U.S. v. Milstein

Decision Date10 March 2005
Docket NumberDocket No. 01-1499.,Docket No. 03-1414.
Citation401 F.3d 53
PartiesUNITED STATES of America, Appellee, v. Moshe MILSTEIN, Defendant-Appellant.
CourtU.S. Court of Appeals — Second Circuit

Kenneth M. Breen, Assistant United States Attorney, New York, New York (Roslynn R. Mauskopf, United States Attorney for the Eastern District of New York, Barbara D. Underwood, Assistant United States Attorney, New York, New York, on the brief), for Appellee.

Richard A. Greenberg, New York, New York (Steven Y. Yurowitz, Newman & Greenberg, New York, New York, on the brief), for Defendant-Appellant.

Before: VAN GRAAFEILAND*, KEARSE, and WESLEY, Circuit Judges.

PER CURIAM:

Defendant-Appellant Moshe Milstein ("Milstein") appeals a judgment of the United States District Court for the Eastern District of New York (Dearie, J.), entered September 5, 2001, convicting him after a jury trial of distributing misbranded drugs in interstate commerce with fraudulent intent, in violation of 21 U.S.C. §§ 331(a) and 333(a)(2) (Count Three); knowingly distributing wholesale prescription drugs in interstate commerce without a required state license, in violation of 21 U.S.C. §§ 331(t), 333(b)(1), and 353(e)(2)(A) (Count Four); knowingly distributing prescription drugs in violation of criminal trademark laws, 18 U.S.C. § 2320(a) (Count Two); distributing wholesale prescription drugs without providing the required history of transactions, in violation of 21 U.S.C. §§ 331(t), 333(a)(2), and 353(e)(1)(A) (Count Five); and conspiracy to commit the first three above-mentioned crimes, in violation of 18 U.S.C. § 371 (Count One). The District Court sentenced Milstein, under the Sentencing Guidelines ("Guidelines"), to 48 months in prison followed by three years of supervised release; fined him $25,000; and imposed a special assessment of $300. The Court also ordered Milstein to pay approximately $3.5 million in restitution to the drug companies that held the trademarks he had infringed.

On appeal, Milstein contends principally that the district court (a) erred in allowing the government to obtain a midtrial superseding indictment, (b) made erroneous evidentiary rulings, and (c) gave erroneous instructions to the jury. He also challenges the constitutionality of the federal statute requiring states to have a federally mandated scheme for licensing wholesale drug distributors engaged in interstate commerce. Finally, he contends that his sentence was impermissibly enhanced based on misinterpretations of the Guidelines and on facts not found by the jury, and that he is entitled to be resentenced in any event because the Guidelines, treated as mandatory, are unconstitutional. For the reasons that follow, we vacate the judgment of conviction on Count Three; we remand for further proceedings with respect to that count and for resentencing; and we affirm the convictions on the other counts.

FACTUAL AND PROCEDURAL BACKGROUND

The evidence at trial, taken in the light most favorable to the government, revealed the following. Through several business entities, Milstein and others bought, repackaged, and sold foreign prescription drugs: Eldepryl, a medication used to treat Parkinson's disease, and the fertility drugs Pergonal and Metrodin.

The Food and Drug Administration ("the FDA") regulates the sale of prescription drugs, including Eldepryl, Pergonal, and Metrodin, in the United States. During the period of Milstein's drug sales, the only FDA-approved distributor of Eldepryl in the United States was Somerset Pharmaceuticals, Inc., of Tampa, Florida. The only FDA-approved distributor of Pergonal and Metrodin in the United States was Serono Labs USA, a subsidiary of Laboratories Serono, S.A., of Aubonne, Switzerland.

The Eldepryl, Pergonal, and Metrodin distributed in the United States by these companies were manufactured and packaged outside the United States in compliance with FDA standards. The companies also produced these drugs for distribution outside the United States with different packaging, and not necessarily in compliance with FDA standards.

Federal law imposes numerous requirements on the distribution of prescription drugs, of which three are relevant here. First, the law forbids distribution in interstate commerce of drugs that are misbranded. See 21 U.S.C. §§ 331(a), 333(a)(2), 352(a), (b), (i)(1), (j), 321(n). Second, the law forbids wholesale distribution of prescription drugs in interstate commerce without a state license. See 21 U.S.C. §§ 331(t), 333(b)(1), 353(e)(2)(A). Third, the law forbids wholesale distribution of prescription drugs without providing a history of transactions from the original manufacturer. See 21 U.S.C. §§ 331(t), 333(a)(2), 353(e)(1)(A). In addition, prescription drugs are subject to the general federal statutory prohibition of trafficking in counterfeit goods. See 18 U.S.C. § 2320.

The Government established at trial that Milstein and others purchased Eldepryl, Pergonal, and Metrodin produced for distribution outside the United States, stripped them of their original factory packaging, repackaged them with forged labels and packaging materials closely resembling those of drugs produced in accordance with FDA requirements for the U.S. market, and then fraudulently sold the drugs in the United States to doctors, pharmacists, and pharmaceutical wholesalers.

The principal witnesses at trial were Albert Silberberg, Alan Weisberger, and Alan Rosenblum, business associates of Milstein, who were not charged with any crimes in connection with this scheme. According to their testimony and other evidence, Milstein began distributing misbranded and counterfeit Pergonal in late 1991, and thereafter added Metrodin and Eldepryl. Milstein obtained foreign Pergonal, Metrodin, and Eldepryl from one George Braun at prices lower than commanded by those drugs when prepared for the U.S. market.

Government lab analysis showed that the drugs Milstein distributed were not identical to the drugs prepared by their manufacturers for the U.S. market. The active ingredient in Milstein's Pergonal and Metrodin did not come from the same batch as the active ingredient in the drugs produced by the European manufacturer, Ares-Serono, for U.S. distribution. Moreover, some of the saline solution in the saline ampules packaged with Milstein's Pergonal and Metrodin contained quantities of bacteria and endotoxins, and therefore were not sterile. Milstein's Eldepryl also differed from the drug produced for the American market: his tablets were thicker, were off-white instead of white, and had dirt particles embedded in them. The Government alleged that Milstein was personally involved in repackaging the drugs to make it appear that they were produced for the U.S. market in accordance with FDA standards.

The Government also asserted that Milstein took substantial measures to hide his unlawful conduct from the Government. Specifically, the Government claimed that Milstein first sold his drugs through a company called WSE Distributors ("WSE"), and later formed a company called Gem Distributors ("Gem"), through which to sell the bulk of his drugs. Milstein needed a prescription drug wholesaler license to show to his customers. Rather than register and obtain a New York license to operate as a prescription drug wholesaler in New York (as he otherwise would be required to do since Gem did all of its business in New York), Milstein registered WSE and later Gem as prescription drug wholesalers in New Jersey.

Actually, WSE's wholesaler application was filed in the name of Milstein's associate, Alan Weisberger. The Government also offered evidence that Milstein filed the wholesaler application for Gem in the name of Irving Goldstein. Milstein signed Goldstein's name, and five of Milstein's fingerprints were found on Gem's wholesaler filings. Milstein set up a fake supplier, Landys Ltd., in Hollywood, Florida, to make it appear that Gem had a legitimate supplier. After Milstein became aware of the investigation into his activities, he gave Silberberg fictitious Landys Ltd. invoices and a business card for Mark Landys, with instructions to show them to the FDA.

When an investigation of Milstein's activities appeared likely, Milstein transferred more than $400,000 in profits to his bank account in Israel by means of a complicated series of transactions, routed through accounts in Switzerland and Israel. When FDA agents eventually questioned Milstein regarding his drug sales, he falsely identified Goldstein as the owner of Gem, and Landys Ltd. as Gem's source for drugs. However, Goldstein's father testified that Goldstein was mentally unstable and not "well enough to be an owner of a chicken coop," and the Government's financial analysis showed that Goldstein received no profits from Gem.

In early September 1993, shortly before his interview with FDA agents, Albert Silberberg told Milstein he was worried about investigation rumors and wanted to stop distributing Milstein's drugs. Consequently, Milstein arranged to sell directly to Silberberg's largest customer, Alan Rosenblum. Milstein's business associate Menachem Korall, using the name Mark Landys, then contacted Rosenblum, and the Pergonal and Metrodin sales continued. The continued illegal sales were accomplished through a new fictitious entity, M. Vase & Co., at a non-existent address. Rosenblum received deliveries of Pergonal and Metrodin on September 15, September 29, October 18, and December 6, 1993.

In September 1998, a grand jury returned an indictment charging Milstein, along with co-defendants Ethel Milstein and Menachem Korall, with criminal trademark infringement, distribution of misbranded drugs in interstate commerce, wholesale distribution of prescription drugs without the required state license, wholesale distribution of prescription drugs...

To continue reading

Request your trial
102 cases
  • U.S. v. Stierhoff
    • United States
    • U.S. District Court — District of Rhode Island
    • August 3, 2007
    ...is uncertain whether the defendant was convicted of conduct that was the subject of the grand jury's indictment." United States v. Milstein, 401 F.3d 53, 65 (2nd Cir.2005). "There is no constructive amendment `where a generally framed indictment encompasses the specific legal theory or evid......
  • United States v. Larry Davis & DCM Erectors, Inc.
    • United States
    • U.S. District Court — Southern District of New York
    • August 3, 2017
    ...United States v. Mollica, 849 F.2d 723, 730 (2d Cir. 1988); United States v. Zingaro, 858 F.2d 94, 99 (2d Cir. 1988); United States v. Milstein, 401 F.3d 53, 65 (2005); United States v. Wozniak, 126 F.3d 105, 111 (2d Cir. 1997); United States v. Dhinsa, 243 F.3d 635 (2d Cir. 2001); United S......
  • U.S. v. Rigas
    • United States
    • U.S. Court of Appeals — Second Circuit
    • May 24, 2007
    ...jury charge operates to `broaden[] the possible bases for conviction from that which appeared in the indictment.'" United States v. Milstein, 401 F.3d 53, 65 (2d Cir.2005) (second alteration in original) (quoting United States v. Miller, 471 U.S. 130, 138, 105 S.Ct. 1811, 85 L.Ed.2d 99 (198......
  • Amalgamated Lithographers of America v. Unz & Co.
    • United States
    • U.S. District Court — Southern District of New York
    • November 3, 2009
    ...the applicable statute of limitations. U.S. v. Mack, 295 U.S. 480, 489, 55 S.Ct. 813, 79 L.Ed. 1559 (1935); see also U.S. v. Milstein, 401 F.3d 53, 63 (2d Cir.2005); Ivani Contracting Corp. v. City of New York, 103 F.3d 257, 260 (2d Cir.1997) ("The prevailing rule, then, is that when a plai......
  • Request a trial to view additional results
11 books & journal articles
  • Federal Law of Unfair Competition
    • United States
    • ABA Antitrust Library Business Torts and Unfair Competition Handbook Business tort law
    • January 1, 2014
    ...1088, 1103 (9th Cir. 2004); Kason Indus., 120 F.3d at 1205-06. 131. 15 U.S.C. § 1115(b)(9). 132. See, e.g., United States v. Milstein, 401 F.3d 53, 64 (2d Cir. 2005); Hermes Int’l v. Lederer de Paris Fifth Ave., Inc., 219 F.3d 104, 107 (2d Cir. 2000); cf. Kason Indus., 120 F.3d at 1207 (“Ge......
  • FEDERAL CRIMINAL CONSPIRACY
    • United States
    • American Criminal Law Review No. 58-3, July 2021
    • July 1, 2021
    ...were fraudulentlykeeping an alien in the United States and that was the purpose of the conspiracy), and United States v. Milstein,401 F.3d 53, 72 (2d Cir. 2005) (holding that acts to safeguard money gained through a conspiracy areconcealment acts in furtherance of the purpose of the conspir......
  • Federal Criminal Conspiracy
    • United States
    • American Criminal Law Review No. 60-3, July 2023
    • July 1, 2023
    ...fraudulently keeping an unlawful alien in the United States and that was the purpose of the conspiracy), and United States v. Milstein, 401 F.3d 53, 72 (2d Cir. 2005) (holding acts to safeguard money gained through a conspiracy are concealment acts in furtherance of the purpose of the consp......
  • Federal Criminal Conspiracy
    • United States
    • American Criminal Law Review No. 59-3, July 2022
    • July 1, 2022
    ...fraudulently keeping an unlawful alien in the United States and that was the purpose of the conspiracy), and United States v. Milstein, 401 F.3d 53, 72 (2d Cir. 2005) (holding that acts to safeguard money gained through a conspiracy are 2022] F EDERAL C RIMINAL C ONSPIRACY 835 co-conspirato......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT