US v. Najarian, Cr. No. 3-95-45.

Decision Date12 January 1996
Docket NumberCr. No. 3-95-45.
PartiesUNITED STATES of America, Plaintiff, v. John S. NAJARIAN, Defendant.
CourtU.S. District Court — District of Minnesota

COPYRIGHT MATERIAL OMITTED

Henry J. Shea, Janet A. Newberg and Mark D. Larsen, Assistant United States Attorneys, Minneapolis, Minnesota, for U.S.

Peter Thompson and John Lundquist, Thompson, Lundquist & Sicoli, Minneapolis, Minnesota, for Defendant.

ORDER

KYLE, District Judge.

This matter is before the Court on Defendant's Objections to the December 27, 1995 Report and Recommendation ("R & R") of Magistrate Judge Raymond L. Erickson. This matter was referred to Magistrate Judge Erickson for a report and recommendation pursuant to 28 U.S.C. § 636(b)(1)(A) and (B).

The Defendant objects to the Magistrate Judge's recommendation to (1) deny Defendant's Motion to Dismiss Counts 1 through 4 of the Superseding Indictment on the grounds of vagueness and failure to state offenses; (2) deny Defendant's Motion to Dismiss Counts 1 through 4 of the Superseding Indictment on the grounds of estoppel; (3) deny Defendant's Motion to Dismiss Count 1, Paragraph 10(b) of the Superseding Indictment; (4) deny Defendant's Motion to Dismiss Counts 14, 23 and 24 of the Superseding Indictment; and (5) deny Defendant's Motion to Suppress Statement pursuant to Garrity v. New Jersey, 385 U.S. 493, 87 S.Ct. 616, 17 L.Ed.2d 562 (1967).

The Court reviews a magistrate judge's report and recommendation de novo and reviews a magistrate judge's order under the clearly erroneous standard. 28 U.S.C. §§ 636(b)(1)(C) and 636(b)(1)(A); Banbury v. Omnitrition Int'l, Inc., 818 F.Supp. 276, 279 (D.Minn.1993).

The Court has independently reviewed the R & R, the materials filed in support of and opposition to Defendant's motions, the Transcript of the hearing held before the Magistrate Judge with respect to Defendant's Motion to Suppress under Garrity, the Defendant's Memorandum in Support of his Objections to the R & R, and the Government's response. The R & R is thorough, well-reasoned, and exhaustively assesses the Defendant's claims and the applicable law. The Court concurs with the Magistrate Judge's legal analysis and finds his factual findings with respect to Garrity to be fully supported by the record.

Accordingly, based on the foregoing and a de novo review of all the files, records, and proceedings herein, the Court will ADOPT the Report and Recommendation dated December 27, 1995 (Doc. No. 183) and IT IS ORDERED that:

(1) Defendant's Motion to Dismiss Counts 1 through 4 of the Superseding Indictment on the grounds of vagueness and failure to state offenses (Doc. Nos. 41 and 74) is DENIED;

(2) Defendant's Motion to Dismiss Counts 1 through 4 of the Superseding Indictment on estoppel grounds (Doc. No. 45) is DENIED;

(3) Defendant's Motion to Dismiss Count 1, Paragraph 10(b) of the Superseding Indictment (Doc. No. 43) is DENIED;

(4) Defendant's Motion to Dismiss Counts 14, 23 and 24 of the Superseding Indictment (Doc. No. 131) is DENIED;

(5) Defendant's Motion to Suppress Statement pursuant to Garrity v. New Jersey, 385 U.S. 493 (1967) (Doc. No. 65) is DENIED.

ORDER and REPORT AND RECOMMENDATION

ERICKSON, United States Magistrate Judge.

At Duluth, in the District of Minnesota, this 27th day of December, 1995.

Crim. No. 3-95-45(1)

I. Introduction

This matter came before the undersigned United States Magistrate Judge pursuant to a special assignment, made in accordance with the provisions of Title 28 U.S.C. § 636(b)(1)(A) and (B), upon the following Motions of the Defendant:

1. An Amended Motion to Dismiss Counts 1 through 4 of the Superseding Indictment on Vagueness and Due Process Grounds.1
2. A Motion to Dismiss Counts 1 through 4 of the Superseding Indictment on Estoppel Grounds.
3. A Motion to Dismiss Count 1, Paragraph 10(b) of the Superseding Indictment.
4. A Motion to Dismiss Counts 14, 23 and 24 of the Superseding Indictment.
5. A Motion to Suppress Statement.

A Hearing on these Motions was conducted on November 8 and 9, 1995, at which time the Defendant appeared personally and by Peter Thompson and John W. Lundquist, Esqs., and the Government appeared by Henry J. Shea, Mark D. Larsen, and Janet A. Newberg, Assistant United States Attorneys.2

For reasons which follow, we recommend that the Motions be denied.

II. Findings of Fact

In a 52-page, 21-Count Superseding Indictment, that was filed on July 19, 1995, the Defendant was charged with one Count of participating in a conspiracy to defraud the United States, in violation of Title 18 U.S.C. § 371;3 with one Count of willfully making a false statement, in violation of Title 18 U.S.C. § 1001; with two Counts of failing to report to the Food and Drug Administration ("FDA"), an adverse experience, purportedly related to the use of an experimental drug, in violation of Title 21 U.S.C. §§ 331(e), 355(i) and 333(a)(2), and 21 C.F.R. § 312.32(c); with one Count of conspiring to commit offenses against the United States, in violation of Title 18 U.S.C. § 371; with two Counts of theft and embezzlement from the University of Minnesota, in violation of Title 18 U.S.C. §§ 666 and 2; with seven Counts of mail fraud, in violation of Title 18 U.S.C. §§ 1341 and 2; with five Counts of willfully filing a false tax return, in violation of Title 26 U.S.C. § 7206(1); with one Count of obstructing an administrative proceeding of the FDA, in violation of Title 18 U.S.C. §§ 1505 and 2; and with one Count of willfully obstructing the due administration of justice, in violation of Title 18 U.S.C. §§ 1503 and 2. The events which precipitated these charges, and which are germane to the Motions before the Court, may be briefly summarized.

The charges pending against the Defendant arise from the development, the clinical investigation, and the marketing of Antilymphocyte Globulin ("ALG"), a biologic drug product that is administered to suppress the immune response, and to prevent and treat the rejection of transplanted organs.4 In addition to being a medical doctor and the former Chairman of the Department of Surgery at the University's Medical School, the Defendant is charged with being a sponsor of, and a clinical investigator with, the Minnesota ALG Program, during the period from January of 1971 through August of 1992. In those capacities, the Defendant would be responsible for preparing and signing various reports to the FDA in order to conduct any clinical studies of ALG that would involve human subjects. Beyond reporting any adverse clinical experiences that were associated with ALG, the Defendant was obliged to assure that the study was conducted according to its protocol, was subject to the monitoring of an institutional Review Board, and was being conducted only upon patients who had provided their "informed consent" to participate in the investigation.

According to the Indictment, in his efforts to develop, to clinically study, and to market ALG, the Defendant engaged in a criminal conspiracy whose object was to enhance the Defendant's "personal power and prestige through financial gain and otherwise." The Indictment charges that the Defendant accomplished this object "by making materially false statements to the FDA, by failing to report material matters to the FDA, and by submitting fraudulent documents to the FDA, in repeated efforts to impede, impair, and obstruct the lawful governmental functions of the FDA."5 Specifically, the Indictment alleges that the Defendant sold ALG for a profit, all the while denying such sales to the FDA;6 that, in violation of FDA regulations, the Defendant failed to obtain "informed consents" from his patients who received ALG in the course of the Defendant's clinical investigation of the drug; that the Defendant made false statements to the FDA and the University concerning the identity, frequency and severity of any "adverse experiences" associated with the administration of ALG, including the failure to report nine known, fatal reactions to the drug;7 and that, as a result of the adverse reactions which were associated with a specific lot of ALG, the Defendant replaced that lot at the University, but did not recall the shipments from the same lot which had been sold to other transplant centers.

The Superseding Indictment also charges the Defendant with a conspiracy to commit offenses against the United States that arose from the University's receipt, during the period that is relevant to the Indictment, of substantial monetary grants from the National Institutes of Health ("NIH"). Indeed, according to the Superseding Indictment, during the period between 1986 and 1992, the University's Medical School, alone, received in excess of $349,000,000.00 in NIH grants for medical and scientific research. In this respect, the Superseding Indictment asserts that the Defendant misappropriated funds from the University, which had been provided via these NIH grants or through the sale of ALG, by charging the University for travel expenses that had already been charged to the organization for whose benefit the expenses were incurred—a practice that is referred to as "excess reimbursement" or "double-billing." Specifically, the Indictment contends that, on at least sixty occasions, during the period from prior to February of 1986 until about December of 1992, the Defendant submitted duplicative expense summaries and vouchers, by which he is purported to have been excessively reimbursed. Assertedly, during the period from January of 1988 to December of 1992, the excess reimbursements totalled the approximate amount of $76,000.00.

These same claims of "double-billing" underlie a number of the mail fraud charges that have been leveled against the Defendant but, in addition, the Superseding Indictment alleges that the Defendant, with others, defrauded the University by appropriating, for his own personal use, funds that had been paid to him in order to defray certain clerical...

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