U.S. v. Coleman

• Decision Date: 24 May 2005
• Docket Number: No. CR-2-02-130(1), (2), (3).,CR-2-02-130(1), (2), (3).
• Citation: 370 F.Supp.2d 661
• Parties: UNITED STATES, Plaintiff, v. Marilyn A. COLEMAN, et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

Page 661

370 F.Supp.2d 661

UNITED STATES, Plaintiff, v. Marilyn A. COLEMAN, et al., Defendants.

No. CR-2-02-130(1), (2), (3).

United States District Court, S.D. Ohio, Eastern Division.

May 24, 2005.

Deborah A. Solove, United States Attorney, Columbus, OH, for Plaintiff.

Max Kravitz, Paula Milsom Brown, Kravitz, Gatterdam & Brown, LLC, Thomas Michael Tyack, Tyack Blackmore & Liston Co. LPA, Kort Walter Gatterdam, Kravitz, Gatterdam & Brown, LLC, Columbus, OH, for Defendants.

SENTENCING MEMORANDUM

MARBLEY, District Judge.

I. INTRODUCTION

The Defendants, Marilyn A. Coleman, Mitchell V. Kaminski, and Ovimmune, Inc., came before the Court for sentencing on April 29, 2005. The Court found that Defendants Coleman and Kaminski had a total offense level of 10 and a Criminal History Category of I, resulting in a guideline imprisonment range of 6-to-12 months. The Court sentenced both Defendants to a term of probation of five years, which includes six months of confinement at a community treatment center, with work-release only, and 6 months of home confinement, which may include electronic monitoring. The Court ordered each Defendant to pay a fine of $6,000 and a special assessment of $375. In addition, all Defendants were found jointly and severally liable for restitution in the amount of $33,604.12. The Court stayed Ovimmune's sentence for sixty days pending resolution of certain matters.¹ In addition to outlining the sentences imposed, this Sentencing Memorandum addresses this Court's post-Booker approach to sentencing enhancements.

II. BACKGROUND AND FACTS

A. Trial

In a 23 count Superseding Indictment, the government charged Defendants Marilyn A. Coleman ("Coleman"), Mitchell V. Kaminski ("Kaminski"), and Ovimmune, Inc. ("Ovimmune"), with one count of conspiracy, seven counts of mail fraud, and fifteen counts for violations of the Federal Food, Drug, and Cosmetic Act, 21 U.S.C. § 301 et seq. ("FDCA"). At the time of the Superceding Indictment, Defendants Coleman and Kaminski were the only active officers of the Ovimmune corporation and, together, were co-owners of the corporation.²

The charges were based on the Defendants' manufacture of "hyperimmune" egg products, which they allegedly sold as treatment for a variety of human diseases. These egg products were manufactured by specially vaccinating chickens, then treating the chickens' eggs to create products referred to, inter alia, as "anti-chlamydia egg powder," "anti-candida egg powder," and "Candida Rx." The theory was that the vaccinated chickens would create antibodies that would cause their eggs to be useful in treating disease. The vaccines were transported in interstate commerce. The egg products were manufactured by treating the eggs in the basement of Defendant Coleman's home, which was listed as the business address for Defendant Ovimmune. One baggie of egg powder often sold for more than $200.

On August 15, 2002, Defendants Coleman and Kaminski were arraigned and entered pleas of not guilty. The Defendants denied all of the government's allegations, claiming: (1) their products were not drugs; (2) they lacked the criminal intent necessary under federal law; and (3) they acted in reasonable reliance on the government's assertions that their conduct was lawful. The trial began June 23, 2003, and lasted nineteen days. After four days of deliberations, on July 23, 2003, the jury reached a verdict.

The jury found all three Defendants not guilty of the crime of conspiracy in violation of 18 U.S.C. § 371 as charged in Count 1 of the Superseding Indictment and not guilty of the crimes of mail fraud in violation of 18 U.S.C. §§ 2 and 1341 as charged in Counts 2 through 8. As to Counts 9 through 13, introduction into interstate commerce of unapproved new drugs in violation of 21 U.S.C. §§ 331(d), 355(a) and 333(a)(2) and 18 U.S.C. § 2, the jury found that the Defendants did not have the intent to defraud or mislead required for felony violations, but did find them guilty of the lesser included offenses of introduction into interstate commerce of unapproved new drugs without intent to defraud or mislead, misdemeanor offenses.

As to Counts 14 through 17, introduction of misbranded drugs into interstate commerce in violation of 21 U.S.C. §§ 331(a) and 333(a)(2) and 18 U.S.C. § 2, the jury found that the Defendants did not have the intent to defraud or mislead required to find felony violations, but found them guilty of the lesser included offenses of introduction into interstate commerce of misbranded drugs without intent to defraud or mislead, misdemeanor offenses. The jury specifically found "misbranding" by virtue of the fact both that (1) the product's labeling did not bear adequate directions for use, and (2) the product was manufactured, prepared, propagated, compounded, or processed in an establishment in any state not duly registered with the Food and Drug Administration ("FDA").

As to Count 18, failure to register a drug manufacturing facility in violation of 21 U.S.C. §§ 331(p) and 333(a)(2) and 18 U.S.C. § 2, the jury found that the Defendants did not have the intent to defraud or mislead required to find a felony violation, but found them guilty of the lesser included offense of failure to register a drug manufacturing facility without intent to defraud or mislead, a misdemeanor.

As to Counts 19 through 21, misbranding drugs while held for sale after shipment in interstate commerce in violation of 21 U.S.C. §§ 331(k) and 333(a)(2) and 18 U.S.C. § 2, the jury found that the Defendants did not have the intent to defraud or mislead required to find felony violations, but did find them guilty of the lesser included offenses of misbranding drugs while held for sale after shipment in interstate commerce without intent to defraud or mislead, misdemeanor offenses.

The jury found the Defendants guilty as charged in Counts 22 and 23, adulterating drugs in violation of 21 U.S.C. §§ 331(k) and 333(a)(1) and 18 U.S.C. § 2. The jury specifically found "adulteration" by virtue of the fact that (1) the product was prepared, packed, or held under unsanitary conditions whereby it may have been contaminated with filth, or whereby it may have been rendered injurious to health, and (2) the methods used in, or the facilities or controls used for, its manufacture, processing, packing, or holding did not conform to or were not operated or administered in conformity with current good manufacturing practice.

B. Sentencing

In the presentence investigation report, ("PIR"), prepared on October 22, 2003, the probation officer calculated the applicable guideline range under the United States Sentencing Guidelines ("U.S.S.G.") for Defendants Coleman and Kaminski under the 2000 edition of the United States Sentencing Guidelines Manual. PIR at ¶ 48. The PIR first explained that all five counts would be grouped together under 3D1.2(d), which provides that "[c]ounts involve substantially the same harm ... when the offense level is determined largely on the basis of the total amount of harm or loss, the quantity of a substance involved, or some other measure of aggregate harm, or if the offense behavior is ongoing or continuous in nature and the offense guideline is written to cover such behavior." Id. The PIR found a base offense level of 6 under U.S.S.G. § 2N2.1,³ which covers violations of statutes dealing with any food, drug, biological product, device, cosmetic or agricultural product. PIR at ¶ 50. The PIR then explained that because this case involved fraud, the fraud cross-reference in § 2N2.1(b)(1) should apply, meaning that § 2F1.1 must also be utilized in determining the appropriate sentence. PIR at ¶ 50. Turning to § 2F1.1, the PIR added 7 levels to the base offense (for a preliminary total of 13) because the "total monetary loss to the individual and corporate victims is $128,907.68." See U.S.S.G. § 2F1.1(b)(1)(H) (adding 7 levels for any loss exceeding $120,000). PIR at ¶ 51.⁴ The PIR then added 2 levels pursuant to § 2F2.1(b)(2) because the offense involved a scheme to defraud more than one victim, and added another 2 levels because, under § 3B1.3, Defendants Kaminski and Coleman both abused a position of public or private trust, or used a special skill in any manner that significantly facilitated the commission or concealment of the offenses. PIR at ¶¶ 52, 54. Finally, the PIR added 2 levels for each Defendant for obstruction of justice. PIR at ¶¶ 55-56. Neither Defendant received an adjustment for acceptance of responsibility pursuant to § 3E1.1 because each Defendant proceeded to trial and attempted to obstruct justice. PIR at ¶ 57. Thus, each Defendant had a total offense level of 19 with a Criminal History Category of I, resulting in a guideline imprisonment range of 30-to-37 months.

Both the government and Defendants objected extensively to the probation officer's conclusions. In response to these objections, the probation department issued an addendum to the PIR on January 28, 2005, which addressed seven substantive objections from Defendants and two substantive objections from the government. Defendant Coleman submitted four additional sentencing memoranda between April 5, 2005 and April 28, 2005. Likewise, Defendant Kaminski submitted an additional sentencing memorandum on April 26, 2005. The government responded accordingly. These filings focused primarily on the impact, if any, that the Supreme Court's decision in United States v. Booker, ___ U.S. ___, 125 S.Ct. 738, 160 L.Ed.2d 621 (2005) would have on each Defendant's sentence.

III. ANALYSIS

As Defendants pointed out in their voluminous filings, the post-Booker world has raised several novel legal issues. In Booker, Justice Stevens, writing for the constitutional majority of the Court, found that the Sixth Amendment was violated when an enhanced sentence was imposed under a mandatory sentencing guideline regime based on a sentencing judge's determination, as opposed to a jury's...