United States v. Fishman, Giannelli

• Court: Court of Appeals for the Second Circuit
• Decided: September 22, 2025
• Docket: 22-1600
• Status: Published

Opinion

22-1600-cr (L) United States v. Fishman, Giannelli

In the United States Court of Appeals For the Second Circuit

August Term, 2024

(Argued: September 17, 2024 Decided: September 22, 2025)

Docket Nos. 22-1600-cr (L), 22-2063-cr (C), 23-6819-cv (C)

UNITED STATES OF AMERICA,

Appellee,

–v.–

SETH FISHMAN, LISA GIANNELLI,

Defendants-Appellants,

JORGE NAVARRO, ERICA GARCIA, MARCOS ZULUETA, MICHAEL TANNUZZO, GREGORY SKELTON, ROSS COHEN, JORDAN FISHMAN, RICK DANE, JR., CHRISTOPHER OAKES, JASON SERVIS, KRISTIAN RHEIN, MICHAEL KEGLEY, JR., ALEXANDER CHAN, HENRY ARGUETA, NICHOLAS SURICK, REBECCA LINKE, CHRISTOPHER MARINO,

Defendants. *

Before: LYNCH, ROBINSON, and MERRIAM, Circuit Judges.

* The Clerk of Court is respectfully directed to amend the caption as reflected above. This case arises from doping in the professional horse racing industry. As part of two different conspiracies, Dr. Seth Fishman, a licensed veterinarian, developed and manufactured performance enhancing drugs (PEDs) that could not be detected in a drug test, and he sold them to horse trainers. Those trainers then administered the PEDs to their horses to gain a competitive advantage.

Defendants Fishman and Lisa Giannelli, his salesperson, were charged and convicted in two separate trials for their participation in this conspiracy to manufacture and distribute misbranded or adulterated drugs with an intent to defraud or mislead in violation of 21 U.S.C. §§ 331 and 333(a)(2). Fishman appeals from an amended judgment entered on July 14, 2023, and an order of forfeiture entered on July 10, 2023, and Giannelli appeals from a judgment entered on September 9, 2022; all were entered by the United States District Court for the Southern District of New York (Vyskocil, J.).

On appeal, both Fishman and Giannelli challenge the government’s theory that “the intent to defraud or mislead” element of 21 U.S.C. § 333(a)(2) can be satisfied if their intent was to defraud state horse racing regulators and officials. We conclude that § 333(a)(2) does not limit the target of the requisite intent to defraud to any particular categories of victims. Instead, the essential requirement of the statute is that the intent to defraud relate to the underlying 21 U.S.C. § 331 violation.

Giannelli challenges the district court’s admission of evidence regarding a 2011 investigation into Fishman’s and her activities that was conducted by the Delaware Division of Professional Regulation, contending that it was inadmissible evidence of other bad acts under Federal Rule of Evidence 404 and unfairly prejudicial under Federal Rule of Evidence 403. Because the evidence involved conduct within the scope of the conspiracy, the district court did not err in admitting this evidence.

Fishman argues that the district court incorrectly applied United States Sentencing Guideline § 2B1.1(b)(1) by using his gains as a proxy for loss in calculating his Guidelines sentence range. He contends that no

2 victims suffered actual loss resulting from his conduct. But one of Fishman’s coconspirators won races with doped horses that the district court reasonably found he would have lost without those drugs, so that coconspirator’s competitors suffered actual loss which could not be reasonably determined. Thus, the district court did not err in relying on Fishman’s gain to determine his Guidelines sentence range.

Fishman challenges the district court’s order requiring him to pay $25 million in restitution to the racetracks. The district court calculated the restitution amount based on a coconspirator’s stipulation that he won that amount in races with doped horses. But the racetracks would have had to pay out winnings regardless, and there is no evidence that they suffered any pecuniary loss. We conclude that the district court exceeded its discretion when it ordered restitution to the racetracks.

Finally, Fishman challenges the district court’s orders requiring forfeiture of monies representing the street value of the adulterated drugs involved in the conspiracy. The district court reasoned that (1) 21 U.S.C. § 344, which provides for the seizure of adulterated or misbranded drugs, is a civil forfeiture statute; (2) 28 U.S.C. § 2461(c) authorizes the court to pursue forfeiture under civil forfeiture statutes through criminal forfeiture proceedings subject to the procedures of 21 U.S.C. § 853; and (3) under 21 U.S.C. § 853(p) the court can require forfeiture of substitute property if the property to be forfeited cannot be found.

We conclude that 21 U.S.C. § 334 is not a civil forfeiture statute subject to 28 U.S.C. § 2461(c) and the substitute property provision 21 U.S.C. § 853. Civil forfeiture statutes “are designed primarily to confiscate property used in violation of the law, and to require disgorgement of the fruits of illegal conduct.” United States v. Ursery, 518 U.S. 267, 284 (1996). But § 334 provides for procedures allowing “the court [to] direct that such [drug] be delivered to the owner thereof to be destroyed or brought into compliance with the provisions of this chapter.” 21 U.S.C. § 334(d)(1) (emphasis added). This provision does not result in the confiscation of property or “disgorgement of the fruits of illegal conduct,” Ursery, 518 U.S. at 284; nor does it “impos[e] an economic penalty” for illegal behavior, Bennis v. Michigan, 516 U.S. 442, 452 (1996). Therefore, we conclude that Congress did not intend § 334 to

3 operate as a civil forfeiture statute subject to enforcement in a criminal proceeding and the substitute property forfeiture provision.

We thus affirm both Fishman’s and Giannelli’s convictions, affirm Fishman’s sentence, vacate Fishman’s restitution order and remand for further proceedings, and vacate Fishman’s forfeiture order.

SARAH MORTAZAVI (David R. Felton, Michael D. Maimin, on the brief), Assistant United States Attorneys, for Damian Williams, United States Attorney for the Southern District of New York, New York, NY, for Appellee.

RICHARD D. WILLSTATTER (Theodore S. Green, on the brief), Green & Willstatter, White Plains, NY, for Defendant-Appellant Seth Fishman.

Louis V. Fasulo, Fasulo Giordano & Di Maggio, LLP, New York, NY, for Defendant-Appellant Lisa Giannelli.

Lindsay A. Lewis, Dratel & Lewis, New York, NY; Michael M. Rosensaft, Nicholas J. Liotta, Katten Muchin Rosenman LLP, New York, NY for Amicus Curiae National Association for Criminal Defense Lawyers, in Support of Defendant-Appellant Seth Fishman.

ROBINSON, Circuit Judge:

This case arises from extensive and years-long doping conspiracies in the

professional horse racing industry. As part of two different conspiracies, Dr. Seth

Fishman, a licensed veterinarian, developed and manufactured unapproved

4 performance enhancing drugs (“PEDs”) that could not be detected in a drug test,

and he sold them to horse trainers. These trainers then administered the PEDs to

their horses to gain an advantage in competitions.

Defendants Fishman and Lisa Giannelli, his salesperson, were charged and

convicted in two separate trials for conspiracy to manufacture and distribute

misbranded or adulterated drugs with an intent to defraud or mislead in violation

of the Food, Drug, and Cosmetics Act (FDCA). See 21 U.S.C. §§ 331, 333(a)(2).

Fishman appeals from an amended judgment entered on July 14, 2023, and an

order of forfeiture entered on July 10, 2023, and Giannelli appeals from a judgment

entered on September 9, 2022; all were entered by the United States District Court,

Southern District of New York (Vyskocil, J.). The parties raise several issues on

appeal.

First, both Fishman and Giannelli challenge the government’s theory that

“the intent to defraud or mislead” element of 21 U.S.C. § 333(a)(2) can be satisfied

if their intent was to defraud state horse racing regulators. We conclude that

§ 333(a)(2) does not limit the target of the requisite intent to mislead to any

particular categories of victims. Instead, the essential requirement of the statute is

that the intent to mislead relate to the underlying 21 U.S.C. § 331 violation.

5 Second, Giannelli challenges the district court’s admission of evidence

regarding a 2011 investigation into Fishman’s and her activities that was

conducted by the Delaware Division of Professional Regulation, contending that

it was inadmissible evidence of other bad acts under Federal Rule of Evidence 404

and unfairly prejudicial under Federal Rule of Evidence 403. Because the evidence

involved conduct within the scope of the conspiracy, we conclude that the district

court did not err in admitting it.

Third, Fishman argues that the district court incorrectly applied United

States Sentencing Guideline § 2B1.1(b)(1) by using his gains as a proxy for loss in

calculating his Guidelines sentence range. He contends that no victims suffered

actual loss resulting from his conduct. But one of Fishman’s coconspirators

admitted that his horses won races due to Fishman’s PEDs, and the district court

reasonably found that the coconspirator’s competitors thus suffered actual loss in

amounts that could not be reasonably determined. Thus, the district court did not

err in relying on Fishman’s gain in determining his Guidelines sentence range.

Fourth, Fishman challenges the district court’s order requiring him to pay

$25 million in restitution to the racetracks. The district court calculated the

restitution amount based on a coconspirator’s stipulation that he won that amount

in races with doped horses. But the racetracks would have had to pay out

6 winnings to someone regardless of the doping, so they did not necessarily suffer

any actual pecuniary loss. We conclude that the district court exceeded its

discretion when it ordered restitution to the racetracks based on this purported

loss.

Finally, Fishman argues that the district court erred when it ordered him to

forfeit money in an amount equal to the street value of the drugs involved in the

conspiracy. He contends that the FDCA does not authorize an order requiring

forfeiture of money in lieu of the adulterated and misbranded drugs. In her own

appeal brief, Giannelli adopts Fishman’s argument by reference. However,

Giannelli did not appeal the order of forfeiture ordered against her, so we address

only Fishman’s arguments. We agree with Fishman and conclude that the FDCA

is not structured as a civil forfeiture statute that is subject to the substitute assets

provision in a criminal proceeding.

For these reasons, as explained more fully below, we:

• AFFIRM Fishman’s and Giannelli’s convictions;

• AFFIRM Fishman’s sentence;

• VACATE the district court’s order of restitution as to Fishman and REMAND for further proceedings; and

• VACATE the district court’s forfeiture orders as to Fishman.

7 BACKGROUND 1

I. The Adulteration and Misbranding Conspiracies

This case focuses on two separate but related conspiracies to dope

racehorses with adulterated or misbranded performance enhancing drugs. PEDs

include blood building substances intended to boost a racehorse’s red blood cell

count, growth factors intended to promote tissue repair and increase stamina,

customized analgesics, and anti-inflammatory drugs.

As part of the “Navarro Conspiracy,” Defendant Fishman, in concert with

racehorse trainer Jorge Navarro and others, manufactured and distributed

unapproved PEDs for doping horses from 2016 to 2020 in violation of the FDCA’s

prohibitions against misbranding and adulterating drugs under 21 U.S.C. § 331.

Fishman manufactured and sold the adulterated and misbranded PEDs to

Navarro. During this time, Navarro entered horses in at least 1,480 races. And

Navarro credited Fishman’s PEDs with helping him succeed in those races. After

he won a $1.5 million prize with a doped racehorse, Fishman texted Navarro,

“Congratulations, just saw your race,” and Navarro replied, “Thank you, boss.

You’re a big part of it.” Dist. Ct. Dkt. 751 (Fishman Tr.) at 694.

1Because this is an appeal from a jury’s verdict, “we construe all evidence, draw all inferences, and make all credibility determinations in favor of the party that prevailed before the jury”— here, the government. Sheng v. M&TBank Corp., 848 F.3d 78, 81 (2d Cir. 2017).

8 Fishman and Defendant Lisa Giannelli also participated in a separate

“Fishman Conspiracy” from 2002 to 2020. As part of this conspiracy, Fishman and

Giannelli created a company called Equestology. Giannelli incorporated the

company and opened accounts for Equestology. She also served as its sales

representative, selling PEDs to horse trainers seeking to improve their racehorses’

performances, and earning commissions based on the clients’ purchases. She sold

PEDs on demand, without requiring a prescription or verifying a medical need for

the drug. Through this conspiracy, Equestology made millions of dollars and

Giannelli personally made approximately $900,000. And the racehorse trainers

credited the PEDs with their success. For example, a trainer explained that a horse

who had been given Fishman and Giannelli’s PEDs “dominated” and “won by five

lengths. I mean he was a completely different animal.” GX 105B-T at 2.

At trial, the government introduced evidence that the drugs involved in

both conspiracies were adulterated or misbranded because they: (1) were not

manufactured in facilities registered with the United States Food and Drug

Administration (FDA); (2) were labeled with deficient or misleading information;

(3) were not dispensed pursuant to valid veterinary prescriptions; and (4) lacked

the requisite FDA approval. Fishman specifically created these PEDs so that they

would not be detected on drug tests, and this was a significant draw for his

9 customers. And the PEDs were not harmless; the government introduced

evidence that some of the PEDs could cause a horse pain or could have dangerous

effects if administered incorrectly. Though Fishman was a licensed veterinarian,

he did not examine, treat, or diagnose the racehorses given these PEDs, and did

not issue prescriptions for the PEDs he distributed.

Importantly, Fishman and Giannelli engaged in secretive or deceptive acts

throughout the conspiracy. For example, they vetted new clients before selling to

them to ensure they could be trusted. They put misleading information on the

labels of the PEDs to make them appear innocuous. And they falsified customs

forms to escape detection.

II. District Court Proceedings

Based on these and other facts, a grand jury indicted Fishman and Giannelli

for conspiracies to distribute in interstate commerce misbranded and adulterated

drugs. The November 2020 superseding indictment charged Fishman with two

counts of conspiracy to violate 21 U.S.C. § 331(a), (b), (c), and (k) and § 333(a)(2),

and Giannelli with one count of conspiracy to violate 21 U.S.C. § 331(a), (b), and

(c) and § 333(a)(2).

Fishman and Giannelli filed a motion to dismiss the indictment, arguing that

their alleged conduct in defrauding state horseracing commissions did not violate

10 21 U.S.C. § 333(a)(2), the enhanced penalty provision of the FDCA. The district

court denied their motion. Fishman and Giannelli were subsequently tried

separately.

Fishman was tried first. The district court instructed the jury that an intent

to defraud or mislead “can be demonstrated by evidence of intent to defraud or

mislead consumers, state racing and drug regulators, the Food and Drug

Administration, or other federal drug enforcement authorities, including U.S.

Customs and Border Protection, the FBI and the DEA.” Fishman App’x 225.

A jury found Fishman guilty of both counts of conspiracy. In July 2022, the

district court sentenced Fishman principally to 132 months’ imprisonment and

imposed $25,860,514 in restitution and $13,503,176.20 in forfeiture. In July 2023,

the district court reduced the forfeiture amount to $10,312,627.40, and entered an

amended judgment.

During Giannelli’s trial, over her objection, the district court admitted

evidence relating to the Delaware Division of Professional Regulation’s 2011

investigation into Fishman’s and Giannelli’s practices following the death of a

racehorse. The jury convicted Giannelli and, in September 2022, the district court

sentenced her principally to 42 months’ imprisonment and imposed $900,000 in

forfeiture.

11 Both Fishman and Giannelli timely appealed.

DISCUSSION

I. Target of Intent to Defraud or Mislead

Fishman and Giannelli were charged with conspiring to violate § 331 of the

FDCA by manufacturing and distributing drugs that were misbranded or

adulterated. Absent an aggravating factor, violation of § 331 is a misdemeanor

punishable by no more than one year of imprisonment and a $1,000 fine. 21 U.S.C.

§ 333(a)(1). However, under § 333(a)(2), “if any person commits such a

violation . . . with the intent to defraud or mislead, such person shall be

imprisoned for not more than three years or fined not more than $10,000, or both.”

Id. § 333(a)(2). Defendants were charged with misbranding or adulteration with

intent to defraud or mislead and thus were subject to the heightened penalties under

§ 333(a)(2).

Fishman and Giannelli contend that they cannot be convicted of this charge

based on an intent to defraud or mislead state racing regulators. This legal argument

underlies their challenges to two district court rulings. First, the district court

denied their motion to dismiss the indictment; in that motion they argued that the

FDCA regulates conduct directed at consumers, purchasers, or the FDA—not

12 conduct under the purview of state horseracing regulators who regulate the rules

of racing.

Second, at Fishman’s trial, consistent with its pretrial ruling, the district

court instructed the jury concerning “intent to defraud” in relevant part as follows:

To act “with intent to defraud” means to act with the specific intent to deceive or to cheat, ordinarily for the purpose of either causing some financial loss to another or bringing about some financial gain to oneself. The intent must be connected—related in time, causation or logic—to the commission of the misbranding or adulteration offense that is the subject of each charged conspiracy. . . . To act with “intent to mislead,” means to act with a specific intent to create a false impression by misstating, omitting or concealing material facts. . . . Intent to defraud or mislead can be demonstrated by evidence of intent to defraud or mislead consumers, state racing and drug regulators, the Food and Drug Administration, or other federal drug enforcement authorities, including U.S. Customs and Border Protection, the FBI and the DEA.

Fishman App’x 224–25. Fishman objected to the instructions by renewing his

pretrial objection to the indictment.

In addition, the district court declined to give the instruction Fishman

requested:

The FDCA does not purport to regulate the competitive integrity of horse races. And Dr. Fishman is not charged with violating, or conspiring to violate, state or local racing rules. If you find that Dr. Fishman intended only to conceal from authorities, for purposes of competitive

13 advantage, the presence of performance enhancing drugs in racehorses, you must acquit him of the felonies charged in the indictment.

Fishman App’x 187.

On appeal, Fishman challenges the jury instruction and Giannelli challenges

the district court’s denial of the motion to dismiss and purports to join Fishman’s

objection to the jury instruction. 2 We consider this question of statutory

interpretation without deference to the district court. See Moreira v. Société

Générale, S.A., 125 F.4th 371, 387 (2d Cir. 2025).

We see nothing in the text of § 333(a)(2), or the FDCA generally, that would

exclude state racing regulators and officials as targets of the intent to defraud or

mislead. What matters under the statute is that the intent to mislead is connected

to the misbranding or adulteration. Caselaw from our own Circuit and beyond

supports this understanding. The district court properly instructed the jury that it

must find such a connection in order to convict, and there is sufficient evidence in

the record to establish such a connection between the misbranding or adulteration

and an intent to mislead or defraud state regulators. Fishman’s arguments to the

2 The relevant jury instruction was substantially the same in Giannelli’s case. The government contends that Giannelli waived any challenge on appeal to the district court’s instruction in her case because she did not object to the instruction before the trial court, and that Fishman forfeited his challenges to the district court’s instruction so that we must review only for plain error. We need not decide these questions, because we conclude in any event that the challenged jury instruction was not erroneous.

14 contrary, including his invocation of the federal Horseracing Integrity and Safety

Authority (HISA), are unpersuasive. For these reasons, the district court did not

err in declining to dismiss the grand jury’s indictment and in instructing the jury.

A. Text and Context of § 333(a)(2)

When construing a statute, “we necessarily begin with the statutory text

because we assume that ‘the ordinary meaning of that language accurately

expresses’ Congress’s intent.” United States v. Edwards, 834 F.3d 180, 192 (2d Cir.

2016) (quoting Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 251 (2010)). 3

Section 333(a)(2) states simply that any person who commits such a violation

“with the intent to defraud or mislead” is subject to the heightened penalties. 21

U.S.C. § 333(a)(2). The statute does not limit application of the enhancement in

§ 333(a)(2) only to certain classes of victims—such as consumers. And in the

absence of such language, we decline to write in an implicit requirement that a

defendant must defraud or mislead a particular victim. See E.E.O.C. v. Abercrombie

& Fitch Stores, Inc., 575 U.S. 768, 774 (2015) (explaining it “is Congress’s province”

“to add words to the law,” and interpreting statutory silence “as exactly that:

silence”).

3In quotations from caselaw and the parties’ briefing, this opinion omits all internal quotation marks, footnotes, and citations, and accepts all alterations, unless otherwise noted.

15 Congress, of course, knows how to limit the reach of a fraud statute to

particular categories of victims. See, e.g., 18 U.S.C. § 1344 (“Whoever knowingly

executes . . . a scheme or artifice . . . to defraud a financial institution . . . .”); 18

U.S.C. § 1002 (“Whoever, knowingly and with intent to defraud the United States,

or any agency thereof . . . .”). In fact, Congress did limit several provisions of the

FDCA so they would only reach conduct directed at particular individuals or

entities. See, e.g., 21 U.S.C. § 331(tt) (“Making any express or implied statement or

representation directed to consumers . . . that . . . misleads or would mislead

consumers into believing . . . .”). “When Congress uses particular language in one

section of a statute and different language in another, we presume its word choice

was intentional.” United States v. Peterson, 394 F.3d 98, 107 (2d Cir. 2005).

Fishman and Giannelli argue that the structure and purpose of the FDCA

suggests a limitation on the cognizable targets of an intent to defraud. The FDCA

is concerned with protecting consumers and purchasers, as evidenced by its

requirements concerning false labeling, misleading advertising, and inaccurate

information. Therefore, they extrapolate, there are only three cognizable victims

of an intent to defraud or mislead under § 333(a)(2) in this context. First, the horse

trainers who purchased the PEDs could be victims—but in this case they were not

misled about the PEDs. Second, the ultimate consumers of the drug, the horses,

16 who may suffer from the administration of PEDs, could be victims—but

Defendants argue that horses are not capable of being defrauded or misled.

According to Defendants, that leaves only the third category of potential victims:

the FDA or other comparable state agencies that regulate drugs, as opposed to

governmental entities that regulate racing.

We agree that the statutory scheme as a whole is relevant to our analysis,

and that we should interpret individual provisions with an understanding of the

broader statutory context. Corley v. United States, 556 U.S. 303, 314 (2009). But we

do not agree with Defendants that the statute reaches only fraudulent or

misleading conduct directed at certain targets. What matters under this statute is

not the identity of the target of a defendant’s intent to defraud or deceive. What

matters is the connection between the fraudulent intent and the offense of

adulteration and misbranding: Was the misbranding undertaken with the intent

to deceive?

Indeed, the immediate statutory context of § 333(a)(2) illuminates the

rationale for its penalty enhancement. The misdemeanor provision of § 333(a)

creates a strict liability offense. See United States v. Dotterweich, 320 U.S. 277, 280–

81 (1943). That is, § 333(a)(1) is a regulatory offense that “dispenses with the

conventional requirement for criminal conduct—awareness of some

17 wrongdoing.” Id. at 281. Statutes that create such criminal liability without a

culpable state of mind are unusual in our law, which generally requires a mens

rea—in plain English, a “guilty mind”—before labeling conduct criminal. See

Morissette v. United States, 342 U.S. 246, 250–53 (1952). But the Supreme Court long

ago recognized that Congress sometimes omits that traditional requirement for

crimes that are, like the activities proscribed by § 331, “public welfare offenses” or

regulatory violations, for which the “penalties commonly are relatively small, and

conviction does no grave damage to an offender’s reputation.” Id. at 255–56.

But more serious crimes carrying more severe penalties, akin to traditional

common-law crimes, typically require intentional or otherwise culpable conduct,

including knowledge that one’s conduct is wrongful. While the strict liability

offense of distributing a misbranded drug can be punished as a misdemeanor even

when the misbranding is unintentional, or even not avoidable by the exercise of

ordinary care, Congress has marked for more serious punishment misbranding

violations that are committed knowingly and with criminal intent, specifically, an

intention to “mislead or defraud.” That is the apparent rationale for the felony

provision of § 333(a)(2).

So construed, § 333(a) creates a harmonious and rational scheme:

unintentional distribution of misbranded products (at least as a single isolated

18 violation) is punished only as a misdemeanor, while aggravated felony penalties

are applied where the misbranding is deliberate, knowing, and intended to harm,

deceive, or cheat.

Fishman’s interpretation, in contrast, would lump the negligent or innocent

failure to properly label approved drugs into the same category as intentionally

selling unapproved drugs, using false labels, and cheating and deceiving others

with the intent to gain profits. Both types of conduct would be classified as mere

misdemeanors, and felony punishment would be reserved for only those who

misbrand with the specific intent to deceive a limited group of victims. Nothing

in the statute suggests that Congress intended such a peculiar scheme.

B. Supportive Caselaw

The caselaw bears out this understanding. In United States v. Mitcheltree, the

Tenth Circuit considered a case in which a defendant was charged with conspiracy

to introduce misbranded drugs into interstate commerce with the intent to mislead

or defraud. 940 F.2d 1329, 1345 (10th Cir. 1991). The conspiracy involved multi-

state distribution of the drug MDMA—at a time before it was scheduled as a

controlled substance. Id. The district court instructed the jury that to convict the

defendant, it must find that he acted “with the specific intent to mislead or defraud

natural persons to whom the drug was sold, or government agencies.” Id. at 1346.

19 The primary issue in Mitcheltree that’s relevant for our purposes was

whether a felony violation under § 333(a)(2) could be based on the theory that, in

misbranding drugs, the defendant acted “with intent to mislead or defraud”

government agencies. Id. The Tenth Circuit concluded that it could “if there is

evidence that a defendant consciously sought to mislead drug regulatory

authorities such as the FDA or a similar governmental agency.” Id. at 1347.

Responding to the critique that such an interpretation would effectively subject all

conscious violations of § 331 to the felony penalty in § 333(a)(2) because they

“would necessarily involve a deliberate evasion of established regulatory

systems,” the court reasoned that the specific intent requirement in § 333(a)(2)

would temper that concern. Id. at 1349. It held that “if the government proceeds

on this theory, there must be a demonstrated link between the § 331 violation and

an intent to mislead or defraud an identifiable drug regulatory agency involved in

consumer protection.” Id. The court emphasized that “[d]istributing drugs in

knowing violation of federal and state regulatory systems and rules is too

general.” Id.

The next question on appeal, then, was whether the government had

produced sufficient evidence that the defendant’s § 331 violation was linked to “an

intent to mislead or defraud an identifiable drug regulatory agency involved in

20 consumer protection.” Id. The government presented evidence of distribution

across multiple states, and it identified the targets of the intent to mislead or

defraud as including law enforcement officials in Dallas and Plano, Texas, and

Oklahoma City, Oklahoma. Id. at 1350.

The Tenth Circuit was not persuaded. It noted that nothing in the record

indicated that the local police departments were doing “anything other than

routine controlled substance investigations.” Id. at 1351 (emphasis added). It

concluded that “a defendant may knowingly misbrand with an intent to mislead

or defraud a government authority that, for example, sets drug standards, inspects

drugs, regulates the use of prescription drugs, or issues permits to drug

wholesalers.” Id. at 1352. But the government had failed to show “(1) any

conscious involvement by the defendant with a government agency involved in

consumer protection which performs any of the above or similar functions, and (2)

any link between conscious misbranding activity and a specific intent to mislead

or defraud such an agency.” 4 Id.

4 We note that the “link between conscious misbranding activity and a specific intent to mislead . . . [a government] agency” is very often self-evident in the misbranding activity. In Mitcheltree, the drug at issue was alleged to be “misbranded” because it omitted necessary labeling information. See 940 F.2d at 1345–46. It failed to include, for example, “labels containing . . . the name . . . of the manufacturer . . . and the name . . . of the active ingredients.” Id. at 1345. In such a scenario, it is conceivable that the defendant intentionally failed to include

21 Mitcheltree reinforces that the central question in the context of adulterating

or misbranding drugs with an intent to defraud a government agency is not “What

is the agency?” Rather, it’s “[Is there] proof of an intent to mislead or defraud

which is connected to the misbranding violation under § 331[?]” Id. at 1349.

In United States v. Milstein, 401 F.3d 53, 69 (2d Cir. 2005), this Court endorsed

the Mitcheltree opinion as “persuasive,” and upheld a § 333(a)(2) conviction for

misbranding with an intent to defraud the FDA. In Milstein, the defendant created

several business entities to buy, repackage, and sell foreign prescription drugs in

the United States, and he repackaged the drugs with forged labels and sold them

to doctors and pharmacies. Id. at 59–60. Milstein was charged with, among other

offenses, distributing wholesale prescription drugs without providing the

required history of transactions, in violation of 21 U.S.C. §§ 331(t), 333(a)(2), and

353(e)(1)(A). Id. at 58. On appeal, Milstein argued that an intent to defraud the

government and the consuming public (as opposed to direct purchasers) could not

support a § 333(a)(2) conviction. Id. at 69.

We rejected that argument and affirmed his convictions. We concluded that

“[b]y misleading governmental agencies, and thereby frustrating their efforts to

that information while still lacking the intent to mislead a specific government agency. But where a defendant affirmatively misbrands a drug (e.g., labels it as something it is not), an inference could reasonably be drawn that they are doing so to avoid detection by or deceive a particular person or agency.

22 protect the public, [the defendant] indirectly misled and defrauded the public,

thus contravening the overriding congressional purpose of consumer protection

embodied in these provisions.” Id. And we recognized that “nothing in the

language of [§ 333(a)(2)] precludes the ‘intent to defraud’ provision from applying

to the purchasing public.” Id.

This caselaw supports what the text and context of § 333(a)(2) show—that

there is no blanket rule precluding a conviction based on misbranding with an

intent to defraud or mislead state racing regulators. In doing so, it makes clear

that what matters is the connection between the misbranding offense and the intent

to defraud those regulators.

C. The Record Here

The district court’s instruction to the jury reflects this imperative, as the

court advised the jury that an intent to defraud or mislead under § 333(a)(1) “must

be connected—related in time, causation or logic—to the commission of the

misbranding or adulteration offense that is the subject of each charged

conspiracy.” Fishman App’x 225.

And there is sufficient evidence in the record to support including an intent

to defraud state racing regulators within the court’s instruction. For example, at

least some state racing regulators prohibit administration to racing horses of drugs

23 that are not FDA approved. See, e.g., Dist. Ct. Dkt. 751 (Fishman Tr.) at 642:7-8

(explaining that, in Florida, “[n]on-FDA-approved products are not allowed to be

administered to racehorses”); 9 N.Y.C.R.R. § 4012.1(a)(2) (“No person . . . is

permitted to have or possess in or upon the premises of a licensed or franchised

race track . . . any drug that has not been approved for use in the horse by the

Federal Food and Drug Administration.”); id. § 4120.6 (same, but for harness

racing); see also Mitcheltree, 940 F.2d at 1352 (“We recognize that a defendant may

knowingly misbrand with an intent to mislead or defraud a government authority

that . . . regulates the use of prescription drugs[.]”); United States v. Bradshaw, 840

F.2d 871, 875 n.9 (11th Cir. 1988) (“[W]e have little difficulty in finding that [the

intent requirement] may extend to state drug enforcement authorities as well.”).

Fishman attempts to minimize the drug-regulation role of state racing

regulators by arguing that rules addressing the administration of drugs to racing

horses is “only a small part” of the regulators’ role. Fishman Br. at 40. That may

be true. But it doesn’t matter how large the role was; the evidence could support

the inference that Fishman sought to deceive racing officials and regulators

regarding his misbranding and adulteration of unapproved drugs because they

regulate the administration of unapproved drugs to horses. And in any event,

deliberately misbranding the drugs in order to deceive state racing regulators—a

24 necessary element of the scheme to win horse races by illicit means—

unquestionably defeats the congressional purpose to “keep impure and

adulterated . . . drugs out of the channels of commerce.” Dotterweich, 320 U.S. at

280. The fraudulent intent is thus intimately linked to the misbranding violation.

D. Fishman’s Remaining Arguments

Fishman’s remaining arguments are unpersuasive. First, he argues that the

rule of lenity must be applied to overcome any ambiguity in § 333(a). The rule of

lenity applies “where there is a ‘grievous ambiguity or uncertainty in the language

and structure of a statute.’” United States v. Trapilo, 130 F.3d 547, 552 n.8 (2d Cir.

1997) (quoting Chapman v. United States, 500 U.S. 453, 463 (1991)). But we find no

ambiguity in the language or structure of § 333(a)(2), so the rule of lenity does not

apply.

Second, he suggests that Congress’s more recent passage of the Horseracing

Safety and Integrity Act of 2020, which creates a framework for regulation of

doping and medication control in horseracing, underscores that § 333(a)(2) is an

improper vehicle for prosecuting doping violations. See 15 U.S.C. § 3052

(providing for establishment of a “private, independent, self-regulatory, nonprofit

corporation” to develop and implement a “horseracing anti-doping and

medication control program and a racetrack safety program for covered horses,

25 covered persons, and covered horseraces”). 5 We disagree. This legislation, which

post-dates the events at issue in this case, calls on a private entity under the

oversight of the Federal Trade Commission to develop rules regulating what

drugs can be given to horses under what circumstances. See id. § 3055. It does not

purport to regulate the approval and labeling of drugs, or to otherwise displace

the longstanding role of the FDA in regulating drugs. The offense charged here,

while committed in the context of doping in violation of applicable racing rules

and regulations, was an adulteration and misbranding offense under the FDCA. See

21 U.S.C. § 331.

E. The District Court’s Challenged Rulings

With the above analysis in mind, we conclude that the two specific rulings

challenged on appeal were not error. We review both challenges without

deference to the district court. See United States v. Smilowitz, 974 F.3d 155, 158 (2d

Cir. 2020) (standard of review for the denial of a motion to dismiss an indictment);

United States v. Mangano, 128 F.4th 442, 464 (2d Cir. 2025) (standard of review for

a defendant’s preserved challenge to jury instructions).

5The Fifth Circuit has ruled this statute unconstitutional on the basis that it unlawfully delegates government power to a private entity. National Horsemen’s Benevolent and Protective Association v. Black, 53 F.4th 869, 873 (5th Cir. 2022). Congress amended the statute in response. See Walmsley v. Federal Trade Commission, 117 F.4th 1032, 1037 (8th Cir. 2024) vacated on other grounds by No. 24- 420, 2025 WL 1789398 (June 30, 2025); Oklahoma v. United States, 62 F.4th 221, 225 (6th Cir. 2023) vacated on other grounds by No. 23-402, 2025 WL 1787679 (June 30, 2025).

26 The district court did not err in declining to dismiss the indictment. That

indictment alleged in relevant part:

To avoid detection of their administration of misbranded and adulterated PEDs to racehorses, also known as “doping,” the scheme participants routinely defrauded and misled government agencies, including federal and state drug regulators, U.S. Customs and Border Protection, various state horse racing regulators, certain horse owners, and the betting public.

Giannelli App’x 179, ¶ 3.

As the district court noted, there are other potential grounds for affirming

this ruling. For example, the indictment was arguably sufficient insofar as it

tracked the language of the statute. And the indictment would have survived the

parties’ motion to dismiss regardless of whether § 332(a) encompasses

misbranding with an intent to defraud or mislead state horse racing regulators,

because the indictment identified the FDA itself as a target of Defendants’ intent

to defraud.

But based on the analysis above, we squarely reject Giannelli’s central

challenge to the district court’s failure to dismiss the indictment. Section 333(a)(2)

does not categorically exclude state horse racing regulators as targets of the

required intent to defraud or mislead.

27 Likewise, assuming Fishman adequately preserved his challenge to the

district court’s jury instruction, we see no error. Fishman contends that the district

court’s instructions allowed the jury to convict based on a finding that Fishman

engaged in the adulteration or misbranding with an intent to defraud state horse

racing regulators. It did; but § 333(a)(2) permits that.

“A jury instruction is erroneous if it misleads the jury as to the correct legal

standard or does not adequately inform the jury on the law.” Mangano, 128 F.4th

at 464. For the above reasons, the district court’s instruction did not mislead the

jury as to the correct legal standard. It authorized the jury to rely on an intent to

defraud state racing regulators, and it instructed that “[t]he intent [to defraud]

must be connected—related in time, causation or logic—to the commission of the

misbranding or adulteration offense that is the subject of each charged

conspiracy.” Fishman App’x 224. As we explained above, that instruction is

consistent with the governing law.

II. Evidence of the 2011 Investigation

Giannelli argues evidence of a 2011 investigation conducted by the

Delaware Division of Professional Regulation was inadmissible under Federal

Rules of Evidence 404(b) and 403, and the district court erred by admitting it. We

disagree.

28 A. The Delaware Investigation Evidence

In 2011, the Delaware Division of Professional Regulation received a

complaint alleging that Fishman and Gianelli were providing prescription

medications to horses without Valid Client Patient Relationships in place, as

required under Delaware law. The investigation revealed, among other things,

evidence that Fishman had improperly prescribed an unapproved drug for a

racehorse, “Louisville,” who died not long after the drug was administered. The

investigation report reflected that Louisville completed a harness race on

December 30, 2010, that the unapproved drug was administered after the horse

had been announced for another race to take place on January 6, 2011, and that the

horse was found deceased on January 5, 2011. The Delaware State Attorney

General’s Office eventually dismissed the matter based on insufficient evidence.

As relevant here, the evidence relating to this 2011 investigation consisted

of (1) a complaint; (2) recorded interviews of Fishman and Giannelli in connection

with the investigation; and (3) written responses to the complaint made through

Fishman and Giannelli’s shared attorneys and adopted by each of them. Both

Giannelli and the government filed pretrial motions seeking rulings regarding the

admissibility of this evidence. The government argued that the evidence should

be admitted for non-hearsay purposes to show that Giannelli was on notice that

29 she could have been violating the law by selling unapproved drugs without a

license, and that she should have been aware that Fishman was illegally selling

drugs for animals.

Giannelli opposed admission of the evidence, arguing that under Rule 403

“the relevance of this evidence [would] be substantially outweighed by the danger

of unfair prejudice resulting from the death of the equine,” and that admitting this

evidence would “prompt a mini-trial on the cause of death of this racehorse.”

Giannelli App’x 578–79.

The district court generally admitted the records of the 2011 investigation,

reasoning that the existence of the investigation and some of the allegations in the

complaint were probative as to Giannelli’s notice as to the illegality of her conduct,

and as to her “state of mind and perhaps the issue of intent to defraud or mislead.”

Giannelli App’x 734. But the district court agreed with Giannelli “that the death

of [the] racehorse would be more prejudicial than probative,” and it “prohibited

[the government] from talking about the fact that [the] horse died while under the

care of Dr. Fishman.” Id.

At trial, the parties stipulated to admission of certain documents relating to

the 2011 investigation. While on the stand, Giannelli minimized her role in the

conspiracy, saying she was no more than a “delivery person . . . [l]ike a UPS

30 driver.” Dist. Ct. Dkt. 840 (Giannelli Tr.) at 1085. But she also admitted that she

had incorporated Equestology, opened accounts for Equestology, worked on

commission based on clients’ payments, and was a “salesperson” for Equestology.

Id. at 1085–88.

In summation, the government used the 2011 investigation as evidence of

Giannelli’s intent to defraud because she “outright lied” about her role to

investigators. Giannelli App’x 1965. It emphasized the conflict between her

statements to the Delaware investigators that she was not selling drugs and was

simply a delivery person and the evidence that she had incorporated Equestology,

had co-signed its bank account, and was earning commissions for her sales.

Giannelli App’x 1965–67.

B. Admissibility

Because Giannelli objected to admission of evidence regarding the 2011

investigation based only on Rule 403 and the prejudice that would arise from

disclosure of the horse’s death, and raises her objection under Rule 404(b) for the

first time on appeal, we review her challenge to the district court’s ruling on that

basis for plain error. United States v. Medico, 557 F.2d 309, 317 (2d Cir. 1977). “Plain

error is (1) error (2) that is plain, (3) that affects substantial rights, and (4) that

seriously affects the fairness, integrity, or public reputation of judicial

31 proceedings.” United States v. Riggi, 541 F.3d 94, 102 (2d Cir. 2008). Her argument

fails because the district court didn’t err, let alone plainly err, in admitting this

evidence.

Rule 404(b) “generally prohibits the introduction of evidence of extrinsic

acts that might adversely reflect on the actor’s character, unless that evidence bears

upon a relevant issue in the case such as motive, opportunity, or knowledge.”

Huddleston v. United States, 485 U.S. 681, 685 (1988). But evidence of misconduct

“may be admissible as direct evidence of the crime charged” and not subject to

Rule 404(b) “if it arose out of the same transaction or series of transactions as the

charged offense, if it is inextricably intertwined with the evidence regarding the

charged offense, or if it is necessary to complete the story of the crime on trial.”

United States v. Hsu, 669 F.3d 112, 118 (2d Cir. 2012).

The district court did not plainly err in admitting this evidence. The

indictment alleged a conspiracy beginning in 2002 and lasting through March

2020. The challenged Delaware investigation involved administration of

unapproved PEDs to a horse around December 30, 2010, placing it squarely within

the time period of the alleged conspiracy. The 2011 investigation is not extrinsic

evidence of other bad acts; instead, it is intrinsic evidence that falls entirely outside

Rule 404(b). “An act . . . done in furtherance of the alleged conspiracy . . . is not an

32 ‘other’ act within the meaning of Rule 404(b); rather, it is part of the very act

charged.” United States v. Concepcion, 983 F.2d 369, 392 (2d Cir. 1992).

Nor did the district court abuse its discretion when it determined that

evidence relating to the investigation, other than the fact of the racehorse’s death,

did not run afoul of Rule 403. The district court reasonably concluded that the

evidence was probative of Giannelli’s knowledge, intent, and notice, and it

excluded evidence regarding the death of the horse that Giannelli had identified

as unfairly prejudicial.

III. Fishman’s Guidelines Calculation

Fishman challenges the district court’s Guidelines calculation. “A district

court commits procedural error where it . . . makes a mistake in its Guidelines

calculation . . . or rests its sentence on a clearly erroneous finding of fact.” United

States v. Cavera, 550 F.3d 180, 190 (2d Cir. 2008). Any “disputed factual allegations

must be proven by the government by a preponderance of the evidence—meaning

that they are more likely than not true.” United States v. Rizzo, 349 F.3d 94, 98 (2d

Cir. 2003).

We review a challenge to the district court’s legal interpretation of the

Guidelines without deference, and we review its factual determinations for clear

error. United States v. Rainford, 110 F.4th 455, 475 (2d Cir. 2024). “A finding of fact

33 is clearly erroneous only if the appellate court is left with the definite and firm

conviction that a mistake has been committed.” Rizzo, 349 F.3d at 98. When we

are reviewing a district court’s loss calculation, we “determine whether the trial

court’s method of calculating the amount of loss was legally acceptable.” United

States v. Lacey, 699 F.3d 710, 717 (2d Cir. 2012).

In calculating Fishman’s Guidelines range, the district court added twenty

levels to the base offense level pursuant to § 2B1.1(b)(1) of the United States

Sentencing Guidelines. That Guideline calls for an increase in the offense level

based on the amount of loss resulting from the offense conduct. “Loss is the

greater of actual loss or intended loss.” U.S.S.G. § 2B1.1(b)(1) table note (A).

“Actual loss” means “the reasonably foreseeable pecuniary harm that resulted

from the offense.” Id. table note (C)(i). The Guideline further provides, “The court

shall use the gain that resulted from the offense as an alternative measure of loss

only if there is a loss but it reasonably cannot be determined.” Id. table note (B);

see also United States v. Romano, 794 F.3d 317, 339 (2d Cir. 2015) (“[W]e interpret the

authorization for a sentencing court to use gain for the determination of loss under

subsection (b)(1), Guidelines § 2B1.1 Application Note 3, to be premised solely on

actual loss: Gain can only be resorted to only if there is a loss.”).

34 The district court found the government had proven, by a preponderance of

the evidence, that there was actual loss to victims: specifically, the FDA, Navarro’s

racing competitors, the betting public, and racetracks. The district court found

there was loss to the FDA because it didn’t collect the fees it would have been

entitled to if Dr. Fishman’s facilities had been properly licensed by the FDA and if

the drugs he was selling had been FDA approved. Citing evidence that various

individuals attributed their horses’ competitive successes to Dr. Fishman’s PEDs,

the district court also “ha[d] no trouble finding by a preponderance of the evidence

that Dr. Fishman caused actual loss to racing competitors of his coconspirators,

including specifically Jorge Navarro.” Fishman App’x 291. Finally, the district

court found that other participants in the racing industry, including the betting

public and racetracks, suffered actual loss.

Because the district court concluded that the actual loss could not be

reasonably determined, it used Fishman’s “gain in excess of $13 million” as the

basis for the twenty-level increase under U.S.S.G. § 2B1.1(b)(1)(K). Fishman App’x

294. This $13 million figure represented the gross revenue from Fishman’s illegal

drug sales.

On appeal, Fishman argues that the district court erred when it used

Fishman’s gains as an alternative to his victims’ losses in applying § 2B1.1(b)(1)

35 because there were no actual losses. Alternatively, he contends that, even if the

district court did not err in using his gain as a substitute for the loss, the amount of

gain used by the district court was not a reasonable proxy for the purported loss.

We disagree on both points.

A. Actual Loss

Fishman argues there was no actual loss to Navarro’s competitors because

the government did not prove by a preponderance of the evidence that the offense

conduct caused any of Navarro’s competitors to fail to win a race. 6 He contends,

“The ‘runners up’s’ failure to win cannot be reasonably ascribed to Navarro’s use

of PEDs provided by Fishman or a co-conspirator and the government did not

even attempt to show the runners up were not also using PEDs.” Fishman Br. at

56. Nor, Fishman argues, is it clear whether all of Navarro’s winning horses were

doped at all.

We disagree. The district court’s finding that Navarro’s competitors

suffered actual loss by losing prize money they would have otherwise won was

not clearly erroneous. It pointed to record evidence that Navarro specifically

credited Fishman with securing his horse’s victory at the Dubai Golden Shaheen

6 Fishman also argues there was no loss to the FDA or to the racetracks. Because we conclude Navarro’s competitors did suffer actual loss, we do not address whether the district court erred in concluding there was actual loss to the racetracks or to the FDA.

36 Race, a victory which came with a substantial prize. See also Dist. Ct. Dkt. 751

(Fishman Tr.) at 694 (describing text Navarro sent to Fishman after winning the

prize in which he said, “You’re a big part of it.”).

That Navarro’s competitors would not win this and other prizes is a

foreseeable consequence of Fishman’s conspiracy to distribute adulterated or

misbranded PEDs that cannot be readily detected by racing regulators. See

U.S.S.G. § 2B1.1(b)(1) table note (C)(i) (explaining that “[a]ctual loss” means “the

reasonably foreseeable pecuniary harm that resulted from the offense”).

Though Fishman suggests that all the competing horses could also have been

doped, there is no evidence in the record to support that claim. And Fishman’s

argument that the PEDs may not have helped Navarro’s horses win does little to

undermine the ample evidence in the record, in the form of statements by

individuals whose horses performed well after consuming the PEDs, to support a

finding that the PEDs made a difference. In addition to Navarro’s statement

crediting the PEDs for his success, for example, one trainer reported that a doped

horse “dominated” and “won by five lengths” and said, “I mean he was a

completely different animal.” GX 105B-T at 2.

To the extent that Fishman challenges whether the government could

affirmatively identify which of Navarro’s winning horses were or were not doped,

37 any failure to do so goes to whether the actual loss to competitors could be

reasonably determined, not whether they suffered actual loss at all. It was not

clear error for the district court to find that, given the evidence adduced at trial,

many if not all of Navarro’s horses competed while doped.

B. Fishman’s Gain

During sentencing, Fishman objected to the district court’s use of his gain as

a proxy for loss, contending that there was no actual loss proximately caused by

his conduct. But Fishman did not object to the district court’s determination that

his gain was $13 million. In fact, at sentencing, his counsel specifically said, given

the court’s ruling as to actual loss, “[W]e accept [the $13 million] figure for

purposes of calculating loss.” Fishman App’x 295–96. But now, on appeal,

Fishman argues that this figure is an unreasonable estimate of the actual loss. He

contends the district court should have used his salary from his business, which

would have resulted in a gain amount of $1,059,212 and a fourteen-level increase.

And he contends that the district court was required to explain the underlying

factual findings supporting the $13 million figure, which it did not do.

38 Because Fishman did not object on this basis in the district court, we review

for plain error. 7 United States v. Villafuerte, 502 F.3d 204, 208 (2d Cir. 2007). “To

establish plain error, the defendant must establish (1) error (2) that is plain and

(3) affects substantial rights.” Id. at 209.

Here, the district court’s application of the twenty-level increase was not

plain error. For one, in order to apply the enhancement, the district court needed

to find gains of only $9.5 million. U.S.S.G. § 2B1.1(b)(1)(K). Even assuming that

his gross revenues exceeded his actual gains, the district court’s finding of

$13 million gain is considerably higher than the required gain for the twenty-level

increase. Moreover, insofar as the gain figure is a proxy for the losses suffered by

coconspirators’ competitors, the $13 million gain figure is considerably less than

the $25 million winnings of just one of Fishman’s PED customers and

coconspirators—Navarro. As a result, we cannot conclude that the district court

committed plain error when it increased Fishman’s offense level by twenty levels

on the basis of Fishman’s $13 million gross revenues from the illegal sale of PEDs.

7The government argues that through this statement Fishman waived any challenge to the $13 million figure. Because we conclude Fishman cannot show plain error, we decline to decide whether this statement amounted to a waiver.

39 IV. Fishman’s Restitution Order

Fishman challenges the district court’s order of restitution to be paid to the

racetracks because, he argues, the racetracks suffered no actual loss. We agree.

A. Factual Background

Navarro, Fishman’s coconspirator, pled guilty. In connection with that

guilty plea, Navarro agreed that “the total dollar amount of my horse’s first

winning . . . were just over $25 million—$25,860,514.” Dist. Ct. Dkt. 478 at 51.

Navarro was Fishman’s most prominent coconspirator and purchaser of PEDs.

In connection with Fishman’s sentencing, the government urged the district

court to impose a restitution order of $25,860,514, to be paid jointly and severally

with Navarro and any other defendant convicted in connection with the Navarro

Conspiracy. This is the same sum Navarro agreed to pay in restitution based on

his horse’s “first winning.” Id. With respect to the Fishman Conspiracy, the

government urged the court to order Fishman to pay an additional $11,268,177 in

restitution, which it calculated based on losses associated with horses the

government was able to determine were doped by trainers who repeatedly bought

adulterated or misbranded PEDs from Fishman.

In his own sentencing submissions, Fishman objected to any restitution

order because there was no quantifiable loss to any victim identified in the

40 Presentence Report (“PSR”). He argued that “because doping does not guarantee

victory, the government cannot begin to prove that racetracks, competitors or the

betting public suffered actual loss or pecuniary harm directly and proximately

resulting from the offense.” Dist. Ct. Dkt. 888 at 12. As to racetracks specifically,

Fishman argued they did not suffer any pecuniary harm because “they would

have paid out winnings regardless, and [the government] does not allege they paid

doped winners bigger purses due to, say, longer odds.” Dist. Ct. Dkt. 889 at 4.

And Fishman invoked 18 U.S.C. § 3663(A)(c)(3)(B), which provides that courts are

not required to order restitution where the burden on the sentencing process

arising from the complexity of determining the amount of victims’ losses

outweighs the need to provide restitution to specific victims.

At the sentencing hearing, Fishman asserted that Navarro’s stipulated loss

figure—entered as part of Navarro’s plea deal—could not establish “by a

preponderance of the evidence either that, A, all of his horses were doped or, B,

that they were doped by Fishman or his coconspirators.” Fishman App’x 304.

The district court concluded there was insufficient evidence of actual losses

to support a restitution order in the Fishman Conspiracy, but ordered restitution

in connection with the Navarro Conspiracy in an amount equal to the losses to

which Navarro had stipulated. The court reasoned that Fishman and Navarro

41 were coconspirators, and that Fishman was thus jointly and severally liable for

losses that resulted from the reasonably foreseeable actions of his coconspirators,

including Navarro. In response to Fishman’s argument that Navarro’s stipulation

in the context of a plea deal in his own case was not competent evidence of the

actual losses arising from the Navarro Conspiracy, the district court noted that “an

admission by a coconspirator is admissible against a coconspirator.” Fishman

App’x 304. Accordingly, the court ordered Fishman to pay restitution in the

amount of $25,860,514 “to the victims of [the Navarro Conspiracy],” listed in the

schedule attached to the order. Dist. Ct. Dkt. 891 at 2. The attached schedule listed

racetracks where Navarro had won prize money from the efforts of doped horses.

B. Legal Analysis

Under the Mandatory Victims Restitution Act (“MVRA”), a defendant can

be ordered to make restitution to the victims of the offense. 18 U.S.C.

§ 3663A(a)(1). A “‘victim’ means a person directly and proximately harmed as a

result of the commission of an offense for which restitution may be ordered

including, in the case of an offense that involves as an element

a . . . conspiracy . . . , any person directly harmed by the defendant’s criminal

conduct in the course of the . . . conspiracy.” Id. § 3663A(a)(2). When more than

one defendant “has contributed to the loss of a victim, the court may make each

42 defendant liable for payment of the full amount of restitution or may apportion

liability among the defendants to reflect the level of contribution to the victim’s

loss and economic circumstances of each defendant.” Id. § 3664(h). As the district

court acknowledged at sentencing, although gain may sometimes be used as a

proxy for loss in calculating offense levels under the Sentencing Guidelines, under

the MVRA, any “restitution order must be tied to the victim’s actual, provable,

loss.” United States v. Zangari, 677 F.3d 86, 91 (2d Cir. 2012); see also United States v.

Marino, 654 F.3d 310, 319-20 (2d Cir. 2011) (“[R]estitution is authorized only for

losses that were directly caused by the conduct composing the offense of

conviction, and only for the victim’s actual loss.”).

The government bears the burden of proof as to the amount of restitution,

and “[a]ny dispute as to the proper amount or type of restitution shall be resolved

by the court by the preponderance of the evidence.” 18 U.S.C. § 3664(e). An order

of restitution does not have to be “mathematically precise.” Rainford, 110 F.4th at

490. But the district court must make a “reasonable estimate . . . based on the

evidence before it.” Id. That said, “only a victim’s actual loss is compensable, not

losses that are hypothetical or speculative.” United States v. Maynard, 743 F.3d 374,

378 (2d Cir. 2014). And “to the extent that the court determines that the

complication and prolongation of the sentencing process resulting from the

43 fashioning of an order of restitution . . . outweighs the need to provide restitution

to any victims, the court may decline to make [a restitution] order.” 18 U.S.C.

3663(a)(1)(B)(ii).

We review an order of restitution for abuse of discretion. United States v.

Goodrich, 12 F.4th 219, 227 (2d Cir. 2021). “An abuse of discretion occurs when a

challenged ruling rests on an error of law, a clearly erroneous finding of fact, or

otherwise cannot be located within the range of permissible decisions.” Id.

On appeal, Fishman challenges the district court’s finding that the

racetracks suffered any loss. He argues that this finding is impossible; the

racetracks could not have suffered a pecuniary loss because they would have paid

the prize money to someone even if Navarro’s horses had not used PEDs and won

the races.

We agree. We have previously held that where a purported victim “would

have paid” the amounts claimed as losses “in any event,” a restitution award for

those payments would result in an improper windfall. Maynard, 743 F.3d at 379-

80.

There is insufficient evidence in the record to support a finding that

racetracks suffered “actual loss” such that “restitution is authorized.” Marino, 654

F.3d at 319-20. The evidence the court relied on in calculating the amount of the

44 restitution order—Navarro’s stipulation—was based on presumed losses to

competitors of coconspirator Navarro, not losses to the racetracks.

On appeal, the government relies on an argument it made at Navarro’s

sentencing that “even if the racetracks would have paid purses to the owners of

other horses, as a practical and legal matter, the racetracks are going to end up

being the clearinghouse for claims” and “providing restitution to the racetracks

will provide a mechanism by which the racetracks can rectify the wrongs that have

been caused.” Gov’t Br. at 59–60 (citing Dist. Ct. Dkt. 727 at 45–48).

To support its position that the racetracks are proper recipients of restitution

from Fishman, the government cites to an out-of-circuit case, United States v.

Woodard, 459 F.3d 1078 (11th Cir. 2006). That case involved a scheme to defraud

the City of Atlanta and individuals who had money or property that had been

seized and held by the Atlanta Police Department (“APD”). Id. at 1082. Pursuant

to APD policy, individuals who had their money or property seized could reclaim

it by presenting proper identification and completing certain paperwork. Id.

Otherwise, “Unclaimed money [was] deposited into the City’s general fund after

a certain time.” Id. Defendants, who included a police officer who had previously

overseen the relevant APD unit, used confidential information to identify and

contact individuals whose money or property had been seized and held by the

45 APD, secured a “limited” power of attorney from clients to reclaim their property,

and kept a substantial portion as a fee for their services. Id. Some property was

never distributed to its rightful owners. Id. In total, the police department issued

$710,262 in payments to the defendants’ company. Id. at 1083.

The defendants challenged the district court’s restitution order requiring

them to pay restitution of $333,504 to the City of Atlanta rather than to other

identified victims. Id. at 1087. The district court had “concluded that the City was

a victim,” and “that it would be impractical to separate” restitution amounts for

individual claimants. Id. at 1088. The Eleventh Circuit affirmed, concluding,

“Although the City had no property interest in the money it paid to [the

defendant’s company], the City was responsible for that money, and the City is

required to repay the money to its rightful owners.” Id. In other words, the City

was merely holding the money for the rightful owners.

The government’s argument fails as a factual matter as well as a legal matter.

As a factual matter, the government made this argument at Navarro’s sentencing,

not Fishman’s. See Gov’t Br. at 59–60. 8 Nothing in Fishman’s sentencing record

8The government states that “Navarro did not object to any of those representations.” Gov’t Br. at 60. But the fact Navarro didn’t object makes no difference when it is Fishman that is challenging his own restitution order. And the government cites no caselaw, nor could we find any, that suggests Fishman can be bound by Navarro’s failure to object when Fishman had no meaningful opportunity to respond.

46 suggests that the district court was relying on the racetracks to serve as a

“clearinghouse” for the actual victims.

And the racetracks are not like the City of Atlanta in Woodard, which—via

its police department—was always legally obligated to repay the rightful owners.

It is not clear whether the racetracks would have any legal obligation to distribute

the restitution money to the competitors who suffered losses as a result of the

Navarro Conspiracy. Nothing in the record of Fishman’s sentencing reflects an

expectation that the racetracks will act as a clearinghouse. And nothing in the

court’s restitution order requires the racetracks to distribute the money to losing

competitors. Under the restitution order as written, the racetracks could simply

pocket Fishman’s restitution and end up with a windfall. That’s not permitted.

Under the MVRA, “a sentencing court cannot order restitution that goes beyond

making the victim whole.” United States v. Boccagna, 450 F.3d 107, 117 (2d Cir.

2006).

For these reasons, we conclude that the district court exceeded its discretion

when it entered a restitution order because the order “rests on” the finding that

racetracks suffered actual loss, which was “a clearly erroneous finding of fact.”

47 Goodrich, 12 F.4th at 227. We vacate and remand for the district court to reconsider

the issue of restitution in light of this analysis. 9

V. Forfeiture

Finally, Fishman challenges the district court’s amended order of forfeiture

in the amount of $10,312,627.40, arguing that forfeiture is not authorized for FDCA

convictions because § 334 is not a civil forfeiture statute. 10

The PSR recommended a forfeiture order in the amount of $13,503,176.20,

which the government advised defense counsel was based on the value of the

drugs that were sold or transferred as part of the conspiracies.

At the July 11, 2022 sentencing, defense counsel stated that they were “not

prepared to accept this number today.” Fishman App’x 280. The government

requested that a preliminary forfeiture order be entered but “that the defense be

given 30 days within which to submit a letter to the Court as to whether it has a

revised proposed forfeiture figure or whether it consents to the forfeiture figure in

9 Because we are vacating and remanding on the issue of restitution, we need not address Fishman’s arguments that it was an abuse of discretion for the district court to decline to hold an evidentiary hearing as to the amount of restitution and that the district court improperly held Fishman to a post-conspiracy stipulation by his former coconspirator.

10Giannelli “adopts and incorporates by reference the arguments” raised by Fishman, “including the arguments raised as to forfeiture.” Giannelli Br. at 26. However, Giannelli never appealed the order of forfeiture ordered against her. Accordingly, we address only the forfeiture order against Fishman.

48 the government’s calculations.” Fishman App’x 333. The district court agreed,

and stated, “The defense will have 30 days from entry of the judgment to file any

application to modify that order or to advise the Court that you are consenting to

the order.” Fishman App’x 353.

The district court’s preliminary order of forfeiture imposed a money

judgment against Fishman in the amount of $13,503,176.20 on the ground that the

forfeitable property—the adulterated and misbranded drugs—could no longer be

located because they had been sold.

Following the July 2022 sentencing hearing, Fishman retained new counsel

and sought an extension to respond to the preliminary forfeiture order. Fishman

then filed an objection to any monetary forfeiture order, arguing that it was not

authorized by statute and was therefore unlawful.

The district court concluded that Fishman had waived or forfeited any

objection to forfeiture because he had not argued before or at his sentencing that

any sentence of forfeiture would be illegal. United States v. Fishman, No. 1:20-cr-

160, 2023 WL 4409020, at *9–11 (S.D.N.Y. July 7, 2023). Nevertheless, the court

addressed the merits of Fishman’s arguments. The court reasoned that 21 U.S.C.

§ 344, providing for the seizure of adulterated or misbranded drugs, is a civil

forfeiture statute; that under 28 U.S.C. § 2461(c) the court can thus order forfeiture

49 as part of Fishman’s criminal case; and that under 21 U.S.C. § 853(p) the court can

require forfeiture of substitute assets if the property to be forfeited cannot be

found. Id. at *10–12. The district court thus determined that it had the power to

order Fishman to forfeit money that represents the value of the dissipated

“forfeitable property”—that is, the adulterated or misbranded drugs. Id. at *12.

The district court rejected Fishman’s argument that § 334 is not a civil forfeiture

statute, observing that this Court has previously described the statute as involving

forfeiture. Id. (quoting United States v. Eight Unlabeled Cases, more or less, of an

Article of Cosmetics, 888 F.2d 945, 949 (2d Cir. 1989)). On appeal, Fishman

challenges this conclusion.

We review the district court’s legal conclusions regarding forfeiture without

deference to the district court’s decision. United States v. Capoccia, 503 F.3d 103,

109 (2d Cir. 2007). 11

11We reject the government’s suggestion that we should review for plain error on the basis that Fishman forfeited his ability to object to the lawfulness of a forfeiture order for money, rather than the amount of the order. Fishman did object below. True, at the July 2022 sentencing, he appeared to object to the amount of the forfeiture order—a narrower objection than he advanced later in the sentencing proceedings or now on appeal. However, we are generally less concerned about forfeited objections where the district court has addressed the merits of the argument. See Vintero Corp. v. Corporacion Venezolana de Fomento, 675 F.2d 513, 515 (2d Cir. 1982). And if Fishman is correct that forfeiture is not authorized by the statutes, this issue implicates the fairness of his sentence. Therefore, to the extent this argument could be considered forfeited, “this rule is prudential, not jurisdictional [and] we have discretion to consider” any potentially forfeited

50 The pivotal question here is whether 21 U.S.C. § 334 is a civil forfeiture

statute subject to 28 U.S.C. § 2461(c) and 21 U.S.C. § 853. Section 334 is part of the

FDCA, adopted in 1938. See Pub. L. No. 75-717, § 304, 52 Stat. 1040, 1044–45 (1938).

It allows for seizure and condemnation of misbranded and adulterated drugs and

establishes a mechanism for proceeding against such property.

Section 2461(c) of Title 28 is a general provision Congress enacted in 2000 as

part of the Civil Asset Forfeiture Reform Act (“CAFRA”). See Pub. L. No. 106-185,

§ 16, 114 Stat. 202, 221 (2000). It states:

If a person is charged in a criminal case with a violation of an Act of Congress for which the civil or criminal forfeiture of property is authorized, the Government may include notice of the forfeiture in the indictment or information pursuant to the Federal Rules of Criminal Procedure. If the defendant is convicted of the offense giving rise to the forfeiture, the court shall order the forfeiture of the property as part of the sentence in the criminal case pursuant to [] the Federal Rules of Criminal Procedure and section 3554 of title 18, United States Code. The procedures in section 413 of the Controlled Substances Act (21 U.S.C. [§] 853) apply to all stages of a criminal forfeiture proceeding, except that subsection (d) of such section applies only in cases in which the defendant is convicted of a violation of such Act.

arguments. Palin v. New York Times Company, 113 F.4th 245, 274 (2d Cir. 2024). Finally, whether § 334 is a civil forfeiture statute is a question of law. And “when a party raises new contentions that involve only questions of law, an appellate court may consider the new issues.” Vintero Corp., 675 F.2d at 515.

51 28 U.S.C. § 2461(c). In short, § 2461(c) provides that if a defendant is convicted of

a crime associated with a civil forfeiture statute, the government may seek a

criminal forfeiture order in the criminal case, applying the procedures applicable

to criminal forfeitures under 21 U.S.C. § 853—the statute governing forfeitures

under the Controlled Substances Act.

One of those procedures, § 853(p), provides in relevant part that if, due to

the defendant’s act or omission, any of the forfeitable property “cannot be located

upon the exercise of due diligence” or “has been transferred or sold to, or

deposited with, a third party,” among other things, the court “shall order the

forfeiture of any other property of the defendant, up to the value of [such

property].” 21 U.S.C. § 853(p).

So the district court’s imposition of a money judgment based on the value

of adulterated and misbranded drugs distributed by Fishman rests on the premise

that § 334 of the FDCA is a “civil forfeiture” statute such that, by virtue of § 2461(c),

the substitute assets provision in § 853(p) applies. The question is, what makes a

statute one “for which the civil or criminal forfeiture of property is authorized”

within the meaning of § 2461(c)?

We note at the outset that § 334 does not clearly call itself a “forfeiture”

statute. It is titled “Seizure,” and provides that adulterated or misbranded drugs

52 that are or have been in interstate commerce are subject to “libel for

condemnation.” 21 U.S.C. § 334(a)(1). The statute does provide a process for

“remission or mitigation of . . . forfeiture” when any “equipment or thing (other

than a drug)” is condemned. Id. § 334(d)(3) (emphasis added). This provision

expressly excludes the condemnation of drugs from its scope.

In any event, the text of § 334 (part of a 1938 statute) is of limited value in

determining what Congress understood to be a “forfeiture” statute when it

enacted § 2461(c) decades later in 2000. See In re Bernard L. Madoff Inv. Sec. LLC, 12

F.4th 171, 186 (2d Cir. 2021) (“To assess ordinary meaning, we consider the

commonly understood meaning of the statute’s words at the time Congress

enacted the statute, and with a view to their place in the overall statutory

scheme.”). Fortunately, we have substantial caselaw from that time.

“The conceptual basis of [civil] forfeiture is, quite basically, that the property

has perpetrated some wrong.” United States (Drug Enforcement Agency) v. One 1987

Jeep Wrangler, 972 F.2d 472, 476 (2d Cir. 1992). As understood around the time of

CAFRA’s passage (and as is still true today), “civil forfeiture” meant forfeitures

that “are designed primarily to confiscate property used in violation of the law,

and to require disgorgement of the fruits of illegal conduct.” United States v.

Ursery, 518 U.S. 267, 284 (1996). Civil “[f]orfeiture of property prevents illegal uses

53 both by preventing further illicit use of the property and by imposing an economic

penalty, thereby rendering illegal behavior unprofitable.” Bennis v. Michigan, 516

U.S. 442, 452 (1996). “The government may also use [civil] forfeitures to

compensate the government’s investigation and enforcement expenditures, in

addition to any damages the government may suffer directly as a result of criminal

acts, essentially as a form of liquidated damages for harm caused by an individual

wrong-doer.” United States v. Certain Real Property and Premises Known as 38

Whalers Cover Drive, Babylon, N.Y., 954 F.2d 29, 36 (2d Cir. 1992).

Section 334 allows for a range of dispositions after condemnation. Upon

condemnation, a drug can “be disposed of by destruction or sale as the court

may . . . direct.” 21 U.S.C. § 334(d)(1). Or “the court may by order direct that such

[drug] be delivered to the owner thereof to be destroyed or brought into compliance

with the provisions of this chapter.” Id. (emphasis added). Or “[i]f the article was

imported into the United States . . . the court may permit the article to be delivered

to the owner for exportation in lieu of destruction.” Id. In other words, the

objective of § 334 is to eliminate misbranded or adulterated drugs from interstate

commerce—by destruction in some cases, but also by export or by measures to

bring the drugs into compliance with the FDCA.

54 That focus distinguishes this statute from the typical civil forfeiture statute

that Congress would have had in mind in enacting § 2461(c). Condemned drugs

seized pursuant to § 334(a) can be brought into compliance and then sold by the

owner—something that would not result in the “disgorgement of the fruits of

illegal conduct,” Ursery, 518 U.S. at 284, or “impos[e] an economic penalty,” Bennis,

516 U.S. at 452. And destruction or exportation of the drugs would not

“compensate the government’s investigation and enforcement expenditures.” 38

Whalers Cover Drive, 954 F.2d at 36. In short, § 334 is not designed to deprive

wrongdoers of the instrumentalities or fruits of their misconduct; it is, first and

foremost, a public safety statute. Its goal is to remove dangerous or mislabeled

drugs from the flow of commerce, and in some circumstances it allows those same

drugs to be restored to the original owner, returned to an importer, or relabeled

properly.

The district court is right that we and other courts have sometimes used the

term “forfeiture” interchangeably with “seizure” and “condemnation” in

discussing 21 U.S.C. § 334. But the cases the district court cites all involve

condemnation of drugs pursuant to the procedures in § 334 itself, not application

of the procedural provisions generally made available by § 2461(c), including the

general substitute asset provision of § 853(p), to a condemnation under § 334. For

55 example, the primary case the district court relies upon was a civil in rem

condemnation proceeding against the adulterated cosmetics seeking their

“forfeiture and destruction.” Eight Unlabeled Cases, 888 F.2d at 946. That’s exactly

how the statute is supposed to accomplish its purpose of ensuring public safety.

Our focus there was on the merits of the government’s allegations (i.e., whether a

cosmetic that “contain[ed] a color additive approved for use in food and drugs but

unapproved for use in cosmetics” was “adulterated” under the FDCA), not the

remedy (i.e., the statutory vehicle that permitted the seizure of “adulterated”

products), and the case did not involve application of § 28 U.S.C. § 2461(c). Id. at

946–47. For that reason, Eight Unlabeled Cases offers scant support for the

government’s position.

The other cases cited in the district court’s decision similarly focus on the

substantive question of whether the seized property was “adulterated” in

violation of the FDCA. See United States v. 52 Drums Maple Syrup, 110 F.2d 914, 914

(2d Cir. 1940); United States v. Undetermined Quantities of All Articles of Finished &

In-Process Foods, 936 F.3d 1341, 1344 (11th Cir. 2019); United States v. Two Units,

More or Less, of an Article or Device, Consisting of a Power Unit & a Chair, 49 F.3d 479,

481 (9th Cir. 1995); United States v. Articles of Drug for Veterinary Use, 50 F.3d 497,

499 & n.2 (8th Cir. 1995); see also United States v. Kanasco, Ltd., 123 F.3d 209, 210–11

56 (4th Cir. 1997) (civil action by the government requesting seizure and

condemnation of 104 drums of adulterated antibiotics). None of these cases

involved a challenge to the application of criminal forfeiture proceedings, as

authorized by § 2461(c), to a § 334 “forfeiture.”

The cases the district court relies on underscore the novelty of the

government’s position. Neither the government nor the district court has

identified a single case in which a court has relied on § 2461(c) to condemn

adulterated or misbranded drugs by way of criminal forfeiture, let alone to apply

the substitute assets provision of § 853(p), to a condemnation under § 334. As

noted above, § 334 has been around since 1938, and § 2461(c) has been around

since 2000. The unprecedented nature of the government’s extension of criminal

forfeiture proceedings to this statute that provides for in rem condemnation

proceedings bespeaks caution.

Moreover, if the government is right, then a manufacturer who has

inadvertently sold drugs or other articles regulated under the FDCA with

noncompliant but relatively benign labeling would be subject to the disgorgement

of all proceeds from the sale of the drugs. We don’t think Congress contemplated

such a remedy.

57 We thus conclude that 21 U.S.C. § 334 is not a civil forfeiture statute within

the meaning of § 2461(c) and that the district court therefore erred by imposing a

criminal forfeiture order pursuant to § 2461(c). We therefore vacate the district

court’s forfeiture order as to Fishman.

CONCLUSION

For these reasons, we:

• VACATE the district court’s order of restitution as to Fishman and

REMAND for reconsideration; and

• VACATE the district court’s forfeiture order as to Fishman.

Additionally, we deny Fishman’s motion to unseal the list of purported

victims in the district court as MOOT in light of our decision to vacate the district

court’s restitution order and remand for reconsideration.