538 F.2d 815 (9th Cir. 1976), 74-3397, United States v. Goldfine
|Docket Nº:||74-3397, 74-3320.|
|Citation:||538 F.2d 815|
|Party Name:||UNITED STATES of America, Plaintiff-Appellee, v. Darrell Daniel GOLDFINE, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Solomon Walter GOLDFINE, Defendant-Appellant.|
|Case Date:||June 01, 1976|
|Court:||United States Courts of Appeals, Court of Appeals for the Ninth Circuit|
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Murray B. Guterson (argued), Seattle, Wash., for defendant-appellant Solomon Walter Goldfine.
James S. Kempton (argued), Seattle, Wash., for defendant-appellant Darrell Daniel Goldfine.
J. Ronald Sim, Asst. U. S. Atty. (argued), Seattle, Wash., for plaintiff-appellee.
Before MERRILL and WRIGHT, Circuit Judges, and FERGUSON, [*] District Judge.
MERRILL, Circuit Judge:
Darrell Daniel Goldfine and Solomon Goldfine, brothers, are pharmacists licensed by the State of Washington. Darrell Goldfine was sole owner of a drugstore in Seattle, Service Rexall Drugs, and half owner of a second, Greenlake Rexall Drugs. Solomon Goldfine was an employee of his brother at Service Rexall. Darrell Goldfine was registered with the Federal Drug Enforcement Administration to sell controlled substances pursuant to 21 U.S.C. § 822. Solomon Goldfine was not so registered.
In 1974 an indictment was issued against the Goldfines, charging them with a multitude of violations of the Controlled Substances Act, 21 U.S.C. §§ 801 et seq. Following trial they were both found guilty of the following offenses in violation of 18 U.S.C. § 2 and 21 U.S.C. §§ 841, 842, 843 and 846: conspiracy to possess controlled substances with intent to distribute, and to omit information from required records; possession with intent to distribute (two counts as to Solomon Goldfine; four counts as to Darrell Goldfine); knowingly failing to make and keep required records; and knowingly omitting material information from required records. In addition Darrell Goldfine was found guilty of use of interstate facilities in carrying on an unlawful activity in violation of 18 U.S.C. §§ 2, 1952(a)(3), and with making false statements to Compliance Investigators of the Drug Enforcement Administration, in violation of 18 U.S.C. § 1001. For the nine counts on which he was found guilty Darrell Goldfine received concurrent sentences of from one to five years. On each count he was fined $5,000 for a total fine of $45,000. For the five counts on which he
was found guilty Solomon Goldfine received concurrent sentences of one and three years. No fines were imposed. As to each defendant special parole terms were imposed.
At trial, the United States introduced evidence to the following effect: that both Goldfine pharmacies performed the usual and accepted functions of such establishments, but also were used for the acquisition of extraordinarily large quantities of controlled substances. In the course of their legitimate business activities all drugs were ordered from local suppliers, paid for by check, with records maintained as to acquisition and disposition. However, traffic in controlled substances was also carried on by orders from nine out-of-state firms, paid for by money orders purchased with cash, with no records kept showing the orders, receipt, or disposition. Drugs so acquired were sold to addicts in the Seattle area at exorbitant profits.
Prior to trial the Goldfines moved to suppress all evidence resulting from an audit of Service Rexall Drugs. The motion was denied and that order is assigned as error.
The audit was conducted pursuant to an administrative warrant issued by a United States magistrate under 21 U.S.C. § 880(b) and (d), relevant portions of which are set forth in the margin. 1 The warrant was issued upon a showing made by a Compliance Investigator, the substance of which is set forth in the margin. 2 The investigator did not disclose that activities of the Goldfines were under investigation, which, by then, included reports of large orders of controlled substances by the pharmacy, surveillance of the pharmacy, tracing of shipments and arrest of certain of the pharmacy's customers. Appellants contend that the audit was not an administrative inspection, but, in truth, was a search for evidence
of crime, and that a showing under traditional standards of probable cause to suppose that evidence of crime was present and seizable was necessary in order to support the warrant.
We agree with the Second Circuit in Colonnade Catering Corp. v. United States, 410 F.2d 197, 205 (2d Cir. 1969), rev'd on other grounds,397 U.S. 72, 90 S.Ct. 774, 25 L.Ed.2d 60 (1970), that "(a)cceptance of defendant's contentions would place the agent in the position of being authorized to conduct a warrantless search (or administrative inspection) only when he had no reason to suspect a possible violation." We reject the proposition that pharmacies as to which there is probable cause to suppose a violation are by that fact rendered exempt from administrative inspection and subject only to search for evidence of crime. 3 The administrative need for and the public interest in inspection continue to provide justification apart from the obtaining of evidence of crime.
If evidence of a crime is sought that would not be disclosed by an inspection under § 880(b)(1), limited to the purposes there specified, a search warrant specifying such evidence would be required and would have to be supported by a showing of probable cause to suppose the presence of that which was sought. However, if the extent of the intrusion is to be limited to an inspection under § 880(b)(1) an administrative inspection warrant upon probable cause as defined in § 880(d)(1) is all that is required.
The Goldfines contend that the showing made for issuance of warrant does not constitute probable cause. In our view paragraphs 1, 2 and 3 (see note 2, supra ), showed justification for inspection under the statutory definition. In drafting that definition Congress apparently had in mind the language of Camara v. Municipal Court, 387 U.S. 523, 539, 87 S.Ct. 1727, 1736 (1967): "If a valid public interest justifies the intrusion contemplated, then there is probable cause to issue a suitably restricted search warrant." See H.R.Rep. No. 91-1444, 91st Cong., 2d Sess., 1970 U.S.Code Cong. & Admin.News, p. 4623. A valid public interest in the inspection clearly appears.
We conclude that the inspection was proper and that it was not error to deny the motion to suppress.
The Conviction Under § 841
The Goldfines were prosecuted under 21 U.S.C. § 841(a)(1), which makes it unlawful for "any person" knowingly or intentionally to possess with intent to distribute a controlled substance except as authorized by the Act. Darrell Goldfine contends that by virtue of his status as a registrant he could only be prosecuted under §§ 842 and 843, which provide lesser penalties for certain specific violations by registrants. Section 841, he contends, should be limited to those outside the legitimate distribution chain. Solomon Goldfine makes a similar contention. He asserts that as an employee of a registrant he is exempt from registration under § 822(c)(1) and is authorized to possess controlled substances and thus should be free from prosecution under § 841.
Our court has rejected a similar contention made by a medical doctor in United States v. Rosenberg, 515 F.2d 190 (9th Cir. 1975), and the case on which the Goldfines rely has now been reversed by the Supreme Court. United States v. Moore, 423 U.S. 122, 96 S.Ct. 335, 46 L.Ed.2d 333 (1975). There it was held:
"By its terms § 841 reaches 'any person.' It does not exempt (as it could have) 'all registrants' or 'all persons registered under this Act.' "
423 U.S. at 131, 96 S.Ct. at 340. 4
Convictions for Violations of Record Keeping Requirements
Darrell Goldfine was charged with omitting material information from required records in violation of § 843(a)(4). Specifically he was charged with failing to maintain and furnish records respecting out-of-state purchases. He asserts that failing to maintain any records at all is not a furnishing of false information. We find no merit in this contention. He furnished records respecting some purchases (in-state), but omitted information respecting others (out-of-state). This omission constituted a violation of the section. To willfully furnish incomplete records with the implicit representation that they are complete is to furnish false information.
Solomon Goldfine contends that since he was not a registrant, record-keeping requirements did not apply to him; that his only offense was in selling prescription drugs without a prescription in violation of §§ 842(a) and 829. He was charged with violating § 843(a)(4) by omitting material information from records required to be made and kept, and with violating § 842(a)(5) which makes it unlawful "to refuse or fail to make, keep or furnish any record * * * order or order form * * * required under this subchapter." Section 828(a) makes it unlawful for "any person" to distribute a controlled substance save pursuant to written order of the distributee. Section 828(c)(1) requires that preservation of such orders for a period of two years and that they be made available for inspection. These requirements applied to Solomon Goldfine.
18 U.S.C. § 1001, in relevant part, imposes criminal penalties on one who knowingly and willfully makes any false, fictitious or fraudulent statements or representations in "any matter within the jurisdiction of any department or agency of the United States."
In the course of the investigation of this case, Darrell Goldfine, after having received Miranda warnings, was asked by Compliance Investigators of the Drug Enforcement Administration whether he had made any out-of-state purchases. The investigators already knew that he had. He stated that he had not. For that false statement he was charged...
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