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United States v. Arif

United States District Court, D. New Hampshire

October 6, 2016

United States of America
v.
Mustafa Hassan Arif Opinion No. 2016 DNH 179

          ORDER

          Landya McCafferty United States District Judge.

         The government has charged defendant, Mustafa Arif, with wire fraud in violation of 18 U.S.C. § 1343 (Count I) and four counts of introducing misbranded drugs into interstate commerce in violation of 21 U.S.C. §§ 331(a), 333(a)(2), and 352(a) (Counts II - V) ("misbranding of drugs"). The charges arise from alleged misrepresentations Arif made on his websites offering various drugs for sale.

         Arif has filed two motions pursuant to Federal Rule of Criminal Procedure 12(b)(1), requesting that the court determine that two defenses he intends to offer at trial are viable. See doc. nos. 113 & 114. The government objects to both motions.

         Background

         The parties have agreed to 19 separate, detailed factual stipulations. See doc. no. 94. As the court summarized these facts in its September 16, 2016 order, see doc. no. 108, the court will refer to them in this order only where relevant.

         To prove that Arif committed wire fraud, the government must prove that he participated in a scheme to defraud with the intent to defraud. To prove that Arif introduced misbranded drugs into interstate commerce, the government must prove that he acted with the intent to defraud or mislead.[1]

         In his trial briefs, Arif stated that he intended to offer at trial a defense that he had a good faith belief in the efficacy of the drugs sold on his websites and, therefore, could not have had an intent to defraud for purposes of any of the charges ("good faith defense").[2] Arif proposed a hybrid approach to his defense: counsel would represent Arif on the entirety of his case with the exception of his good faith defense, and, on that defense, Arif would represent himself.

         After a hearing on Arif's request for hybrid counsel, Arif requested that the court decide the issue of the viability of his good faith defense as a matter of law prior to trial. In an order dated September 16, 2016, the court held that Arif's proposed good faith defense is not a viable defense to the "intent to defraud" element of the pending wire fraud and misbranding of drugs charges. See doc. no. 108.

         At a hearing on that same date, the parties disclosed that the ruling had generated discussions about a conditional plea agreement. Arif informed the court that he intended to plead guilty to the wire fraud charge if he could retain his right to appeal two legal issues.[3] The two legal issues, briefly summarized, are: (1) whether Arif's proposed good faith defense is a viable defense to the "intent to defraud" element of the pending wire fraud and misbranding of drugs charges (the issue addressed in the court's September 16 order); and (2) whether the government would be precluded from prosecuting the wire fraud charge in the event the government failed at trial to prove certain alleged facts with respect to the misbranding of drugs charges (i.e., that the representations about the drugs constitute labeling as opposed to advertising) (the "jurisdictional defense").

         There were two impediments to Arif's ability to enter into a plea and reserve his right to challenge the court's rulings on the two issues. First, the court had not issued an order or expressed any view, adverse to Arif or otherwise, on his jurisdictional defense. Second, although the court decided the first legal issue adversely to Arif, see doc. no. 108, that issue did not come before the court by way of "a specified pretrial motion" as required in Rule 11(a)(2). See doc. no. 108 (explaining the case's unique procedural history).

         To resolve these procedural snags, the parties proposed that they place both issues before the court in a manner that would allow the court to rule, as required by Rule 11(a) (2), on "a specified pretrial motion." The court agreed to continue the trial for a short time (until October 11, 2016), to enable the parties to file their motions and objections, and allow the court to rule on the motions prior to the start of trial.

         Arif has now filed two specified pretrial motions, pursuant to Federal Rule of Criminal Procedure 12(b)(1). The first is a "motion for pre-trial ruling regarding jurisdiction" (doc. no. 113). The second is "defendant's pro se motion for pretrial ruling - intent" (doc. no. 114). The government objects to both motions.

         Discussion

         Rule 12(b)(1) provides: "A party may raise by pretrial motion any defense, objection, or request that the court can determine without a trial on the merits." The parties agree that the court can determine the viability of Arif's jurisdictional defense and his good faith defense without a trial on the merits.

         I. Jurisdictional Defense

         Counts II through V of the superseding indictment charge Arif with misbranding of drugs with the intent to defraud or mislead in violation of 21 U.S.C. §§ 331(a) and 333(a) (2) .[4] The superseding indictment alleges that the drugs were misbranded under 21 U.S.C. § 352(a) because their labeling, in this case, Arif's statements about the drugs on his websites, was false or misleading. Thus, if the government fails to prove at trial that Arif's statements about the drugs on his websites constitute labeling (as opposed to advertising), then Arif would be entitled to a verdict of not guilty on Counts II through V.

         Arif's motion (doc. no. 113) asks the court to assume, for purposes of the motion, that the government would fail at trial to prove that Arif's statements about the drugs on his websites constitute labeling, and instead that they constitute merely advertising. Arif contends that, in such circumstances, the government would be precluded from prosecuting the wire fraud charge (Count I) on the basis of false advertising because the Federal Trade Commission ("FTC") has exclusive jurisdiction over false advertising of drugs. Arif asserts two arguments to support his theory of preclusion: 1) the Department of Justice cannot criminally charge a defendant with wire fraud based on false advertising because such a charge is preempted by the Federal Trade Commission Act ("FTCA"); and 2) even if the Department of Justice could criminally charge a defendant based on false advertising, it cannot do so unless the FTC certifies the facts necessary for such a charge, which the FTC has not done in this case. See doc. no. 113 at 7. The court addresses each of these arguments in turn.[5]

         A. Preemption

         Arif first asserts that a charge of wire fraud based on false advertising of drugs is preempted or implicitly repealed by the FTCA. See doc. no. 113 at 7 ("To allow the Government to charge wire fraud . . . where the allegations of fraud fall squarely within the regulatory jurisdiction of the FTCA, guts the intent of 15 U.S.C. §§ 52-57 and renders it meaningless."). In so arguing, Arif "march[es] into the teeth of a strong judicial policy disfavoring the implied repeal of statutes." United States v. Brien, 617 F.2d 299, 310 (1st Cir. 1980); Posadas v. Nat'l City Bank of N.Y., 296 U.S. 497, 503 (1936) ("The cardinal rule is that repeals by implication are not favored."). "For a court to find implied repeal, there must be a positive repugnancy between the two statutes." Brien, 617 F.2d at 310 (citing United States v. Borden Co., 308 U.S. 188, 198 (1939)). "When two statutes are capable of ...


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