United States v. Chin

965 F.3d 41

• Court: Court of Appeals for the First Circuit
• Decided: July 9, 2020
• Docket: 18-1263P
• Status: Published

Opinion

United States Court of Appeals For the First Circuit

Nos. 18-1263, 18-1310, 18-1500

UNITED STATES OF AMERICA,

Appellee, Cross-Appellant,

v.

GLENN A. CHIN,

Defendant, Appellant, Cross-Appellee.

APPEALS FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Richard G. Stearns, U.S. District Judge]

Before

Barron, Stahl, and Lipez, Circuit Judges.

James L. Sultan, with whom Kerry A. Haberlin and Rankin & Sultan were on brief, for appellant/cross-appellee. David M. Lieberman, Attorney, Criminal Division, Appellate Section, United States Department of Justice, with whom Andrew E. Lelling, United States Attorney, Amanda P. Strachan, Assistant United States Attorney, George P. Varghese, Assistant United States Attorney, Brian A. Benczkowski, Assistant Attorney General, and Matthew S. Miner, Deputy Assistant Attorney General, were on brief, for appellee/cross-appellant. July 9, 2020 BARRON, Circuit Judge. These consolidated appeals, like

those we also decide today in United States v. Cadden, ___ F.3d

___ (1st Cir. 2020) [Nos. 17-1694, 17-1712, 17-2062], concern

convictions that stem from a 2012 scandal involving the

Massachusetts-based New England Compounding Center ("NECC"). The

scandal broke after federal investigators traced the cause of a

deadly nationwide outbreak of fungal meningitis and other

illnesses to medications that NECC had produced at its facilities.

Federal criminal charges were then brought against a number of

NECC employees, including the defendant in this case, Glenn Chin,

who was NECC's supervising pharmacist at the time. For his role

in the scandal, he was convicted in 2017 of numerous federal

crimes, and, in consequence, sentenced to a lengthy term of

imprisonment, subjected to an order of forfeiture, and ordered to

pay restitution.

Chin now challenges two of those convictions, for

racketeering and racketeering conspiracy, respectively. He

contends that they must be reversed because the evidence did not

suffice to support them. He also contends that, in consequence,

his prison sentence must be vacated. If he is right about the

lack of evidence to support his convictions, then the order of

forfeiture also must be reversed.

The government, for its part, brings its own appeal. It

challenges the prison sentence that Chin received as well as both

- 3 - the $175,000 order of forfeiture that the District Court imposed

on him and its award of restitution of an as-yet-unspecified

amount.

We affirm both of Chin's federal racketeering-related

convictions. However, we vacate and remand the prison sentence,

the forfeiture order, and the restitution order.

I.

Our opinion in Cadden addresses the consolidated appeals

in the criminal case against Chin's boss and alleged co-conspirator

at NECC, Barry Cadden. He was charged in the same indictment as

Chin but his trial on those charges was severed from Chin's. See

Cadden, ___ F.3d at ___ [slip op. at 7-8]. The issues that we

confront here overlap in many respects with those that we address

in our opinion in Cadden's case. We thus refer to our reasoning

there throughout the analysis that follows. We also refer the

reader to that opinion for additional details about NECC's

practices and the federal criminal investigation into them.

Briefly stated, however, the facts relevant to the appeals in

Chin's case are the following.

The practice of compounding involves combining drugs

with other substances to produce medications. As a compounding

pharmacy, NECC -- which was based in Framingham, Massachusetts --

prepared specialized medications, otherwise unavailable in the

- 4 - wider market, to hospitals and other medical providers upon their

request.

Chin was a trained pharmacist who served as a supervisor

at both of NECC's clean rooms. The company's compounding

operations that produced the medications tied to the outbreak took

place in one of these clean rooms.

On December 16, 2014, following an extensive federal

criminal investigation into NECC's role in the outbreak, Chin was

charged, along with Cadden and twelve other individuals affiliated

with NECC, in a 131-count indictment in the United States District

Court for the District of Massachusetts. The indictment charged

Chin with racketeering in violation of 18 U.S.C. § 1962(c);

racketeering conspiracy in violation of 18 U.S.C. § 1962(d);

forty-three counts of federal mail fraud in violation of 18 U.S.C.

§ 1341; and thirty-two counts of violating the Federal Food, Drug,

and Cosmetic Act ("FDCA"), see 21 U.S.C. §§ 331(a), 333(a).

The racketeering charge alleged sixty-eight predicate

acts of racketeering to support the allegation that Chin

participated in the conduct of NECC through a "pattern of

racketeering activity." See 18 U.S.C. § 1962(c). These alleged

predicate acts of racketeering included forty-three that were

premised on mail fraud allegations, as mail fraud is a racketeering

activity. See id. § 1961(1)(B). These allegations corresponded

- 5 - to the mail fraud allegations set forth in forty-three of the

stand-alone mail fraud counts.

The alleged mail fraud entailed NECC misrepresenting its

various safety protocols to customers who purchased its

medications. Those medications included the contaminated "high-

risk" sterile medication, methylprednisolone acetate ("MPA"),

that NECC had compounded during Chin's tenure as the supervising

pharmacist there and that had given rise to the outbreak. In

particular, NECC was alleged to have misrepresented that it had

complied with the safety standards set forth in Chapter 797 of the

United States Pharmacopeia ("USP-797"), which applies to high-risk

sterile compounded medications, including MPA.

The sixty-eight alleged predicate acts of racketeering

also included twenty-five that were premised on allegations of

second-degree murder, which is itself a racketeering activity.

See id. § 1961(1)(A). The allegations of second-degree murder

were tied to twenty-five patients who had died from having been

injected with the contaminated MPA that NECC had compounded.

The racketeering conspiracy charge did not identify

specific predicate acts of racketeering that it alleged that Chin

conspired to commit. See id. § 1962(d). Rather, the indictment

alleged that Chin conspired to commit a racketeering violation

through a pattern of racketeering activity that involved only

unspecified instances of mail fraud.

- 6 - The District Court severed Chin's case from Cadden's and

the other defendants'. Chin's case proceeded to trial, and the

jury found him guilty on all counts. A special verdict form

indicated that, for the purposes of the racketeering offense, the

jury found that the government had proved twelve of the sixty-

eight alleged predicate acts of racketeering, each of which

concerned only mail fraud. The special verdict form expressly

made clear that the jury did not find any of the twenty-five

alleged predicate acts of second-degree murder, which, again, were

relevant only to the racketeering count, not the racketeering

conspiracy count. As to the FDCA counts, the special verdict form

showed that the jury found that Chin acted with an "intent to

defraud or mislead," an aggravating factor, on two of the counts.

See 21 U.S.C. § 333(a)(2). It did not so find for the other thirty

FDCA counts.

The District Court calculated Chin's sentencing range

under the United States Sentencing Guidelines ("Guidelines") to be

seventy-eight to ninety-seven months' imprisonment. The District

Court then sentenced Chin to ninety-six months' imprisonment. The

District Court also issued a forfeiture order against Chin in the

amount of $175,000. Finally, the District Court ruled on the

government's motion for restitution. It ordered that it would

"calculate the total restitution award as the loss suffered by the

hospitals and clinics that purchased lots of degraded or defective

- 7 - drugs during the life of the racketeering enterprise," but stated

that it would await the trial of Chin's co-defendants before

apportioning the restitution amount among those found guilty and

so did not identify a dollar amount for the award of restitution.

The government issued a notice of appeal, and Chin

followed suit.

II.

We begin with Chin's appeal, in which he challenges his

convictions for racketeering and racketeering conspiracy. See 18

U.S.C. § 1962(c), (d).1 He contends that each must be reversed

due to insufficient evidence. His sufficiency challenges focus

solely on what the record shows -- or, more precisely, fails to

show -- about whether a juror reasonably could find satisfied the

"pattern of racketeering activity," id. § 1961(5), element that is

common to each of the underlying offenses, see id. § 1962(c), (d).

1 The racketeering conviction at issue was based on 18 U.S.C. § 1962(c), which states that [i]t shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity or collection of unlawful debt. The racketeering conspiracy conviction was based on 18 U.S.C. § 1962(d), which states that "[i]t shall be unlawful for any person to conspire to violate any of the provisions of subsection (a), (b), or (c) of this section." The government alleged that Chin conspired to violate § 1962(c).

- 8 - As we will explain, the challenges to these convictions

turn on whether the evidence sufficed to show that NECC was -- as

of 2012 -- engaged in a regular business practice of fraudulently

representing to its customers that the medications that it was

shipping to them had been produced in accord with certain safety

standards when in fact they had not been. For, if the evidence

did support that conclusion, then a reasonable juror supportably

could have found not merely isolated acts of racketeering activity

but a "pattern" of it.

We begin with Chin's challenge to the racketeering

conviction. We then briefly consider his racketeering conspiracy

conviction.

A.

Congress has provided little guidance as to the meaning

of the "pattern of racketeering activity" element for the offense

of racketeering. See id. § 1961(5). It has made clear that there

must be at least two predicate acts of racketeering within ten

years of one another for there to be a "pattern of racketeering

activity." See id. But, the relevant statutory text is otherwise

silent as to what makes a pair -- or more -- of individual predicate

acts of racketeering a "pattern of racketeering activity."

The United States Supreme Court has fleshed out this

"pattern" element in the following ways. First, the Court has

made clear that the individual predicate acts of racketeering that

- 9 - occur within ten years of one another must have been "related" to

one another. H.J. Inc. v. Nw. Bell Tel. Co., 492 U.S. 229, 239

(1989). Second, the Court has made clear that the predicate acts

must "amount to or pose a threat of continued criminal activity"

to constitute such a "pattern." Id. (emphasis added).

As we have noted, the special verdict form revealed that

the jury based its finding of guilt on the racketeering charge on

twelve of sixty-eight alleged predicate acts of racketeering and

that each of the twelve involved mail fraud.2 Chin does not dispute

that the evidence sufficed to prove those twelve alleged predicate

acts of racketeering or that they were "related" to one another.

2 The mail fraud provision under which Chin was convicted and on which his predicate acts were based reads, in relevant part, as follows: Whoever, having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises . . . for the purpose of executing such scheme or artifice or attempting so to do, places in any post office or authorized depository for mail matter, any matter or thing whatever to be sent or delivered by the Postal Service, or deposits or causes to be deposited any matter or thing whatever to be sent or delivered by any private or commercial interstate carrier, or takes or receives therefrom, any such matter or thing, or knowingly causes to be delivered by mail or such carrier according to the direction thereon, or at the place at which it is directed to be delivered by the person to whom it is addressed, any such matter or thing, shall be fined under this title or imprisoned not more than 20 years, or both. 18 U.S.C. § 1341.

- 10 - But, Chin does contend that the evidence did not suffice to permit

a juror reasonably to find that they could satisfy the requirement

of continuity. For that reason alone, he contends, his

racketeering conviction must be reversed for insufficient evidence

of a "pattern of racketeering activity." We thus turn our

attention to the continuity requirement and what the evidence shows

regarding it in Chin's case.

B.

There are two distinct means by which the continuity

requirement may be satisfied. The first requires a showing of

"closed-ended" continuity, which depends on a showing that the

related predicated acts occurred during "a closed period of

repeated conduct." H.J., 492 U.S. at 241. Such closed-ended

continuity may be demonstrated "by proving a series of related

predicates extending over a substantial period of time" that is

nonetheless finite. Id. at 242.

The second type of continuity requires a showing of

"open-ended" continuity. Id. at 241. That type of continuity

depends on a showing that the related predicate acts constituted

"past conduct that by its nature projects into the future with a

threat of repetition." Id.

The Supreme Court has provided two examples of what

constitutes evidence of open-ended continuity. In the first

example, related predicate acts may reflect the kind of open-ended

- 11 - continuity that suffices to show a "pattern of racketeering

activity" because they "involve a distinct threat of long-term

racketeering activity," as when a criminal's extortionary demand

is accompanied by a promise, implicit or explicit, to regularly

make similar illegal requests in the future. Id. at 242. In the

second example, related predicate acts may be found to reflect

open-ended continuity when they "are part of an ongoing entity's

regular way of doing business." Id. The Court has made clear

that the entity referenced in the second example may have been, at

least in part, a "legitimate business." Id. at 243.

C.

Chin contends that the evidence did not suffice to

support a finding of either closed-ended or open-ended continuity.

But, even assuming that Chin adequately preserved this challenge,

despite the government's contention to the contrary, and thus that

our review is de novo, see United States v. Tanco-Baez, 942 F.3d

7, 15 (1st Cir. 2019), we disagree. As we will explain, a juror

could reasonably find on this record that, by the fall of 2012, it

had become a regular business practice of NECC to ship medications

that had not been prepared in line with the requirements of USP-

797 despite representing to customers that they had been.

Significantly, the twelve predicate acts of racketeering

that the jury found involved NECC having shipped customers

medications that it had falsely told them the company had produced

- 12 - in compliance with USP-797, and Chin does not dispute that the

evidence sufficed to support the finding that such a fraud had

been perpetrated in each instance via that particular false

representation. Moreover, those twelve predicate acts concerned

distinct shipments of medications that had been sent to distinct

customers. And while they were all sent within a discrete time

period, a juror reasonably could find on this record that the

company's practice of fraudulently shipping medications as if they

had been produced in compliance with USP-797 had no natural

endpoint.

In accord with this conclusion, we note that a former

lab technician at NECC, Joseph Connolly, testified that the company

"routinely sent medications out prior to getting results back from

testing" for sterility, notwithstanding that USP-797 called for

NECC to wait for the results of such testing before shipment. In

addition, another company employee, Nicholas Booth, testified that

it was not necessarily "a common practice" when he started for the

company to ship medications without testing them in the manner

that USP-797 required, but that, as production ramped up, "corners

were cut" and "it started happening more and more." Booth further

testified that, by the fall of 2012, the company was sending

shipments of untested medications to customers under old labels,

- 13 - for medications that had been tested, "quite a bit" and that Cadden

endorsed the practice.3

Chin argues in response that NECC operated safely for

more than a decade before cutting corners in response to a brief

surge in demand in 2012. Based on the much longer period of safe

conduct, he appears to argue, a juror could not reasonably find

that mail fraud via false representations of USP-797 compliance

was part and parcel of a regular NECC business practice, such that

the practice would be an ongoing one.

The jury was tasked, however, with deciding whether the

period of fraudulent activity at NECC was of a nature that there

was "a realistic prospect of continuity over an open-ended period

yet to come." Home Orthopedics Corp. v. Rodríguez, 781 F.3d 521,

531 (1st Cir. 2015) (quoting Feinstein v. Resolution Tr. Corp.,

942 F.2d 34, 45 (1st Cir. 1991)). At the very least, the evidence

sufficed to permit a juror to find that NECC's regular practice

3 Because our analysis is based only on evidence that relates to the twelve predicate acts found by the jury, Chin's argument, to the extent he makes it, that we may not rely on evidence that relates to other predicate acts not found by the jury is beside the point. In any event, our precedent does not support the proposition on which he relies. See United States v. Connolly, 341 F.3d 16, 26 (1st Cir. 2003) (finding continuity of a racketeering enterprise based in part on "evidence of the existence of the enterprise apart from the specified racketeering acts"); cf. United States v. Cianci, 378 F.3d 71, 93 (1st Cir. 2004) ("The evidence relating to those acts that were found 'unproven' by the jury was still available to the jury in its evaluation of the overall [racketeering] charge.").

- 14 - was to engage in similar acts in the face of high demand and that

demand pressure would have continued to be high going forward.

Chin points to evidence that shows that NECC tried to

address the problems in its clean rooms in arguing that NECC's

fraudulent scheme was likely to come to an end after the production

surge in 2012. But, as Chin himself concedes, some of these

efforts were "inadequate," some were "short-lived," and they all

"ultimately failed."

Chin also argues that it would have been illogical for

NECC to continue to produce medications in a substandard manner

indefinitely, given that its business model depended on customers'

trust in the safety of its products. But, Chin does not dispute

that the twelve predicate acts of mail fraud occurred despite the

obvious business risk that they -- like any fraudulent activity,

if discovered -- posed to NECC. Thus, a juror reasonably could

find that, to whatever extent NECC was incentivized to comply with

safety protocols, those incentives were insufficient to cause the

company to refrain from fraudulent conduct in the face of high

demand from customers.4

4 We note that the jury necessarily concluded in finding that Chin committed twelve predicate acts of racketeering involving mail fraud that he was a "knowing and willing participa[nt] in [NECC's mail fraud] scheme with the intent to defraud," United States v. Soto, 799 F.3d 68, 92 (1st Cir. 2015), and Chin does not dispute that a juror could infer he would have continued to be a knowing and willing participant in that fraudulent scheme if there

- 15 - Finally, Chin invokes various precedents that have

vacated findings of liability for racketeering based on

insufficient evidence of open-ended continuity. But, those cases

either involve a defendant's attempt to maintain a single contract,

see Sys. Mgmt., Inc. v. Loiselle, 303 F.3d 100, 106 (1st Cir.

2002), or a circumstance in which the defendant's alleged

fraudulent scheme was limited to a "handful of victims" and was

"inherently terminable," Cofacredit, S.A., Inc. v. Windsor

Plumbing Supply Co., 187 F.3d 229, 244 (2d Cir. 1999). They are

thus readily distinguishable from Chin's case.

In sum, the record fails to support Chin's sufficiency

challenge to his conviction for racketeering. Rather, the evidence

sufficed to show that NECC's fraudulent scheme of shipping

medications as if they had been produced in compliance with USP-

797 was an ongoing business practice as of 2012 that showed no

signs of abating.

D.

There remains Chin's sufficiency challenge to his

conviction for racketeering conspiracy. But, the only arguments

that he makes in support of that challenge are identical to the

ones that we have just rejected. We thus must reject this

challenge as well.

were a supportable basis for finding that NECC would continue to perpetrate it.

- 16 - III.

We now turn to the government's challenges in its appeal.

They concern, respectively, the prison sentence that the District

Court imposed and the orders of forfeiture and restitution that it

issued. We begin with the government's arguments that the District

Court erred in calculating the appropriate range for Chin's

sentence under the Guidelines. We then take up the government's

challenge to the District Court's forfeiture order. We conclude

by considering the government's challenge to the District Court's

ruling on restitution.

The government argues that the District Court

miscalculated the amount of loss attributable to Chin's illegal

conduct under the Guidelines and that the District Court

erroneously failed to apply several enhancements under the

Guidelines. In assessing these challenges, we review the District

Court's "factfinding for clear error and afford de novo

consideration to its interpretation and application of the

sentencing guidelines." United States v. Benítez-Beltrán, 892

F.3d 462, 469 (1st Cir. 2018) (quoting United States v. Flores-

Machicote, 706 F.3d 16, 20 (1st Cir. 2013)).

1.

Chin's total offense level was based, in part, on the

amount of "loss" attributable to the underlying fraudulent scheme

- 17 - in which he was found to have been engaged. See U.S.S.G.

§ 2B1.1(b)(1); see also id. § 2B1.1 cmt. n.3(A)(i) (explaining

that "loss is the greater of actual loss or intended loss," where

"'[a]ctual loss' means the reasonably foreseeable pecuniary harm

that resulted from the offense"). The District Court fixed that

loss amount at $1.4 million -- a figure that required the District

Court to increase Chin's offense level under the Guidelines by

fourteen levels. See id. § 2B1.1(b)(1)(H). The government

contends, however, that the District Court erred because it

substantially understated the loss amount.

The District Court arrived at the $1.4 million amount by

adding up the revenue that NECC had generated in the relevant

period from what the District Court described as "every potentially

contaminated or degraded drug shipped by NECC from the period

beginning in March 2011 to the demise of the company in 2012."

The District Court's method for calculating the loss amount was

apparently the same one that it used at Cadden's sentencing, and

the parties make no argument to the contrary. We thus understand

the District Court to have arrived at the loss amount of $1.4

million by, as it had done in Cadden's case, adding up the total

NECC revenue generated from sales of medications that were

identified as expired, contaminated, nonsterile, sub-potent,

super-potent, or compounded by an unqualified technician.

- 18 - The government takes issue with that approach, as it did

in Cadden's case, and contends that the District Court erred by

not calculating the loss amount in Chin's case based on the total

amount of NECC's sales during the relevant time period. But, the

government has failed to show that all of NECC's sales over that

period were based on fraudulent representations, just as the

government failed to make that showing in Cadden. See ___ F.3d at

___ [slip op. at 66-67]. Nor, as we explained in Cadden, is the

government right that revenue that NECC generated from non-

fraudulent sales during the relevant time period may be included

in the loss amount because customers would not have made the

purchases from NECC had they known about NECC's fraudulent sales

even if they had not been directly defrauded themselves. See id.

at ___ [slip op. at 67-68].

To be sure, shipments in addition to those that the

District Court relied on to calculate the loss amount in Chin's

case could, perhaps, have been supportably found to have been made

fraudulently in their own right. Thus, such shipments could

perhaps have been included in the loss amount calculation, thereby

generating a figure greater than $1.4 million. The government did

not present the District Court in Chin's case, however, with a

figure for the loss amount that would have reflected its view of

the actual amount that customers paid for the fraudulent shipments

made by NECC that would have been less than the greatest loss

- 19 - amount that it sought but more than the $1.4 million amount. At

Chin's sentencing, the government merely advanced its sweeping

claim that any NECC sales during the relevant period necessarily

constituted "loss." That was so, we note, even though the

government was on notice that the District Court was aware of the

argument that the government had failed to prove that all NECC

products were sold pursuant to a fraudulent scheme from the

arguments made at Cadden's sentencing, which preceded Chin's.

Accordingly, much as we concluded when facing the

similar issue in Cadden's case, see Cadden, ___ F.3d at ___ [slip

op. at 69-70], we hold that the District Court acted well within

its discretion in identifying specific shipments that were shown

to be fraudulent and using NECC's revenue from those shipments to

ground its loss calculation. The District Court was not obliged

to speculate on the extent to which NECC's revenues also reflected

other fraudulent sales that were not specifically identified by

the government. See U.S.S.G. § 2B1.1 cmt. n.3(C) ("The court need

only make a reasonable estimate of the loss. . . . [T]he court's

loss determination is entitled to appropriate deference."); United

States v. Flete-Garcia, 925 F.3d 17, 28 (1st Cir. 2019) ("[A] loss

calculation need not be precise: the sentencing court need only

make a reasonable estimate of the range of loss."); United States

v. Rivera-Rodríguez, 489 F.3d 48, 53 (1st Cir. 2007) ("In arriving

at an appropriate sentence, a district court enjoys 'broad

- 20 - discretion in the information it may receive and consider regarding

[a] defendant and his conduct.'" (alteration in original) (quoting

United States v. Curran, 926 F.2d 59, 61 (1st Cir. 1991))). We

thus decline the government's request to vacate and remand the

sentence so that the District Court may undertake the kind of

calculation that the government failed to request be made at

sentencing.

2.

The government next takes issue with the District

Court's refusal under the Guidelines to apply the two-level

enhancement that kicks in when an "offense involved . . . the

conscious or reckless risk of death or serious bodily injury."

U.S.S.G. § 2B1.1(b)(16).5 The District Court found the enhancement

inapplicable because Chin had not committed an offense that carried

with it the requisite risk identified in the enhancement. The

District Court's conclusion rested on an interpretation of the

Guidelines, and so we review it de novo. See Benítez-Beltrán, 892

F.3d at 469. We agree with the government that the District Court

erred.

The District Court appears to have concluded that, as a

matter of law, the enhancement could only apply if Chin had

committed a criminal offense that, by its nature, involved the

5 At the time the District Court handed down Chin's sentence in 2018, the enhancement was codified at U.S.S.G. § 2B1.1(b)(15).

- 21 - conscious or reckless risk of death or serious bodily injury. The

District Court then found that the nature of his offenses did not

pose the requisite kind of risk. According to the District Court,

this was so because, with respect to those offenses, the "victims

that were identified were the clinics and the hospitals who

purchased the drugs," not the patients who were actually put at

risk, as those patients "were not recipients of NECC's [fraudulent]

representations."

The District Court did go on to consider whether it could

find, contrary to the jury, that Chin had committed second-degree

murder. The District Court appears to have thought that offense

might carry with it the conscious or reckless risk identified in

the enhancement. But, the District Court concluded, "the evidence

did not establish a reckless and knowing disregard of a reasonable

certainty of causing death or great bodily harm." Thus, consistent

with the jury verdict, it found that Chin had not committed second-

degree murder.

The problem with the District Court's reasoning is the

following. As we explained in Cadden, see ___ F.3d at ___ [slip

op. at 71-72], in considering the nature of the risk involved in

Chin's "offense," U.S.S.G. § 2B1.1(b)(16), the District Court

needed to evaluate the "relevant conduct" for which the Guidelines

hold him accountable in relation to the offenses for which he was

convicted, id. § 1B1.1 cmt. n.1(I) (defining "offense"). That

- 22 - "relevant conduct" includes, among other things, "all acts and

omissions" that Chin "committed, aided, abetted, counseled,

commanded, induced, procured, or willfully caused . . . that

occurred during the commission of the offense of conviction." Id.

§ 1B1.3(a)(1)(A). Thus, Chin was subject to the enhancement so

long as his conduct during the commission of the offenses for which

he was convicted -- whether federal mail fraud, or racketeering

and racketeering conspiracy based on predicate acts of

racketeering involving mail fraud6 -- carried with it the risk

identified in the enhancement.

Thus, it is not necessarily determinative -- as the

District Court appeared to conclude -- that the direct targets of

the mail-fraud-based offenses that he was convicted of committing

were hospitals and medical providers and not the patients who were

at risk of being hurt downstream. Chin's participation in a scheme

to distribute medications that are subject to USP-797 -- including

high-risk sterile ones like MPA -- but that are not compounded in

compliance with it despite representations to the contrary could

potentially constitute "relevant conduct" that "involved . . . the

conscious or reckless risk of death or serious bodily injury."

Id. § 2B1.1(b)(16). Thus, it was legal error for the District

6The government does not argue that actions associated with any of the FDCA convictions could serve to make the enhancement applicable.

- 23 - Court to conclude that such a finding could not trigger the

enhancement simply because the patients who might inject those

medications were not themselves defrauded and only NECC's direct

customers were.

Chin argues that we can nonetheless affirm the District

Court. Chin bases that contention on a finding that the District

Court made in the course of addressing the jury's determination

that Chin did not commit the predicate acts of racketeering

activity involving second-degree murder. The finding was that

Chin did not act with "a reckless and knowing disregard of a

reasonable certainty of causing death or great bodily harm."

Chin asserts that, by finding that he did not have that

state of mind, the District Court necessarily found that he did

not act, as the enhancement requires, with a "conscious or reckless

risk of death or serious bodily injury." Thus, he argues, the

District Court necessarily found that this Guidelines enhancement

did not apply.

Here, too, the District Court's analysis turns on an

interpretation of the Guidelines and thus presents a question of

law that we review de novo. See Benítez-Beltrán, 892 F.3d at 469.

And, here, again, we agree with the government.

The District Court found that Chin did not act with a

"reckless and knowing" state of mind in disregarding a "reasonable

certainty of . . . death or great bodily harm." The sentencing

- 24 - enhancement, however, describes the requisite mental state using

disjunctive language: the enhancement applies so long as the

defendant acted in spite of either a "conscious or reckless risk."

U.S.S.G. § 2B1.1(b)(16)(A) (emphasis added). Thus, the District

Court's finding does not foreclose the possibility that Chin's

offense involved the mental state necessary for the enhancement's

application. We therefore vacate and remand the sentence for the

District Court to assess whether any of Chin's relevant conduct,

as defined under U.S.S.G. § 1B1.3(a), "involved . . . the

conscious or reckless risk of death or serious bodily injury."

Id. § 2B1.1(b)(16).

3.

We next consider the government's challenge to the

District Court's refusal to apply a two-level enhancement that the

government requested based on its contention that Chin "knew or

should have known that a victim of the offense was a vulnerable

victim." U.S.S.G. § 3A1.1(b)(1). We also consider the

government's related challenge to the District Court's refusal to

apply an additional two-level increase, insofar as that vulnerable

victim enhancement applied, based on the government's contention

that "the offense involved a large number of" those "vulnerable

victims." Id. § 3A1.1(b)(2).

The District Court ruled that the harmed patients were

not "victims" within the meaning of either enhancement. It did so

- 25 - because it determined -- seemingly as a matter of law -- that they

could not constitute "victims" because they were not the direct

targets of the false representations to company customers on which

the mail fraud-based convictions depended. But, reviewing this

question of Guidelines' interpretation de novo, see Benítez-

Beltrán, 892 F.3d at 469, we agree with the government that, just

as we explained in Cadden, "'[t]o come within the guidelines'

definition' of 'victim,' 'one need not be a victim of the charged

offense so long as one is a victim of the defendant's other

relevant conduct,'" ___ F.3d at ___ [slip op. at 75] (alteration

in original) (quoting United States v. Souza, 749 F.3d 74, 86 (1st

Cir. 2014)).

The "relevant conduct" that the Guidelines hold Chin

accountable for engaging in includes, as noted, any action he took

during the commission of mail fraud. If, for instance, Chin failed

to comply with appropriate safety procedures in compounding the

fatal lots of MPA, the patients who died from being injected with

those lots could potentially be "victims" of his offense. Thus,

the District Court erred in concluding that only individuals who

received fraudulent representations from NECC could be "vulnerable

victims" for the purpose of the enhancements at issue.

Chin nonetheless urges us to affirm the District Court's

decision not to apply these enhancements on an alternative ground.

He argues that the patients, even if "victims," are not

- 26 - "vulnerable" ones. But, because the District Court ruled that the

patients could not be victims at all, it has not yet addressed the

question. Thus, as in Cadden, we leave it for the District Court

to address the issue in the first instance on remand. See ___

F.3d at ___ [slip op. at 76].

In doing so, we pass no judgment on whether Chin's

relevant conduct actually justified the application of the

enhancement. We thus leave it to the District Court in the first

instance to address, among other things, whether his actions were

analogous to those of a fraudster who "market[s] an ineffective

cancer cure," who the Guidelines indicate would merit the

enhancement, U.S.S.G. § 3A1.1 cmt. n.2, and whether the fact that

medical providers, not the patients themselves, dealt with NECC

directly affects the patients' status as "vulnerable."7

4.

The government's last challenge to Chin's prison

sentence concerns the District Court's refusal to apply the

enhancement set forth in U.S.S.G. § 3B1.1. That enhancement

increases the offense level of the defendant based on the

defendant's "role in the offense." Id.

7 The government does not argue that any conduct associated only with his convictions on the FDCA counts could require the application of the vulnerable victims enhancement.

- 27 - At sentencing, the government argued that Chin was "an

organizer or leader of a criminal activity that involved five or

more participants" and that his offense level thus should be

increased by four levels. Id. § 3B1.1(a). The District Court

found at sentencing, however, that Chin was only "a supervisor or

manager" of such an activity, "but not an organizer or leader."

See id. § 3B1.1(b). Accordingly, it increased his offense level by

only three.

The District Court reasoned as follows:

The organizer and leader of the enterprise was Barry Cadden. Consequently, he was given the full four-point upward adjustment. That description does not, however, apply to Mr. Chin. Rather, the evidence established at trial, as the government accurately states on page 12 of its sentencing memorandum, that Mr. Chin was "the supervisory pharmacist at NECC who managed both of NECC's cleanrooms."

The government contends that the District Court erred by

concluding that Chin could not have been a "leader" or "organizer"

because Cadden had already filled such a role and because of Chin's

title as "supervisory pharmacist." Our review is de novo. See

Benítez-Beltrán, 892 F.3d at 469.

The government is right that "[t]here can . . . be more

than one person who qualifies as a leader or organizer of a

criminal association or conspiracy." U.S.S.G. § 3B1.1 cmt. n.4.

The government is also correct that, in conducting the leader-

organizer analysis, "titles such as 'kingpin' or 'boss' are not

- 28 - controlling." Id. Thus, to the extent that the District Court

relied only on Chin's title and Cadden's leadership role at NECC

in determining that Chin was neither a "leader" nor an "organizer,"

we agree with the government that the District Court's approach

was erroneous.

Chin urges us to conclude, however, that the District

Court in the relevant passage at sentencing was referring to

"evidence" other than Chin's title and Cadden's place at the top

of the NECC hierarchy. But, while we may affirm the District

Court's application of an enhancement where we can infer its

reasoning based on "what was argued by the parties or contained in

the pre-sentence report," United States v. Sicher, 576 F.3d 64, 71

(1st Cir. 2009) (quoting United States v. Hoey, 508 F.3d 687, 694

(1st Cir. 2007)), we are unable to do so here.

The District Court did not indicate its agreement with

the theory that Chin advances on appeal, which is that Chin "had

no ultimate decision-making authority" because he took all of his

actions "at Cadden's direction." The record also includes evidence

supportably showing that Chin directed other NECC workers to

prepare medications in ways that the government alleges were

incompatible with representations made by NECC. See United States

v. Carrero-Hernández, 643 F.3d 344, 350 (1st Cir. 2011) ("[T]he

defendant must have exercised some degree of control over others

involved in the commission of the offense or he must have been

- 29 - responsible for organizing others for the purpose of carrying out

the crime." (quoting United States v. Fuller, 897 F.2d 1217, 1220

(1st Cir. 1990))). The District Court's description of Chin's

conduct as "supervisory" in nature, moreover, is not itself

preclusive of a finding that, in performing his supervisory duties,

Chin took on the role of an "organizer" within the meaning of the

enhancement. Nor does the pre-sentence report prepared by the

United States Office of Probation and Pretrial Services shed any

light on the District Court's thinking; that report concluded that

Chin was either an organizer or a leader.

Thus, "[g]iven the impact that a possible error would

have had on the sentence and the need for further clarification

before we can determine whether an error occurred," United States

v. Lacouture, 835 F.3d 187, 191-92 (1st Cir. 2016), we decline to

affirm the District Court's ruling on the ground Chin proposes.

Instead, "we think the wisest course here is to follow our

occasional practice" of vacating and "remanding the matter to the

district court" in light of the lack of clarity about the basis

for the District Court's ruling. Id.

5.

In light of the issues we have identified with the

treatment of three enhancements, the District Court may find on

remand that application of one or more of these enhancements is

warranted and that recalculation of Chin's sentencing range is

- 30 - necessary. If it does, then the District Court may of course in

imposing a final sentence consider the parties' arguments about

how the traditional concerns of sentencing play out given the

modified range. Even if the District Court must reconsider its

analysis in these respects, though, we are not thereby inviting

the District Court to revisit other conclusions it reached in

calculating Chin's sentencing range under the Guidelines that are

not affected by our decision today. Thus, aside from the three

enhancements the District Court failed to give a legally adequate

rationale for declining to apply, the District Court may not on

remand reconsider its initial determinations about whether any

adjustments to Chin's total offense level are or are not

applicable.

forfeiture order. The government does so on the ground that it

rested on an unduly limited view of the amount of funds that could

be subject to forfeiture.

Due to his racketeering and racketeering conspiracy

convictions, Chin was required to forfeit "any property

constituting, or derived from, any proceeds which [he] obtained,

directly or indirectly, from racketeering activity." 18 U.S.C.

§ 1963(a)(3). At sentencing, the District Court agreed with the

government's contention that Chin's salary from NECC provided an

- 31 - appropriate starting point for the forfeiture calculation and held

that Chin's earnings from March of 2010 to October of 2012 were

subject to forfeiture. That was the period during which NECC,

according to the District Court, was operating as a "criminal

enterprise."8

Chin earned $473,584.50 in salary over this period of

time. The District Court did not require Chin to forfeit this

full amount, however. Instead, the District Court limited the

forfeiture order to $175,000. The government contends that neither

of the two reasons that the District Court gave for limiting the

forfeiture order in that way -- one of which was statutory, and

one of which was constitutional -- is sustainable. We agree.

The District Court first explained that Chin could not

be required to forfeit his full salary because he never "obtained"

proceeds that were paid as taxes to the United States Treasury

within the meaning of 18 U.S.C. § 1963(a)(3). The District Court

indicated that, if this reason had been the sole one for reducing

the size of Chin's forfeiture order, then it would have reduced

8 The government had requested that Chin be required to forfeit his salary over a longer period of time, stretching back to 2006. On appeal, the government does not challenge the District Court's finding that the relevant period was from March of 2010 to October of 2012.

- 32 - the forfeiture amount from $473,584.50 to $348,084.60 rather than

to the amount of $175,000 to which it ultimately reduced it.

To the extent this question presents one of law, our

review is de novo. See United States v. Ponzo, 853 F.3d 558, 589

(1st Cir. 2017). But, "to the extent factual issues are

intermingled, [we] consider mixed questions of law and fact under

the more deferential clear error standard." Id.

As we explained in Cadden, see ___ F.3d at ___ [slip op.

at 81], a defendant convicted of racketeering must forfeit property

even when "it has merely been held in custody by that individual

and has been passed along to its true owner," United States v.

Hurley, 63 F.3d 1, 21 (1st Cir. 1995). Thus, the fact that the

offender is required to pay a certain portion of his salary to the

federal government as taxes does not affect the fact that he

"obtained" that portion.

The District Court expressed concern that, because Chin

was forced to forfeit money that he had already paid in federal

taxes, he was "being asked, in effect, to pay his taxes twice."

But, the purpose of criminal forfeiture -- unlike a federal tax

-- is to punish a racketeering offender. See United States v.

Bajakajian, 524 U.S. 321, 332 (1998) (noting that "in personam,

criminal forfeitures . . . have historically been treated as

punitive"); Hurley, 63 F.3d at 21 (viewing "criminal forfeiture

[for racketeering] as a kind of shadow fine," where "the size of

- 33 - the amount transported is some measure of the potential harm from

the transaction"). Under our established precedent, an in personam

forfeiture order against a racketeering offender is based on the

gross amount of proceeds he acquires, even temporarily, and it is

thus entirely unremarkable that such a forfeiture order may exceed

the net amount of the offender's ill-gotten gains. See Hurley, 63

F.3d at 21. Thus, the District Court's taxes-based reason for

reducing the amount of Chin's "proceeds" is not sustainable.

The District Court's other reason for reducing the size

of Chin's forfeiture order was to avoid an "excessive fine" in

violation of the Eighth Amendment of the federal Constitution.

See U.S. Const. amend. VIII ("Excessive bail shall not be required,

nor excessive fines imposed, nor cruel and unusual punishments

inflicted."). The District Court acknowledged that Chin and his

wife had a net worth of about $423,000 and that the couple had

spent almost $700,000 in the sixteen months prior to the entry of

the forfeiture order. Nevertheless, the District Court noted the

costs that Chin would face in raising his two young children and

also concluded that Chin had little prospect of earning a

professional-level salary again, given his lack of an education

outside of the pharmaceutical industry. The District Court on

that basis found that imposing the nearly half-a-million dollar

forfeiture would unconstitutionally deprive Chin of the ability to

- 34 - earn a livelihood in violation of the Excessive Fines Clause. See

Bajakajian, 524 U.S. at 335-36 (1998).

"The factual findings made by the district courts in

conducting the excessiveness inquiry . . . must be accepted unless

clearly erroneous." Id. at 336 n.10. But, we review the question

of whether those facts add up to a constitutional violation de

novo. Id.

The government offers a variety of arguments for why the

Eighth Amendment does not require the cap imposed by the District

Court. We need focus on only its final one, in which it contends

that the District Court's findings do not suffice to show that the

full forfeiture amount sought by the government would deprive Chin

of the ability to earn a livelihood that the Eighth Amendment

limitation on excessive fines protects.

In United States v. Levesque, 546 F.3d 78 (1st Cir.

2008), we considered a challenge to a forfeiture order of more

than $3 million by a defendant who claimed to have "nothing of

value left to forfeit." Id. at 80. Without suggesting that the

defendant herself might have a meritorious Eighth Amendment

challenge to the size of her forfeiture order, we stated that it

was not "inconceivable that a forfeiture could be so onerous as to

deprive a defendant of his or her future ability to earn a living,

thus implicating the historical concerns underlying the Excessive

Fines Clause," and remanded for further proceedings. Id. at 85.

- 35 - As the District Court itself noted, however, Levesque

made clear that "a defendant's inability to satisfy a forfeiture

at the time of conviction, in and of itself, is not at all

sufficient to render a forfeiture unconstitutional." 546 F.3d at

85. Levesque also stressed that, "even if there is no sign that

the defendant could satisfy the forfeiture in the future, there is

always a possibility that she might be fortunate enough to

legitimately come into money." Id. (quotations omitted).

As Levesque recognizes, the bar for a forfeiture order

to be unconstitutionally excessive on livelihood-deprivation

grounds is a high one. The District Court's findings about Chin's

net worth, familial obligations, and inability to earn a

professional-level salary simply are not sufficient to ground a

determination that the full forfeiture order sought by the

government would constitute the type of "ruinous monetary

punishment[]" that might conceivably be "so onerous as to deprive

a defendant of his or her future ability to earn a living" and

thus violate the Eighth Amendment's Excessive Fine Clause. Id. at

84-85. Nor has Chin identified any authority to suggest otherwise.

Cf. United States v. Sepúlveda-Hernández, 752 F.3d 22, 37 (1st

Cir. 2014) (rejecting a challenge to a $1 million forfeiture order

on plain error review); United States v. Aguasvivas-Castillo, 668

F.3d 7, 16-17 (1st Cir. 2012) (rejecting a challenge to a $20

million order on plain error review); United States v. Fogg, 666

- 36 - F.3d 13, 17-20 (1st Cir. 2011) (reversing a District Court's

determination that issuing a $264,000 forfeiture order to a

defendant who was deeply in debt would be unconstitutional).

Accordingly, we vacate the forfeiture order and direct the District

Court to enter a forfeiture order in the full amount sought by the

government.

We come, then, to the last of the government's

challenges. Here, the government takes aim at a conclusion reached

by the District Court in calculating Chin's restitution

obligation.

Chin was convicted of an offense "committed by fraud or

deceit." 18 U.S.C. § 3663A(c)(1)(A)(ii). The Mandatory Victims

Restitution Act ("MVRA") thus required the District Court to order

Chin to "make restitution to the victim[s] of the offense or . . .

[their] estate[s]." Id. § 3663A(a)(1).

In a preliminary order, the District Court found that

the only "victims" entitled to restitution were the "medical

facilities who purchased drugs from NECC," but that "the patients

who were adversely affected by NECC's drugs" were "not 'victims'

. . . under the MVRA's statutory definition." The District Court

noted that the "sine qua non of mail fraud" is a scheme to "obtain[]

money or property by means of false or fraudulent pretenses,

representations, or promises" transmitted to some recipient, see

- 37 - 18 U.S.C. § 1341, and reasoned that NECC's "misrepresentations"

were made "to the hospitals and clinics that purchased the drugs,"

not to "end-users and patients." Thus, the District Court declined

to require Chin to pay restitution to patients or insurance

companies. It instead deferred calculation of the final

restitution amount and thus the imposition of a final order

containing that amount until the completion of the trials of Chin's

co-defendants. The District Court did indicate, however, as part

of Chin's criminal judgment, that restitution to hospitals and

clinics would be mandatory.

The government challenges the District Court's narrow

construction of who counts as a "victim."9 We review factual

findings underlying a restitution order for clear error and legal

9 Under our established precedent, we treat a restitution order as an appealable final judgment even when it does not indicate the amount of restitution. See United States v. Cheal, 389 F.3d 35, 51 (1st Cir. 2004) (citing 18 U.S.C. § 3664(o)). Two Supreme Court precedents have subsequently addressed the appealability of a restitution calculation in a deferred restitution scenario such as this one, see Manrique v. United States, 137 S. Ct. 1266, 1270-72 (2017); Dolan v. United States, 560 U.S. 605, 616-18 (2010), but neither of them purports to make a holding about the jurisdiction of appellate courts to hear appeals of preliminary restitution orders, see Manrique, 137 S. Ct. at 1271; Dolan, 560 U.S. at 617-18. No party, however, asks us to conclude from the subsequent Supreme Court precedent that this is the rare case in which we may depart from prior Circuit precedent based on new developments. We thus stick to the law of the circuit as articulated by Cheal, under which we have jurisdiction to consider the government's appeal, notwithstanding that the amount of restitution has not been specified.

- 38 - conclusions de novo. See Soto, 799 F.3d at 97. The final order

is reviewed for abuse of discretion. Id.

The MVRA defines "victim" as "a person directly and

proximately harmed as a result of the commission of an offense for

which restitution may be ordered." 18 U.S.C. § 3663A(a)(2). When

an offense "involves as an element a scheme, conspiracy, or pattern

of criminal activity," like Chin's mail fraud and racketeering-

related convictions, see id. §§ 1341, 1963(c), 1963(d), "any

person directly harmed by the defendant's criminal conduct in the

course of the scheme, conspiracy, or pattern" is a victim. Id.

§ 3663A(a)(2).

We disagree with the District Court's conclusion that

patients and insurers were, as a matter of law, not "victims"

within the scope of the MVRA. The restitution analysis focuses on

the causal relationship "between the conduct and the loss," not

between the nature of the statutory offense and the loss. United

States v. Cutter, 313 F.3d 1, 7 (1st Cir. 2002) (emphasis added)

(quoting United States v. Vaknin, 112 F.3d 579, 590 (1st Cir.

1997)); see also Robers v. United States, 572 U.S. 639, 645 (2014)

(focusing on the relationship between "the harm alleged" and the

defendant's "conduct" (quoting Lexmark Int'l, Inc. v. Static

Control Components, Inc., 572 U.S. 118, 133 (2014))). This

approach to the "victim" analysis tracks the language of the

statute, as it focuses on whether the victim was "harmed as a

- 39 - result of the commission of an offense" or "by the defendant's

criminal conduct in the course of [a] scheme, conspiracy, or

pattern [of criminal activity]." 18 U.S.C. § 3663A(a)(2)

(emphasis added).

Chin nonetheless argues that we must affirm the District

Court's ruling for the following reason. The "directly and

proximately" language of the MVRA incorporates "a proximate cause

requirement." Robers, 572 U.S. at 645 (discussing 18 U.S.C.

§ 3663A(a)(2)). In assessing whether that requirement has been

satisfied, we ask "'whether the harm alleged has a sufficiently

close connection to the conduct' at issue." Id. (quoting Lexmark

Int'l, Inc., 572 U.S. at 133); see also Cutter, 313 F.3d at 7

("[R]estitution is inappropriate if the conduct underlying the

conviction is too far removed, either factually or temporally,

from the loss."). Put otherwise, the statute asks, "was the harm

foreseeable?" Soto, 799 F.3d at 98.

Chin contends that the District Court made a factual

finding about the lack of proximate causation, which he would have

us review under the deferential "clear error" standard and sustain.

We see no indication, however, that the District Court made such

a proximate cause finding. It rooted its conclusion that the

patients were not "victims" on its reading of the mail fraud

statute, and its determination that the "sine qua non" of mail

fraud identified the direct recipients of fraudulent

- 40 - representations as the sole "victims" of such fraud. It thus did

not attempt to evaluate the "factual[] or temporal[]" link between

"the conduct underlying the conviction" and "the loss." Cutter,

313 F.3d at 7.

The District Court did at one point state:

To the extent that patients may have implicitly relied on NECC's representations by relying on their doctors as learned intermediaries, this additional layer of insulation between NECC and the patient further renders any such reliance "too attenuated" to satisfy the "direct causation" standard of the MVRA. See Cutter, 313 F.3d at 7.

But, the District Court invoked this attenuation concern

only to respond to the government's contention that the patients

indirectly relied on NECC's representations such that they

themselves were defrauded. We thus do not take the District Court

to have engaged in a proximate cause analysis of whether the harm

that would flow to the patients from Chin's conduct was

foreseeable. Accordingly, we vacate and remand the restitution

order.

IV.

We affirm Chin's convictions and vacate and remand his

sentence, forfeiture order, and restitution order.

- 41 -