Another Good Federal Sentencing Memorandum
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
UNITED STATES OF AMERICA, :
Plaintiff, :
: Case No. CR2-02-130
v.
: JUDGE MARBLEY
MARILYN COLEMAN :
Defendant. :
SENTENCING MEMORANDUM
PART II
I. Introduction.
Defendant Coleman objects to the Government’s attempt to relitigate the fraud case that the jury rejected. The Presentence Investigation Report (“PIR”) and the Government suggest that this court sentence the Defendants as if they had plead guilty or been found guilty of all the charges in the indictment rather than being found innocent of 63 out of 63 felonies. To accept the Government’s arguments would make a farce and mockery out of the right to a jury trial and the right to proof beyond a reasonable doubt. See Blakely v. Washington, 124 S. Ct. 2531 (2004).
The application of the United States Sentencing Guidelines (“USSG”) results in a Zone A range.
Defendant Coleman recognizes that this memorandum is being filed later than initially represented to the Court. This memorandum is intended to be a comprehensive supplement to the objections and initial Sentencing Memorandum previously filed. Defendant Coleman suggests that the Government be given an additional week, if necessary, to file any reply to this Sentencing Memorandum, Part II.
II. Standard of Review.
On April 6, 2005, the Sixth Circuit decided the case of United States v. Webb, ___F.3d___, No. 03-6110 (2005). Although the Sixth Circuit declined to specify precisely what weight the district courts must give to the appropriate Guidelines range, or any other 18 U.S.C. 3553(a) factor, the panel decision held that whether a sentence is “reasonable” is not dependent on whether it comports with the Guidelines, but is a “concept of flexible meaning, generally lacking precise boundaries.” Webb, at *9 n.9. The Sixth Circuit noted that if “reasonableness” were equated with a Guideline sentence, such a standard “would effectively re-institute mandatory adherence to the Guidelines” that was condemned in Blakely. Webb, supra, citing United States v. Crosby, 397 F.3d 103, 115 (2d Cir. 2005).
The Webb court held:
[W]e read Booker as instructing appellate courts in determining reasonableness to consider not only the length of the sentence but also the factors evaluated and the procedures employed by the district court in reaching its sentencing determination. Thus, we may conclude that a sentence is unreasonable when the district judge fails to “consider” the other factors listed in 18 U.S.C. 3553(a), and instead simply selects what the judge deems an appropriate sentence without such required consideration.” Booker, 125 S. Ct. at 757 . . .
Webb, supra, at *7. See also, Defendant Coleman’s Sentencing Memorandum, filed April 5, 2005.
This Honorable Court need not hold an evidentiary hearing to resolve each of the factual disputes raised in Coleman’s and the Government’s correspondence to the probation department and this Court. Coleman objects to the re-litigation of the case at sentencing. See, Webb, at *8 n.6 (“we decline to address whether a district judge must always calculate the precise appropriate Guidelines range in order to comply with Booker. . . [The] ‘precise calculation of the applicable Guidelines range may not be necessary’ in certain situations where the district judge imposes a non-Guidelines sentence.”). See also, Coleman’s Sentencing Memorandum, Part I, April 5, 2005.
The jury unanimously and conclusively rejected any notion that any of the defendants acted fraudulently concerning any private individual, entity or in their transactions with the government. The rejection of fraud in 63 out of 63 counts speaks volumes for the total lack of any evidentiary support for a finding of fraudulent intent. Moreover, Blakely and Booker prohibit all of the enhancements contained in the PSI or urged by the Government in its submission to this Court.
III. General Objections.
Defendant Coleman objects to numerous factual determinations in her Presentence Investigation Report (“PIR”). These objections as well as supporting exhibits are fully set forth in a letter to David Walden on behalf of Coleman and Defendant OvImmune and appear as an Addendum to the Sentencing Memorandum, Part I, filed April 5, 2005. Defendants Coleman and OvImmune reassert each and every objection in the Walden correspondence as if specifically set forth anew in this memorandum.
IV. The appropriate guideline computation pursuant to 18 U.S.C. 3553(a)(4).
In addition to the objections based on Blakely-Booker, Defendant Coleman specifically objects to any sentence, Guideline or otherwise, based on fraud. As a threshold matter, the mail fraud and conspiracy acquittals were totally unrelated to the charges contained in Counts 9 through 23 and therefore cannot be considered “relevant conduct” pursuant to USSG 1B1.3. The issues in Counts 9 through 23 concerned whether the egg powder was a food or a drug. Counts 1 through 8 do not constitute “jointly undertaken activity,” see USSG 1B1.3, related to the strict liability misdemeanor convictions in Counts 9 through 23.
The issues in Counts 1 through 8 concerned alleged misrepresentations to Ray Suen about the efficacy of the hyperimmune egg powder and whether Ray Suen relied on the purported misrepresentations of the Defendants when insisting that the egg powder be produced. The evidence at trial showed that Suen didn’t care about efficacy claims, that he knew his venture was a “crapshoot,” that he had a large law firm protect his interests and that he was determined to produce and sell the egg product regardless of whether studies showed the egg powder was effective. Suen pled guilty to a misdemeanor FDCA count. If he was a victim, presumably the Government would not have pursued him as a defendant. To reiterate counsel’s closing argument at trial, the charges concerning Suen were a complete sham.
Defendants do not shed their constitutional rights to a jury trial and proof beyond a reasonable doubt at the start of sentencing proceedings. A determination of the “statutory maximum” must precede and cabin a determination of the USSG for purposes of 3553(a)(4). When a fact is not proven at trial utilizing proof beyond a reasonable doubt, unless the Defendant stipulates the facts supporting an enhancement (which Coleman does not) or consents to judicial fact-finding (which Coleman does not), those facts cannot be used to enhance a guideline level. In this case, application of 18 U.S.C 3553(a), as well as an application of the USSG, demands that a non-incarcerative sentence within Zone A is required.
Counts 9-23 do not specify any monetary loss, presumably because the purported (and jury-rejected) fraud was on the government rather than on any individual. Nor was the jury asked to make any findings that would implicate the fraud table in USSG 2F1.1. The only findings that the jury made rejected fraud – 63 times! Therefore, the base offense level as established in USSG 2N2.1 is 6 for each offense. It is now settled law that the Sixth Amendment forbids a judge from increasing a defendant’s sentence based on facts not admitted by the defendant or proven to a jury beyond a reasonable doubt. Booker, 125 S.Ct. at 744-45 (Stevens, J).
In this case, the guideline range is 6. The Defendant’s Criminal History is Category I. A Zone A non-incarcerative sentence is mandated. Any enhancements taking Coleman out of the 0-6 range would constitute “a tail which wags the dog of the substantive offense(s)”McMillan v. Pennsylvania, 477 U.S. 79, 88 (1986).
The jury determined that the hyperimmune egg powder was a drug rather than a food or food supplement, presumably because of some language used to market the product. That determination does not implicate fraud. Coleman obtained inactivated candida vaccine and inoculated 10,000 chickens. If there was fraud, why go to the trouble of inoculating the chickens? Or spend money on vaccines? The evidence was equivocal on efficacy, the Government contending that the product didn’t work and the many defense experts and lay witnesses contending that it would and did. Evidence at trial showed that the Government (both the USDA and, at times, the FDA) confirmed that hyperimmune eggs were a food and that Addison Labs checked with various agencies of the Government before shipping deactivated vaccines to Coleman. Unless the rights to a jury trial and proof beyond a reasonable doubt are merely talismanic incantations devoid of any true meaning, the base offense level for the strict liability misdemeanors is 6.
V. Factors in 18 U.S.C. 3553(a).
18 U.S.C. 3553(a) provides that a court shall impose a sentence sufficient but not greater than necessary to comply with the purposes of sentencing. The court in determining the particular sentence to be imposed, shall consider:
A. The nature and circumstances of the offense and the history and characteristics of the defendant:
The indictment alleged that Coleman “knew” that her product didn’t work. This was the gravamen of the government’s case. The jury concluded that Coleman’s hyperimmune eggs were a “drug” rather than a food or food supplement. In all other respects, the Government’s theories were rejected. The reasonable conclusion from the evidence at trial is that the jury believed that hyperimmune eggs had value in treating a wide variety of ailments. Certainly, the evidence presented by expert and lay witnesses for the defense supported efficacy. Coleman’s hyperimmune egg product was not the only product on the market extolling the virtues of hyperimmune eggs. At the time, the former general counsel for the FDA was providing testimonials for a competitor’s hyperimmune egg product, noting how hyperimmune eggs made him feel like a 20 year old man (he was around 65 at the time). See, Exhibit A. Although Coleman’s advertising did not fit within the strictures of FDA-acceptable litany, her product was based on the same science as many other products on market. Since the evidence at trial clearly showed that the FDA was unsure at various times whether the hyperimmune egg product should be treated as a food or a drug, how can the government claim that Coleman should have known that her product would be considered a drug?
On March 25, 1998, Marilyn Coleman was notified by the USDA that her products, made from hyperimmune eggs, were given GRAS (Generally Recognized as Safe) status under the Food, Drug and Cosmetic Act. The government argues that one agency does not “speak” for another, and that one agency will not interfere with the ruling of another agency. See, Government’s Letter to Mr. Walden, March 16, 2004, pg. 4. Dr. Coleman tried to do what she thought was right – she tried to get answers from the government. Even the government’s own witnesses testified how confusing the process is. Dr. Coleman called, she wrote, and she visited the FDA with little to no response. Dr. Coleman never had the intent to commit any of the offenses in Counts 1-21.
Marilyn Coleman is 59 years old. She has no prior criminal history. She is a respected scientist, researcher and innovator. She has been described by one of her colleagues as an “intellectually stimulating” person who has contributed much to society, and has much more to contribute. For the past thirty years she has dedicated her life to the poultry industry. She was an Assistant Professor of Poultry Science at The Ohio State University, and has a PhD in Physiology. She has worked throughout the world with poultry growers and manufactures.
Dr. Coleman is also the president of MAC Associates, an international poultry consulting business. MAC Associates works with all areas of the poultry industry, from feed mill to further processing. Dr. Coleman’s specialty is live production and incubation.
Dr. Coleman is known throughout her community for her humanitarian and missionary works. She has volunteered and consulted throughout the world helping third world countries with their food production. She opened her home to many wayward teenagers; there were over 50 teenagers who stayed at the Coleman residence from anywhere from one night to three years. She is active in the Kiwanis and provides a yearly fundraiser for the group. She is active in her church and throughout the years has volunteered to teach Bible studies and has been involved in other church related activities. When Dr. Coleman had difficulty processing hyperimmune egg powder, she gave approximately 10,000 eggs to her community for free rather than having them go to waste.
Exhibit B represents letters from her friends and family that describe her as a caring individual that is always there for her friends and family. She is described as the kind of person who goes out of her way to help others. She has been married to her husband George for thirty-seven years. They have two children whom, like their mother, have chosen careers in areas of science. She has four grandchildren whom she cares for as often as possible.
She has exhausted all of her funds developing her hyperimmune egg product or defending it and herself in civil and criminal court proceedings. She is nearly bankrupt after 40 years of productivity. This is not an offense or offender that calls for jail time.
B. The need for the sentence imposed:
The court in determining what sentence to impose must look at the seriousness of the offense, and impose a sentence that will provide adequate deterrence to criminal conduct, protect the public from future crimes of the defendant, and provide the defendant with needed educational or vocational training, medical care or other corrective treatment.
Marilyn Coleman believed in her work, and believed her products made people feel better because people told her they felt better, that the product had a positive effect on their lives, and that it enhanced their well-being. Marilyn Coleman cared about the people who bought the product from her, and she cared about their problems. Marilyn Coleman never intended to mislead or defraud anyone and, as the jury’s verdict forms reflect, the jury found that Marilyn Coleman was not fraudulent in her venture.
Dr. Coleman has much to offer the community. Throughout her life she has been involved in humanitarian efforts to help improve the lives of others. She not only has expertise in the area of scientific research and the poultry industry, but she is also an avid, experienced and well respected gardener. Given the opportunity, she has many talents she could share with others.
Dr. Coleman lives a simple life in Richwood, Ohio. She is still devastated by these proceedings. She has spent all of her money in development of this product, and then defending the product against her competitors and now the government. She is nearly bankrupt and can barely afford to keep her 49,000 pounds of hymperimmune egg powder refrigerated as she explores how to sell it, perhaps as animal feed in a foreign country. Any incarcerative sentence would just be some form of totally unnecessary “piling on.” There is absolutely no need to protect the public from further crimes and it needs to be stressed as often as possible that the offenses before the court are strict liability. Furthermore, with her many talents, Marilyn Coleman could serve the community through her vast knowledge of scientific matters, and her humanitarian and religious beliefs.
Since Blakely and Booker, forbidden or discouraged sentencing factors are now appropriate to be considered when relevant to factors enumerated in 3553(a). Considering defendant’s age, her education and vocational skills, employment record, family ties and responsibilities and her lack of a criminal record for her entire life, and the strict liability nature of the misdemeanors, there is no need for punishment in this case.
Counsel will address the need to avoid unwarranted sentence disparities at the hearing.
C. The need to provide restitution to any victims of the offense.
The relevant conduct rules of USSG 1B1.3(a) do not apply to restitution under the chapter five guidelines. The threshold issue is whether the sentencing provisions of 18 U.S.C. 3561 and 3583 apply concerning restitution, or are the provisions of 18 U.S.C. 3663(a) applicable?
Since each of the counts of conviction specify 18 U.S.C. 2, it is arguable that 18 U.S.C. 3663(a) applies to these offense. This provision provides that if restitution is ordered, it must be in lieu of any other penalty authorized by law. Therefore, no incarceration can be ordered if restitution is ordered. See Black’s Law Dictionary, citing Glassman Construction Co. v. Baltimore Brick Co., 246 Md. 478, 228 A.2d 472, 474: “in lieu of. Instead of: in place : in substitution of. It does not mean “in addition to.” Contra United States v. Lanzano, 1998 WL 812046 (S.D.N.Y. Nov. 18, 1998); United States v. Miguel, 49 F.3d 505 (9th Cir. 1995).
There is at least one recent Ninth Circuit decision which indicates that 18 U.S.C. 3663(a)(1)(A) would not be applicable to the facts of Defendant Coleman’s case. In United States v. Elias, 269 F.3d 1003 (9th Cir. 2001), the Court held that a conviction under 18 U.S.C. 2 will not trigger 3663(a)(1)(A) unless the underlying offense would otherwise fall within the scope of the restitutional statute. Id. at 1021-22. The Sixth Ciruict does not appear to have decided the issue. However one unreported decision appears to have left the question open. See United States v. Daniel, 14 Fed. Appx. 355 (6th Cir. 2001), 2001 WL 856985 at *7.
The offenses that Defendant Coleman were convicted of do not require mandatory restitution as they are outside the mandatory restitution provisions of 18 U.S.C. 3663 and 18 U.S.C. 3663A.
The PIR suggests that this Court order restitution in the amount of $88,907.63. However, included in this amount is $55,303.51 that the PIR suggests should be paid to Mr. Suen. There is no offense of conviction that would justify an order of restitution to Mr. Suen. Further, Mr. Suen was not defrauded and there has been no showing that Mr. Suen incurred a loss. On cross examination, Mr. Tyack asked Mr. Suen if he knew the results from Dr. Rex’s study, which Mr. Suen responded “Right.” Transcript, pg. 52-53.
The government argues that Ray Suen was a “trusting, admittedly naïve, individual who spent a lot of money on the egg powder based on no scientific evidence of its effectiveness.” See, Government’s letter to Mr. Walden, March 16, 2004, pg. 10. Nothing can be further from the truth. Mr. Suen was a savvy businessman with a prior FDCA conviction on his record who negotiated with a team of lawyers to represent his interests. Although the government argues that Mr. Suen had no way of contacting Dr. Rex, Mr. Suen testified otherwise. On cross examination he testified that he could have written to Dr. Rex. Transcript, pg. 36.
Mr. Suen marketed and sold the product he received from the defendants. It is uncontested that Mr. Suen incurred expenses in producing and marketing the hyperimmune egg product. However, Mr. Suen was able to sell at least $79,432.28 of the hyperimmune egg powder. PIR, paragraph 34. In other words, based on restitution of $55,303.51, he didn’t lose anything.
It would be incongruous, indeed, if Mr. Suen is permitted to manufacture and sell a prohibited product, at a profit, and then plead guilty to a FDCA offense (not his first) and then have the Government order that his costs in his illegal venture be reimbursed. What the government really wants is for this Court to grant Mr. Suen a reward, a gratuitous windfall, for his cooperation. That is not a proper reason for a restitution order. After substracting $55,303.51, the purported balance of restitution is $33,604.12.
Included in the $33,604.12 is $13,466.12 that was sold to either chiropractors or other commercial ventures and re-sold to the public, presumably at a profit. There is no basis to characterize these entities and individuals as victims nor has there been any showing of a loss. There may have been expenditures but instead of a loss, there was more likely than not a substantial profit. The list of “alleged” victims included in the PIR include many names of individuals who testified on behalf of the defense or who provided testimonials and who adamantly stated that they would buy this product again if made available.
In addition, the jury was never asked to find any monetary damage, or to determine that anyone had been victimized by Marilyn Coleman. In fact, the jury’s decision that no fraud was committed on behalf of the Defendant infers that the jury believed the individuals who testified that they felt better after taking the product and that they believed the product improved their quality of life. What seems to be lost on the government is not only did laypeople, experts and a lawyer, Sandy Mueller, testify as to efficacy, but also doctors and chiropractors. There was no fraud.
Finally, in addition to the fact that Coleman cannot make any restitution based on her financial status, the only restitution that can be ordered must be based on the substantive misdemeanors of conviction. In other words, Count 20, alleged a sale of hyperimmune egg powder to Patricia Lynch. After deducting the amount that was returned to Lynch by Coleman, the balance would constitute restitution (assuming previous objections were overruled). Counts 21, 22 and 23 concern sales to undercover agent Robert Cole. Whatever these sales total could be ordered as restitution. In no event can restitution be ordered for Suen or beyond the aggregate sales representing the specific transactions in Counts 9-23. For example, Count 18 concerns failing to register a manufacturing facility. There would be no restitution from this count. Restitution, for all practical purposes, is de minimis.
VI. Defendant Coleman’s Objection No. 1:
The PIR recommended utilization of § 2F1.1 in the calculation of the offense level alleging that the offenses involved fraud. It is our understanding that the probation officer made this determination without the benefit of the transcript. Most importantly, however, is that the jury found there was no intent to defraud or mislead anyone.
Paragraph 50 of the PIR mistakenly places the burden of proof on Defendants to prove the efficacy of the product. Defendants are under no obligation to prove anything in this case.
All that is reflected in the jury findings was that the egg product was a drug rather than a food or food supplement. The jury never made a finding of efficacy. The jury’s finding implies that the egg powder was effective in curing and treating a number of ailments. In other words, although Defendants did prove efficacy, they are under no duty to do so. The government must prove lack of efficacy and must then, by inference, further argue that Defendants knew of the lack of efficacy and then further argue that Defendants misrepresented the product to consumers. The jury rejected these theories. Under the record of this case and the testimony of the lay and expert witnesses for the defense, the government has not proved fraud or lack of efficacy by any standard, including proof beyond a reasonable doubt or the preponderance of the evidence.
The offense level for all the charges is 6.
VII. Defendant Coleman’s Objection No. 2:
Simply stated, there was no fraud and the Fifth and Sixth Amendments guarantee that no individual will be subjected to a sentence greater than that permitted under the USSG based on the verdict of a jury and proved beyond a reasonable doubt.
VIII. Defendant Coleman’s Objection No. 3:
USSG 3B1.3 only applies if the defendant abused a position of trust, or used a special skill “in a manner that significantly facilitated the commission or concealment of the offense.” Application Note 1 expands on this point, stating that the position of trust “must have contributed in some significant way to facilitating the commission or concealment of the offense (e.g., by making the detection of the offense or the defendant’s responsibility for the offense more difficult). According to the PIR, this enhancement applies because Defendant Coleman portrayed herself as a medical doctor, offered egg powder while purporting to be a medical doctor, published articles about the positive effects of the egg powder which were unproven, and spoke on television about the positive effects of the egg powder. On the facts of this case, this enhancement does not apply. “[T]he fact that [the defendant] posed as a physician does not by itself mean that [s]he occupied a position of trust . . . with the victims as that term is used in section 3B1.3 of the Guidelines.” United States v . Caplinger, 339 F.3d 226, 237-38 (4th Cir. 2003).
The only person who testified that Dr. Coleman represented that she was a medical doctor was an agent for the government. There was also at least one newspaper article that characterized Defendant as a medical doctor. Other individuals who testified for the defense all stated that they were aware of Coleman’s qualifications and knew she was not a physician. See Exhibit B, Letters from Coleman colleagues, chiropractors, friends and consumers. Moreover, Dr. Coleman’s credentials were not the issue in this case. Whether the OvImmune product was or was not a drug was not dependent on Dr. Coleman’s qualifications and Dr. Coleman was found not guilty of fraud.
From the jury verdict, there was a determination that the egg powder was a drug. The effect of the egg powder on the consumer was the same, regardless of whether the egg powder was technically a drug or a food. Even in cases involving fraud, “fraud alone does not justify the enhancement.” United States v. Caplinger, 339 F.3d 226, 237 (4th Cir. 2003), citing United States v. Bollin, 264 F.3d 391, 415 (4th Cir. 2001). The enhancement applies to fraud offenses where a person of trust uses the position to commit a difficult-to-detect wrong. As summarized earlier, there was no fraud, no concealment and the relevant conduct provisions of USSG 1B1.3 do not apply. The Government did not prove lack of efficacy. Whether Coleman was a medical doctor or Ph.D. is not tethered to whether the hyperimmune egg powder is a food or a drug and therefore the allegations in the PIR did not significantly facilitate the strict liability misdemeanors. United States v. Brunson, 54 F.3d 673, 678 (10th Cir. 1995)(enhancement “requires more than a mere showing that the victim had confidence in the defendant. Something more akin to a fiduciary function is required.”).
The Sixth Circuit has found “position of public or private trust” is a term of art, appropriating some of the aspects of the legal concept of a trustee or fiduciary.” United States v. Ragland, 72 F.3d 500, 502-03 (6th Cir. 1996)(bank employee who defrauded customers did not abuse trust); United States v. Humphrey, 279 F.3d 372, 380 (6th Cir. 2002)(vault teller who defrauded bank did not abuse trust). The concept of a trustee or fiduciary does not apply to the offenses of conviction in the Coleman case. The offenses of conviction are strict liability regulatory mala prohibitum offenses where the “penalties commonly are relatively small, and conviction does not do grave damage to an offender’s reputation.” United States v. Morisette, 342 U.S. 246 (1952).
Counsel for Coleman cannot find any cases that have applied an abuse of trust enhancement to a strict liability misdemeanor offense under the FDCA. Almost all cases involving doctors and others concern offenses for fraud or some other type of fraudulent activity such as false statements. Research will continue until April 29, 2005 but at this time, there does not appear to be any cases that apply 3B1.3 to the offenses of conviction in this case.
IX. Defendant Coleman’s Objection No. 4:
On January 6, 2002, the defense filed a Motion to Strike Overt Act #42 and/or any reference to a defamation action filed by the defendant in Union County entitled Coleman v. Wiley, et al., on February 21, 2002. All of the proceedings in the civil matter were placed on inactive status for a period of eighteen months, or until the conclusion of any federal criminal case in the United States District Court of Ohio, Eastern Division, whichever was later. In other words, there was no judicial determination of an obstruction.
On April 18, 2002, the government and Marilyn Coleman entered into an agreement prior to the date of the Protective Order Hearing. The parties agreed that the Entry would not be construed in any way as an admission that Dr. Coleman and OvImmune engaged in the conduct alleged in the government’s complaint. The parties also agreed that the Entry would not be construed in any way as an admission that Dr. Coleman and OvImmune engaged in the conduct alleged in the government’s complaint. The parties also agreed that the Entry would not be admissible, and would not be used as an admission, in any civil, administrative or criminal case that is pending, or may be filed, concerning Dr. Coleman and OvImmune. See Exhibit C. The Government is now barred from asserting that the agreed Entry is evidence of obstructing or impeding the administration of justice pursuant to USSG 3C1.1.
On February 18, 2003, this Court granted Defendant’s motion holding that reference to the defamation action violates the Agreed Entry, and was not an act in furtherance of the conspiracy charge.
Defendant Coleman consulted with an attorney before filing the case and was understandably upset with someone who was falsely impugning her character and her egg product. Filing a lawsuit is how disputes are settled in this country. An attorney is bound by the Ohio Code of Professional Responsibility and Civil Rule 11. The decision to seek counsel to determine a lawsuit is justified, and acquiescing in the attorney’s decision that the case is meritorious cannot be considered an obstruction of justice. Counsel for Coleman has been unable to find any case where an obstruction of justice enhancement has been applied to a defendant, represented by counsel, who files a defamation action against a potential witness for the Government. For example, the provision is not intended to punish a defendant for the exercise of a constitutional right. USSG 3C1.1, comment. (n.2).
As to the allegation that Dr. Coleman obstructed justice by filing police reports when strange and unusual things happened at her house, she did what anyone in her situation would do. Even if Dr. Coleman did file a complaint against the agent in charge of the investigation (which she did not), she did so through appropriate channels. Evidence presented at the sentencing hearing will further support that this enhancement is not justified.
As stated earlier, there is no relevant conduct concerning the offenses of conviction. Nor can there be an obstruction of the instant offenses of conviction. USSG 3C1.1. The issue of whether a substance is a food or a drug cannot be impeded by any of the conduct alleged in the PIR. Counsel has been unable to find any cases where the filing of a civil lawsuit has been considered an obstruction of justice.
The conduct alleged in paragraphs 39 and 40 is not “material.” Application note 6 defines “material” to mean “evidence, fact, statement or information that, if believed, would tend to influence or affect the issue under determination.” Nothing alleged in paragraph 39 or 40 meets this definition. In addition, the requirement of “willfully” has not been met. “Willfully” has been defined as the “specific intent to obstruct justice.” United States v. Reed, 49 F.3d 895 (2d Cir. 1995).
X. Defendant Coleman’s Objection No. 5:
There is no restitution because there is no victim. No one was defrauded. See above. The court has the financial data in the PIR. There is no ability to pay a fine unless it is de minimis.
XI. Defendant Coleman’s Objection No. 6:
Defendant does not object to the PIR determination that the offenses of conviction should be grouped together. Defendant does object to the use of the fraud table to determine the applicable guideline range. See infra (Government’s objections). It would be a violation of Blakely and Booker and an erroneous application of the factors in 18 U.S.C. 3553(a) to render consecutive sentences.
The basic rule of guideline § 3D1.2 is that “counts involving substantially the same harm” must be grouped together. Subsection (d) provides for grouping of counts when:
The offense level is determined largely on the basis of the total amount of harm or loss, the quantity of a substance involved, or some other measure of aggregate harm, or if the offense behavior is ongoing or continuous in nature and the offense guideline is written to cover such behavior.
The charged offenses in the Indictment all related to whether the hyperimmune egg powder was a food or drug. In addition, the majority of the product was seized pursuant to a search warrant at the Defendant’s office. The remaining egg powder was seized from The Ohio State University. See, United States Memorandum Contra Defendant’s Motion in Limine to Exclude Samples of the OvImmune Product.
Under Blakely, consecutive sentences would violate Coleman’s Sixth Amendment right to a jury trial and the right to be proven guilty beyond a reasonable doubt because the facts supporting the consecutive sentences were neither admitted by the defendant nor found by the jury.
XII. Downward “departures”.
In light of Booker/Fanfan, “departures” may not be the right nomenclature. A departure implies a standard to depart from. The USSG constitute merely one factor out of seven that must be considered in determining an appropriate sentence. Even a sentence within the guideline range may be unreasonable depending on the facts of the case. Moreover, after Booker, previous forbidden and discouraged factors must be considered when relevant to a particular sentencing decision.
For the reasons set forth below, this case warrants a substantial downward departure from the otherwise applicable guidelines. The Defendant should receive a downward departure based on the factors outlined below:
1. As set forth in the guideline, § 2N2.1 suggests that a downward departure may be justified; “Where only negligence was involved, a downward departure may be warranted.” Marilyn Coleman was found not guilty of fraud, and not guilty of knowing, reckless, or even negligent conduct. Marilyn Coleman never intended to do anything wrong.
2. Entrapment by estoppel: Marilyn Coleman was told by the USDA that in corroboration with the FDA that the products had been given GRAS status in 1998. The Defendant called, wrote and visited the FDA on numerous occasions. She did everything possible to keep open communication with the FDA and USDA regarding the OvImmune products. She cooperated fully with Agent McClure before, during, and after his March 2001 visit. The FDA took no steps to revoke, modify or rescind the GRAS status. The FDA did not prohibit the Defendant from distributing the OvImmune products after the March 30, 2001 teleconference. The FDA never sent the Defendant a copy of the memorandum from the teleconference. The only Warning Letter that was sent to the Defendant was addressed to a wrong address and did not arrive until after the search in August 2001. The doctrine of entrapment by estoppel is based on the fundamental notions of fairness embodied in the Due Process Clause of the Constitution. United States v. Smith, 940 F.2d 710 (1st Cir. 1991). Individuals should not be punished for actions undertaken in good faith reliance upon authoritative assurance that punishment will not attach. United States v. Laub, 385 U.S. 475 (1967). See also, U.S. v. McClelland, 72 F.3d 717 (9th Cir. 1995).
3. First-offender status: Courts are not precluded from considering first-offender status as a factor in downward departure calculations. The Guidelines explain that ‘the court may depart . . . even though the reason for departure is taken into consideration . . . if the court determines that, in light of unusual circumstances, the guideline level attached to that factor is inadequate.” U.S.S.G. § 5k2.0. This departure is in addition to considering the defendant’s criminal record at the criminal history stage. United States v. Grandmaison, 77 F.3d 555, 563 (1st Circuit 1996).
4. Family and Community Ties: Marilyn Coleman is described by her family and friends as a warm and caring person. She has done significant charitable work, and her door has always been open for those who are in need.
5. Defendant’s educational record and community leadership/role model: Marilyn Coleman has dedicated her life to poultry research. She has traveled to over eighty different countries to provide her expertise, often at her own expense. She has consulted with the largest egg producers and broiler producers in the world. She is well respected among poultry researchers. When her children were teenagers, Marilyn Coleman was known in her community for taking in wayward children. She remains active in her community and in her church.
6. An aggregation of factors may warrant a downward departure from sentencing by taking a case out of the “heartland” of typical cases. United States v. Coleman, 188 F.3d 354 (6th Cir. 1999). The Commentary to § 5K2.0 provides that “the Constitution does not foreclose the possibility of an extraordinary case that, because of a combination of such characteristics or circumstances, differs significantly from the “heartland” case covered by the guidelines in a way that is important to then statutory purpose of sentencing, even though none of the characteristics or circumstances individually distinguish the case.” The FDA rules and regulations are complex and the Defendant did her best to try and decipher these rules and to obtain information from officials of the FDA.
XIII. Government Objection No. 1: The United States objects to the PSIRs’ failure to discuss the applicability of grouping.
The PIR correctly groups the fourteen strict liability misdemeanors as a single group. The offense level is largely based on the aggregate harm of introducing one product into the marketplace in violation of the FDCA, the offense behavior was ongoing or continuous in nature, and the offense guideline is written to cover such behavior. Assuming the fraud guidelines do not apply, then there are no victims. At best, the only “victim” would be the government by reason of having its laws broken. Therefore, in addition to the application of USSG 3D1.2(d), USSG 3D1.2(b) would demand that all counts be grouped together because the acts or transactions were connected together by a common criminal objective or constituting part of a common scheme or plan.
USSG 3D1.2, Groups of Closely Related Counts, provides that all counts involving substantially the same harm shall be grouped together into a single group. Subsection (d) of USSG 3D1.2 will be used with the greatest frequency when the offenses “are based primarily on quantity or contemplate continuing behavior and are to be grouped together. The list of instances in which this subsection should be applied is not exhaustive” USSG 3D1.2, comment (n.6).
The harm, as expressed in the indictment, was the introduction into the marketplace of a “drug,” i.e. hyperimmunized eggs, that Coleman “knew” were ineffective for the purposes for which they were marketed. Coleman disputed these allegations at trial and the jury agreed with her on all material points. One “drug” was introduced into the marketplace. Counts 9-23 reflect one aggregate “harm.” The PIR correctly grouped Counts 9-23. Whether hyperimmune eggs are technically classified as a “drug” rather than a “food” has absolutely no bearing on efficacy or on the ultimate consumer.
XIV. Government Objection No. 2:
The government argues that the probation officer should have included in the PIR an enhancement for vulnerable victim pursuant to USSG 3A1.1(b)(1). The PIR takes no position on this issue. The government never made this argument to the jury and it was not part of the Indictment. The government’s case was that the product was a drug because the Defendant allegedly used terminology associated with what the government considers “treat” and “cure” language. The jury was never asked to come to a decision as to whether the product was effective.
The Defendant presented numerous witnesses that testified how the product had enhanced their well-being and that they were upset that the product was no longer available. No one testified that they were denied medical care by taking the product or that their underlying condition worsened by taking the product. In fact, many who testified stated that they took the egg product with the full knowledge of their treating physician. In addition, the jury found that the Defendants never had the intent to defraud or mislead anyone. The PIR correctly determined that there should be no “vulnerable victim” enhancement under the Guidelines.
This enhancement does not even apply in all fraud cases involving multiple parties. USSG 3A1.l, comment. (n.2). It would be anomalous to apply the enhancement to a strict liability misdemeanor. The point of the guideline is to provide an enhancement when a defendant specifically targets an unusually vulnerable victim. The offenses of conviction are not crimes of intent; they are strict liability. Moreover, much of the hyperimmune egg powder that was sold was distributed by chiropractors who exercised their best medical judgment when counseling their patients. The result of applying this guideline to individuals who never considered themselves victimized and whose only complaint is that the hyperimmune egg powder is no longer marketed can only be described as bizarre. Why would Coleman “know or should have known” that a “victim” was “unusually vulnerable” when the “victims” were informing her of the remarkable health benefits of her product? See United States v. Smith, 39 F.3d 119, 122-25 (6th Cir. 1994)(“the evidence must show that the defendant knew his victim was unusually vulnerable and that he perpetrated a crime on him because he was vulnerable. It is not enough to show that the victim happened to be vulnerable at the time the crime occurred.”).
Once again, USSG 3A1.1 appears to apply primarily to fraud cases. Businesses and the government do not fall under this provision. United States v. Gieger, 190 F.3d 661, 665 (5th Cir. 1999); United States v. Brunson, 54 F.3d 673, 676-77 (10th Cir. 1995). In addition, USSG 3A1.1 is “applicable only where the alleged victim of a defendant’s offense of conviction.” United States v. Wright, 12 F.3d 70, 73 (6th Cir. 1993) (emphasis added), appeal after remand, 56 F.3d 66 (Table), cert. denied Wright v. United States, 516 U.S. 923. Nor are the “relevant conduct” provisions of USSG 1B1.3 applicable to a suggested “vulnerable victim” enhancement. Id at 74-75..
XV. Conclusion.
The Government argues that Coleman should be sentenced as if she had pled guilty to the indictment and a trial had never occurred. The Government advocates unprecedented as well as heavy-handed application of Guideline enhancements and consecutive sentencing provisions to strict liability, regulatory misdemeanors. To accept the Government’s arguments would create a situation where “the lagniappe might begin to overwhelm the main course” United States v. Lombard, 72 F.3d 170, 183 (1st Cir. 1995) citing United States v. Rivera-Gomez, 67 F.3d 993 (1st Cir. 1995)(correctly predicting the Blakely and Booker holdings and noting that “there are constitutional limits on the way sentencing factors can be deployed in the punishment of a substantive offense).
For the reasons set forth in this Sentencing Memorandum, Part II, Defendant Coleman requests that this Honorable Court render a Zone A sentence that does not involve incarceration, restitution or more than a small fine.
Respectfully submitted,
___________________________
Max Kravitz (0023765)
Paula Brown
KRAVITZ,GATTERDAM & BROWN, LLC
145 E. Rich St.
Columbus, Ohio 43215
Tel: 614-464-2000
Fax: 614-464-2002
COUNSEL FOR DEFENDANT COLEMAN
CERTIFICATE OF SERVICE
I hereby certify that an exact copy of the foregoing Sentencing Memorandum, Part II, was sent to Ms. Deborah Solove, Assistant United States Attorney, 303 Marconi Blvd., Suite 200, Columbus, Ohio 43215, on this the __13th__ day of April, 2005 via Clerk’s email and U.S. mail.
____________________________
Max Kravitz
FOR THE SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
UNITED STATES OF AMERICA, :
Plaintiff, :
: Case No. CR2-02-130
v.
: JUDGE MARBLEY
MARILYN COLEMAN :
Defendant. :
SENTENCING MEMORANDUM
PART II
I. Introduction.
Defendant Coleman objects to the Government’s attempt to relitigate the fraud case that the jury rejected. The Presentence Investigation Report (“PIR”) and the Government suggest that this court sentence the Defendants as if they had plead guilty or been found guilty of all the charges in the indictment rather than being found innocent of 63 out of 63 felonies. To accept the Government’s arguments would make a farce and mockery out of the right to a jury trial and the right to proof beyond a reasonable doubt. See Blakely v. Washington, 124 S. Ct. 2531 (2004).
The application of the United States Sentencing Guidelines (“USSG”) results in a Zone A range.
Defendant Coleman recognizes that this memorandum is being filed later than initially represented to the Court. This memorandum is intended to be a comprehensive supplement to the objections and initial Sentencing Memorandum previously filed. Defendant Coleman suggests that the Government be given an additional week, if necessary, to file any reply to this Sentencing Memorandum, Part II.
II. Standard of Review.
On April 6, 2005, the Sixth Circuit decided the case of United States v. Webb, ___F.3d___, No. 03-6110 (2005). Although the Sixth Circuit declined to specify precisely what weight the district courts must give to the appropriate Guidelines range, or any other 18 U.S.C. 3553(a) factor, the panel decision held that whether a sentence is “reasonable” is not dependent on whether it comports with the Guidelines, but is a “concept of flexible meaning, generally lacking precise boundaries.” Webb, at *9 n.9. The Sixth Circuit noted that if “reasonableness” were equated with a Guideline sentence, such a standard “would effectively re-institute mandatory adherence to the Guidelines” that was condemned in Blakely. Webb, supra, citing United States v. Crosby, 397 F.3d 103, 115 (2d Cir. 2005).
The Webb court held:
[W]e read Booker as instructing appellate courts in determining reasonableness to consider not only the length of the sentence but also the factors evaluated and the procedures employed by the district court in reaching its sentencing determination. Thus, we may conclude that a sentence is unreasonable when the district judge fails to “consider” the other factors listed in 18 U.S.C. 3553(a), and instead simply selects what the judge deems an appropriate sentence without such required consideration.” Booker, 125 S. Ct. at 757 . . .
Webb, supra, at *7. See also, Defendant Coleman’s Sentencing Memorandum, filed April 5, 2005.
This Honorable Court need not hold an evidentiary hearing to resolve each of the factual disputes raised in Coleman’s and the Government’s correspondence to the probation department and this Court. Coleman objects to the re-litigation of the case at sentencing. See, Webb, at *8 n.6 (“we decline to address whether a district judge must always calculate the precise appropriate Guidelines range in order to comply with Booker. . . [The] ‘precise calculation of the applicable Guidelines range may not be necessary’ in certain situations where the district judge imposes a non-Guidelines sentence.”). See also, Coleman’s Sentencing Memorandum, Part I, April 5, 2005.
The jury unanimously and conclusively rejected any notion that any of the defendants acted fraudulently concerning any private individual, entity or in their transactions with the government. The rejection of fraud in 63 out of 63 counts speaks volumes for the total lack of any evidentiary support for a finding of fraudulent intent. Moreover, Blakely and Booker prohibit all of the enhancements contained in the PSI or urged by the Government in its submission to this Court.
III. General Objections.
Defendant Coleman objects to numerous factual determinations in her Presentence Investigation Report (“PIR”). These objections as well as supporting exhibits are fully set forth in a letter to David Walden on behalf of Coleman and Defendant OvImmune and appear as an Addendum to the Sentencing Memorandum, Part I, filed April 5, 2005. Defendants Coleman and OvImmune reassert each and every objection in the Walden correspondence as if specifically set forth anew in this memorandum.
IV. The appropriate guideline computation pursuant to 18 U.S.C. 3553(a)(4).
In addition to the objections based on Blakely-Booker, Defendant Coleman specifically objects to any sentence, Guideline or otherwise, based on fraud. As a threshold matter, the mail fraud and conspiracy acquittals were totally unrelated to the charges contained in Counts 9 through 23 and therefore cannot be considered “relevant conduct” pursuant to USSG 1B1.3. The issues in Counts 9 through 23 concerned whether the egg powder was a food or a drug. Counts 1 through 8 do not constitute “jointly undertaken activity,” see USSG 1B1.3, related to the strict liability misdemeanor convictions in Counts 9 through 23.
The issues in Counts 1 through 8 concerned alleged misrepresentations to Ray Suen about the efficacy of the hyperimmune egg powder and whether Ray Suen relied on the purported misrepresentations of the Defendants when insisting that the egg powder be produced. The evidence at trial showed that Suen didn’t care about efficacy claims, that he knew his venture was a “crapshoot,” that he had a large law firm protect his interests and that he was determined to produce and sell the egg product regardless of whether studies showed the egg powder was effective. Suen pled guilty to a misdemeanor FDCA count. If he was a victim, presumably the Government would not have pursued him as a defendant. To reiterate counsel’s closing argument at trial, the charges concerning Suen were a complete sham.
Defendants do not shed their constitutional rights to a jury trial and proof beyond a reasonable doubt at the start of sentencing proceedings. A determination of the “statutory maximum” must precede and cabin a determination of the USSG for purposes of 3553(a)(4). When a fact is not proven at trial utilizing proof beyond a reasonable doubt, unless the Defendant stipulates the facts supporting an enhancement (which Coleman does not) or consents to judicial fact-finding (which Coleman does not), those facts cannot be used to enhance a guideline level. In this case, application of 18 U.S.C 3553(a), as well as an application of the USSG, demands that a non-incarcerative sentence within Zone A is required.
Counts 9-23 do not specify any monetary loss, presumably because the purported (and jury-rejected) fraud was on the government rather than on any individual. Nor was the jury asked to make any findings that would implicate the fraud table in USSG 2F1.1. The only findings that the jury made rejected fraud – 63 times! Therefore, the base offense level as established in USSG 2N2.1 is 6 for each offense. It is now settled law that the Sixth Amendment forbids a judge from increasing a defendant’s sentence based on facts not admitted by the defendant or proven to a jury beyond a reasonable doubt. Booker, 125 S.Ct. at 744-45 (Stevens, J).
In this case, the guideline range is 6. The Defendant’s Criminal History is Category I. A Zone A non-incarcerative sentence is mandated. Any enhancements taking Coleman out of the 0-6 range would constitute “a tail which wags the dog of the substantive offense(s)”McMillan v. Pennsylvania, 477 U.S. 79, 88 (1986).
The jury determined that the hyperimmune egg powder was a drug rather than a food or food supplement, presumably because of some language used to market the product. That determination does not implicate fraud. Coleman obtained inactivated candida vaccine and inoculated 10,000 chickens. If there was fraud, why go to the trouble of inoculating the chickens? Or spend money on vaccines? The evidence was equivocal on efficacy, the Government contending that the product didn’t work and the many defense experts and lay witnesses contending that it would and did. Evidence at trial showed that the Government (both the USDA and, at times, the FDA) confirmed that hyperimmune eggs were a food and that Addison Labs checked with various agencies of the Government before shipping deactivated vaccines to Coleman. Unless the rights to a jury trial and proof beyond a reasonable doubt are merely talismanic incantations devoid of any true meaning, the base offense level for the strict liability misdemeanors is 6.
V. Factors in 18 U.S.C. 3553(a).
18 U.S.C. 3553(a) provides that a court shall impose a sentence sufficient but not greater than necessary to comply with the purposes of sentencing. The court in determining the particular sentence to be imposed, shall consider:
A. The nature and circumstances of the offense and the history and characteristics of the defendant:
The indictment alleged that Coleman “knew” that her product didn’t work. This was the gravamen of the government’s case. The jury concluded that Coleman’s hyperimmune eggs were a “drug” rather than a food or food supplement. In all other respects, the Government’s theories were rejected. The reasonable conclusion from the evidence at trial is that the jury believed that hyperimmune eggs had value in treating a wide variety of ailments. Certainly, the evidence presented by expert and lay witnesses for the defense supported efficacy. Coleman’s hyperimmune egg product was not the only product on the market extolling the virtues of hyperimmune eggs. At the time, the former general counsel for the FDA was providing testimonials for a competitor’s hyperimmune egg product, noting how hyperimmune eggs made him feel like a 20 year old man (he was around 65 at the time). See, Exhibit A. Although Coleman’s advertising did not fit within the strictures of FDA-acceptable litany, her product was based on the same science as many other products on market. Since the evidence at trial clearly showed that the FDA was unsure at various times whether the hyperimmune egg product should be treated as a food or a drug, how can the government claim that Coleman should have known that her product would be considered a drug?
On March 25, 1998, Marilyn Coleman was notified by the USDA that her products, made from hyperimmune eggs, were given GRAS (Generally Recognized as Safe) status under the Food, Drug and Cosmetic Act. The government argues that one agency does not “speak” for another, and that one agency will not interfere with the ruling of another agency. See, Government’s Letter to Mr. Walden, March 16, 2004, pg. 4. Dr. Coleman tried to do what she thought was right – she tried to get answers from the government. Even the government’s own witnesses testified how confusing the process is. Dr. Coleman called, she wrote, and she visited the FDA with little to no response. Dr. Coleman never had the intent to commit any of the offenses in Counts 1-21.
Marilyn Coleman is 59 years old. She has no prior criminal history. She is a respected scientist, researcher and innovator. She has been described by one of her colleagues as an “intellectually stimulating” person who has contributed much to society, and has much more to contribute. For the past thirty years she has dedicated her life to the poultry industry. She was an Assistant Professor of Poultry Science at The Ohio State University, and has a PhD in Physiology. She has worked throughout the world with poultry growers and manufactures.
Dr. Coleman is also the president of MAC Associates, an international poultry consulting business. MAC Associates works with all areas of the poultry industry, from feed mill to further processing. Dr. Coleman’s specialty is live production and incubation.
Dr. Coleman is known throughout her community for her humanitarian and missionary works. She has volunteered and consulted throughout the world helping third world countries with their food production. She opened her home to many wayward teenagers; there were over 50 teenagers who stayed at the Coleman residence from anywhere from one night to three years. She is active in the Kiwanis and provides a yearly fundraiser for the group. She is active in her church and throughout the years has volunteered to teach Bible studies and has been involved in other church related activities. When Dr. Coleman had difficulty processing hyperimmune egg powder, she gave approximately 10,000 eggs to her community for free rather than having them go to waste.
Exhibit B represents letters from her friends and family that describe her as a caring individual that is always there for her friends and family. She is described as the kind of person who goes out of her way to help others. She has been married to her husband George for thirty-seven years. They have two children whom, like their mother, have chosen careers in areas of science. She has four grandchildren whom she cares for as often as possible.
She has exhausted all of her funds developing her hyperimmune egg product or defending it and herself in civil and criminal court proceedings. She is nearly bankrupt after 40 years of productivity. This is not an offense or offender that calls for jail time.
B. The need for the sentence imposed:
The court in determining what sentence to impose must look at the seriousness of the offense, and impose a sentence that will provide adequate deterrence to criminal conduct, protect the public from future crimes of the defendant, and provide the defendant with needed educational or vocational training, medical care or other corrective treatment.
Marilyn Coleman believed in her work, and believed her products made people feel better because people told her they felt better, that the product had a positive effect on their lives, and that it enhanced their well-being. Marilyn Coleman cared about the people who bought the product from her, and she cared about their problems. Marilyn Coleman never intended to mislead or defraud anyone and, as the jury’s verdict forms reflect, the jury found that Marilyn Coleman was not fraudulent in her venture.
Dr. Coleman has much to offer the community. Throughout her life she has been involved in humanitarian efforts to help improve the lives of others. She not only has expertise in the area of scientific research and the poultry industry, but she is also an avid, experienced and well respected gardener. Given the opportunity, she has many talents she could share with others.
Dr. Coleman lives a simple life in Richwood, Ohio. She is still devastated by these proceedings. She has spent all of her money in development of this product, and then defending the product against her competitors and now the government. She is nearly bankrupt and can barely afford to keep her 49,000 pounds of hymperimmune egg powder refrigerated as she explores how to sell it, perhaps as animal feed in a foreign country. Any incarcerative sentence would just be some form of totally unnecessary “piling on.” There is absolutely no need to protect the public from further crimes and it needs to be stressed as often as possible that the offenses before the court are strict liability. Furthermore, with her many talents, Marilyn Coleman could serve the community through her vast knowledge of scientific matters, and her humanitarian and religious beliefs.
Since Blakely and Booker, forbidden or discouraged sentencing factors are now appropriate to be considered when relevant to factors enumerated in 3553(a). Considering defendant’s age, her education and vocational skills, employment record, family ties and responsibilities and her lack of a criminal record for her entire life, and the strict liability nature of the misdemeanors, there is no need for punishment in this case.
Counsel will address the need to avoid unwarranted sentence disparities at the hearing.
C. The need to provide restitution to any victims of the offense.
The relevant conduct rules of USSG 1B1.3(a) do not apply to restitution under the chapter five guidelines. The threshold issue is whether the sentencing provisions of 18 U.S.C. 3561 and 3583 apply concerning restitution, or are the provisions of 18 U.S.C. 3663(a) applicable?
Since each of the counts of conviction specify 18 U.S.C. 2, it is arguable that 18 U.S.C. 3663(a) applies to these offense. This provision provides that if restitution is ordered, it must be in lieu of any other penalty authorized by law. Therefore, no incarceration can be ordered if restitution is ordered. See Black’s Law Dictionary, citing Glassman Construction Co. v. Baltimore Brick Co., 246 Md. 478, 228 A.2d 472, 474: “in lieu of. Instead of: in place : in substitution of. It does not mean “in addition to.” Contra United States v. Lanzano, 1998 WL 812046 (S.D.N.Y. Nov. 18, 1998); United States v. Miguel, 49 F.3d 505 (9th Cir. 1995).
There is at least one recent Ninth Circuit decision which indicates that 18 U.S.C. 3663(a)(1)(A) would not be applicable to the facts of Defendant Coleman’s case. In United States v. Elias, 269 F.3d 1003 (9th Cir. 2001), the Court held that a conviction under 18 U.S.C. 2 will not trigger 3663(a)(1)(A) unless the underlying offense would otherwise fall within the scope of the restitutional statute. Id. at 1021-22. The Sixth Ciruict does not appear to have decided the issue. However one unreported decision appears to have left the question open. See United States v. Daniel, 14 Fed. Appx. 355 (6th Cir. 2001), 2001 WL 856985 at *7.
The offenses that Defendant Coleman were convicted of do not require mandatory restitution as they are outside the mandatory restitution provisions of 18 U.S.C. 3663 and 18 U.S.C. 3663A.
The PIR suggests that this Court order restitution in the amount of $88,907.63. However, included in this amount is $55,303.51 that the PIR suggests should be paid to Mr. Suen. There is no offense of conviction that would justify an order of restitution to Mr. Suen. Further, Mr. Suen was not defrauded and there has been no showing that Mr. Suen incurred a loss. On cross examination, Mr. Tyack asked Mr. Suen if he knew the results from Dr. Rex’s study, which Mr. Suen responded “Right.” Transcript, pg. 52-53.
The government argues that Ray Suen was a “trusting, admittedly naïve, individual who spent a lot of money on the egg powder based on no scientific evidence of its effectiveness.” See, Government’s letter to Mr. Walden, March 16, 2004, pg. 10. Nothing can be further from the truth. Mr. Suen was a savvy businessman with a prior FDCA conviction on his record who negotiated with a team of lawyers to represent his interests. Although the government argues that Mr. Suen had no way of contacting Dr. Rex, Mr. Suen testified otherwise. On cross examination he testified that he could have written to Dr. Rex. Transcript, pg. 36.
Mr. Suen marketed and sold the product he received from the defendants. It is uncontested that Mr. Suen incurred expenses in producing and marketing the hyperimmune egg product. However, Mr. Suen was able to sell at least $79,432.28 of the hyperimmune egg powder. PIR, paragraph 34. In other words, based on restitution of $55,303.51, he didn’t lose anything.
It would be incongruous, indeed, if Mr. Suen is permitted to manufacture and sell a prohibited product, at a profit, and then plead guilty to a FDCA offense (not his first) and then have the Government order that his costs in his illegal venture be reimbursed. What the government really wants is for this Court to grant Mr. Suen a reward, a gratuitous windfall, for his cooperation. That is not a proper reason for a restitution order. After substracting $55,303.51, the purported balance of restitution is $33,604.12.
Included in the $33,604.12 is $13,466.12 that was sold to either chiropractors or other commercial ventures and re-sold to the public, presumably at a profit. There is no basis to characterize these entities and individuals as victims nor has there been any showing of a loss. There may have been expenditures but instead of a loss, there was more likely than not a substantial profit. The list of “alleged” victims included in the PIR include many names of individuals who testified on behalf of the defense or who provided testimonials and who adamantly stated that they would buy this product again if made available.
In addition, the jury was never asked to find any monetary damage, or to determine that anyone had been victimized by Marilyn Coleman. In fact, the jury’s decision that no fraud was committed on behalf of the Defendant infers that the jury believed the individuals who testified that they felt better after taking the product and that they believed the product improved their quality of life. What seems to be lost on the government is not only did laypeople, experts and a lawyer, Sandy Mueller, testify as to efficacy, but also doctors and chiropractors. There was no fraud.
Finally, in addition to the fact that Coleman cannot make any restitution based on her financial status, the only restitution that can be ordered must be based on the substantive misdemeanors of conviction. In other words, Count 20, alleged a sale of hyperimmune egg powder to Patricia Lynch. After deducting the amount that was returned to Lynch by Coleman, the balance would constitute restitution (assuming previous objections were overruled). Counts 21, 22 and 23 concern sales to undercover agent Robert Cole. Whatever these sales total could be ordered as restitution. In no event can restitution be ordered for Suen or beyond the aggregate sales representing the specific transactions in Counts 9-23. For example, Count 18 concerns failing to register a manufacturing facility. There would be no restitution from this count. Restitution, for all practical purposes, is de minimis.
VI. Defendant Coleman’s Objection No. 1:
The PIR recommended utilization of § 2F1.1 in the calculation of the offense level alleging that the offenses involved fraud. It is our understanding that the probation officer made this determination without the benefit of the transcript. Most importantly, however, is that the jury found there was no intent to defraud or mislead anyone.
Paragraph 50 of the PIR mistakenly places the burden of proof on Defendants to prove the efficacy of the product. Defendants are under no obligation to prove anything in this case.
All that is reflected in the jury findings was that the egg product was a drug rather than a food or food supplement. The jury never made a finding of efficacy. The jury’s finding implies that the egg powder was effective in curing and treating a number of ailments. In other words, although Defendants did prove efficacy, they are under no duty to do so. The government must prove lack of efficacy and must then, by inference, further argue that Defendants knew of the lack of efficacy and then further argue that Defendants misrepresented the product to consumers. The jury rejected these theories. Under the record of this case and the testimony of the lay and expert witnesses for the defense, the government has not proved fraud or lack of efficacy by any standard, including proof beyond a reasonable doubt or the preponderance of the evidence.
The offense level for all the charges is 6.
VII. Defendant Coleman’s Objection No. 2:
Simply stated, there was no fraud and the Fifth and Sixth Amendments guarantee that no individual will be subjected to a sentence greater than that permitted under the USSG based on the verdict of a jury and proved beyond a reasonable doubt.
VIII. Defendant Coleman’s Objection No. 3:
USSG 3B1.3 only applies if the defendant abused a position of trust, or used a special skill “in a manner that significantly facilitated the commission or concealment of the offense.” Application Note 1 expands on this point, stating that the position of trust “must have contributed in some significant way to facilitating the commission or concealment of the offense (e.g., by making the detection of the offense or the defendant’s responsibility for the offense more difficult). According to the PIR, this enhancement applies because Defendant Coleman portrayed herself as a medical doctor, offered egg powder while purporting to be a medical doctor, published articles about the positive effects of the egg powder which were unproven, and spoke on television about the positive effects of the egg powder. On the facts of this case, this enhancement does not apply. “[T]he fact that [the defendant] posed as a physician does not by itself mean that [s]he occupied a position of trust . . . with the victims as that term is used in section 3B1.3 of the Guidelines.” United States v . Caplinger, 339 F.3d 226, 237-38 (4th Cir. 2003).
The only person who testified that Dr. Coleman represented that she was a medical doctor was an agent for the government. There was also at least one newspaper article that characterized Defendant as a medical doctor. Other individuals who testified for the defense all stated that they were aware of Coleman’s qualifications and knew she was not a physician. See Exhibit B, Letters from Coleman colleagues, chiropractors, friends and consumers. Moreover, Dr. Coleman’s credentials were not the issue in this case. Whether the OvImmune product was or was not a drug was not dependent on Dr. Coleman’s qualifications and Dr. Coleman was found not guilty of fraud.
From the jury verdict, there was a determination that the egg powder was a drug. The effect of the egg powder on the consumer was the same, regardless of whether the egg powder was technically a drug or a food. Even in cases involving fraud, “fraud alone does not justify the enhancement.” United States v. Caplinger, 339 F.3d 226, 237 (4th Cir. 2003), citing United States v. Bollin, 264 F.3d 391, 415 (4th Cir. 2001). The enhancement applies to fraud offenses where a person of trust uses the position to commit a difficult-to-detect wrong. As summarized earlier, there was no fraud, no concealment and the relevant conduct provisions of USSG 1B1.3 do not apply. The Government did not prove lack of efficacy. Whether Coleman was a medical doctor or Ph.D. is not tethered to whether the hyperimmune egg powder is a food or a drug and therefore the allegations in the PIR did not significantly facilitate the strict liability misdemeanors. United States v. Brunson, 54 F.3d 673, 678 (10th Cir. 1995)(enhancement “requires more than a mere showing that the victim had confidence in the defendant. Something more akin to a fiduciary function is required.”).
The Sixth Circuit has found “position of public or private trust” is a term of art, appropriating some of the aspects of the legal concept of a trustee or fiduciary.” United States v. Ragland, 72 F.3d 500, 502-03 (6th Cir. 1996)(bank employee who defrauded customers did not abuse trust); United States v. Humphrey, 279 F.3d 372, 380 (6th Cir. 2002)(vault teller who defrauded bank did not abuse trust). The concept of a trustee or fiduciary does not apply to the offenses of conviction in the Coleman case. The offenses of conviction are strict liability regulatory mala prohibitum offenses where the “penalties commonly are relatively small, and conviction does not do grave damage to an offender’s reputation.” United States v. Morisette, 342 U.S. 246 (1952).
Counsel for Coleman cannot find any cases that have applied an abuse of trust enhancement to a strict liability misdemeanor offense under the FDCA. Almost all cases involving doctors and others concern offenses for fraud or some other type of fraudulent activity such as false statements. Research will continue until April 29, 2005 but at this time, there does not appear to be any cases that apply 3B1.3 to the offenses of conviction in this case.
IX. Defendant Coleman’s Objection No. 4:
On January 6, 2002, the defense filed a Motion to Strike Overt Act #42 and/or any reference to a defamation action filed by the defendant in Union County entitled Coleman v. Wiley, et al., on February 21, 2002. All of the proceedings in the civil matter were placed on inactive status for a period of eighteen months, or until the conclusion of any federal criminal case in the United States District Court of Ohio, Eastern Division, whichever was later. In other words, there was no judicial determination of an obstruction.
On April 18, 2002, the government and Marilyn Coleman entered into an agreement prior to the date of the Protective Order Hearing. The parties agreed that the Entry would not be construed in any way as an admission that Dr. Coleman and OvImmune engaged in the conduct alleged in the government’s complaint. The parties also agreed that the Entry would not be construed in any way as an admission that Dr. Coleman and OvImmune engaged in the conduct alleged in the government’s complaint. The parties also agreed that the Entry would not be admissible, and would not be used as an admission, in any civil, administrative or criminal case that is pending, or may be filed, concerning Dr. Coleman and OvImmune. See Exhibit C. The Government is now barred from asserting that the agreed Entry is evidence of obstructing or impeding the administration of justice pursuant to USSG 3C1.1.
On February 18, 2003, this Court granted Defendant’s motion holding that reference to the defamation action violates the Agreed Entry, and was not an act in furtherance of the conspiracy charge.
Defendant Coleman consulted with an attorney before filing the case and was understandably upset with someone who was falsely impugning her character and her egg product. Filing a lawsuit is how disputes are settled in this country. An attorney is bound by the Ohio Code of Professional Responsibility and Civil Rule 11. The decision to seek counsel to determine a lawsuit is justified, and acquiescing in the attorney’s decision that the case is meritorious cannot be considered an obstruction of justice. Counsel for Coleman has been unable to find any case where an obstruction of justice enhancement has been applied to a defendant, represented by counsel, who files a defamation action against a potential witness for the Government. For example, the provision is not intended to punish a defendant for the exercise of a constitutional right. USSG 3C1.1, comment. (n.2).
As to the allegation that Dr. Coleman obstructed justice by filing police reports when strange and unusual things happened at her house, she did what anyone in her situation would do. Even if Dr. Coleman did file a complaint against the agent in charge of the investigation (which she did not), she did so through appropriate channels. Evidence presented at the sentencing hearing will further support that this enhancement is not justified.
As stated earlier, there is no relevant conduct concerning the offenses of conviction. Nor can there be an obstruction of the instant offenses of conviction. USSG 3C1.1. The issue of whether a substance is a food or a drug cannot be impeded by any of the conduct alleged in the PIR. Counsel has been unable to find any cases where the filing of a civil lawsuit has been considered an obstruction of justice.
The conduct alleged in paragraphs 39 and 40 is not “material.” Application note 6 defines “material” to mean “evidence, fact, statement or information that, if believed, would tend to influence or affect the issue under determination.” Nothing alleged in paragraph 39 or 40 meets this definition. In addition, the requirement of “willfully” has not been met. “Willfully” has been defined as the “specific intent to obstruct justice.” United States v. Reed, 49 F.3d 895 (2d Cir. 1995).
X. Defendant Coleman’s Objection No. 5:
There is no restitution because there is no victim. No one was defrauded. See above. The court has the financial data in the PIR. There is no ability to pay a fine unless it is de minimis.
XI. Defendant Coleman’s Objection No. 6:
Defendant does not object to the PIR determination that the offenses of conviction should be grouped together. Defendant does object to the use of the fraud table to determine the applicable guideline range. See infra (Government’s objections). It would be a violation of Blakely and Booker and an erroneous application of the factors in 18 U.S.C. 3553(a) to render consecutive sentences.
The basic rule of guideline § 3D1.2 is that “counts involving substantially the same harm” must be grouped together. Subsection (d) provides for grouping of counts when:
The offense level is determined largely on the basis of the total amount of harm or loss, the quantity of a substance involved, or some other measure of aggregate harm, or if the offense behavior is ongoing or continuous in nature and the offense guideline is written to cover such behavior.
The charged offenses in the Indictment all related to whether the hyperimmune egg powder was a food or drug. In addition, the majority of the product was seized pursuant to a search warrant at the Defendant’s office. The remaining egg powder was seized from The Ohio State University. See, United States Memorandum Contra Defendant’s Motion in Limine to Exclude Samples of the OvImmune Product.
Under Blakely, consecutive sentences would violate Coleman’s Sixth Amendment right to a jury trial and the right to be proven guilty beyond a reasonable doubt because the facts supporting the consecutive sentences were neither admitted by the defendant nor found by the jury.
XII. Downward “departures”.
In light of Booker/Fanfan, “departures” may not be the right nomenclature. A departure implies a standard to depart from. The USSG constitute merely one factor out of seven that must be considered in determining an appropriate sentence. Even a sentence within the guideline range may be unreasonable depending on the facts of the case. Moreover, after Booker, previous forbidden and discouraged factors must be considered when relevant to a particular sentencing decision.
For the reasons set forth below, this case warrants a substantial downward departure from the otherwise applicable guidelines. The Defendant should receive a downward departure based on the factors outlined below:
1. As set forth in the guideline, § 2N2.1 suggests that a downward departure may be justified; “Where only negligence was involved, a downward departure may be warranted.” Marilyn Coleman was found not guilty of fraud, and not guilty of knowing, reckless, or even negligent conduct. Marilyn Coleman never intended to do anything wrong.
2. Entrapment by estoppel: Marilyn Coleman was told by the USDA that in corroboration with the FDA that the products had been given GRAS status in 1998. The Defendant called, wrote and visited the FDA on numerous occasions. She did everything possible to keep open communication with the FDA and USDA regarding the OvImmune products. She cooperated fully with Agent McClure before, during, and after his March 2001 visit. The FDA took no steps to revoke, modify or rescind the GRAS status. The FDA did not prohibit the Defendant from distributing the OvImmune products after the March 30, 2001 teleconference. The FDA never sent the Defendant a copy of the memorandum from the teleconference. The only Warning Letter that was sent to the Defendant was addressed to a wrong address and did not arrive until after the search in August 2001. The doctrine of entrapment by estoppel is based on the fundamental notions of fairness embodied in the Due Process Clause of the Constitution. United States v. Smith, 940 F.2d 710 (1st Cir. 1991). Individuals should not be punished for actions undertaken in good faith reliance upon authoritative assurance that punishment will not attach. United States v. Laub, 385 U.S. 475 (1967). See also, U.S. v. McClelland, 72 F.3d 717 (9th Cir. 1995).
3. First-offender status: Courts are not precluded from considering first-offender status as a factor in downward departure calculations. The Guidelines explain that ‘the court may depart . . . even though the reason for departure is taken into consideration . . . if the court determines that, in light of unusual circumstances, the guideline level attached to that factor is inadequate.” U.S.S.G. § 5k2.0. This departure is in addition to considering the defendant’s criminal record at the criminal history stage. United States v. Grandmaison, 77 F.3d 555, 563 (1st Circuit 1996).
4. Family and Community Ties: Marilyn Coleman is described by her family and friends as a warm and caring person. She has done significant charitable work, and her door has always been open for those who are in need.
5. Defendant’s educational record and community leadership/role model: Marilyn Coleman has dedicated her life to poultry research. She has traveled to over eighty different countries to provide her expertise, often at her own expense. She has consulted with the largest egg producers and broiler producers in the world. She is well respected among poultry researchers. When her children were teenagers, Marilyn Coleman was known in her community for taking in wayward children. She remains active in her community and in her church.
6. An aggregation of factors may warrant a downward departure from sentencing by taking a case out of the “heartland” of typical cases. United States v. Coleman, 188 F.3d 354 (6th Cir. 1999). The Commentary to § 5K2.0 provides that “the Constitution does not foreclose the possibility of an extraordinary case that, because of a combination of such characteristics or circumstances, differs significantly from the “heartland” case covered by the guidelines in a way that is important to then statutory purpose of sentencing, even though none of the characteristics or circumstances individually distinguish the case.” The FDA rules and regulations are complex and the Defendant did her best to try and decipher these rules and to obtain information from officials of the FDA.
XIII. Government Objection No. 1: The United States objects to the PSIRs’ failure to discuss the applicability of grouping.
The PIR correctly groups the fourteen strict liability misdemeanors as a single group. The offense level is largely based on the aggregate harm of introducing one product into the marketplace in violation of the FDCA, the offense behavior was ongoing or continuous in nature, and the offense guideline is written to cover such behavior. Assuming the fraud guidelines do not apply, then there are no victims. At best, the only “victim” would be the government by reason of having its laws broken. Therefore, in addition to the application of USSG 3D1.2(d), USSG 3D1.2(b) would demand that all counts be grouped together because the acts or transactions were connected together by a common criminal objective or constituting part of a common scheme or plan.
USSG 3D1.2, Groups of Closely Related Counts, provides that all counts involving substantially the same harm shall be grouped together into a single group. Subsection (d) of USSG 3D1.2 will be used with the greatest frequency when the offenses “are based primarily on quantity or contemplate continuing behavior and are to be grouped together. The list of instances in which this subsection should be applied is not exhaustive” USSG 3D1.2, comment (n.6).
The harm, as expressed in the indictment, was the introduction into the marketplace of a “drug,” i.e. hyperimmunized eggs, that Coleman “knew” were ineffective for the purposes for which they were marketed. Coleman disputed these allegations at trial and the jury agreed with her on all material points. One “drug” was introduced into the marketplace. Counts 9-23 reflect one aggregate “harm.” The PIR correctly grouped Counts 9-23. Whether hyperimmune eggs are technically classified as a “drug” rather than a “food” has absolutely no bearing on efficacy or on the ultimate consumer.
XIV. Government Objection No. 2:
The government argues that the probation officer should have included in the PIR an enhancement for vulnerable victim pursuant to USSG 3A1.1(b)(1). The PIR takes no position on this issue. The government never made this argument to the jury and it was not part of the Indictment. The government’s case was that the product was a drug because the Defendant allegedly used terminology associated with what the government considers “treat” and “cure” language. The jury was never asked to come to a decision as to whether the product was effective.
The Defendant presented numerous witnesses that testified how the product had enhanced their well-being and that they were upset that the product was no longer available. No one testified that they were denied medical care by taking the product or that their underlying condition worsened by taking the product. In fact, many who testified stated that they took the egg product with the full knowledge of their treating physician. In addition, the jury found that the Defendants never had the intent to defraud or mislead anyone. The PIR correctly determined that there should be no “vulnerable victim” enhancement under the Guidelines.
This enhancement does not even apply in all fraud cases involving multiple parties. USSG 3A1.l, comment. (n.2). It would be anomalous to apply the enhancement to a strict liability misdemeanor. The point of the guideline is to provide an enhancement when a defendant specifically targets an unusually vulnerable victim. The offenses of conviction are not crimes of intent; they are strict liability. Moreover, much of the hyperimmune egg powder that was sold was distributed by chiropractors who exercised their best medical judgment when counseling their patients. The result of applying this guideline to individuals who never considered themselves victimized and whose only complaint is that the hyperimmune egg powder is no longer marketed can only be described as bizarre. Why would Coleman “know or should have known” that a “victim” was “unusually vulnerable” when the “victims” were informing her of the remarkable health benefits of her product? See United States v. Smith, 39 F.3d 119, 122-25 (6th Cir. 1994)(“the evidence must show that the defendant knew his victim was unusually vulnerable and that he perpetrated a crime on him because he was vulnerable. It is not enough to show that the victim happened to be vulnerable at the time the crime occurred.”).
Once again, USSG 3A1.1 appears to apply primarily to fraud cases. Businesses and the government do not fall under this provision. United States v. Gieger, 190 F.3d 661, 665 (5th Cir. 1999); United States v. Brunson, 54 F.3d 673, 676-77 (10th Cir. 1995). In addition, USSG 3A1.1 is “applicable only where the alleged victim of a defendant’s offense of conviction.” United States v. Wright, 12 F.3d 70, 73 (6th Cir. 1993) (emphasis added), appeal after remand, 56 F.3d 66 (Table), cert. denied Wright v. United States, 516 U.S. 923. Nor are the “relevant conduct” provisions of USSG 1B1.3 applicable to a suggested “vulnerable victim” enhancement. Id at 74-75..
XV. Conclusion.
The Government argues that Coleman should be sentenced as if she had pled guilty to the indictment and a trial had never occurred. The Government advocates unprecedented as well as heavy-handed application of Guideline enhancements and consecutive sentencing provisions to strict liability, regulatory misdemeanors. To accept the Government’s arguments would create a situation where “the lagniappe might begin to overwhelm the main course” United States v. Lombard, 72 F.3d 170, 183 (1st Cir. 1995) citing United States v. Rivera-Gomez, 67 F.3d 993 (1st Cir. 1995)(correctly predicting the Blakely and Booker holdings and noting that “there are constitutional limits on the way sentencing factors can be deployed in the punishment of a substantive offense).
For the reasons set forth in this Sentencing Memorandum, Part II, Defendant Coleman requests that this Honorable Court render a Zone A sentence that does not involve incarceration, restitution or more than a small fine.
Respectfully submitted,
___________________________
Max Kravitz (0023765)
Paula Brown
KRAVITZ,GATTERDAM & BROWN, LLC
145 E. Rich St.
Columbus, Ohio 43215
Tel: 614-464-2000
Fax: 614-464-2002
COUNSEL FOR DEFENDANT COLEMAN
CERTIFICATE OF SERVICE
I hereby certify that an exact copy of the foregoing Sentencing Memorandum, Part II, was sent to Ms. Deborah Solove, Assistant United States Attorney, 303 Marconi Blvd., Suite 200, Columbus, Ohio 43215, on this the __13th__ day of April, 2005 via Clerk’s email and U.S. mail.
____________________________
Max Kravitz
posted by Dallas Federal Criminal Defense Attorney - David Finn at 4:17 PM
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