GOVERNMENT'S OPPOSITION TO|
DEFENDANT'S THIRD MOTION IN LIMINE
In his Third Motion in Limine, defendant argues that, because
charged with feloniously acting with an "intent to defraud or
he can only be convicted if the United States or an individual
were defrauded of money. Defendant states that the United States
proof of any monetary fraud, and should be precluded from arguing
defendant may be convicted of a felony unless and until it
This argument is meritless and must be rejected.
The government will stipulate at the outset that this case does
involve evidence of monetary loss to the government or to any
No such proof, however, is required. The defendant's motion is not
supported by either the language of the statute or the four
courts that have considered this particular issue.
As is outlined in more detail in the United States' trial
(at pages 9 - 15), the government's proof in this case will
that defendant XXXX XXXXXXXX or his coconspirators took active
designed to avoid detection by the FDA and other regulatory
while illegally purchasing and distributing adulterated and
bulk animal drugs. Among other things, the defendant on various
occasions affirmatively misrepresented the nature of his business
FDA investigator; used multiple delivery sites to obtain smuggled,
unlabeled bulk drugs; maintained no records of his purchases or
these illegal drugs; and used coded invoices to represent products
sold to customers. Such evidence is more than sufficient to support
determination that the defendant acted with felonious "intent to
or mislead" pursuant to 21 U.S.C. § 333(a)(2).[FN1] See
United States v. Arlen, 947 F.2d 139 (5th Cir. 1991),
denied, 112 S. Ct. 1480 (1992);[FN2] United States v.
Bradshaw, 840 F.2d 871 (11th Cir.), cert. denied, 488
924 (1988);[FN3] see also United States v.
933 F.2d 752, 755 (9th Cir. 1991) (defendant had "the intent that
FDA not realize what he was doing, and he certainly was trying to
his activities from the FDA because he was worried that they
wouldn't approve what he was doing").
FN1. Prior to July 22, 1988, 21 U.S.C. § 333(a)(2)
been codified at 21 U.S.C. § 333(b).
FN2. In Arlen, the defendant took "active steps
. . .
to avoid detection and regulation by the FDA." Id. at 144.
Evidence established that the defendant did not generate or
records of his drug dealings, stopped using blank money orders
they created a record, rented a private postal box under a
name, and used fictitious names and addresses when mailing
Id. at 143-44.
FN3. In Bradshaw, evidence of the defendant's
to defraud was established through proof that the defendant moved
state to state, used mail drops rather than his home address, used
names, mislabeled his products, and used others to pick up and
the packages. 840 F.2d at 873.
Title 21, United States Code, Section 333(a)(1) provides that
person who violates a provision of 21 U.S.C. § 331 is guilty of
misdemeanor.[FN4] Section 333(a)(2) provides that such violations,
committed with "the intent to defraud or mislead," are felonies. 21
U.S.C. § 333(a)(2).[FN5] Significantly, the latter provision
that a felony may be based on either intent to defraud or
mislead, and an intent to mislead anyone -- whether the government
private individuals -- does not require any monetary loss. On its
therefore, the statute does not require proof of monetary loss.
FN4. Prior to July 22, 1988, 21 U.S.C. § 333(a)(1)
been codified at 21 U.S.C. § 333(a).
FN5. See footnote 1,
As the defendant recognizes, four different courts of appeals
considered this issue, and all have held that the type of fraud
by 21 U.S.C. § 333(a)(2) includes not only fraud involving
loss, but also fraud involving the regulatory authority of
agencies. United States v. Arlen, 947 F.2d at 142-44;
States v. Mitcheltree, 940 F.2d 1329, 1347, 1352 (10th Cir.
United States v. Cambra, 933 F.2d at 755; United States
Bradshaw, 840 F.2d at 874-75. No court has reached a contrary
Defendant places principal reliance on McNally v. United
States, 483 U.S. 350 (1987). In McNally, the Supreme
reversed convictions under the mail fraud statute, 18 U.S.C. §
The defendants had been convicted of using the mail to defraud
of their intangible right to honest and impartial government in
connection with a scheme involving the sharing of commissions for
workmen's compensation insurance. The Supreme Court examined the
of the mail fraud statute and concluded that it was intended only
protect against the use of the post office in schemes to deprive
property rights, not the intangible right to good government.
After McNally, courts have recognized that an
of a statutory "defraud" element must be determined in light of the
structure, purpose, and history of the statute in question. In so
courts have not hesitated to reject the suggestion that
inclusion of the word "defraud" in a statute inexorably mandates
evidence of a monetary loss. See, e.g., United
v. Murphy, 957 F.2d 550, 553 (8th Cir. 1992) (affirming
of conspiring to defraud the government under 18 U.S.C. § 371
connection with the leaking of information about an FBI
United States v. Elkins, 885 F.2d 775, 781 (11th Cir. 1989)
(conspiracy to defraud the government of its right to implement
policy), cert. denied, 494 U.S. 1005 (1990);
States v. Kato, 878 F.2d 267, 270 (9th Cir. 1989)
defraud the United States under 18 U.S.C. § 371 does not
agreement to defraud the government of money or property").
Four different courts of appeals have recognized that the
purpose, and history of the Food, Drug, and Cosmetic Act ("FDCA")
different from the structure, purpose, and history of the mail
statute at issue in McNally. As a result, in decisions all
rendered after McNally, these courts have unanimously
that the "intent to defraud or mislead" requirement in the FDCA
an intent to defraud a government regulatory agency of its
abilities. See Arlen, 947 F.2d at 143;
940 F.2d at 1349; Cambra, 933 F.2d at 755; Bradshaw,
F.2d at 874-75 & n.8.
In Arlen and Bradshaw, both the Fifth and
Circuits examined the FDCA's language and purpose. The courts
that, given the statutory language of 21 U.S.C. § 333(a) [now
U.S.C. § 333(a)(1)], a violation of any of the
of 21 U.S.C. § 331 constitutes a misdemeanor, and that,
the language of 21 U.S.C. § 333(b) [now 21 U.S.C. §
any such act done with intent to defraud or mislead
felony. Arlen, 947 F.2d at 142; Bradshaw, 840 F.2d at
Both courts further observed that several of the acts
21 U.S.C. § 331 concern only the government. For example, 21
§ 331(e) prohibits regulated individuals and entities from
to permit FDA access to records; 21 U.S.C. § 331(f) prohibits
regulated individuals or entities from refusing to permit FDA
inspections; and 21 U.S.C. § 331(p) requires regulated
and entities to register with the FDA.
In light of these provisions directly related to the FDA's
of the food, drug, device, and cosmetic industries, both courts
recognized the anomaly that would be created were they to hold that
government could not be a defrauded victim: such a result "would
the conclusion that there could never be a felonious violation of
§§ 331(e), (f), or (p)." Arlen, 947 F.2d at 142;
see Bradshaw, 840 F.2d at 874-75. Because "the plain
inclusive language of § 333(b) . . . contemplates both
and felony violations for all § 331 offenses,"
947 F.2d at 142 (emphasis added), the courts concluded that
meant to punish, within the FDCA framework, conduct intended to
government agencies of their oversight authority.[FN4]
FN4. Wholly misplaced is the defendant's suggestion
Marchetti v. United States, 390 U.S. 39 (1968) and Grosso
United States, 390 U.S. 62 (1968) bar any potential felony
violations of these various requirements, which pertain solely to
individual or entity's interaction with the FDA. (Defendant's
Memorandum in Support of Defendant XXXXXXX's Pending Pretrial
Limine, at 7 n.4). Unlike the statutes at issue in Marchetti
Grosso, it can hardly be said that statutory requirements
designed to regulate legitimate conduct in the food, drug, and
industries are designed solely to prevent criminal behavior.
e.g., United States v. Reiff, 435 F.2d 257 (7th Cir.
1970), cert. denied, 401 U.S. 938 (1971); United
v. Malcouronne, 283 F. Supp. 87, 88 (D. Mass. 1968); see
also In re Grand Jury Proceedings (John Doe, M.D.),
F.2d 1164, 1168 (9th Cir. 1986); see generally
v. United States, 335 U.S. 1 (1948).
To superimpose upon section 333(a)(2)'s mens rea requirement of
"intent to defraud or mislead" proof of a monetary loss to the FDA,
XXXXXXXX suggests, would be wholly inconsistent with the FDCA's
statutory purpose. As the Eighth Circuit has recognized, "[i]t is
difficult to overstate the urgent nature of the public-health
served by effective regulation of our nation's drug-manufacturing
industry." United States v. Jamieson-McKames
F.2d 532, 537 (8th Cir. 1981), cert. denied, 455 U.S.
(1982). Unlike the mail fraud statute, 18 U.S.C. § 1341, the
primary objective is not in protecting monetary or property
The general scheme of the Act and its legislative
indicate that the overriding congressional purpose was consumer
protection -- the protection of the public against any misbranded
adulterated food, drug, device, or cosmetic. When [a defendant]
misle[ads] the governmental agencies, thereby frustrating their
to protect the public, he indirectly misle[ads] and defraud[s] the
Bradshaw, 840 F.2d at 874.
As discussed, many acts prohibited by 21 U.S.C. § 331 are
exclusively directed at facilitating the FDA's ability to fulfill
regulatory mission. Violations of these provisions directly impair
FDA's ability to regulate; moreover, they have absolutely no
relationship to the exchange of money or property. To construe the
FDCA's "intent to defraud" language as precluding felony charges
proof of monetary loss would thus render it impossible to ever
this class of violations as felonies.
One example of the problems created by imposing such a
can be found in Arlen, where the Fifth Circuit describes the
difference between a misdemeanor violation of 21 U.S.C. §
a felony violation of the same provision:
[A]n operator of a drug storage facility must permit
inspection of his premises when FDA personnel present him with
credentials and written notice of inspection. If the operator
permit the inspection of his facility because he feels it is an
inconvenient time for an inspection, he has committed a willful
violation of § 331(f) (failure to permit inspection by FDA),
his facility fully complies with all FDA regulations. This
would be punished as a misdemeanor under § 333(a). If, however,
operator refuses inspection because he wants time to clean up his
contaminated facility, he has willfully violated § 331(f) with
intent to defraud or mislead the government. This violation would
punished as a felony under § 333(b).
Arlen, 947 F.2d at 143. In this context, considerations of
loss are not only irrelevant, but are incompatible and inconsistent
FN5. Such an approach would also be at odds with the
Court's admonition that the provisions of the FDCA are to be
liberally so as to further the Act's public health and safety
See, e.g., United States v. Park, 421 U.S.
672-73 (1975); United States v. Wiesenfeld Warehouse
U.S. 86 (1964); Kordel v. United States, 335 U.S. 345,
(1948); United States v. Sullivan, 332 U.S. 689, 692 (1948);
United States v. Dotterweich, 320 U.S. 277, 280 (1943);
see also Master Insulators of St. Louis v.
International Ass'n of Heat and Frost Insulators and Asbestos
Local No. 1, 925 F.2d 1118, 1121 (8th Cir. 1991) (statutory
provisions should be interpreted in a manner that will "preserve
object and policy of the entire statute").
Thus, defendant's interpretation of section 333(b) goes well
merely "strict" construction or "rational interpretation"; it
effectively construes a sizeable portion of the statute right out
existence. Such a result transgresses the well-established
statutory construction that "[a] statute should be construed so
effect is given to all its provisions, so that no part of it will
inoperative or superfluous, void or insignificant." Gonzalez v.
McNary, 980 F.2d 1418, 1420 (11th Cir. 1993); see
Weinberger v. Hynson, Westcott and Dunning, Inc., 412 U.S.
633 (1973) ("well-settled rule of statutory construction that all
of a statute, if at all possible, are to be given effect" applied
FDCA's "new drug" definition).
In short, both the language and purpose of the FDCA lead to the
conclusion that it applies to any activities that are fraudulent
misleading, including activities aimed at defrauding or misleading
government regulatory agency, without any requirement of monetary
The defendant's argument that McNally requires a different
flies in the face of the FDCA's language and purpose, as well as
opinions from four courts of appeals, and therefore must be
For the foregoing reasons, the defendant's Third Motion in
should be denied.
Dated: February __, 1994
STEPHEN JOHN RAPP
United States Attorney
GREGORY T. EVERTS
JAMES E. ARNOLD
Office of Consumer Litigation
U.S. Department of Justice
P.O. Box 386
Washington, D.C. 20044
(202) 514-0516/(202) 307-01744
[cited in Civil Resource Manual 15]