U.S. v. Smith, 83-5200

Citation740 F.2d 734
Decision Date13 August 1984
Docket NumberNo. 83-5200,83-5200
PartiesUNITED STATES of America, Plaintiff-Appellant, v. Ronald C. SMITH, M.D., Robert Miltimore and Donald F. Mitchell, Defendants-Appellees.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

Richard R. Romero, Asst. U.S. Atty., Los Angeles, Cal., for plaintiff-appellant.

Mark Heaney, Richard D. Burda, Los Angeles, Cal., for defendants-appellees.

Appeal from the United States District Court for the Central District of California. Argued and submitted February 6, 1984.

Before WALLACE, TANG and SKOPIL, Circuit Judges.

TANG, Circuit Judge:

The government appeals the dismissal of an indictment charging the defendants with nine counts of causing false statements to be made to the government and with five counts of failure to maintain accurate drug testing records. The following issues are raised in this appeal: First, whether a federal agency must receive a false statement in order to trigger the statute of limitations for a violation of 18 U.S.C. Sec. 1001; and second, whether 21 U.S.C. Secs. 355(i) and 331(e) in conjunction with 21 C.F.R. Sec. 312.1 make it a crime for a clinical investigator to maintain inadequate or inaccurate records. We affirm.

I

Ronald C. Smith, M.D., maintained medical research facilities in southern California and employed Robert Miltimore and Donald F. Mitchell as researchers. They were engaged by certain pharmaceutical companies to study the safety and efficacy of particular investigational drugs when used on human beings. On April 19, 1983, a grand jury returned a fourteen count indictment against Smith, Miltimore and Mitchell. The first nine counts charged the defendants with causing the submission of false statements to the government in violation of 18 U.S.C. Secs. 1001 1 and 2(b). 2 Specifically, the indictment alleged that the defendants had caused the Sterling-Winthrop pharmaceutical company to submit to the Food and Drug Administration reports indicating that certain individuals had improved or had shown no reaction after taking an experimental drug when these individuals had not actually participated in the drug testing experiments. The last five counts of the indictment charged the defendants with failure to maintain accurate drug testing records in violation of 21 U.S.C. Secs. 331(e), 333(b) and 355(i). Specifically, the indictment alleged that the defendants had failed to maintain accurate records by placing falsified and fraudulent data, including false consent forms, in patient files.

The district court dismissed the first nine counts, concluding that they were barred by the five-year statute of limitations, 18 U.S.C. Sec. 3282. It also dismissed the last five counts of the indictment, concluding that the statute requiring the maintenance of accurate records applied only to manufacturers and sponsors of research and did not apply to the clinical investigators.

II

The government contends that the statute of limitations does not bar the first nine counts of the indictment which charge the defendants with causing the submission of false statements to the government. Relying on 18 U.S.C. Sec. 2(b), which makes a person liable for causing another to commit crimes against the United States, the government argues that the defendants are liable for causing Sterling-Winthrop to submit false statements to the government by providing false information to Sterling-Winthrop for submission to the FDA. It is not necessary, however, to address the merits of the government's theory of substantive liability under 18 U.S.C. Sec. 2(b), because even if we accepted it, the five-year statute of limitations would still bar the action.

The statute of limitations begins to run when the crime is complete. Toussie v. United States, 397 U.S. 112, 115, 90 S.Ct. 858, 860, 25 L.Ed.2d 156 (1970). A crime is complete when each element of the crime has occurred. United States v. Drebin, 557 F.2d 1316, 1332 (9th Cir.1977). The government contends that the crime was complete when the FDA received a written report from Sterling-Winthrop concerning the defendants' research on April 20, 1978. The report had been mailed to the FDA on April 14, 1978. The government's contention that the April 19, 1983, indictment fell within the five-year statute of limitations hinges on a determination that the offense is not complete until the government has actually received the allegedly false statements. The statute, however, has no such requirement. The offense is complete when the false statement is submitted. There is no requirement that the government actually receive or rely on the statement before the offense is completed. United States v. Balk, 706 F.2d 1056, 1059 (9th Cir.1983); United States v. Rose, 570 F.2d 1358, 1363 (9th Cir.1978). Thus, even under the government's liability theory, the statute of limitations began to run when the report was mailed on April 14, 1978. Because the indictment issued more than five years after the completion of the offense, the district court correctly concluded that the statute of limitations barred prosecution of the nine counts charging submission of false statements to the government.

The government cites cases in which venue was deemed proper in districts where the false statements were received. Haddad v. United States, 349 F.2d 511 (9th Cir.1965); United States v. Candella, 487 F.2d 1223 (2d Cir.1973), cert. denied, 415 U.S. 977, 94 S.Ct. 1563, 39 L.Ed.2d 872 (1974). Because venue is proper where the crime is completed, 18 U.S.C. Sec. 3237(a), the government contends that these cases implicitly suggest that a violation of 18 U.S.C. Sec. 1001 is not complete until the false statement is received by the federal agency. The government's effort to redefine the essential elements of the substantive offense by resorting to venue cases is unpersuasive. First, the theory goes against the weight of authority holding that a section 1001 violation can be complete without actual receipt of the statement by the relevant federal agency. United States v. Balk, 706 F.2d at 1059; United States v. Hooper, 596 F.2d 219, 223 (7th Cir.1979); United States v. Herberman, 583 F.2d 222, 227 (5th Cir.1978). Second, even the case law allowing venue in districts where the statements were received indicates that the perpetrator's actions constitute a complete and indictable offense upon preparation of the false statement and its application to a matter within the jurisdiction of a federal agency. The cases do not suggest that actual receipt by the relevant agency is an essential element of the offense. United States v. Wuagneux, 683 F.2d 1343, 1356 (11th Cir.1982), cert. denied, --- U.S. ----, 104 S.Ct. 69, 78 L.Ed.2d 83 (1983); United States v. Candella, 487 F.2d at 1228.

III

The government also contends that the last five counts of the indictment charging the defendants with failure to maintain accurate drug testing records were improperly dismissed because the district court incorrectly concluded that 21 U.S.C. Sec. 355(i) 3 does not apply to clinical investigators. The failure to maintain records as required by section 355(i) is a prohibited act and may lead to imprisonment, a fine or both. 21 U.S.C. Secs. 331(e), 333. While section 355(i) expressly authorizes regulations requiring manufacturers or the sponsors of clinical investigations to maintain and submit drug testing reports to the FDA, it does not expressly call for the imposition of such a requirement on clinical researchers. The government argues, however, that section 355(i) should be interpreted to apply to clinical investigators because regulations promulgated pursuant to section 355 require sponsors to obtain from investigators a form stating that the investigator will maintain accurate drug testing records and case histories. 21 C.F.R. Secs. 312.1(a)(12) and 312.1(a)(13). Such regulations, the government contends, provide sufficient notice to investigators that failure to maintain accurate records would constitute a statutory offense. The district court correctly determined, however, that the statute and regulations cannot be read to attach criminal liability to the clinical investigators.

Although the statute expressly authorizes regulations which impose affirmative duties on manufacturers and the sponsors of clinical investigations, we are reluctant to read the statute as authorizing criminal penalties for the violation of any regulation promulgated pursuant to the statute's general authorizing language. In creating the obligation to maintain drug testing records, Congress expressly imposed the burden on manufacturers and sponsors. Sec. 355(i)(3). The government asks that we extend the statutory obligation to include clinical investigators pursuant to the statute's general regulatory authority which allows the Secretary to establish "other conditions relating to the protection of public health" before exempting manufacturers from the statute's basic drug approval application requirements. Sec. 355(i). Such general authorizing language, however, is insufficient legislative guidance for the issuance of regulations which, if violated, would furnish the basis for criminal liability. Executive agencies have the authority to establish regulations which are enforced by criminal penalties only when Congress has provided "sufficient guidelines and standards for the exercise of the authority." United States v. Davis, 564 F.2d 840, 844 (9th Cir.1977), cert. denied, 434 U.S. 1015, 98 S.Ct. 733, 54 L.Ed.2d 760 (1978); United States v. Suquet, 551 F.Supp. 1194, 1198 (N.D.Ill.1982); United States v. Piatti, 416 F.Supp. 1202, 1205 (E.D.N.Y.1976).

Moreover, even if Congress had provided standards for extending the recordkeeping requirement to investigators by regulation, the regulatory language falls short of imposing an explicit affirmative duty on the investigators to maintain accurate records. 4 The regulations do not make it clear that the...

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