United States v. Chin

• Decision Date: 09 July 2020
• Docket Number: Nos. 18-1263,18-1500,18-1310,s. 18-1263
• Citation: 965 F.3d 41
• Parties: UNITED STATES of America, Appellee, Cross-Appellant, v. Glenn A. CHIN, Defendant, Appellant, Cross-Appellee.
• Court: U.S. Court of Appeals — First Circuit

965 F.3d 41

UNITED STATES of America, Appellee, Cross-Appellant,

v.Glenn A. CHIN, Defendant, Appellant, Cross-Appellee.

Nos. 18-1263

18-1310

18-1500

United States Court of Appeals, First Circuit.

July 9, 2020

James L. Sultan, with whom Kerry A. Haberlin and Rankin & Sultan were on brief, for appellant/cross-appellee.

David M. Lieberman, Attorney, Criminal Division, Appellate Section, United States Department of Justice, with whom Andrew E. Lelling, United States Attorney, Amanda P. Strachan, Assistant United States Attorney, George P. Varghese, Assistant United States Attorney, Brian A. Benczkowski, Assistant Attorney General, and Matthew S. Miner, Deputy Assistant Attorney General, were on brief, for appellee/cross-appellant.

Before Barron, Stahl, and Lipez, Circuit Judges.

BARRON, Circuit Judge.

These consolidated appeals, like those we also decide today in United States v. Cadden, ––– F.3d ––––, 2020 WL 3868247 (1st Cir. 2020) [Nos. 17-1694, 17-1712, 17-2062], concern convictions that stem from a 2012 scandal involving the Massachusetts-based New England Compounding Center ("NECC"). The scandal broke after federal investigators traced the cause of a deadly nationwide outbreak of fungal meningitis and other illnesses to medications that NECC had produced at its facilities. Federal criminal charges were then brought against a number of NECC employees, including the defendant in this case, Glenn Chin, who was NECC's supervising pharmacist at the time. For his role in the scandal, he was convicted in 2017 of numerous federal crimes, and, in consequence, sentenced to a lengthy term of imprisonment, subjected to an order of forfeiture, and ordered to pay restitution.

Chin now challenges two of those convictions, for racketeering and racketeering conspiracy, respectively. He contends that they must be reversed because the evidence did not suffice to support them. He also contends that, in consequence, his prison sentence must be vacated. If he is right about the lack of evidence to support his convictions, then the order of forfeiture also must be reversed.

The government, for its part, brings its own appeal. It challenges the prison sentence that Chin received as well as both the $175,000 order of forfeiture that the District Court imposed on him and its award of restitution of an as-yet-unspecified amount.

We affirm both of Chin's federal racketeering-related convictions. However, we vacate and remand the prison sentence, the forfeiture order, and the restitution order.

I.

Our opinion in Cadden addresses the consolidated appeals in the criminal case against Chin's boss and alleged co-conspirator at NECC, Barry Cadden. He was charged in the same indictment as Chin but his trial on those charges was severed from Chin's. See Cadden, 965 F.3d at 8. The issues that we confront here overlap in many respects with those that we address in our opinion in Cadden's case. We thus refer to our reasoning there throughout the analysis that follows. We also refer the reader to that opinion for additional details about NECC's practices and the federal criminal investigation into them. Briefly stated, however, the facts relevant to the appeals in Chin's case are the following.

The practice of compounding involves combining drugs with other substances to produce medications. As a compounding pharmacy, NECC -- which was based in Framingham, Massachusetts -- prepared specialized medications, otherwise unavailable in the wider market, to hospitals and other medical providers upon their request.

Chin was a trained pharmacist who served as a supervisor at both of NECC's clean rooms. The company's compounding operations that produced the medications tied to the outbreak took place in one of these clean rooms.

On December 16, 2014, following an extensive federal criminal investigation into NECC's role in the outbreak, Chin was charged, along with Cadden and twelve other individuals affiliated with NECC, in a 131-count indictment in the United States District Court for the District of Massachusetts. The indictment charged Chin with racketeering in violation of 18 U.S.C. § 1962(c) ; racketeering conspiracy in violation of 18 U.S.C. § 1962(d) ; forty-three counts of federal mail fraud in violation of 18 U.S.C. § 1341 ; and thirty-two counts of violating the Federal Food, Drug, and Cosmetic Act ("FDCA"), see 21 U.S.C. §§ 331(a), 333(a).

The racketeering charge alleged sixty-eight predicate acts of racketeering to support the allegation that Chin participated in the conduct of NECC through a "pattern of racketeering activity." See 18 U.S.C. § 1962(c). These alleged predicate acts of racketeering included forty-three that were premised on mail fraud allegations, as mail fraud is a racketeering activity. See id. § 1961(1)(B). These allegations corresponded to the mail fraud allegations set forth in forty-three of the stand-alone mail fraud counts.

The alleged mail fraud entailed NECC misrepresenting its various safety protocols to customers who purchased its medications. Those medications included the contaminated "high-risk" sterile medication, methylprednisolone acetate ("MPA"), that NECC had compounded during Chin's tenure as the supervising pharmacist there and that had given rise to the outbreak. In particular, NECC was alleged to have misrepresented that it had complied with the safety standards set forth in Chapter 797 of the United States Pharmacopeia ("USP-797"), which applies to high-risk sterile compounded medications, including MPA.

The sixty-eight alleged predicate acts of racketeering also included twenty-five that were premised on allegations of second-degree murder, which is itself a racketeering activity. See id. § 1961(1)(A). The allegations of second-degree murder were tied to twenty-five patients who had died from having been injected with the contaminated MPA that NECC had compounded.

The racketeering conspiracy charge did not identify specific predicate acts of racketeering that it alleged that Chin conspired to commit. See id. § 1962(d). Rather, the indictment alleged that Chin conspired to commit a racketeering violation through a pattern of racketeering activity that involved only unspecified instances of mail fraud.

The District Court severed Chin's case from Cadden's and the other defendants'. Chin's case proceeded to trial, and the jury found him guilty on all counts. A special verdict form indicated that, for the purposes of the racketeering offense, the jury found that the government had proved twelve of the sixty-eight alleged predicate acts of racketeering, each of which concerned only mail fraud. The special verdict form expressly made clear that the jury did not find any of the twenty-five alleged predicate acts of second-degree murder, which, again, were relevant only to the racketeering count, not the racketeering conspiracy count. As to the FDCA counts, the special verdict form showed that the jury found that Chin acted with an "intent to defraud or mislead," an aggravating factor, on two of the counts. See 21 U.S.C. § 333(a)(2). It did not so find for the other thirty FDCA counts.

The District Court calculated Chin's sentencing range under the United States Sentencing Guidelines ("Guidelines") to be seventy-eight to ninety-seven months' imprisonment. The District Court then sentenced Chin to ninety-six months' imprisonment. The District Court also issued a forfeiture order against Chin in the amount of $175,000. Finally, the District Court ruled on the government's motion for restitution. It ordered that it would "calculate the total restitution award as the loss suffered by the hospitals and clinics that purchased lots of degraded or defective drugs during the life of the racketeering enterprise," but stated that it would await the trial of Chin's co-defendants before apportioning the restitution amount among those found guilty and so did not identify a dollar amount for the award of restitution.

The government issued a notice of appeal, and Chin followed suit.

II.

We begin with Chin's appeal, in which he challenges his convictions for racketeering and racketeering conspiracy. See 18 U.S.C. § 1962(c), (d).¹ He contends that each must be reversed due to insufficient evidence. His sufficiency challenges focus solely on what the record shows -- or, more precisely, fails to show -- about whether a juror reasonably could find satisfied the "pattern of racketeering activity," id. § 1961(5), element that is common to each of the underlying offenses, see id. § 1962(c), (d).

As we will explain, the challenges to these convictions turn on whether the evidence sufficed to show that NECC was -- as of 2012 -- engaged in a regular business practice of fraudulently representing to its customers that the medications that it was shipping to them had been produced in accord with certain safety standards when in fact they had not been. For, if the evidence did support that conclusion, then a reasonable juror supportably could have found not merely isolated acts of racketeering activity but a "pattern" of it.

We begin with Chin's challenge to the racketeering conviction. We then briefly consider his racketeering conspiracy conviction.

A.

Congress has provided little guidance as to the meaning of the "pattern of racketeering activity" element for the offense of racketeering. See id. § 1961(5). It has made clear that there must be at least two predicate acts of racketeering within ten years of one another for there to be a "pattern of racketeering activity." See id. But, the relevant statutory text is otherwise silent as to what makes a pair -- or more -- of individual predicate acts of racketeering a "pattern of racketeering activity."

The United States Supreme Court has fleshed out this "pattern" element in the following ways. First, the Court has made clear that the individual predicate acts of racketeering that occur within ten years of one another must have been "related" to one another. H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 239, 109...