United States v. Orrego-Martinez

United States Court of Appeals
For the First Circuit

Nos. 05-2059
08-1147

UNITED STATES,

Appellee,

v.

CARLOS ORREGO-MARTINEZ,

Defendant, Appellant.

APPEALS FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Daniel R. Domínguez, U.S. District Judge]

Before

Lynch, Chief Judge,
Torruella and Boudin, Circuit Judges.

Carlos Orrego-Martinez on brief pro se.
Nelson Pérez-Sosa, Assistant U.S. Attorney, Thomas F. Klumper,
Assistant U.S. Attorney, and Rosa Emilia Rodríguez-Vélez, on brief
for appellee.

July 30, 2009
 Per Curiam. Defendant Carlos Orrego-Martinez helped to

operate a business that injected clients with liquid silicone and

other substances for wrinkle reduction and related cosmetic

purposes. The business was fostered by misrepresentations about

such matters as the nature of the substances being injected and the

attendant health risks. A jury convicted defendant of eight

offenses involving the introduction of adulterated devices and non-

approved new drugs into interstate commerce with intent to defraud

and mislead. 21 U.S.C. §§ 331(a) & (d), 333(a)(2).

The district court imposed a 58-month prison term.

Defendant then filed a direct appeal, which we held in abeyance

pending a district court ruling on defendant's motion for new

trial. The denial of that motion prompted a second appeal. Having

scrutinized defendant's various arguments, we affirm in all

respects. The pertinent facts are stated in the light most

favorable to the government insofar as the defendant attacks the

adequacy of the evidence to support a conviction.

From June 2001 until March 2002, defendant and a

collaborator named Sergio Lopez operated a business in Puerto Rico

called Esthetics International, Inc. ("EI"), which was devoted to

nonsurgical cosmetic improvements. The primary treatment consisted

of injecting liquid silicone into the face and other areas of the

body for purposes of wrinkle reduction. Defendant and Lopez ran EI

on the premises of a beauty salon owned by an individual named

-2-
Evelyn Valentin. They visited the salon approximately one week per

month, often arriving from the Dominican Republic where they

conducted a similar operation. Lopez performed the promotional and

administrative work and interviewed prospective clients, while

defendant purchased and transported all materials and administered

the injections.

The scheme involved four separate products. Most

frequently used was the liquid silicone, which defendant purchased

under the brand name "Silicex" from a Venezuelan company. He

injected some clients with an alternative substance known as

"Karthy Swed," which he purchased from a Guatemalan company.

Defendant also used two drugs: Lignocaine Injection BP 2% and

Kenacort-A. The former was an anaesthetic; the latter was used to

treat granulomas, which are nodules of hard tissue that can result

from silicone injections. Defendant carried these substances with

him in a handbag to and from the salon.

Misrepresentations were made to prospective clients.

Chief among these were false assurances that defendant and Lopez

were doctors and that the substances had been approved by the Food

and Drug Administration ("FDA") and had negligible side-effects.1

EI occasionally retained a physician to evaluate prospective

1
In fact, injection of liquid silicone can have serious side-
effects. In addition to causing granulomas, for example, it can
cause inflammation of surrounding tissue, and the silicone can move
to and remain indefinitely in other parts of the body.

-3-
clients. But the physician did not supervise defendant when the

injections were administered. The silicone was not described as

silicone but as a "biopolymer," said to be a natural product

derived from minerals. The Karthy Swed was said to be shark

cartilage; in fact, it was petroleum jelly.

Lopez, in charge of recruiting new customers, was the

source of most such comments, but defendant also contributed to the

deception; several witnesses described specific instances where he

claimed to be a doctor or denied that silicone was involved.

Nearly 400 persons ended up being evaluated for possible treatment;

approximately 200 ended up being injected. Between June 2001 and

March 2002, EI collected payments of almost $200,000, often by way

of credit cards.

Misrepresentations were also made to the government.

After encountering problems getting the substances through U.S.

Customs and Border Protection ("U.S. Customs") at the airport,

defendant decided that false papers were needed to facilitate that

process. At his request, the Venezuelan company in its shipment

papers stopped describing the silicone as an implant and instead

referred to the contents as "various capular treatments." Also at

his request, the Guatemalan company created an "information sheet"

-4-
that falsely described the Karthy Swed as a "relaxing facial mask

for topical use" containing cartilage.2

In 2002, defendant was indicted along with Lopez and

Valentin for wire fraud. Specifically, the three were charged with

causing wire communications to be transmitted in interstate

commerce as part of a scheme to obtain money by false pretenses.

The indictment listed seven instances in which five EI clients

(identified by their initials) made charges to American Express

credit cards; each of the seven counts, in other words, concerned

a specific act of wire fraud perpetrated against a specific

individual on a specific date.

Lopez and Valentin pled guilty, while defendant went to

trial. In September 2002, after discharging a hung jury, the court

granted defendant's motion under Fed. R. Crim. P. 29(c) for

judgment of acquittal. By way of explanation, it stated that "the

Government has not proven beyond a reasonable doubt the specific

intent to defraud in this case."

Less than three months later, defendant was indicted on

the current charges. The statute in question, the Federal Food,

Drug and Cosmetic Act, bars the introduction into interstate

2
The implants went through U.S. Customs when mailed to
defendant in Miami or Puerto Rico by way of DHL mail carrier.
Defendant also personally carried the implants through U.S. Customs
when he traveled from the Dominican Republic to Puerto Rico.

-5-
commerce of any "adulterated device" or non-approved new drug.3

See 21 U.S.C. § 331(a), (d). Any such violation is a felony if

committed "with the intent to defraud or mislead," id. § 333(a)(2);

otherwise, it is a misdemeanor. The nine-count indictment charged

a conspiracy covering the same time period as the wire-fraud

indictment.4

The indictment also charged eight substantive violations,

five involving the silicone and three involving the other three

substances respectively; one of the silicone charges was later

dismissed. These counts listed the dates on which, and the

countries from which, the substances were introduced (either from

the Dominican Republic or Venezuela). Although the indictment

included the "intent to defraud or mislead" element in each count,

it did not identify the victim(s).

Before trial, defendant moved to bar the government from

relitigating the issue of intent to defraud. Pointing to his

earlier acquittal, and citing the doctrine of issue preclusion

(also known as collateral estoppel), he contended that all evidence

3
Liquid silicone and Karthy Swed are considered adulterated
devices when used as an implant for cosmetic purposes. Liquid
collagen is the only injectable substance approved for the purpose
of wrinkle reduction. The injection of silicone is authorized only
for treatment of a rare eye condition. Whether Lignocaine BP 2%
and Kenacort-A are nonapproved new drugs is an issue on appeal.
4
Both indictments alleged that the scheme operated from June
2001 to March 2002. However, the seven specific acts of wire fraud
charged in the earlier indictment occurred over a two-month period
(between November 2001 and January 2002).

-6-
pertaining to the fraud issue should be excluded and all counts

accordingly reduced to misdemeanors. The government filed an

opposition that was perhaps ambiguous: it could be read to say

that the fraud evidence would be limited to showing defendant's

efforts to defraud or mislead government agencies but it also

suggested that issue preclusion would only bar evidence of fraud

pertaining to the five clients listed in the earlier wire-fraud

indictment.

The magistrate judge appears to have construed this

opposition to mean that defendant was being charged with intent to

defraud or mislead only government agencies and officials, not EI's

clients. Largely for this reason, he issued a report and

recommendation ("R&R") proposing that the motion be denied. But

the district judge, in adopting that recommendation, voiced a

different interpretation. Applying plain-error review because of

defendant's failure to object to the R&R, he stated (emphasis

added):

Though no intent to defraud was [earlier]
found under the wire fraud statute as to
particular end users [clients], the government
is entitled to prove under 21 U.S.C. § 331
that Defendant had [the] intent to defraud
other end users and/or government agencies.

Defendant voiced no objection to this declaration.

During the 12-day trial, the government offered a

smattering of evidence concerning the efforts to mislead U.S.

Customs, but it focused overwhelmingly on the false statements made

-7-
to the clients (other than the five clients listed in the wire-

fraud indictment)--e.g., the same type of misrepresentations

concerning the identity and safety of the implants and defendant's

status as a physician that were presented at the first trial. The

government did the same during closing argument, making only a

passing reference to the U.S. Customs matter.

Defendant filed no contemporaneous objection to the

evidence of fraud on other clients (except in one minor respect not

pertinent here), stating that he "d[id]n't have a problem with

that." Such evidence was received, inter alia, through the

testimony of Lopez (the main government witness), Valentin (the

salon owner who was also a client), and four other clients. The

jury returned a verdict of guilty on all counts. Thereafter, a

Rule 29 motion for judgment of acquittal was denied after extensive

hearings.

The court held eight days of sentencing hearings. The

government there put Lopez and various EI clients on the stand to

establish, inter alia, the number of victims and amount of loss;

defendant, acting pro se, was allowed to cross-examine Lopez for

five days. After filing a direct appeal, defendant submitted a

Rule 33 motion for new trial based on newly discovered evidence

which, when ultimately denied, prompted a second appeal, which has

been consolidated with the first.

-8-
 Issues Involving Evidence of Defrauding Clients.

Defendant's main complaint on appeal is that the government

impermissibly altered its theory of the case in midstream.

According to defendant, the government told the grand jury and the

magistrate judge that the issue was not how the clients were fooled

but, rather, how government agencies were defrauded or misled in

order to get the products into the country. At trial, however, the

government allegedly shifted its focus to the issue of fraud on the

clients, the subject of the first trial. This new tack is said to

have violated issue preclusion and other constitutional

protections.

Issue preclusion--now deemed to implicate double jeopardy

protection in criminal cases--provides that "when an issue of

ultimate fact has once been determined by a valid and final

judgment, that issue cannot again be litigated between the same

parties in any future lawsuit."5 Ashe v. Swenson, 397 U.S. 436,

443 (1970); accord, e.g., Bobby v. Bies, 129 S. Ct. 2145, 2152

(2009) ("Issue preclusion bars successive litigation of an issue of

fact or law that is actually litigated and determined by a valid

and final judgment, and ... is essential to the judgment.")

(internal quotation marks omitted). An acquittal will thus bar

5
The "more descriptive term 'issue preclusion,'" although a
more recent coinage, is generally used now "in lieu of 'collateral
estoppel.'" Yeager v. United States, 129 S. Ct. 2360, 2367 n.4
(2009).

-9-
prosecution on new charges if a fact necessarily determined in the

prior proceeding is an essential element of those charges. See,

e.g., United States v. Dray, 901 F.2d 1132, 1136 (1st Cir. 1990).

While it is often hard to tell whether an issue of

ultimate fact was resolved in a defendant's favor in an earlier

proceeding, no such problem exists here; as already noted, the

district judge in the wire-fraud trial specifically found that

intent to defraud the five listed clients had not been proven.

According to defendant, this ruling establishes as a fact that he

did not intend to defraud any of the approximately 195 other

clients who were injected.6

We do not agree that issue preclusion barred the

government's evidence but, at the outset, put to one side a

different government response to the claim. It is true, as the

government points out, that the evidence of defendant's intent to

deceive U.S. Customs provides an adequate foundation for invoking

§ 333(a)(2)'s felony provision. Various courts have held, and

defendant does not dispute, that the government can satisfy §

333(a)(2) by establishing an intent to defraud or mislead a

government enforcement agency. See, e.g., United States v. Arlen,

6
The government contends that defendant forfeited this
argument by not objecting to the R&R. Yet it was the district
judge, not the magistrate judge, who permitted evidence of fraud
involving "other end users." And while defendant failed to object
to this ruling, either when it was issued or when such evidence was
introduced, curiously the government has not relied on those
omissions in arguing default and we too bypass that issue.

-10-
947 F.2d 139, 141-45 (5th Cir. 1991); United States v. Bradshaw, 840

F.2d 871, 873-75 (11th Cir. 1988).

Here, the government presented evidence of defendant's

efforts to deceive U.S. Customs regarding the nature of the

substances being brought into the country. Defendant challenges

the sufficiency of such evidence but that is a different matter and

in any event the evidence was sufficient. Nevertheless, that was

slight compared to the evidence showing that customers were misled

and was lightly touched upon in the government's closing argument.

Further, if issue preclusion barred the evidence of

defrauding of customers, its introduction could have been unduly

prejudicial in a case that was based on defrauding only of

government officials. And, to top the matter off, the sentence

appears to have been driven importantly by evidence that the

customers were defrauded. So, while the government's reliance on

defrauding of the government officials might still pass muster, we

think the stronger answer is that issue preclusion did not bar

evidence that defrauding of customers occurred (other than the five

customers already mentioned).

EI's clients were recruited and injected individually or

in small groups. That defendant did not intend to defraud five of

them over a two-month span does not necessarily mean that he lacked

such intent with respect to all of the others who were recruited

and injected over a nine-month span. Cf. United States v. Brown,

-11-
983 F.2d 201, 202-05 (11th Cir. 1993) (holding that, after acquittal

of fraud charges involving sale of one condo, collateral estoppel

did not bar subsequent fraud prosecution for similar financing

scheme involving contemporaneous sale of second condo in same

complex).7

A crime involving multiple victims could in principle be

successively prosecuted in one case after another and, even where

collateral estoppel did not apply, successive bites at the apple

might, in extreme circumstances, raise concerns about abuse

implicating the courts' authority under the common law or even

constitutional doctrine. But cf. United States v. Dixon, 509 U.S.

688, 711 n.15 (1993). In any event, the circumstances here do not

appear abusive and defendant is relying upon issue preclusion and

not some independent doctrine based solely on due process.

Besides his issue-preclusion claim, defendant makes a

couple of related arguments. First, he says that the government's

alleged shift as to the victims violated his right to an

7
The government also asserts that evidence of defendant's
intent to mislead--as opposed to defraud--EI's clients would
likewise suffice to defeat any issue-preclusion challenge. In
theory, this is so. As the terms were defined by the district
court, one theoretically could intend to mislead ("deceive as to a
material fact") without also intending to defraud ("cause injury or
loss by deceit as to a material fact"). And intent to mislead is
not an element of wire fraud. Yet under the evidence here, it is
not immediately clear how defendant could have intended the one
without the other. The misrepresentations, after all, were
designed to recruit clients in order to make money--i.e., to cause
the clients loss. In the end, we need not decide the point.

-12-
independent grand jury, produced an indictment that did not

adequately notify him of the charges, and amounted to a

constructive amendment or prejudicial variance. Yet, each of these

arguments mistakenly assumes that the indictment needed to identify

the defrauded or misled victim(s).

The elements of a [§ 333(a)(2)] violation
are (1) a violation of § 331, (2) committed by
... someone "with the intent to defraud or
mislead." The prosecution must prove beyond a
reasonable doubt that a defendant intended to
defraud or mislead someone, but the indictment
need not specify the intended victim; the
focus is on defendant's intent, not the
victim's identity.

Arlen, 947 F.2d at 145; see also id. at 144 (rejecting similar

argument that fatal variance had occurred); id. at 145 n.7 (noting

that motion for bill of particulars could always be used to gain

specifics).

Defendant also complains of unfair surprise. Given that

the district court's ruling on the magistrate judge's report

specifically allowed evidence of fraud on EI's clients, and given

that defense counsel stated he "d[id]n't have a problem with that,"

this claim falls short. Defendant may have been unhappy with the

trial evidence but it could hardly have come as surprise.

Rule 29 Motion for Judgment of Acquittal. In challenging

the denial of his motion under Fed. R. Crim. P. 29(c) for judgment

of acquittal, defendant makes two preliminary mistakes. First, he

relies on new evidence--mainly, the testimony provided by Lopez at

-13-
sentencing--but review of sufficiency challenges is confined to

"evidence presented at trial." United States v. Combs, 555 F.3d

60, 65 (1st Cir.), cert. denied, 129 S. Ct. 2814 (2009); United

States v. Torres, 2007 WL 30848, at *5 (5th Cir. 2007).

Second, because of the "numerous issues presented" and

the "legal limitations of the brief," he seeks to incorporate by

reference the arguments made in his Rule 33 motion for new trial

based on newly discovered evidence (again, Lopez's testimony at

sentencing). Such a practice has been "consistently and roundly

condemned", Gilday v. Callahan, 59 F.3d 257, 273 n.23 (1st Cir.

1995) (internal quotation marks omitted), and any incorporated

argument is ordinarily deemed forfeited, see, e.g., Sleeper Farms

v. Agway, Inc., 506 F.3d 98, 104-05 (1st Cir. 2007), even when

advanced by a pro se litigant, see, e.g., Cofield v. First Wis.

Trust Co., 1996 WL 521199, at *1 (1st Cir. 1996) (per curiam).

Once the new evidence and the incorporated arguments are

set aside, little remains. Defendant does properly present one

argument: that Lopez's ignorance of the nature of the substances

being used--in particular, his unawareness that the Silicex

consisted of silicone--meant that the conspiracy as charged in the

indictment never existed. Yet Lopez testified that he did know

from the outset that it was illegal to use the products as implants

in the United States. And the government need not show "that the

-14-
conspirators knew all the details of the conspiracy." United

States v. Soto-Beniquez, 356 F.3d 1, 19 (1st Cir. 2003).

Beyond this, defendant in his brief refers in skeletal

fashion to a trio of other Rule 29 contentions. Each of these

assignments of error can be deemed waived for lack of sustained

argument. See, e.g., United States v. Zannino, 895 F.2d 1, 17 (1st

Cir. 1990). Each improperly relies in part on Lopez's testimony at

sentencing. And based on the evidence at trial, each proves

meritless. One example will suffice since they are not properly

presented and the government's brief deals sufficiently with them

all.

As to counts 3 & 4 (involving the introduction of

silicone from Venezuela), he contends that "not even one piece of

material evidence was seized in Puerto Rico, and nobody testified

that [the] product would ... ever [be] used to inject anybody in

Puerto Rico." Yet Lopez testified directly that the silicone used

in Puerto Rico was obtained by defendant from the Venezuelan

company. Shipping documents reveal that the company sent a

shipment of Silicex to Valentin's salon addressed to defendant as

"contact person." And vials of liquid injectable silicone were

seized at the salon on the day defendant was arrested.

Challenges to Lopez's Testimony. Defendant accuses Lopez

of false testimony. He first points to alleged discrepancies

between his testimony before the grand jury and that at trial. Yet

-15-
the inconsistencies either vanish on closer inspection or prove

insignificant. "All but the most serious errors before the grand

jury are rendered harmless by a conviction at trial." United

States v. Reyes-Echevarria, 345 F.3d 1, 4 (1st Cir. 2003). And

"[s]imply because there exist[] inconsistencies between [a

witness's] grand jury and trial testimony does not warrant the

inference that the government knowingly introduced perjurious

testimony." United States v. Hemmer, 729 F.2d 10, 17 (1st Cir.

1984).

Defendant also complains of alleged discrepancies between

Lopez's testimony at trial and that at sentencing. Yet once again,

he improperly seeks to incorporate by reference various arguments

made in his Rule 33 motion and elsewhere. In his brief, he only

mentions three alleged inconsistencies: involving whether he ever

traveled with the false descriptions of the implants; whether

Silicex was actually used; and whether a physician was present

during the treatments. Neither alone nor in combination are these

matters so problematic as to warrant a new trial.

Jury Instructions. Defendant next presents two

unavailing challenges to the jury instructions. First, he

complains that the instruction describing the conspiracy under 18

U.S.C. § 371 did not identify the victim. Yet there was no need to

do so. He was charged under the "commit any offense" prong of §

371, which "does not refer to a particular victim of a particular

-16-
crime." United States v. Brandon, 17 F.3d 409, 422 (1st Cir. 1994).

Second, defendant objects that the court improperly

changed the definition of interstate commerce between its

preliminary and final instructions. Yet the two descriptions were

quite close. Whatever argument he might have about the phrasing of

the preliminary instruction, and it is not a strong one, the final

instruction mirrored the definition set forth in 21 U.S.C. §

321(b).

Sentencing. Defendant next complains, mostly in

generalized fashion, that the sentence he received was based on

improper factors and was otherwise unreasonable. The district

court calculated a base offense level of 6 and then imposed six

separate enhancements to reach a total offense level of 28.8 With

a criminal history category of I, the ensuing sentencing range was

78-97 months, which exceeded the statutory maximum for both the

conspiracy offense (60 months) and the substantive offenses (36

months). The court ended up imposing a 58-month prison term for

the former and 36-month concurrent terms for the latter.

Defendant asserts that Apprendi v. New Jersey, 530 U.S.

466 (2000), was somehow violated. Yet "an Apprendi error cannot

8
The court added 12 points for loss exceeding $200,000
(U.S.S.G. § 2B1.1(b)(1)); 2 points because mass marketing was used
(§ 2B1.1(b)(2)); 2 points because the offense was committed from
outside the U.S. (§ 2B1.1(b)(8)); 2 points for role as organizer or
manager (§ 3B1.1(c)); 2 points for abuse of position of trust or
use of special skill (§ 3B1.3); and 2 points for obstruction of
justice (§ 3C1.1).

-17-
occur unless the sentence actually imposed is greater than the

otherwise applicable statutory maximum." United States v. Eirby,

515 F.3d 31, 36 (1st Cir.), cert. denied, 129 S. Ct. 72 (2008).

That is not the case here.

Defendant also alleges that the court relied on

vindictive prosecutorial comments seeking to punish him for his

decision to go to trial. Yet the cited remarks--e.g., a reference

to his refusal to stipulate to certain evidence--do not stray

outside the bounds of acceptable advocacy. And there is no

evidence that the court had any such improper consideration in

mind.

Nor has defendant cited any other reason to regard the

sentence as unreasonable. The court rejected two other

enhancements proposed by probation, as well as the government's

request for a 60-month sentence on the conspiracy charge. And in

general, the court afforded defendant extraordinary latitude during

the sentencing proceedings--allowing him, for example, to cross-

examine Lopez at length.

Rule 33 Motion for New Trial. Defendant's request for a

new trial, although receiving considerable attention below, has

largely fizzled out on appeal. In a lengthy Rule 33 motion,

defendant separately challenged each count of conviction. On

appeal, however, he confines his attention to counts 8 and 9, which

charged him with introducing non-approved new drugs--Lignocaine

-18-
Injection BP 2% and Kenacort-A--into interstate commerce.

Defendant points to so-called new evidence allegedly showing that

both drugs were approved years ago by the FDA.

At trial, an FDA official (Syzmanski) testified that

neither drug was approved for use in the United States. He

explained that, after conducting searches based on drug name,

active ingredient, and manufacturer, he had found no approval for

either drug in the form provided to him--i.e., based on the

labeling.

In his Rule 33 motion, filed almost one year after

sentencing, defendant disputed this conclusion. Relying on

information from the internet, he asserted that Lignocaine was

another name for Lidocaine and Xylocaine, both of which had been

approved. And relying on information from the FDA website, he

asserted that Kenacort-A was one of several brand names for a drug

called Triamcinolone Acetonide, which similarly had been approved.

In response, the court allowed the parties to submit written

questions to Syzmanski and another FDA official and receive written

answers.

A defendant seeking a new trial based on newly discovered

evidence must satisfy a four-part test. He must show that (1) the

evidence was unknown or unavailable at the time of trial; (2) the

failure to learn of the evidence was not due to lack of diligence;

(3) the evidence is material, not merely cumulative or impeaching;

-19-
and (4) it will probably result in an acquittal upon retrial. See,

e.g., United States v. Wright, 625 F.2d 1017, 1019 (1st Cir. 1980).

We review the denial of a Rule 33 motion for "manifest abuse of

discretion." United States v. Falu-Gonzalez, 205 F.3d 436, 442 (1st

Cir. 2000).

The district court properly denied the motion. First, as

the district court found, the evidence could have been reasonably

discovered prior to trial and, second, Szymanski's written answers

explained that "[w]hen [the] FDA approves drugs to be sold, part of

the approval is specific plant manufacturing location." The seized

bottle labels showed that the Lignocaine was manufactured in

Germany and the Kenacort-A in Equador. And Szymanski stated that

Lignocaine Injection BP 2% (Germany) and Kenacort-A (Equador) had

not been approved by the FDA.

The convictions and sentences are affirmed.

-20-