U.S. v. Butler, 04-10364.

• Citation: 429 F.3d 140
• Decision Date: 25 October 2005
• Docket Number: No. 04-10364.,04-10364.
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Thomas Campbell BUTLER, MD, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

429 F.3d 140

UNITED STATES of America, Plaintiff-Appellee, v. Thomas Campbell BUTLER, MD, Defendant-Appellant.

No. 04-10364.

United States Court of Appeals, Fifth Circuit.

October 25, 2005.

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Susan B. Cowger (argued), Dallas, TX, for U.S.

Daniel Carl Schwartz, Bryan Cave, Washington, DC, Jonathan R. Turley (argued), George Washington University School of Law, Washington, DC, Alison Lynette Perine, Alexandria, VA, for Butler.

Appeal from the United States District Court for the Northern District of Texas.

Before WIENER, DeMOSS, and PRADO, Circuit Judges.

PER CURIAM:

Appellant Dr. Thomas Butler was convicted on 47 of 69 counts of various criminal activity relating to work he performed as a medical researcher at the Texas Tech University Health Sciences Center ("HSC"). Of these 47 counts, Butler was convicted of 44 counts of contract-related crimes, including theft, fraud, embezzlement, mail fraud, and wire fraud, (collectively, the "Contract Counts"). Butler was also convicted of three counts relating to the transportation of human plague bacteria ("yersinia pestis" or "YP"), including the illegal exportation of YP to Tanzania, the illegal transportation of hazardous materials, and making a false statement on the waybill accompanying the YP vials shipped to Tanzania, (collectively, the "Plague Counts"). The district court sentenced Butler to 24 months' imprisonment followed by 3 years' supervised release, a $15,000 fine, and ordered him to pay restitution to HSC in the amount of $38,675. Butler timely filed the instant appeal. For the reasons discussed below, we affirm.

BACKGROUND AND PROCEDURAL HISTORY

Butler was a professor and Chief of Infectious Diseases in HSC's Internal Medicine Department since 1987. As part of Butler's pay structure, a percentage of his income was provided by the State of Texas while the remainder came from the Medical Practice Income Plan ("MPIP"). Under MPIP, a doctor earned money by seeing patients, receiving research grants, or conducting clinical studies under the auspices of HSC. The monies received from the patients a doctor treated and the funds paid out for the research/studies was remitted to HSC. Part of these monies paid for HSC's overhead costs and other expenses while another part was paid out as the non-state portion of the doctor's income. Any remaining funds from a clinical study was transferred to a developmental account for the researcher's department or division. The money in this account was earmarked for expenses such as professional dues and business travel, none of which was related to any particular project.

When a researcher at HSC was in a position to obtain a research grant or conduct a clinical study, it was required that the accompanying documentation be submitted to the institution for approval. Moreover, any monies paid out as a result of the research grant or clinical study were required to be paid directly to the institution. Consulting contracts, however, received different treatment from research grants or clinical studies. Specifically, a consulting contract was viewed by HSC as a means for a doctor to sell his or her expertise or advice directly to a third party, such as in designing a drug study. The consulting would not involve patient care or patient safety issues, and the consultant would not be using HSC's resources such as labs and personnel. Because of these considerations, consulting contracts were permissible without HSC's financial involvement or approval, unlike contracts covering clinical studies.

Between 1998 and 2001, Butler entered into several clinical study contracts with two different pharmaceutical companies, Pharmacia and Chiron. The first contract entered into with Pharmacia occurred in March 1998. Under this contract, Pharmacia agreed to pay HSC $2,400 for each patient enrolled in the clinical study. Apparently unbeknownst to HSC, however Pharmacia and Butler entered into another "shadow" or "split" contract that provided Butler with an additional $2,400 per patient enrolled in the same study. A similar contract was entered into between Pharmacia and Butler in the spring of 2000 and again in the fall of 2000.

With respect to the contract in the fall of 2000, there was another HSC researcher, Dr. Casner, who was working on the same study as Butler. Dr. Casner's contract with Pharmacia was not split, and therefore it appeared that he had a budget twice the size of Butler's. A representative with HSC who was aware of Dr. Casner's contract, contacted Butler to inform him that she could get Butler a bigger budget. Butler allegedly refused the offer and informed the HSC representative that he would remain in charge of negotiating his own contracts. Butler had also negotiated two similar contracts with Chiron (another pharmaceutical company), using the contracts with Pharmacia as a template. The contracts with Chiron involved drug studies that were conducted in February 1999 and March 2000.¹ Butler received payments under the contracts with Pharmacia and Chiron until August 2001.

The existence of the shadow contracts first came to the attention of HSC in July 2002, when an HSC representative learned from a Pharmacia representative that Butler was getting one-half of the money from the Pharmacia studies, while HSC received the other half. HSC initiated a preliminary investigation into the split contracts that continued until January 9, 2003, when HSC informed Butler by letter that an additional investigation by authorities charged with compliance issues was to begin. In the letter, HSC sought a response from Butler by no later than January 21, 2003. For the reasons discussed below, HSC never received the requested response.

In addition to his work at HSC in Texas, Butler conducted plague research in Tanzania in 2001.² Then, in April 2002, Butler returned to Tanzania where, for approximately 10 days, he worked on research of plague in human patients at clinics there. Part of his research involved personally culturing and subculturing specimens that he planned to bring back to the United States for additional studies.

Having returned to the United States with the yersinia pestis cultures, Butler continued his research. Then, on January 13, 2003, four days after receiving the letter from HSC auditors warning of the impending investigation into the alleged shadow contracts, Butler reported that 30 vials of the yersinia pestis were missing from his HSC laboratory in Lubbock. The FBI was immediately notified and within hours descended upon Lubbock, where Butler was questioned. Eventually, Butler revealed that the yersinia pestis was not actually missing, but that he had destroyed the vials accidentally.

In April 2003, a grand jury returned a 15-count indictment charging Butler with various crimes relating to his transporting of yersinia pestis, the providing of false statements to FBI agents regarding yersinia pestis, and a tax crime. A superceding indictment was returned by the grand jury in August 2003, in which Butler was charged with 54 additional criminal counts, including mail fraud, wire fraud, and embezzlement that arose out of Butler's agreements with the pharmaceutical companies and the Food and Drug Administration (the "FDA"). Butler filed a motion seeking to sever the Contract and Plague Counts, which the district court denied. After a three-week trial in November 2003, the jury returned a mixed-verdict against Butler, finding him guilty on most of the Contract Counts and not guilty on most of the Plague Counts and the tax count. On March 10, 2004, the district court sentenced Butler to 24 months' imprisonment, three years' supervised release, $15,000 in fines, and a $4,700 special assessment. Butler was also ordered to pay HSC restitution in the amount of $38,675. Butler timely filed the instant appeal.

DISCUSSION

I. Whether the district court erred by not severing the Contract Counts and the Plague Counts.

On appeal, Butler argues the Federal Rules of Criminal Procedure and this Circuit's case law prohibit the joinder of unrelated criminal categories charged; here, the Contract Counts and the Plague Counts. Butler contends that trying all the counts together caused him prejudice. Conversely, the Government maintains that joinder was proper because the charges in the superceding indictment were linked as transactions within a common scheme or plan.

We review a district court's denial of a motion to sever for an abuse of discretion. United States v. Booker, 334 F.3d 406, 415 (5th Cir.2003). Whether the initial joinder of charges was improper under Rule 8 of the Federal Rules of Criminal Procedure is judged according to the allegations in the superceding indictment. See United States v. Kaufman, 858 F.2d 994, 1003 (5th Cir.1988). Specifically, Rule 8(a) provides that:

The indictment or information may charge a defendant in separate counts with 2 or more offenses if the offenses charged ... are of the same or similar character, or are based on the same act or transaction, or are connected with or constitute parts of a common scheme or plan.

FED.R.CRIM. P. 8(a).

Butler argues that the superceding indictment alleges no connection between the groups of allegations, or any rationale for suggesting that the Contract Counts were based on the same conduct or motivation as the Plague Counts. Butler maintains the two sets of counts are neither connected nor constitute parts of a common scheme or plan. In support of his contention, Butler cites to several cases in which this Court and some district courts have identified improperly joined charges. See, e.g., United States v. Diaz-Munoz, 632 F.2d 1330 (5th Cir.1980); United States v. Lynch, 198 F.Supp.2d 827 (N.D.Tex.2001); United States v. Braig, 702 F.Supp. 547 (E.D.Pa.1989). None of these cases, however, are particularly instructive. The counts involved in each of the cases cited by Butler were not tied in any...