United States District Court, D. Massachusetts
MEMORANDUM AND ORDER ON DEFENDANTS' MOTION TO
COMPEL PRODUCTION OF GRAND JURY MATERIALS
ALLISON D. BURROUGHS U.S. DISTRICT JUDGE.
pending before the Court is Defendants' motion to compel
disclosure of the legal instructions the Government provided
to the grand jury. [ECF No. 547]. For the reasons stated
below, the motion is DENIED.
September 11, 2018, a grand jury returned the Second
Superseding Indictment (“SSI”) against Defendants
Michael Babich, Alec Burlakoff, Michael Gurry, Richard Simon,
Sunrise Lee, Joseph Rowan, and John Kapoor, charging them
with engaging in a racketeering conspiracy in violation of 18
U.S.C. § 1962(d). [ECF No. 419].
following allegations are drawn from the SSI. [ECF No. 419].
The Defendants held executive management positions at Insys
Therapeutics, Incorporated (“Insys”), a
pharmaceutical company that manufactured, marketed, and sold
a fentanyl spray called Subsys. [ECF No. 419 ¶¶
16-22]. Insys constitutes the enterprise underlying the RICO
conspiracy. [Id. ¶ 1]. From about May 2012
through about December 2015, the Defendants and their
co-conspirators sought to increase profits for the enterprise
and for themselves by conducting the affairs of the
enterprise including through bribes, fraud, and the illicit
distribution of Subsys in violation of 18 U.S.C. §
1962(d). [Id. ¶¶ 23, 26]. As part of the
conspiracy, Defendants and their co-conspirators agreed that
a co-conspirator would commit at least two acts of
racketeering activity, including mail fraud, wire fraud,
honest services fraud, and offenses involving the
distribution of controlled substances. [Id.
argue that allegations omitted from the SSI demonstrate that
the prosecution improperly instructed the grand jury either
on the law regarding the alleged predicate crimes or on the
law of RICO conspiracy generally. [ECF No. 548 at 1]. They
believe that they should be able to review the
Government's legal instructions to determine if these
contentions have merit. [Id. at 2, 4-5].
make three arguments about the omitted allegations. First,
they contend that the SSI fails to allege “that
Defendants agreed with alleged co-conspirator
practitioners to divert Subsys for the purpose of non-medical
or ‘street' usage” [id. at 6] and
that such an omission indicates that the Government
“misunderstand[s] . . . the proof needed to show a
[Controlled Substances Act (“CSA”)]
violation” and consequently “erroneously
instructed the grand jury on the elements of a CSA
violation” [id. at 7]. Second, Defendants
argue that the SSI does not allege “the source of the
fiduciary duty” underlying the honest services fraud
claims [id. at 8] or “that Defendants intended
for practitioners to deceive anyone” [id. at
9] and that such omissions suggest that the Government gave
the grand jury incorrect instructions regarding honest
services fraud. Third, Defendants assert that the SSI fails
to aver “that Defendants agreed for anyone to
affirmatively lie to insurance companies about the financial
arrangement between Insys and practitioners, or that anyone
at Insys concealed that information from insurers”
[id. at 10] and that such omissions imply that
“prosecutors misinstructed the grand jury that an
omission without more can constitute a scheme to
defraud” [id. 9-10].
Government responds that the SSI is legally sufficient and
that Defendants have not met their burden of showing a
particularized need that would justify production of the
legal instructions to the grand jury. [ECF No. 611 at 1-2].
Specifically, the Government argues that the SSI is
“facially valid because it pleads the elements of RICO
conspiracy” [id. at 6-7] and that such
elements do not include an agreement by Defendants
“that a conspirator would commit each of the
specified types of racketeering acts” [id. at
8-10] or “that some conspirator commit each
element of those offenses” [id. at 10
(internal quotations omitted)]. The Government also contends
that it “was not required to allege the elements of the
predicate racketeering acts in the indictment” and that
such an omission does not indicate that the grand jury was
improperly instructed regarding those predicate crimes.
[Id. at 11-12].
Rule of Criminal Procedure 6(e) imposes an absolute
obligation of secrecy regarding grand jury proceedings, with
some very limited exceptions. Fed. R. Crim. P. 6(e). One of
these exceptions provides that the court “may authorize
disclosure . . . of a grand jury matter . . . at the request
of a defendant who shows that a ground may exist to ...