United States v. Gonsalves

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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