United States v. Quinones

635 F.3d 590
Court of Appeals for the Second Circuit·Decided March 29, 2011·No. Docket 09-4361-cr (L), 10-0333-cr (con)·Published·Cited by 22 cases

Opinions

Judge STRAUB dissents in part and concurs in part in a separate opinion.

[592] KATZMANN, Circuit Judge:

Defendants-Appellants Antonio and Herman Quinones appeal from judgments of the United States District Court for the Eastern District of New York (Block, /.), entered on October 15 and November 23, 2009, following a jury trial, convicting Herman Quinones (“Herman”) of distribution of controlled substances, and convicting Antonio Quinones (“Antonio”) of conspiracy to distribute and possess with intent to distribute controlled substances, distribution of controlled substances, and money laundering conspiracy. This appeal calls upon us to decide whether (1) any error in giving a conscious avoidance jury instruction was prejudicial to the defendants and thus warranted a new trial, and (2) under United States v. Santos, 553 U.S. 507, 128 S.Ct. 2020, 170 L.Ed.2d 912 (2008), the government must prove that the laundered funds at issue in this case were the profits, rather than merely the gross revenues, of Antonio’s prescription drug sales enterprise.1 As set forth below, we hold that any error in instructing the jury on a conscious avoidance theory was not prejudicial to the defendants because there was overwhelming evidence presented at trial that the defendants knew or reasonably should have known that the doctors and pharmacists upon whom they relied were acting in bad faith. We further hold that Santos, as applied to the sale of contraband, permits a conviction for money laundering conspiracy even absent proof that the laundered funds were profits, and accordingly affirm Antonio’s conviction on this count. For the reasons stated herein and in the accompanying summary order, the judgments of the district court are AFFIRMED.

BACKGROUND

The facts of this case are largely undisputed. The evidence at trial showed that Antonio entered the Internet pharmacy business in 2002, when he purchased Prescriptions & Travel, a pharmacy that filled prescriptions for an Internet pharmacy known as RX Networks. Vincent Chhabra, an Internet pharmacy entrepreneur, owned RX Networks. Antonio later hired Steven Mahana, a website developer, to copy Chhabra’s website design and the system that Chhabra used to manage medication orders.

Antonio’s operation worked as follows: An Internet user who searched for a prescription medication would be directed by a search engine to Antonio’s website. Once at the website, the customer would select his drug and provide payment information and delivery instructions. The customer would also fill out a brief medical questionnaire, which asked the customer for his name, gender, weight, allergies, current medications, reason for requesting the medication, and known medical conditions. The questionnaire was the same regardless of whether a drug required a prescription. The customer’s order then would be transmitted to a so-called “Doctor’s Module,” whereby the questionnaire would be reviewed by a doctor who would approve or disapprove the order. Antonio selected the doctors who reviewed the questionnaires and approved orders made on his websites. The doctors, who were [593] paid per questionnaire reviewed, often reviewed over a hundred applications per day. Once a doctor approved an order, it would be transmitted to a licensed physical pharmacy controlled by Antonio that filled the prescription. Antonio’s pharmacies typically filled one thousand orders per day and shipped the ordered medications to customers by Federal Express.

Antonio’s system permitted no interaction whatsoever between a doctor and a customer. In fact, Mahana placed a disclaimer on his invoices to Antonio stating that the system did not provide a sufficient basis to establish a relationship between a doctor and a patient in order to prescribe medication. Moreover, the system provided few safeguards against substance abuse. For example, some customers were able to obtain excessive amounts of medications by placing orders to the same address using different names. Others were able to receive drugs even though they did not provide all of the information required by the questionnaire.

Mahana, who built twenty-five to thirty websites for Antonio, referred to Antonio’s network of websites as the “administrative back-end” — a “piece of software that is designed to control all aspects of the website or multiple websites.” Gov’t App. 28. Through the “back-end,” Antonio controlled, among other things, the approval of prescription medication orders even without the involvement of physicians. As administrator of the system, he had access to detailed reports about operation of his websites and the manner in which prescriptions were filled. Antonio used the “back-end” also to charge a filling fee for each prescription, a referral fee for access to doctors, and a “per accepted order” fee for each order received by an affiliate of his network. Antonio’s son, Herman, filled orders for his father’s websites and ran his father’s Internet pharmacy customer service call center. Eventually, Herman obtained his own website, 888meds.com, which was connected to the back-end.

Moreover, Antonio used corporations, owned by relatives and friends, to buy medicine from wholesalers, receive payments from affiliated websites, and manage the customer service call center for his Internet pharmacies. He used a company known as My Rainbow Marketing (“My Rainbow”), which was nominally owned by his sister-in-law, Susana Mendez, to buy medicine from wholesale pharmaceutical distributors and to bill websites for medications that Antonio supplied and the filling fees that he charged. Defense counsel conceded in summation that My Rainbow was in fact controlled by Antonio. In addition, Thundergames, a corporation owned by Antonio’s long-time friend, was the legal entity that ran the customer call center for Antonio’s websites.

In November 2003, Chhabra was arrested and charged with illegal distribution of controlled substances. Immediately following Chhabra’s arrest, Antonio stopped using Prescriptions & Travel to fill orders for his websites and took steps to liquidate its assets. He began using a new filling pharmacy, Innovative Remedies, which was located in Florida. In the following months, however, Antonio learned that a proposed change in Florida law would require face-to-face contact between a physician and patient, so he moved his filling pharmacy to Queens. Antonio continued to move his operations to new locations as law enforcement raided or shuttered his filling pharmacies. In all, Antonio used approximately a dozen different pharmacies to fill prescription orders.

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