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United States v. Conigliaro

United States District Court, D. Massachusetts

June 7, 2019

UNITED STATES OF AMERICA
v.
GREGORY CONIGLIARO and SHARON CARTER

          MEMORANDUM AND ORDER ON DEFENDANTS' MOTIONS FOR JUDGMENTS OF ACQUITTAL

          RICHARD G. STEARNS UNITED STATES DISTRICT JUDGE.

         Once a promising niche drug business, the now defunct New England Compounding Center (NECC) willfully deviated from pharmaceutical industry safety standards in a mad pursuit of profits. Scores died and hundreds were injured when three contaminated batches of injectable methylprednisolone acetate (MPA) triggered a national outbreak of fungal meningitis. In the third of the four federal jury trials that followed, defendants Gregory Conigliaro and Sharon Carter were convicted of conspiring to defraud the United States Food and Drug Administration (FDA) by frustrating its regulatory oversight of NECC, in violation of 18 U.S.C. § 371.

         Both Conigliaro and Carter now move for a judgment of acquittal pursuant to Fed. R. Crim. P. 29, arguing, inter alia, that because the FDA's regulatory authority over compounding pharmacies was not clearly established, their conspiracy convictions were legally impossible and violated basic norms of due process. As I agree that defendants' rights to fair notice and due process were violated, their motions will be allowed.

         FACTS AND OVERVIEW

         On December 16, 2014, a federal grand jury handed up an indictment targeting fourteen former owners and employees of NECC. What the indictment lacks in precision it compensates for in length: 131 separate criminal counts involving differing combinations of defendants are spread over seventy-three pages. The unifying theory of the indictment is the allegation that NECC came to be operated as a continuing criminal enterprise as defined by the Racketeer Influenced and Corrupt Organizations Act (RICO), in violation of 18 U.S.C. § 1961. In support of the theory, the indictment sets out seventy-eight RICO predicate acts ranging from second-degree murder to mail fraud. Confusing matters further, under the RICO heading, the indictment sets out two distinct racketeering enterprises - one centered on twenty-five predicate acts of second-degree murder connected to the shipment of the three lots of fungal-contaminated MPA, [1] the other more loosely centered on mail fraud and violations of the federal Food, Drug, and Cosmetic Act (FDCA), 21 U.S.C. § 301 et seq.[2] Bringing up the tail end of the indictment, the majority owners of NECC, Carla and Doug Conigliaro[3](who were not involved in the day-to-day operations of NECC) were charged with criminal contempts of Bankruptcy Court orders freezing their assets, and with the illegal structuring of certain cash transactions involving their personal bank accounts.[4]

         The indictment charged three distinct conspiracies: a racketeering conspiracy (Count 2), [5] a conspiracy to illicitly structure bank transactions (Count 128), and finally - and most relevant here - a Klein conspiracy to defraud (mislead) the United States, specifically the FDA, in violation of 18 U.S.C. § 371 (Count 3).[6] The odyssey of Count 3 is worth recounting, if in brief. In addition to Carter, Conigliaro, and Ronzio, [7] Cadden and Stepanets were also named as Klein conspirators and were acquitted by their respective juries; Ronzio, as previously noted, pled guilty pursuant to a cooperation agreement.[8]

         The core allegation is that Conigliaro, Carter, and their fellow conspirators entered a corrupt agreement to defraud the FDA of its “right” to have its affairs conducted “free from corruption, fraud, improper and undue influence, dishonesty, unlawful impairment and obstruction.” Indictment, Dkt #1, ¶ 77. The generic conspiracy statute, 18 U.S.C. § 371, in broad terms criminalizes conspiracies “to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose.” The “defraud clause” of § 371 has been interpreted to encompass schemes that seek to “interfere with government functions.” United States v. Goldberg, 105 F.3d 770, 773 (1st Cir. 1997); see also United States v. Barker Steel Co., 985 F.2d 1123, 1128 (1st Cir. 1993) (“The objective of the agreement is unlawful if it is for the purpose of impairing, obstructing or defeating the lawful function of any department of Government.”).

         The government's overarching theory was that the conspirators were engaged in a concerted effort to hold out NECC as a more or less conventional pharmacy regulated by the MABOP and Massachusetts law and regulations which required that drugs be dispensed only on receipt of patient-specific and doctor-authorized prescriptions, when in actuality NECC was operating as a drug manufacturer producing compounded medications in bulk quantities without valid prescriptions. If so, according to the government's theory, NECC would have been “subject to heightened regulatory oversight by the FDA, ” Indictment ¶ 78, likely averting a tragedy like the 2012 fungal meningitis outbreak.

         Implicit in the government's theory was the proposition that, as a matter of law (if not as a matter of real world practice), only two distinct entities crafted new drugs for the market: (1) the classic retail pharmacy (like Walgreens or CVS), where a neighborhood pharmacist received a doctor's patient-specific prescription and then compounded the prescribed ingredients to make the medication, and (2) industrial drug manufacturers (like Merck or Pfizer) that created drugs in bulk and shipped them wholesale to distributors. While state boards of pharmacy had supervisory jurisdiction over the former, manufacturers fell into the exclusive regulatory purview of the FDA.

         The indictment alleged three material written misrepresentations by the alleged coconspirators to the FDA. The first, written in 2003 by Barry Cadden, responded to an FDA inquiry with the assertion that NECC was not bound by the FDA's code of good manufacturing practices “since we [NECC] are a compounding pharmacy, not a manufacturer.” Indictment ¶ 89. Similarly, in 2007, Cadden objected to any proposed FDA oversight, explaining that NECC “dispenses compounded medications [only] upon receipt of valid prescriptions.” Id. ¶ 91.[9] Finally, Conigliaro, in an October 1, 2004 letter to the FDA, described NECC as “a small-scale, family-run, compounding-only pharmacy, not a manufacturer.” Id. ¶ 90.[10] Although Carter was not alleged to have ever communicated directly with state or federal regulators, because of her position as NECC's Director of Operations, she was presumed to have been aware that NECC was using celebrity or fictitious names[11] (or names of prior patients) as placeholders to facilitate the bulk shipment of compounded medications to hospitals and clinics.

         Conigliaro, joined by the other defendants charged with the Klein conspiracy, first sought to have Count 3 dismissed under Rule 12(b)(3). See Mot. to Dismiss Count 3, Dkt ## 394, 395 (Nov. 13, 2015). He argued that Count 3 failed to allege a violation of § 371 as a matter of law, failed to give adequate notice of the nature of the offense, and that, as applied, § 371 was void for vagueness. The court denied the motion, finding that the grand jury had “more than adequately defined the purpose of the conspiracy: To induce regulatory authorities, including the FDA, into believing that NECC was doing business as a compounding pharmacy when in fact it was in the business of manufacturing drugs.” See Mem. and Order, Dkt # 671, at 5 (Sept. 21, 2016). Because a motion to dismiss an indictment is rarely, if ever, an appropriate vehicle to challenge the sufficiency of the underlying evidence, and because the indictment tracked the language of the statute and provided facts “specific enough to apprise the defendant of the nature of the accusation against him, ” United States v. Serino, 835 F.2d 924, 929 (1st Cir. 1987), no more was required to allow the prosecution to proceed. Cf. United States v. Stepanets, 879 F.3d 370, 372 (1st Cir. 2018) (“[D]efinitely keep in mind that a court must deny a motion to dismiss if the motion relies on disputed facts.”).

         Seven months later, after the verdict in the Cadden trial, Conigliaro (joined by Carter and Stepanets) filed a renewed Motion to Dismiss Count 3, see Dkt ## 1013, 1014 (Apr. 14, 2017). In the renewed motion, Conigliaro argued that the evidence offered and admitted at Cadden's trial “unequivocally establish[ed] that there [was] no discernible federal law defining any clear distinction between a compounding pharmacy and a drug manufacturer, ” and it was thus “legally impossible for the FDA to be defrauded in the manner the government alleged.” Dkt # 1014, at 1-2. In its opposition to the motion, the government insisted that Conigliaro's “legal impossibility argument” was more accurately a factual one “that relies on evidence to be presented to and assessed by a jury at trial.” See Gov't's Opp'n, Dkt # 1032 at 8 (May 12, 2017). The government further noted that it could “find no cases in the country, and indeed Conigliaro cites none, in which a court has dismissed a Klein conspiracy based on a theory of pure legal impossibility. This makes sense, since it is hard to imagine how conspiring to defraud the government could be legally impossible.” Id. at 9.

         In its order of October 10, 2017, see Dkt # 1232, the court noted that, despite the scholarly and judicial dissonance incited by the legal impossibility doctrine, in the consensus view, “pure” legal impossibility is recognized as an absolute defense. See, e.g., United States v. Fernandez, 722 F.3d 1, 31 (1st Cir. 2013). Although, as Conigliaro argued, many facts were not in dispute, without a fully developed record in the pending trial, the court concluded that it was unable to determine whether Conigliaro (and his fellow defendants) had successfully raised the defense in its pure (or perfect) form. See Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 566 (1931) (stating the general rule that where a “conclusion rested upon inferences from facts within the exclusive province of the jury, ” such a conclusion may “not be drawn by the court . . . without usurping the functions of that fact-finding body”). Nor, as the court noted, would it have been fair to the government to rely solely on the evidence that the jury found insufficient to convict in Cadden's case, as it was possible that “the government has some additional evidence of the FDA's assessment of its legal position with respect to its ability to regulate compounding pharmacies like NECC that for some reason it chose to withhold in the Cadden trial.” See October 10, 2017 Mem. and Order, at 9 n.6.

         At trial, Conigliaro renewed the motion to dismiss at the close of the government's opening statement, see Dkt # 1686 (Oct. 15, 2018), and again after the government rested its case, see Dkt # 1779 (Dec. 3, 2018). After the jury returned a guilty verdict, Conigliaro and Carter filed the instant post-trial motions for acquittal with a supporting memorandum, see Dkt # 1819 (Dec. 19, 2018) and Dkt # 1853 (Jan. 25, 2019).[12] The court requested supplemental briefing on the issues of legal impossibility and due process and heard oral argument on February 26, 2019.[13]

         DISCUSSION

         In analyzing a Rule 29 motion, the court views the evidence in the light most favorable to the verdict. See, e.g., United States v. Santos-Soto, 799 F.3d 49, 56-57 (1st Cir. 2015). A Rule 29 motion is granted sparingly and only where “the evidence, viewed in the light most favorable to the government, could not have persuaded any [reasonable] trier of fact of the defendant's guilt beyond a reasonable doubt.” United States v. Bristol-Mártir, 570 F.3d 29, 38 (1st Cir. 2009). Pure issues of law seldom arise in the context of a Rule 29 motion, which is usually directed to the sufficiency of the evidence. However, because the relevant test is whether the evidence “permits a rational jury to find each essential element of the crime charged beyond a reasonable doubt, ” United States v. Olbres, 61 F.3d 967, 970 (1st Cir. 1995), it follows that the government's failure to satisfy its burden of proof with respect to any element of the charged offense requires an acquittal. A judgment of acquittal is also required, notwithstanding the jury's verdict, when the charged crime is a legal impossibility. See Fernandez, 722 F.3d at 31.

         A. Legal Impossibility

         The doctrine of legal impossibility as applied to inchoate crimes like attempt and conspiracy “has received much scholarly attention, but remains a murky area of the law.” United States v. Hsu, 155 F.3d 189, 199 (3d Cir. 1998); accord Commonwealth v. Bell, 67 Mass.App.Ct. 266, 266 (2006), rev'd on other grounds, 455 Mass. 408 (2009) (“If sheer volume of literature be the measure of fascination, then few subjects have been as intriguing for criminal law scholars as the nexus between the doctrine of impossibility and the crime of attempt.”). According to the author of an authoritative criminal law treatise, this fascination “is not surprising, for the question of whether we should punish a person who has attempted what was not possible under the surrounding circumstances requires careful consideration of many of the fundamental notions concerning the theory and purposes of a system of substantive criminal law.” 2 LaFave, Substantive Criminal Law § 11.5(a), at 791 (6th ed. 2017).

         The traditional solution to this conundrum is to draw a distinction between legal and factual impossibility, which seems easy enough, but is often difficult to apply in practice. Legal impossibility occurs “when the actions which the defendant performs or sets in motion, even if fully carried out as he desires, would not constitute a crime.”[14] United States v. Oviedo, 525 F.2d 881, 883 (5th Cir. 1976). Legal impossibility mirrors the more familiar principle of legality, under which no person is punishable by the state unless his conduct is in violation of a positive law; this is true even if he believes that he is committing a crime, and is doing his best to commit one.[15] Examples of pure legal impossibility might include smoking marijuana in Massachusetts in the mistaken belief that the recreational use of marijuana was illegal in the Commonwealth, or shooting at a stuffed deer outside of deer hunting season, when in fact only real deer were protected and hunting was allowed year round, see Hsu, 155 F.3d at 199 n.16. Although cases like these are most often framed in the context of criminal attempts, “[o]bviously a charge of conspiracy to shoot a deer, ” in the hypothetical suggested above, “would be equally untenable.” In re Sealed Case, 223 F.3d 775, 779 (D.C. Cir. 2000).

         Factual impossibility, by contrast, arises when an attempt is frustrated by a physical circumstance of which the actor is unaware, the classical example being the attempt to pick an empty pocket. See People v. Fiegelman, 33 Cal.App. 2d 100 (1939). Other frequently cited examples of successfully prosecuted attempts in which factual impossibility furnished no defense include the solicitation of sex from a female police officer posing as an underage prostitute, In Re Doe (S.D.), 855 A.2d 1100 (D.C. 2004); the sale of a batch of fake methamphetamine touted as genuine to an undercover agent, United States v. Sobrilski, 127 F.3d 669 (8th Cir. 1997); an attempt to kill with a drink contaminated with what proved to be a subpotent poison, Commonwealth v. Kennedy, 170 Mass. 18, 22 (1897) (Holmes, J.), or with a gun that unbeknownst to the actor is unloaded, State v. Damms, 9 Wis.2d 183 (1960); and firing a deadly shot into a bed where the actor mistakenly believed the intended victim was sleeping, State v. Mitchell, 170 Mo. 633 (1902).

         In cases of factual impossibility, “the defendant's mental state was the same as that of a person guilty of the completed crime” and he is considered to be “deserving of conviction and is just as much in need of restraint and corrective treatment as the defendant who did not meet with the unanticipated events which barred successful completion of the crime.” 2 LaFave, Substantive Criminal Law § 11.5(a); see also United States v. Dixon, 449 F.3d 194, 202 (1st Cir. 2006) (“Recognizing that conduct falling short of a completed criminal objective still may pose a real threat to social order, we long have held that factual impossibility is not a defense to either liability or sentencing enhancements for inchoate offenses such as conspiracy or attempt.”).

         In the case of legal impossibility, although a defendant might appear worthy of punishment - after all, his mind is infected with a criminal mens rea - the right of the state to impose punishment is constrained by the principle of legality, the boundaries of which are defined by considerations of due process, fundamental fairness, and just limits on the state's deployment of the coercive instruments at its disposal. See Kadish et al., Criminal Law and its Processes 152 (9th ed. 2012) (“Perhaps most obvious [among the justifications for the legality principle] is the need to give individuals fair warning as to the conduct that could subject them to prosecution. Another is the need to control discretion of police, prosecutors, and juries. Reflecting these concerns, the legality principle bars both retroactivity and vagueness.”) (emphasis in original); McBoyle v. United States, 283 U.S. 25, 27 (1931) (Holmes, J.) (noting that fair warning should apprise people “in language that the common world will understand, of what the law intends to do if a certain line is passed”); see also United States v. Lanier, 520 U.S. 259, 266 (1997) (“[D]ue process bars courts from applying a novel construction of a criminal statute to conduct that neither the statute nor any prior judicial decision has fairly disclosed to be within its scope.”).[16]

         For these reasons, it is an axiomatic principle of the criminal law that wicked thoughts alone do not provide a basis for the infliction of punishment, no matter how distasteful or worthy of opprobrium the thoughts might be. See Kennedy, 170 Mass. at 21 (Holmes, J.) (noting that “the aim of the law is not to punish sins”). The doctrine of legal impossibility allows for a perfect defense in cases where suspect or even contemptible thoughts are unaccompanied by positive steps towards the achievement of an end that society has seen fit to criminalize. See, e.g., Graham Hughes, One Further Footnote on Attempting the Impossible, 42 N.Y.U. L. Rev. 1005, 1022 (1967) (“[A]n immoral motive to inflict some injury on one's fellows coupled with a misapprehension about the content of the criminal law are not good reasons for conviction.”).

         If to this point it all seems so clear, why the doctrinal confusion? As the Third Circuit has cogently explained, “the distinction between factual and legal impossibility is essentially a matter of semantics, for every case of legal impossibility can reasonably be characterized as a factual impossibility.” United States v. Tykarsky, 446 F.3d 458, 465-466 (3d Cir. 2006). For that reason, “most federal courts have repudiated the [factual-legal impossibility] distinction or have at least openly questioned its usefulness.” United States v. Farner, 251 F.3d 510, 512 (5th Cir. 2001) (collecting cases); but see Fernandez, 722 F.3d at 31 (recognizing the “pure” legal impossibility defense).

         To elaborate, take the stuffed deer example: In 1953, a Missouri court concluded that a defendant could not be lawfully convicted of taking a deer out of season when his cervine trophy proved to be a taxidermical masterpiece for the simple reason that no law made the killing of a stuffed deer a crime. In reaching its decision, the Missouri court focused on the objective end-result of the defendant's acts, rather than his a priori state of mind. See State v. Guffey, 262 S.W.2d 152 (Mo. App. 1953). Some years later, the Vermont Supreme Court on identical facts thought differently, fixing on the defendant's “specific intent to take a wild deer out of season, ” which was frustrated only by his mistake of an ersatz deer for an animate object. See State v. Curtis, 157 Vt. 629 (1991).

         In the celebrated (by mavens of the law) case of People v. Jaffe, 185 N.Y. 497 (1906), the defendant attempted to purchase cloth that he (rightly) believed to have been stolen from its original owner. But unbeknownst to Jaffe, the cloth had been recovered, and the rightful owner had agreed to allow police to use the goods to set a trap for Jaffe. The New York Court of Appeals vacated Jaffe's conviction, holding that once the goods had lost their stolen character, any attempt to receive them was a legal impossibility. Most scholars would (rightly in my view) criticize the thinking behind the Court of Appeals's decision. Jaffe, after all, had done everything within his power to complete the crime and came up short only because of an intervening factual circumstance of which he was unaware. But no one can doubt that had Jaffe succeeded he would have committed a real crime, one so rooted in the common law[17] and the popular imagination that it had its own nineteenth-century avatar in Dickens's fictional character Fagin, Oliver Twist's criminal overlord.

         Being of the same mind, the authors of the Model Penal Code (MPC) repudiated Jaffe in all but name and advocated the abolition of factual impossibility as a defense. See ALI MPC § 5.01(1)(a) (1960) (an actor is guilty of attempt where he “purposely engages in conduct which would constitute the crime if the attendant physical circumstances were as he believes them to be.”). The Jaffe approach, the draftsmen concluded:

is unsound in that it seeks to evaluate a mental attitude - “intent" or “purpose” - not by looking to the actor's mental frame of reference, but to a situation wholly at variance with the actor's beliefs. In so doing, the courts exonerate defendants in situations where attempt liability most certainly should be imposed. In all of these cases the actor's criminal purpose has been clearly demonstrated; he went as far as he could in implementing that purpose; and, as a result, his “dangerousness” is plainly manifested.

MPC § 5.01, Comment at 308-309 (1985). Although many state (and some federal) courts have followed the MPC's teachings, the Code does not question the legality principle, which remains well-embedded in the law. See Kadish et al., Criminal Law and its Processes 646 (9th ed. 2012) (noting that despite the competing approaches to legal impossibility, “[a]ll courts [have] agreed that there [is] a defense of legal impossibility when, unknown to the actor, what the actor planned to do ha[s] not been made criminal”).

         B. Key Principles and the Peculiar Nature of the Regulatory Context

         Several modern cases illustrate facets of the impossibility defense in a way that is helpful to the resolution of this case. First, there is the classic instance of legal impossibility where there is no statute criminalizing the end-result envisioned by the actor. See Hsu, 155 F.3d at 199 n.16 (“For example, a hunter cannot be convicted of attempting to shoot deer if the law does not prohibit shooting deer in the first place.”). The First Circuit has embraced the pure form of legal impossibility in several cases. An illustrative example is United States v. Fernandez, 722 F.3d 1 (1st Cir. 2013). In that case, the defendants were charged with violating the Travel Act, 18 U.S.C. § 1952, which as its name implies, prohibits interstate travel for purposes of committing a crime. While there was no doubt about the travel or the defendants' nefarious intent, the crime that the defendants had in mind, the bribery of a Puerto Rican public official, had been fortuitously annulled by the legislature two weeks before the defendants' scheduled travel. On appeal, the First Circuit vacated the defendants' convictions. While in the eyes of the Court there was no doubt that the defendants sincerely believed that what they set out to do was criminal (bribing a public official), they had unknowingly “conspire[d] to do something that [was not] prohibited by these Puerto Rico bribery laws on the date they planned to do it.” Id. at 32.

         Second, the Courts of Appeals have not drawn a distinction between cases where there is no statute prohibiting a defendant's conduct and those where the prosecution fails to meet its burden of demonstrating that the goal of the alleged conspiracy violated some identifiable legal prohibition. Take, as an example, United States v. Pierce, 224 F.3d 158 (2d Cir. 2000). In Pierce, the government argued that the defendants - who were transporting large quantities of alcohol across the St. Lawrence River into Canada though a Mohawk Indian Reservation that spanned the border - were defrauding the Canadian government by evading that country's import duties and taxes. The Second Circuit reversed defendants' convictions because the government, somewhat unaccountably, failed to introduce evidence at trial that Canada, in fact, taxed the import of alcohol. As the Court noted,

[t]he Pierces were accused of ‘wronging' the Canadian government, by tricking or deceiving it, not to obtain money from it, but to deprive it of its right to collect money in tax and duty revenue . . . . To prove the existence of a scheme to defraud the Canadian government the prosecution had to prove the existence of such a right.

Id. at 165 (internal citations omitted).

         Pierce is a modern analog to one of the most apocryphal hypotheticals in the world of legal impossibility, namely the case of Lady Eldon's French Lace, presented by Dr. Wharton as follows:

Lady Eldon, when traveling with her husband on the Continent, bought what she supposed to be a quantity of French lace, which she hid, concealing it from Lord Eldon in one of the pockets of the coach. The package was brought to light by a customs officer at Dover. The lace turned out to be an English manufactured article, of little value, and of course, not subject to duty. Lady Eldon had bought it at a price vastly above its value, believing it to be genuine, intending to smuggle it into England.

         Wharton, 1 Criminal Law 304 n.9 (12th ed. 1932).

         Lady Eldon's mental state and whether she could be convicted of an attempt has fascinated generations of legal scholars. However, the crucial distinction between Lady Eldon and Pierce is that in most iterations of the hypothetical, the existence of British customs duties on French lace is never questioned. The focus instead is on the relationship between Lady Eldon's mens rea (knowingly or purposefully trying to violate a law) and the fact, unbeknownst to her, that she had been cheated and was attempting to conceal from customs inspectors a shoddy substitute for genuine French lace. In a real case of Regina v. Eldon, the prosecutor would have had little difficulty meeting his burden of showing that Lady Eldon had attempted to violate an existing positive law.

         Third, the case law establishes that legal impossibility is a defense to a § 371 Klein conspiracy where the federal government or one of its constituent agencies is not the intended victim of the planned fraud. In Tanner v. United States, 483 U.S. 107 (1987), the defendants were alleged to have conspired “to defraud the United States by impeding, impairing, obstructing and defeating the lawful functions of the Rural Electrification Administration (REA) in its administration and enforcement of its guaranteed loan program.” Id. at 128-129, quoting the indictment.

         However, the actual target of the Tanner conspirators was a private contractor, Seminole Electric Company, that had received some financial assistance from the federal government in the form of a loan guaranteed by the Rural Electrification Administration (REA), a credit agency of the Department of Agriculture. The loan was intended to help fund the construction of a coal-fired power plant, but during the course of the construction, the defendant had allegedly exploited his personal relationship with Seminole Electric's procurement manager to win the award of a subcontract to build some adjacent roads to the power plant in exchange for kickbacks.

         The government argued that “because Seminole received financial assistance and some supervision from the United States, a conspiracy to defraud Seminole was itself a conspiracy ‘to defraud the United States.'” Id. at 130 (emphasis in original). The Supreme Court, through Justice O'Connor, disagreed, holding that “[t]he conspiracies criminalized by § 371 are defined not only by the nature of the injury intended by the conspiracy, and the method used to effectuate the conspiracy, but also - and most importantly - by the target of the conspiracy.” Id. The Court further noted that, even assuming that some portions of the legislative history of § 371 suggested it was intended to reach remote actors (like Seminole Electric) “performing functions on behalf of the Federal Government, ” id., - a proposition the Court thought doubtful - “the Government has presented us with nothing to overcome our rule that ‘ambiguity concerning the ambit of criminal statutes should be resolved in favor of lenity.'” Id. at 131, quoting Rewis v. United States, 401 U.S. 808, 812 (1971). It stands to reason that the same analysis would apply where the victim of the alleged fraud is a state government, rather than a private entity, or one of its affiliated agencies (like a Board of Pharmacy).

         A useful counterpoint to Tanner is Judge Woodlock's opinion in United States v. Morosco, 67 F.Supp.3d 483 (D. Mass. 2014). In Morosco, the defendant was charged with manipulating the evaluations of public housing units in Chelsea, Massachusetts, that were subsidized by the United States Department of Housing and Urban Development (HUD). The defendants argued that because tinkering with HUD evaluations is nowhere identified in the federal criminal code as a crime, they could not lawfully have been convicted of defrauding HUD. Judge Woodlock rejected the argument, noting that “[t]he defraud clause of the conspiracy statute does not require the commission of a specific offense or the commission of any crime other than the conspiracy itself, ” id. at 488, a ruling later affirmed by the First Circuit, see United States v. Morosco, 822 F.3d 1, 6-7 (1st Cir. 2016).

         What is crucial in Judge Woodlock's decision is any absence of doubt that the Chelsea Housing Authority (CHA) was subject to federal regulatory oversight. In addition to the monitoring of its expenditures of federal funds, the CHA was obligated to comply with HUD public housing regulations, which were intended to ensure safe and sanitary conditions for the inhabitants, and were enforced by regular inspections and compliance evaluations. The housing evaluations that the ...


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