US v. Milicia

• Decision Date: 02 July 1991
• Docket Number: Crim. A. No. 90-00155-1.
• Citation: 769 F. Supp. 877
• Parties: UNITED STATES of America v. Angelo MILICIA.
• Court: U.S. District Court — Eastern District of Pennsylvania

769 F. Supp. 877

UNITED STATES of America v. Angelo MILICIA.

Crim. A. No. 90-00155-1.

United States District Court, E.D. Pennsylvania.

July 2, 1991.

Joan L. Markman, Sonia C. Jaipaul, Philadelphia, Pa., for plaintiff.

John Rodgers Carroll, Peter W. Cooley, Carroll & Carroll, Philadelphia, Pa., for defendant.

MEMORANDUM DECISION UNDER FED.R.CRIM.P. 23(C) TRIAL WITHOUT JURY

LUDWIG, District Judge.

On August 20, 1990 defendant Angelo Milicia, a pharmacist, pleaded guilty to 16 counts of a 17-count superseding indictment charging conspiracy, possession with intent to distribute and distribution of controlled substances, filing false tax returns, and aiding and abetting. 21 U.S.C. §§ 846, 841(a)(1), 26 U.S.C. § 7206(1), 18 U.S.C. § 2. As to count 13, claiming forfeiture of drug offense related-property and proceeds, 21 U.S.C. § 853,¹ he admitted owing some $100,000, but denied responsibility for the amount sought by the government — $4,074,208.60. That amount represents the total sales of prescription medicine alleged to be includable in count one, the conspiracy, beginning November, 1984.² On October 4 and 5, 1990 a bench trial was held to determine "the extent of the interest or property subject to forfeiture, if any." Fed.R.Crim.P. 31(e).

I.

The following facts are undisputed:³

During the more than five-year period of the conspiracy — from April, 1982 to August, 1987 — Mr. Milicia, a licensed pharmacist in Pennsylvania, owned and operated a pharmacy at 1500 South Broad Street, Philadelphia. He worked in the pharmacy and at times employed another pharmacist and two assistants to fill prescriptions. These employees also pleaded guilty to illegal distribution of controlled substances. A fourth employee, hired in 1987, was not charged.

Almost all of the prescriptions dispensed were for name-brand medications: Tuinal, Ritalin, Preludin, Doriden, Empirin # 4, Talwin, Valium, Tussionex, Bromanyl, and Ambenyl. The prescription number, patient name and address, drug name, dosage units, physician, retail price, and the pharmacist's initials were entered into the pharmacy's computer.⁴ The computer made labels for each prescription, a receipt, and a hard copy record of daily sales. The hard copy record was retained in monthly binders. The computer's memory has an inception date of January 6, 1986.

Five physicians wrote most of the prescriptions.⁵ All were licensed practitioners whose illegal prescription writing had not yet been made public.⁶ Also, as of August, 1987 pharmacies were not required to obtain customer identification or to maintain a profile based on a customer's prescription history.

From 1982 to 1987, Milicia Pharmacy purchased all of its supply of controlled substances from West Wholesale Drug Company. In turn, West maintained monthly summaries of the quantities ordered and retained microfiche copies of invoices of the cost of the items sold.

In September, 1986 DEA conducted an accountability audit of the pharmacy. On May 13, 1987, at an administrative hearing, Mr. Milicia was advised of various violations⁷ and was given a memorandum of understanding as to the "corresponding responsibility" requirement of 21 C.F.R. § 1306.04(a),⁸ which he signed and returned on June 8, 1987.

Shortly before August 7, 1987, the pharmacy sold a government informant 2,000 Doriden and 2,000 Empirin # 4 tablets for $5,000. On that date, DEA agents, pursuant to a warrant, searched the pharmacy and seized:

— Computer-generated daily logs of prescription sales from January, 1986 through August, 1987. Gov't exh. 11-30; stip. ¶ 2.

— Written prescriptions filled by the pharmacy from December, 1985 through August, 1987. Gov't exh. 32-44; stip. ¶ 4.

— A handwritten journal used to record bulk sales of controlled substances to regular customers.⁹

— Several large brown paper bags filled with controlled substances.

— Several boxes of vials of pre-counted controlled substances.

— Several packets of unfilled prescriptions for controlled substances written by four of the five regular prescription writers.

— The pharmacy's computer, with memory back to January, 1986.

Defendant concedes that most prescriptions filled after his DEA hearing on May 13, 1987 were not for legitimate medical purposes. This is his basis for admitting liability for about $100,000. Def. admissions ¶ 2.

The government's contention is that the forfeiture period runs from November, 1984 to August 7, 1987. The pharmacy's total retail sales for drugs included in the superseding indictment¹⁰ were $122,803.42 in November and December, 1984,¹¹ $945,299.91 in 1985, and $3,458,795.31 from January, 1986 to August 7, 1987 — a total of $4,526,898.64.

II.

The following facts are found from the evidence:

According to a DEA accountability study made in September, 1983 for the period January-October, 1982, Milicia Pharmacy filled an average of 162 prescriptions per day.¹² Of these, 130 (82.5 percent) were written by one doctor. Moreover, of the Talwin prescriptions, 99.5 percent filled in April, 1982 and 99 percent filled in July, 1982 were from the same physician. Stip. ¶ 19.

In 1986 and 1987, the five regular prescription writers invariably directed 1) the maximum dosage level, 2) the same quantity of medication, and 3) in most instances, brand name medicine rather than generic equivalents. Tr. 80-82, 120, 162. Some often prescribed Doriden and Empirin # 4 for the same individual. Tr. 81, 159. This combination would induce sleep in anyone other than an addicted person who had developed a high tolerance for such drugs. Tr. 81. The pharmacy sold about the same number of controlled cough syrups in the summer-time as the winter. Tr. 79.

As early as February, 1985, pharmacy employees began pre-counting pills and pre-filling cough syrup bottles to expedite anticipated orders. Tr. 166-68; gov't exh. 52. One employee was hired in June, 1987 primarily to fill vials and bottles with Empirin # 4, Doriden, Talwin, Valium and Tuinal tablets and Tussionex and Bromanyl cough syrup. Her instructions from Mr. Milicia, among others, were to prepare specified amounts before the prescriptions were received by the pharmacy. Stip. ¶ 16. When time did not permit pre-counting, pharmacy employees gave out prescription medicine in pre-packed factory containers. Tr. 121. They often used brown grocery bags. Tr. 121, 195; gov't exh. 54-56, 58-60, 62.

Mr. Milicia was contemporaneously aware that all of the prescription filling practices charged in the indictment, from 1982 to 1987, were criminal and that the sales involved were illegal. Milicia statement. At the DEA administrative hearing on May 13, 1987, he admitted being familiar with 21 C.F.R. 1306.04(a). Tr. 226-28.

The pharmacy's regular drug customers numbered five to 10 in 1982 and 20 to 25 by 1987. Tr. 118, 128. In 1982, regular customers brought in five to 15 prescriptions at a time, written for different patients. By 1987, some regular customers were bringing in hundreds of prescriptions at a time. Tr. 118, 195-96. Although some credit was extended, all of these prescriptions were eventually paid for in cash. Tr. 79, 120.

From June 22, 1987 to August 7, 1987, at Mr. Milicia's direction, pharmacy employees maintained a handwritten journal of sales to regular customers. This journal recorded the customer's name, the amount of money that each owed and the amount paid, as well as the date of each transaction. These amounts ranged from several hundred dollars to over $10,000. Stip. ¶ 3; tr. 122, 172-73; gov't exh. 31, 65 ¶ 3. The journal contains 198 entries, totaling over $320,000. Gov't exh. 3; def. admissions ¶ 3.

The pharmacy did not keep records of prescription sales prior to January, 1986 either hard copy or in the computer. The available records of sales before January, 1986 are those of West Wholesale Drug Company; prescriptions filled during the latter part of 1985; and 1982 schedule II controlled substance prescriptions obtained in the 1983 DEA audit. Oct. 4 tr. at 36, 51-52. As one employee testified, prescription sales to regular customers from 1982 to 1985 conformed with those from December, 1985 through August, 1987. They were identical as to brand names, dosages, regular customers, and cash payments — the same modis operandi. Tr. 116-120, 126-27, 130-32.

During the search conducted on August 7, 1987, Mr. Milicia was told by DEA agents that the pharmacy was not required to stop dispensing controlled substances. However, after that date, the pharmacy purchased very small quantities of prescription drugs and ceased ordering Doriden and Empirin # 4. Tr. 4-5.

The sales to its largest regular drug customers between June 22, 1987 and August 7, 1987, as recorded in its journal, represent over 80 percent of the pharmacy's total cash sales during that period. The recorded sales do not include smaller sales of controlled substances. Oct. 4 tr. 38; tr. 159-60; gov't exh. 28, 29, 31.

Prescriptions from the five physicians accounted for over 90 percent of the total filled from January, 1986 to August 7, 1987 and for over 91 percent of pharmacy revenue from prescription sales from June, 1986 to August, 1987. Tr. 79, 82-83; gov't exh. 66, 67.

According to DEA compiled data, for the years 1984 through 1987, this neighborhood pharmacy, located in South Philadelphia, ranked in the top 10 in the United States in wholesale purchases of a variety of name brand drugs. For example, in 1985 and 1986, it ranked first as to hydrocodone (Tussionex); in 1986 and 1987,¹³ second as to secobarbital (Tuinal); in 1987, third as to codeine (Empirin # 4, Bromanyl, Ambenyl).¹⁴ Gov't motion in limine, Oct. 22, 1990.

III.

A.

Our Circuit has held that the government's burden of proof in a criminal forfeiture action is by a preponderance.

We uphold against constitutional challenge 21 U.S.C. § 853(d)'s provision establishing a preponderance of the evidence as the government's burden of proof for criminal forfeiture after a guilty verdict.

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