaks for the company and it binds the com-

pany.’’ I think, most respectfully, we have always been

relying and have tried the case accordingly by arguing that

those people why were called by the government as repre-

sentatives of the company spoke for the company, be they

sales persons or district managers or regional managers or

the persons in charge of their order department.

And I think this unfairly restricts us and makes it lit-

erally impossible—I think it’s almost a—almost requires a

directed verdict of guilty on this issue because the court

says ‘‘you must find that it was company policy determined

by those who had power to make company policy.’’ Well,

we don’t know who had power to make company policy for

the victim companies, and the government had an obliga-

tion if that was the law to establish that that was not com-

pany policy or that at the time in question those who were

in positions of power then did not know about that and

didn’t adopt it as company policy, and that’s clearly not

the proof, your Honor.

8a

APPENDIX E

Affidavit of Charles L. Weintraub, Esq.

UNITED STATES DISTRICT COURT

SoutHERN District or NEw York

584 CR 253

(CBM)

ae

Unitrep States or AMERICA,

agaumst

Jack RANDELL, et. al.,

Defendants.

State of New York )

County of New York ) ss.:

Charles L. Weintraub, being duly sworn deposes and

says:

1. I am a member of the firm of Hoffman, Pollok and

Gasthalter, Attorneys for the defendant Jack Schneider in

the above Captioned Case.

9a

2. On February 23, 1985, by chance, I happened to meet

one of the jurors, Mr. Norman Freimark, who participated

in the deliberations which resulted in a finding that the de-

fendants Jack Randell, Patricia Randell, Marvin Mansfield,

and Louis A. Garruto were guilty of mail and wire fraud

and related offenses.

3. Mr. Freimark was eager to discuss the case and

stated that he and several other jurors had remained at the

courthouse after the verdict was reached in the hope of dis-

cussing the case with defense counsel. When none of the

attorneys appeared, the jurors left the courthouse.

4. Mr. Freimark stated that the jury had a difficult time

reaching a determination in this case. Concerning the mail

fraud, wire fraud and RICO violations, Mr. Freimark

stated that the Court’s charge that pharmaceutical com-

panies were not bound by the decisions of their salesmen,

compelled the jury to find the defendants guilty. To illus-

trate this point, Mr. Freimark pointed out that the defend-

ants were convicted of all mail and wire fraud counts ex- |

cept those which related to Astra Pharmaceuticals. There,

Mr. Freimark noted that the director of sales had testified

and the jury determined that Astra was bound by his

testimony.

5. Mr. Freimark stated that the jury credited the de-

fense but was obligated to follow the Court’s instruction

10a

that the pharmaceutical companies were not bound by de-

cisions of their salesmen.

/s/ CuHartes L. WeEInTRAUB

CuarLes L. WEINTRAUB

Subscribed and Sworn

to before me this 27th

day of March, 1985.

/s/ Lanna Ca.icutri

Norary Pustic

Linpa CaLicurri

Notary Public, State of New York

No. 41-4706191

Qualified in Queens County

Certificate filed in Queens County

Commission Expires March 30, 1985