United States Court of Appeals
For the First Circuit
No. 04-2316
UNITED STATES OF AMERICA,
Appellee,
v.
WALLACE E. GONSALVES, JR.,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. Ronald R. Lagueux, Senior U.S. District Judge]
Before
Boudin, Chief Judge,
Stahl, Senior Circuit Judge,
and Lynch, Circuit Judge.
Anthony M. Traini with whom Richard M. Egbert was on brief for
appellant.
Donald C. Lockhart, Assistant United States Attorney, with
whom Robert Clark Corrente, United States Attorney, Luis M. Matos
and Lisa Dinerman, Assistant United States Attorneys, were on brief
for appellee.
January 20, 2006
BOUDIN, Chief Judge. Wallace Gonsalves, Jr., an
osteopathic doctor, conducted a solo medical practice in Cranston,
Rhode Island. In 1971, he was certified as a "civil surgeon" with
the former Immigration and Naturalization Service ("INS"),
performing blood tests and administering immunizations to
immigrants seeking permanent residence in the United States.
Gonsalves, like most doctors, kept drugs in his office premises,
including vaccines needed for immunizations.
In June 2002, Catherine Cordy, Chief of the Board of
Pharmacy of the Rhode Island Department of Health ("DOH"), received
an anonymous complaint about Gonsalves' medical practice, later
determined to have come from Kelly Walsh. Walsh, a former
employee, reported that Gonsalves was engaged in workers'
compensation fraud and was illegally selling drug samples to a
local pharmacist. Cordy referred this complaint to the Attorney
General and the DOH's Board of Medical Licensure, and Walsh was
interviewed on July 8, 2002.
Walsh told investigators that Gonsalves had instructed
employees to immunize immigrant patients with diluted vaccines and
to administer to those patients only a half-dose of the already-
diluted vaccines. She also reported that Gonsalves was falsely
certifying to the INS that patients had been tested for various
diseases when no such tests had been performed and requiring
payments of $150-$300 in cash (which he did not record in his
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books) for the INS examination, even though the examinations were
covered by the patients' insurance.
On August 16, 2002, the Rhode Island Attorney General's
office executed a search warrant in Gonsalves' office for general
patient and business records, the DOH executed an administrative
subpoena for twelve specific patient records, and Cordy, relying on
her statutory authority to inspect without a warrant locations
where drugs are held, R.I. Gen. Laws § 21-31-21 (2004), conducted
an inspection for misbranded or adulterated drugs. Cordy seized
various drugs as misbranded or adulterated--evaluations later
confirmed in testing by the Food and Drug Administration.
In due course, Gonsalves was indicted in federal court
for drug adulteration and tampering, 18 U.S.C. § 1365(a) (2000) and
21 U.S.C. §§ 331(k), 333(a)(2) (2000), making false statements to
the government, 18 U.S.C. § 1001 (2000), and tax violations, 26
U.S.C. §§ 7201, 7206(1) (2000). At trial, the government's
evidence permitted a jury to conclude that Gonsalves was criminally
responsible for, among other things, the dilution and improper
storage of vaccines, false certifications to the INS that patients
had been tested for HIV and syphilis, falsely reporting that
patients had been properly immunized, and the failure to report
over $400,000 in income. The jury convicted Gonsalves on all
submitted counts.
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For these offenses, the district court sentenced
Gonsalves to ten years in prison and fined him heavily. In the
appeal now before us, Gonsalves does not dispute the adequacy of
the evidence (save in one limited respect discussed below) but
contests the refusal of the district court to suppress evidence
against him, certain of the jury instructions, and alleged errors
in his sentencing. The principal assault is on Cordy's search of
Gonsalves' office and her seizure of vaccine samples, which
provided much of the evidence against Gonsalves.
Prior to trial, Gonsalves moved to suppress the drugs
thus seized on the basis that Cordy had conducted the search and
seizure without a warrant. The district court denied the motion on
the ground that the search and seizure fell within the
"administrative exception" to the warrant requirement. Such an
exception to the normal requirement--a warrant based on probable
cause--applies where certain conditions are met. New York v.
Burger, 482 U.S. 691, 702-03 (1987). See also United States v.
Biswell, 406 U.S. 311, 317 (1972); Colonnade Catering Corp. v.
United States, 397 U.S. 72, 76-77 (1970).
Ordinarily, administrative searches are permitted in
highly regulated industries where authorized by a statutory scheme
and where, in addition, the scheme furthers a substantial
government interest, warrantless inspections are necessary to
further this interest, and the scheme provides a constitutionally
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adequate substitute for a warrant in terms of notice to those
regulated and restrictions on the administrator's discretion.
Burger, 482 U.S. at 702-03. In simplest terms, a pharmaceutical
factory need not be treated as if it were someone's home.
Gonsalves' first objection to Cordy's administrative
search of his office is that the medical profession should not be
treated as a highly regulated enterprise. Whatever the status of
the profession in the abstract, the statute in this case permits
administrative searches of "establishments" where drugs are
manufactured or stored, R.I. Gen. Laws § 21-31-21, and the seizure
at issue is solely of drugs reasonably believed to have been
misbranded or adulterated. Our focus, therefore, is on the
regulation of drugs--not the practice of medicine in general.
In Rhode Island, as under federal law and in other
states, drugs are heavily regulated in storage and dispensation and
have been for many years. Mann v. Cannon, 731 F.2d 54, 59-60 (1st
Cir. 1984); see also United States ex rel. Terraciano v. Montanye,
493 F.2d 682 (2d Cir.) (Friendly, J.), cert. denied, 419 U.S. 875
(1974) (pharmacy operations in New York). Rhode Island's Food,
Drugs, and Cosmetics Act has been in effect for a half-century,
1956 R.I. Pub. Laws ch. 56 § 1 (codified at R.I. Gen. Laws §§ 21-
31-1 to -23), and the pertinent provisions are numerous,
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longstanding and pervasive.1 The scheme readily passes the
"closely regulated" test of Burger. 482 U.S. at 701.
Whether the practice of medicine in general meets this
test is a different question that we need not decide. Compare
Tucson Woman's Clinic v. Eden, 379 F.3d 531, 549-51 (9th Cir.
2004). Nor are we concerned on this appeal with patient records;
Cordy's search and seizure was solely directed to misbranded and
adulterated drugs held at large in Gonsalves' office. Given the
variations in fact patterns and the sensitivity of the subject
area, there is good reason to keep our focus narrow and, for the
time being, to let the law develop case by case.
The other three conditions for an administrative search
are that the scheme serve a substantial government interest, that
administrative (warrantless) searches be "necessary," and that the
scheme impose alternative safeguards. Burger, 482 U.S. at 702-03.
The first is obviously satisfied and the second is adequately
covered by case law explaining the need for random and surprise
inspections, United States v. Maldonado, 356 F.3d 130, 135-36 (1st
1
See R.I. Gen. Laws §§ 21-28-3.12 (requiring practitioners who
administer controlled substances to keep records of receipt and
dispensation); 21-28-3.13 (requiring manufacturers and wholesalers
to keep records of controlled substances received and disposed of);
21-28-3.17 (requiring these records to be open for inspection); 21-
31-3(1) (prohibiting the "holding . . . for sale" of any misbranded
or adulterated drug). See also 21 U.S.C. § 374(a)(1) (providing
for inspections "[f]or purposes of enforcement of this chapter").
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Cir. 2004). Gonsalves does not make a frontal attack on either of
these two conditions.
Instead, Gonsalves claims that the third condition--the
"constitutionally adequate substitute for a warrant," Burger, 482
U.S. at 703--is not satisfied because neither the statute nor
regulations under it (there are none) limit Cordy's discretion as
to such searches. This overstates the matter: Cordy's authority
was limited to entry "at all reasonable hours" to determine whether
"any of the provisions of this chapter are being violated," and to
"secure samples or specimens." R.I. Gen. Laws § 21-31-21. These
are adequately specific limits on the timing and scope of the
activity. Compare Burger, 482 U.S. at 711 ("during regular and
usual business hours"); Biswell, 406 U.S. at 312 n.1 ("at all
reasonable times").
Of course, the statute does not impose a probable cause
or even a reasonable suspicion test as to when such inspections
should be undertaken. As it happens, Walsh's complaint and follow-
up interview arguably provided ample cause for the search. But the
broader point is that administrative searches are allowed without
probable cause precisely because of the character of the activity
being regulated and the need for randomness and surprise to make
such schemes effective. See Burger, 482 U.S. at 710; Maldonado,
356 F.3d at 135-36.
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Ironically, Gonsalves' other main attack on Cordy's
search and seizure of the vaccines stems from the fact that this
search was not random but grew out of a specific charge of
misconduct and was coordinated as to timing with the Attorney
General's search.
Patently, the Attorney General did not use Cordy as a
proxy to conduct his own warrantless search; the Attorney General
secured a warrant and had probable cause. That Cordy coordinated
the timing of her search with law enforcement authorities, so that
neither side tipped off Gonsalves by acting alone, was not an
evasion of the limits on either of them.
The question, then, is whether Cordy should be prevented
from making a warrantless search because in this case it was not
random and because she in fact had good cause to suppose a
violation. To us the answer is self-evident: Gonsalves already had
notice from the statute that his office was subject to
administrative search for misbranded or adulterated drugs; and
Cordy's administrative search was not more intrusive, or less
justifiable, because she actually had suspicion or probable cause.
There is a 25-year-old Ninth Circuit decision that could
be read as holding the contrary where specific cause exists for an
administrative search. United States v. One Device Labeled
Theramatic, 641 F.2d 1289, 1294 (9th Cir. 1981), cert. denied, 465
U.S. 1025 (1984). But that decision is pre-Burger, offers no
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explanation for the surprising result, and conflicts with contrary
rulings in the Ninth Circuit, United States v. Argent Chem. Labs.,
Inc., 93 F.3d 572, 577-78 (9th Cir. 1996), cert. denied, 520 U.S.
1115 (1997); United States v. Goldfine, 538 F.2d 815, 819 (9th Cir.
1976), and elsewhere, including this circuit. As we said in United
States v. Wilbur, 545 F.2d 764, 766 (1st Cir. 1976):
A rule allowing federal agents to conduct a
warrantless search of a [firearms] dealer's
premises only until their suspicions were
aroused, or, as here, the facts established
probable cause, would make little sense.
Gonsalves points to language in Whren v. United States,
517 U.S. 806, 811-12 (1996), to the effect that the exemption from
the warrant requirement for an administrative search extends only
to searches made for administrative purposes. But Cordy's search
did satisfy the administrative purpose of the statute--to protect
consumers from misbranded and adulterated drugs--regardless of
whether criminal proceedings might also ensue. This fact,
regardless of Cordy's subjective intent, is dispositive. City of
Indianapolis v. Edmond, 531 U.S. 32, 45-46, 48 (2000).
We come next to Gonsalves' challenge to the jury
instructions. Context will be of assistance. Vaccines are
typically provided in powder form and intended to be diluted with
a sterile solution immediately before being administered; once
reconstituted as solutions, they must be used promptly or
discarded. Evidence permitted the jury to find that, for his
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immigrant patients, Gonsalves had directed his staff to draw
vaccinations from poorly marked water bottles stored for long
periods in a refrigerator, the vaccine material itself being
greatly diluted as well as aged.
Office records bore out the story. For example,
Gonsalves' records for the period in question showed that 673
patients received chickenpox vaccines where Gonsalves' actual
recorded supply was only 70 doses, 591 patients received measles,
mumps, and rubella vaccines out of a supply of only 100 doses, and
499 patients received tetanus vaccines where Gonsalves had an
actual supply of 90 doses. In addition, Walsh testified that
Gonsalves had told her to give half-doses of the already diluted
vaccines, and Walsh and another employee linked Gonsalves himself
to the deliberate dilution of the vaccines.
Gonsalves' first objection to the instructions is that it
was improper for the judge to allow the jury to convict if it found
--as the instruction permitted--that the adulteration had been
carried out not by Gonsalves personally but by others "at his
direction." Gonsalves assumes that this reflects an aiding-and-
abetting theory, notes that aiding and abetting was not charged in
the indictment, and concludes that this was an impermissible
constructive amendment of the complaint.
The premise of the argument is mistaken. A defendant who
directs wrongdoing is guilty as a principal without regard to
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aiding and abetting liability. 18 U.S.C. § 2 (2000); United States
v. Rivera-Figueroa, 149 F.3d 1, 4 (1st Cir.), cert. denied, 525
U.S. 910 (1998). It is therefore beside the point that the
government did not argue that Gonsalves was an aider or abettor or
that the court did not give a standard aiding and abetting
instruction. As it happens, aiding and abetting need not be
separately charged to support an instruction. United States v.
Keene, 341 F.3d 78, 84 (1st Cir. 2003).
Gonsalves is also mistaken in saying that the "at his
direction" instruction was unsupported by the evidence. The
evidence did not show just how Gonsalves had accomplished the
dilution of the vaccines in each instance; implausibly, he denied
any involvement whatsoever. But the evidence permitted the jury to
infer that in different respects the wrongdoing had been done by
Gonsalves himself, at his direction, or by either one of the two
means (i.e., directly by him or at his direction), even though it
might be uncertain which.
Gonsalves' next attack relates to the requirement,
contained in the tampering statute that was one of the charges
against him, that the tampering be done "with reckless disregard
for the risk" of danger of death or bodily injury to another and
"under circumstances manifesting extreme indifference to such
risk." 18 U.S.C. § 1365(a). Where the term "recklessness" is
used, the recurring question is whether some kind of conscious
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indifference is required or whether objectively reckless behavior
is enough. 1 LaFave, Substantive Criminal Law § 5.4 (2d ed. 2003).
See also Boston Mut. Ins. Co. v. N.Y. Islanders Hockey Club, L.P.,
165 F.3d 93, 96-97 (1st Cir. 1999).
Objectively reckless behavior is often strong evidence of
conscious indifference, which certainly does not require admissions
as to the defendant's subjective state of mind or other "direct"
proof. See LaFave, supra, § 5.4(d). But conceivably, in some
situations, one could be grossly careless in an objective sense
without having a subjective awareness of or indifference to the
risk being created. Accidents with rotating high-speed table saws
provide more than a few examples of this situation.
We think that the better reading of the statute is that
conscious or deliberate indifference to risk is required for
conviction. This reading is supported by the statute's related
reference to a requirement of "circumstances manifesting extreme
indifference to such risk," 18 U.S.C. § 1365(a), and by clear-cut
language in the committee report: "Because the possible penalty is
so severe, the Committee believes that liability should be limited
to those circumstances where the defendant consciously disregards
a grave risk of serious danger to other persons." H.R. Rep. No.
98-93, at 5, as reprinted in 1983 U.S.C.C.A.N. 1257, 1259.
However, Gonsalves got instructions that gave him the
equivalent of what we think Congress had in mind, namely, that
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indifference to risk (connoting a state of mind)--and not mere
carelessness (objectively reckoned)--was the minimum mens rea
required. In addition to quoting the statutory requirement of
"indifference to such risk," the court defined "reckless
disregard," which is the more ambiguous of the two key phrases, in
language sufficient to convey the idea of conscious disregard:
The phrase "reckless disregard" as used in
these instructions, means that the defendant
deliberately closed his eyes to what would
otherwise have been obvious to him. No one
can avoid responsibility for a crime by
deliberately ignoring what is obvious. A
finding beyond a reasonable doubt of an intent
of the defendant to avoid knowledge or
enlightenment would permit the jury to infer
knowledge.
For convenience, we have underscored the connoting
language, evidently adapted from standard "willful blindness"
instructions usually used for a different purpose (i.e., as a
substitute for "knowledge"). 1 Sand, et al., Modern Federal Jury
Instructions ¶ 3A.01 (instruction 3A-2) (2005). This instruction
is not the only way to convey the thought--explaining subjective
recklessness is not easy--but it was sufficient. The precise
choice of phrasing in jury instructions is reviewed with some
deference, United States v. Teemer, 394 F.3d 59, 63 n.2 (1st Cir.),
cert. denied, 125 S. Ct. 1964 (2005), and Gonsalves was not
entitled to his particular choice of language.
As it happens, fine gradations as to the role of
subjective awareness in recklessness cannot have mattered much on
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the present facts. The government's evidence, which the jury
evidently accepted, implicated Gonsalves in the systematic dilution
of vaccines and misreporting of information over a substantial
period. The idea that Gonsalves' conduct or directions were mere
objective carelessness, as might be true if a few doses were
mishandled, is unrealistic.
Gonsalves' next major concern is with the instructions on
the interstate commerce nexus required for conviction on the
tampering count, namely, that the product be one "that affects
interstate or foreign commerce." 18 U.S.C. § 1365(a). The court
charged that this could be satisfied in any of three alternative
ways; Gonsalves objects only to one making it sufficient if "the
drugs had been shipped in interstate commerce and had not yet
reached the end user at the time of tampering." Both sides assume
that "end user" means the patient.
Gonsalves argues that tampering at this stage is too late
because the vaccines were no longer "in" interstate commerce once
they came to rest in the doctor's office and were thereafter
diluted. The objection was preserved and, while the jury may have
rested on one of the alternative nexuses, we will not assume this
to be so. Gonsalves' position finds some support in a Tenth
Circuit decision, United States v. Levine, 41 F.3d 607, 613 (10th
Cir. 1994), which has in turn been rejected by the Seventh Circuit,
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Hays v. United States, 397 F.3d 564, 567 (7th Cir.), cert. denied,
126 S. Ct. 422 (2005).
The statute uses the phrase of art "affects interstate
commerce," not the narrower phrase, "in commerce." By settled
construction, the former reflects an intent to exercise Congress'
full constitutional power. Citizens Bank v. Alafabco, Inc., 539
U.S. 52, 56 (2003); Allied-Bruce Terminix Cos. v. Dobson, 513 U.S.
265, 273 (1995). In such a case, it is clearly enough if the
vaccines imported from out of state had "not yet" reached the
consumer. Cf. United States v. Mennuti, 639 F.2d 107, 110-13 (2d
Cir. 1981) (Friendly, J.), reasoning adopted by Jones v. United
States, 529 U.S. 848, 854 n.6 (2000). Arguably, this quoted
limitation was itself over-generous to Gonsalves.2
The next challenge concerns the instruction for the false
statement counts under 18 U.S.C. § 1001. The core of the district
court's charge on scienter was that the government was required to
show that the "defendant knowingly made a material false statement"
to the INS and "that the defendant made the statement voluntarily
and intentionally," that is, knowing "that it was false or
2
The Seventh Circuit in Hays said that it was enough that the
product had once moved in interstate commerce, regardless of
whether the tampering occurred later. 397 F.3d at 567-68. In
other contexts, the courts have been willing to treat prior travel
as sufficient. Compare Scarborough v. United States, 431 U.S. 563,
571-78 (1977) (firearm previously in interstate commerce).
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demonstrat[ing] reckless disregard for the truth with a conscious
purpose to avoid learning the truth."
Gonsalves says that a good faith instruction (which he
requested) should have been given--a position not seriously
developed and already rejected by the case law. United States v.
Dockray, 943 F.2d 152, 155 (1st Cir. 1991). Then, more to the
point, he argues that the scienter requirement for the offense was
not sufficiently explained and that an "intent to deceive"
instruction should have been given. It is debatable how far the
full objection was preserved, but it warrants comment because of
some tension in our own case law.
Two of our older cases associate section 1001 with an
"intent to deceive" requirement. United States v. Manning, 955
F.2d 770, 773 (1st Cir. 1992); United States v. Corsino, 812 F.2d
26, 29 (1st Cir. 1987). Our more recent decisions impose no such
requirement but do say that the false statement must be made
knowingly and willfully. United States v. McGauley, 279 F.3d 62,
69 (1st Cir. 2002); United States v. Duclos, 214 F.3d 27, 33 (1st
Cir. 2000). Normally, the more recent cases would control, but in
this instance they govern also because the Supreme Court has itself
rejected the claim that an "intent to deceive" is required. See
United States v. Yermian, 468 U.S. 63, 73 (1984).
Willfulness--a term our cases do endorse--means nothing
more in this context than that the defendant knew that his
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statement was false when he made it or--which amounts in law to the
same thing--consciously disregarded or averted his eyes from its
likely falsity. See id. at 69. This is just what the district
judge told the jury in this case, i.e., that the defendant made the
statement knowing that it was false or demonstrating "reckless
disregard for the truth with a conscious purpose to avoid learning
the truth."
Gonsalves' final challenge to the jury instructions
concerns the following statement made by the district court in
advising the jury on its role of evaluating witnesses: "In this
case, the defendant decided to testify. You should examine and
evaluate his testimony just as you would the testimony of any
witness with an interest in the outcome of the case." This, claims
Gonsalves, inappropriately highlighted the fact that, as defendant,
he had an interest in the outcome of the case, and may have
prejudiced the jury against him.
In the past this court has held that certain instructions
in this vein--but more egregiously phrased--amounted to error. See
United States v. Dwyer, 843 F.2d 60, 63 (1st Cir. 1988); United
States v. Rollins, 784 F.2d 35, 36-38 (1st Cir. 1986). The caution
is still good law in this circuit but cannot be pressed too far.
Indeed, in Reagan v. United States, 157 U.S. 301, 305-06 (1895),
cited with approval in Portuondo v. Agard, 529 U.S. 61, 71 (2000),
the Supreme Court expressly approved an instruction calling
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attention to the testifying defendant's interest in the outcome.
In the present case, the reference to the defendant's
interest was no different than the instruction given in Reagan or
standard instructions used elsewhere. Sand, supra, ¶ 7.01
(instruction 7-4). It was immediately followed by the warning that
"[y]ou should not disregard or disbelieve [Gonsalves'] testimony
simply because he is charged as a defendant in this case." We
think the instruction was not error and decline to extend Dwyer
beyond its present reach.
Finally, Gonsalves in his opening brief urges us to
depart from our decisions interpreting United States v. Booker, 125
S. Ct. 738 (2005), in which we have held that because the
guidelines are now advisory, judicial fact-finding alone does not
violate a defendant's sixth amendment rights so long as the
defendant is sentenced at or below the statutory maximum for the
offense of conviction. United States v. Antonakopoulos, 399 F.3d
68 (1st Cir. 2005). The invitation to reconsider Antonakopoulos is
beyond both the panel's power and inclination.
Gonsalves argues that the Supreme Court's recent decision
in Shepard v. United States, 125 S. Ct. 1254 (2005), somehow
supports his position that adjustments in guideline calculations
must be based on jury findings. Shepard involved determinations
under the Armed Career Criminal Act, 18 U.S.C. § 924(e) (2000),
that increased the statutory sentencing range and not merely the
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guideline calculations. Whatever the scope of Shepard, it does not
overrule Booker.
Gonsalves' further sentencing arguments do not merit
detailed discussion. The only arguable error was that the district
court may have departed upward without prior notice in imposing a
fine of $465,000 (the guideline maximum was $175,000) because of
the "vast greed" and self-enrichment of the defendant. Wisely, we
think, the defendant at oral argument waived any request for a
remand for re-sentencing under the new advisory guideline regime.
Affirmed.
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