Opposition Brief — Andreadis v. United States

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| : CITATIONS -

Cases:

_ Adjmi v. United States, 346 F. 2d 654, certiorari

* ened, 8 Oe ee ee

> Dunn v. United States, 284. US. WG noe se

_ Pereira v. United States, 347 U.S. 1_---..--_

: Reilly-v. Pinkus, 338 U.S. 269_---------.--

United States v. Baren; 305 F. 2d 527_-___- oo

U: nited States v. Press, 386 F. 2d 1003, certiorari

,¢ denied, 379 U.S; 965..::---.4....----2.<

— United; tates v. Rabinowitz, 327 E. 2d aye

; United States v. Rowe, 56 F. 2d 747, certiorari

denied, 286 US, OB ecgceaese ~~ BpeR TU SIE

Statutes: ta es.

‘3 USOrON1 ks SR os aa ae.

* 98 US.G:2184livs . Me psu siidc eed

“4 U.S.C. 1342.22 = 22 nnn nnn nent

239-609—66..

-ONNNN

‘Octonen Tamm, 1966.

, a the Sugreme Goi of th iti Sates

~ No. 619 | tod, oat

Je OHN Ania (OR J OHN Axpre) AND Drva

RESEARCH CORPORATION; PETITIONERS 3

| 2 ace Mey

| _ Unirep Saves or Anmnica Ae ts

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ae et

4 %

, ow PRTITION ‘FOR A WRIT OF OBRTIORARI TO ‘THE UNITED |

—e este’ OF ee 5 FOR THE SECOND CIRCUIT

BRIEF ‘in THE, UNITED STATES IN OPPOSITION

) ‘pias BELOW |

‘The opinion of the court of appeals (Pet. App. A)

is repartot at 366 F. 2d 423:

iB! sunnikorsom

- The judgment of the court of spipenla was ‘ecteded ie

on September 1, 1966. ‘The petition for a writ of cer-

_ tiorari was filed‘on October 1, 1966. The area

of this Court i is invoked under 28 USC. 1254(1). .

Ae . _ QUESTIONS PRESENTED ‘

a ee Whether, in a. prosecution, for ‘using the. mails inh

| and television to defraud (18 U.S,C. 1341-1343), the -

: jury must be rape that it is S pevnee to iit

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22

: ?

*

. that persons intended to be defrauded were actually .

ue deceived. Pe

a © Whether certain vigees designed. to. sont peti-

tioners’ knowledge that their ‘representations: concern-

Me ing their product’ were false, was properly admitted.

3: Whether conduct of the prosecutor was improper, —

and if so, whether it requires reversal i in e absence’ -

: _ , of a showing of prejudice.

, branding.

“4, Whether the verdict. was. sunported by ‘the evi-

‘dence as to (a) fraudulent advertising claims, (b) ex-

‘stence. of a conspiracy to defraud, and. Se mis-

| STATEMENT 3 :

a were convicted by a jury in the United

States District Court: for the Eastern District of New .

York on thirty counts. of a fifty-eight count. indict-

ment charging (1) mail fraud | in violation of, 18.

. De S.C, 1341 and 1342 (counts 1-6, 8-13, and. 14-18),

“ae wire fraud in violation of 18 U.S.C. 1343 “and:

1342 (counts. 19-45), (3) conspiracy to commit the .

mail and wire ‘fraud offenses in violation of 18 U.S.C. -

871 (count 46) and. (4) misbranding in‘violation of

21 U.S.C.. 352(f) (1) (count 57). On June 25, 1965, -

| petitioner. Andreadis , ‘was. sentenced to eighteen

+ months in prison on,,each, count, the sentences to run

concurrently, and * was fined $1, 000. on: each of the’ ~:

sixteen mail fraud ‘and twenty-seven “wire fraud

counts, $3,000 on the conspiracy count, and $4,000 on

the ‘thisbranding éounta' total iof $50,000 ‘in ‘fines.

Pétitioner' Drug . Résearch -Corpotation: was’ fined”

$1,000 on eath of the. sortie ‘mail anid wire’ fraud counts,

i “gi on the conspirscy count, ‘and en on the mis- eae

‘

“3

_ branding count, a total of: $53,000 * The court of <a

-Peals affirmed. ae .

The mail and wire frand woke of the icone

charged. that petitioners devised and participated a.

a scheme to defraud by means of false representations «.

in mailéd and. televised advertising which held.out —_

“Regimen. Tablets” as a. clinically proven “No-Diet” aH

method of weight reducing: =by means of drugs: de- -

signed to suppress the. appetite, remove excess fluid,

and _ produce a, feeling of satisfaction (Pet. 6-7). The

misbranding counts accused petitioners of incorporat-

ing the same false representations on the box Jabels

‘and in the circulars and displays accompanying car-" :

tons of “Regimen Tablets” (Pet. 9-10).

The evidence showed that from 1955 through 1962

“Regimen Tablets” were sold as a. non-prescription

_ “miracle” weight reducing drug (R. 658).? Petitioner |

Andreadis was the president: of | petitioner Drug Re-

search. Corporation and the pefson whose approval

was needed before advertising could be run (R. 3042).

| Andreadis retained Kastor, Hilton, Chesley, Clifford

and Atherton, Inc. (hereafter, Kastor-Hilton), as his.

_ advertising agency” from 1957 through 1961 (R. 658). Be

. At: his direction; Kastor-Hilton undertook. a. nation- ie

a Co-defendant’ Kastor, Hilton, Chesley, Clifford and’ Ather- ‘

ton, Inc., was also convicted on substantive counts 1-6, 8-11, —

15-17, 19-45, and. on the conspiracy count. it paid a $50,000

fine. Co-defendant New Drug Institute, Inc., pleaded ‘guilty

to counts 1, 19, 47, and 49. The cases against co-defendants

Herrick:and Miklean were dismissed. The trial court granted |

a motion of acquittal as to all defendants on counts 7 and 14,

and no verdict was reridered on counts 47-56 and count 58.

* The record on file with .the Clerk of this Court is in 12 vol-

"umes, consecutfvely paginated. Pages 4760-5283 are missing.

F]

_ -wide advertising campaign that cost Drug Research

_ between 7 and 10 million dollars and resulted in gross

gales of 12 to 15 million dollars through 1961 ch 657,

2810, 3181). ,

-_. The basic theme of all “Regimen Tablet” siavertioe-

_ ments from 1957 through 1962 consisted of two ideas:

‘that Regimen was a new wonder drug which would

enable the user to lose weight without dieting; and —

: that it had been: medically tested and clinically proved

_ » (CR. 3041).

a es advertising campaign included the hiring of

“endorsers,” persons who appeared. ‘periodically on -

television programs and stated that, while taking

.. “Regimen Tablets,” they were losing weight without

dieting. Dorothy Bryce testified ‘of. being hired as an

endorser by Andreadis who asked her, “Tf I hire you

how do I know you will lose weight?” He. told her

that “no drug was a miracle” ahd that she would have

to diet (R..710, 930). Her contract provided induce-

ments for her to lose weight, and, by a side agreement,

she received a $50 ‘bonus for every pound over fifteen |

_ that she lost (R. 930-932, 2362,.1396-1397, 3129-3130,

2716). Under the supervision of Kastor-Hilton (R.

2266-2269, Exh. 90), in six, weeks she lost twenty-five

> pounds on a starvation diet (R. 803-804, 936, 950).

She also used a drug called Diruil, suggested by peti-

tioners’ physician,. to lose body fluids (R. 792-793).

‘While on the diet she made regular television appear- |

ances during which she stated she was losing weight

without dieting: (R., 774, 952-959). Similar tortipony

was elicited from other hired eneentttae

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Petitioners’ advertising’ copy regularly included as-

sertions that the “new wonder drug” had been sub-

- jected to clinical tests (referred to as “clinicals”’).”

Petitioners purported to engage physicians to test the -

- drug’s efficacy and to substantiate their advertising

claims (R. 3341, 3342, 3373); in order to obtain ac-

ceptance of the claims: s by advertising media (R. 3341-

3344). - However, Dr. Grollman, appearing as an

expert for the government, ‘testified that he had re-|

viewed the alleged. clinical tests and concluded that .

they were meaningless and did not establish the

efficacy of “‘Regimen Tablets” (R. 4464-4478). He

and-Dr. Mayer, another expert, were in complete

agreement that ‘‘Regimen Tablets’? were totally in-

effective as an aid in losing weight (R. 350, 4441-

4443) and that their opinions reflected the views of the

- scientific literature and community (R. 4460, 355-357, -

406). Both testified that the Fazekes test, a well-

controlled ‘scientific experiment which had been per-

‘formed on ‘““PPA,” the primary ingredient in “Regi-|

_ men,” had established that, even at double the dosage

level in “Regimen,’’ the drug was ineffective in curb- —

ing appetite, and that its effect was essentially identi- —

cal to, that of a placebo used i in the test a 584-601, |

_ 4478-4480).

. Complaints and criticisms about petitioners’ ‘adver- eee

tising claims for ‘Regimen Tablets” (including the ~

so-called - “elinicals’””) were expressed, beginning —

around 1957; by the Food and Drug Administration,

thd/Kansas State Board of Health (R. -4650), the

National Better Business Bureau, the American Med- _ :

ical AssoGiation, and the New “York Academy of

ee:

ah Madieine (R. 4659 et. seq.). The agency and: tone es

organizations asserted that the claims regarding loss. -

of weight without dieting were unsubstantiated and

‘that the clinical tests were worthless: These views ©

were communicated to petitioners by Kenneth-Wilson, :

President of the National Better Business Bureau (R.

_ 4675 et seq.),° by the Kansas. State Board .of Health

(R. 4655), by officials of “Life” magazine. (R. 3820),

the: National Broadcasting Company (R. 3332), and

- other publishers and broadcasters (R. 3195, 3198).

Executives of Kastor-Hilton discussed news of the

Fazekes test and the numerous criticisms ‘with peti-

tioner Andreadis (¢.g., R. 3195, 3202, 3272-3283) ; be-

lieving the preduct could not be sold without the rep-"

_ resentations (R. 3051, 3195), Andreadis rejected. the

- complaints and ordered Kastor-Hilton to continue the

campaign unchanged (e.g., R. 3284-32858).

In 1964, petitioners pleaded guilty to'a State charge

of falsely advertising “Regimen Tablets’’ as a no-diet

clinically-proven reducing drug (R. 4840-4842). In |

admitting evidence 9 these pleas, the court instructed

the jury that the State statute requiréd no proof of

intent, to falsify or defraud (R. 4845).

After trial, the court. heard evidence (R. 5492. et

seq.) on petitioners’ complaint that the prosecutor,

Martin Pollner, had improperly collaborated, with °

®Mr. Wilson sumed petitioner Andreadis a ‘letter from Dr.

Brown, one of the physicians hired by petitioners to perform.

clinical evaluations of “Regimen,” in which Brown stated that

no scientific conclusions céuld be drawn from his clinicals and .

that he did not believe they established that “Regimen” was a

“no-diet” reducing drug (R. 4706-4709, Exh. 172). Petitioners

continued to use the clinicals (R. 3341-3363)...

a2

’ ee:

writer Peter Wyden in the latter’s researching of oe

highly derogatory chapter on “Regimen” for his book

“Overweight Society”’ published on March 22, 1965, ©

- during the trial (R.5529). The chapter was later con- .

_ densed and published. on May 1, 1965, in on V- Guide”

magazine (R. 5606). During the trial the court twice

asked the jurors if they had read either publication

and received negative: responses (R. 5308, 5495-5497).

“And throughout the trial, the court repeatedly ad-

monished the jurors that they must not read any pub-—

licity about the case . 6-7, 642, 815, 2721, 3109, 3290,

TY 2 OS RR |

The evidence at. the pies chanel that Peter

_ Wyden approached Mr. Pollner after having read the

‘extensive N ational Better Business Bureau. file and

— the- -transeript of a Congressional hearing, both re--

garding “Regimen,” and after having conferred with

~ Food and Drug Administration officials and with the —

" prosecutor in the prior. State case CR. 5009, 5560, .

5584, 5592). He had learned that Mr. Pollner hadin —

‘his office a set of the depositions given in 1964 in a

civil. case brought against “Regimen’’: by the Food.

and Drug Administration. .These depositions were

part of the public record on file in the United States

District Court (R. 5548-5550). . Although Mr. Pollner

"allowed Wyden to read the depositions in his office —-

on several occasions, he volunteered no information | |

-(R. 5561-5562, 5540, 5548). Wyden characterized . .

Poliner’s . attitude. as one of apprehension, saying

“* * * THe did everything but throw me out of the

office”? (R. 5578-5579). Pollner expressed concern ~

_ that the book (and later the article) would be: pub-

Te os toy

lished before the trial ended (R. 5514), and: sought -

to delay both so that neither would interfere with the

trial (R. 5579, 5588). The court found that nothing

in the conduct of Mr. Pollner had affected the trial, —

‘and that the jurors had read neither the book nor the

article Phong: jibes ae

; S a

iA 1 The évidence was clear and uncontradicted that

petitioners’ advertised product was incapable of doing

what petitioners said it could do: cause loss of weight

without | dieting. Nevertheless, petitioners contend

. (Pet, 22-32) that the mail and wire fraud convictions

should have been reversed. because the indictment did .

not allege, and the judge did not instruct the j jury that

it must find, that someone was in fact defrauded.*

‘Petitioriers recognize’ that it has long been the estab- —

lished rule in mail and wire fraud cases that the gov-

"ernment need not prove that the fraudulent scheme

was actually successful in ‘defrauding anyone.

Pereira v. United States, 347 U.S.1; Adjmi v..United -

States, 346 F. 2d 654 (C.A.-5), certiorari denied, 382

‘US. 823; United States v. Rowe, 56 F. 24 747 (C.A.

_ 2), certiorari denied, 286 U.S. 554. Petitioners read —

United States v. Baren, 305 F. 2d 527 (C.A. 2) and.

United States v. Rabinowitz, 327 F. 2d 62 (C.A. 6),

as changing this settled principle. The eourt below,

which decided the Baren case, viewed it as fonfined to

sThere was in fact. ‘evidence that persons ‘were Chadd

At trial the government produced purchasers who testified that.

= “Regimen”: failed: to help them Jose weight, that some had

" actually. gained weight, that. when a refund was made it was .

_ Tess than ‘amount due, and that | Some got no piney back *

“(R. 4875-4922). |

, °

\ ee Pe gery aie

Nee :

: the situation where the product was in faet siplabla i of

doing. what its promoters said it-could do, the'fraud |

arising out of sales misrepresentations unrelated to

the. quality. ‘of the product itself. See. 366 F. 2d at -

431. For the same reason, the Rabinowitz case.is also

inapposite. The court stated in Rabinowitz: that “the

Snherent: utility’. of the [product] oa'% removes

this ecdse from the ordinary of mail fraud

prosecutions.” 327 F. 2d at 66. ‘neither case —

supports petitioners, . whose product was a fake,’ and

_ neither purports to change the established rule that

the government need not offer proof that persons

- whom a defendant intended to defraud were Neotually

deceived. saat

: Petitioners decry the admission of dividend: re-.

garding complaints made by the National Better

_ Business Bureau and others to petitioners about the. —

-_ falsity of their advertising claims of no-diet. reducing »

and clinical tests (Pet. 36-39). The court admitted

the evidence ‘with repeated instructions (e.g. R. 4669-.

» 4670: and 3279) that it was received /only ‘upon the

issue of whether the defendants. had knowledge that_-

_ their claims as to ‘the efficacy of “Regimen Tablets”

were falsé--easential to the issue of intent to de-

fraud—and not for the truth of the matter asserted in

®The court below pointed out, 366 F. 2d at 431, that when -

_ the product was capable of performing as advertised, it may be

advisable—in order to protect innocent sellers—to require proof

that purchasers: were. in some way deceived. We think such

protection is adequately afforded by the requirement of proof

of intent to defraud—precisely. the element on which the

Rabinowite case was decided, petitioners’ assertions to the con- -

- trary notwithstanding. See 327 F. 2d at 80-81. The Baren and ~

. Rabinowitz cases involved, incidentally, the sale of similar prod-

ucts, namely knitting machines.

dies

10.

ee

the complaints.. The court further instructed the

jury that the truth or falsity of petitioners’ promo:

tional claims for ‘Regimen Tablets” would have to be

established ,by independent evidence and not by the ~

- complaints. The admission of such evidence with the te

: limiting instructions was proper. United States v.

Press, 336 F. 2d 1003. (Pa, 2); certiorari denied; 379

U.S: 965.

3. The inquiry ‘into the conduet of the acuihen in

relation to the publication of Peter Wyden’ s book and

a magazine ‘article demonstrated that petitioners’ com-.

-plaint was baseless (see Pet. 40-44). The prosecutor

did not engage in “collaboration with the author”

(Pet. 40) nor participate “in a sensationalized.attack

on Regimen tablets” (Pet. 3) ; indeed, he attempted to

, discourage and delay publication until after the trial.

The court of appeals found nothing improper | in his

- conduct (366 F. 2d at 432)..

Moreover, the court throughout the trial repeatedly.

admonished the jurors not to read any publicity about

' the case, and on two separate occasions each juror .

"denied that he had read the publications. Petitioners ~

do not claim that the jurors were untruthful. . 7

- 4. Petitioners’ complaints as to the sufficiency of :

the evidence are.also without merit,

a. Petitioners’ ce’ (Pet. 32-36) upon. Reilly =

4 Pinkus, 338 US. 269,. is misplaced, because the evi- ©

dence of Doé¢tors Grollman and. Mayer, which peti-

tioners say: was insufficient on the issue of intent to

defraud, was in fact admitted to. show that petition-

‘ ers’ representations about their product were scien-

~ phd.

=e : rendered a, verdict on only one of the twelve misbrand- :

sd

a

“tifically false. amy merely implies that, if, some-

thing ‘less than universality * of scientific belief is

shown, an intent to deceive might not be: inferrable.. :

. Here, however, there: was ample additional and inde- - :

pendent evidence of petitioners’ intent. In addition, *°

the’ court’s instructions regarding’ these expert wit-

. nesses, to. which pettiohtre raised no objection, were

proper.’ 3

‘ . ®. There was ainple evidurine to pase the con-

spiracy charge (compare Pet. 45-46). The evidence

showed agreements between petitioners and their ad- »

: . vertising agency, among other things, to submit ‘ad-

vertising to media knowing the copy to be false, to .

submit false clinical test reports to media, to.puten-

dorsers on television knowing they were not telling

the truth, to. falsify the entire endorser program, and - —

_ to ignore the criticism and objections leveled at their

advertisements. The court of appeals properly char-.

acterized petitioners’ bald claim of the “manifest de-

. ficiencies of the trial proofs’ (Pet. 46) on. the con-*

spiracy eel as “without a shred ‘of evidentiary — pigcnee tore

support,” “conclusory,” and “wholly without merit”?

' (366 F: 2d at, 434). |

c. Petitioners conclude from the fact that the jury

ing counts that the jury was confused, that the verdict ~. |

“was a ‘compromise, and. that the evidence was insuffi- ©.

ecient to support the charge. (Ret. 47-50). Even as-

‘suming the verdict was logically inconsistent, that is

nota on for reversal. Dunn v. United States, 284

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_ For thé dendana;stited, it is respectfully ‘submitted

“that the petition for a writ of certiorari should be... ~

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