United States v. Milstein
401 F.3d 53 (2005)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A constructive amendment of an indictment, which is a per se violation of the Fifth Amendment, occurs when trial evidence or a jury charge broadens the possible bases for conviction beyond those presented to the grand jury. Furthermore, the unauthorized repackaging of genuine goods with forged markings to deceive consumers about the product's approval status constitutes criminal trademark infringement, a charge to which the equitable defense of laches does not apply against the government.
Facts:
- Moshe Milstein and his associates purchased foreign versions of prescription drugs—Eldepryl, Pergonal, and Metrodin—that were not approved for sale in the United States.
- The foreign drugs were manufactured by the same companies as the U.S. versions but had different packaging and were not necessarily produced in compliance with FDA standards.
- Milstein's operation stripped the drugs of their original foreign packaging and repackaged them using forged labels and materials designed to mimic the appearance of the authentic, FDA-approved U.S. products.
- The counterfeit packaging included false lot numbers intended to deceive purchasers and regulators.
- Subsequent lab analysis revealed that some of the repackaged drugs were contaminated; saline solution contained bacteria and endotoxins, and some tablets had dirt particles embedded in them.
- Milstein then sold these repackaged, misbranded drugs to doctors, pharmacists, and wholesalers in the United States, representing them as the genuine, FDA-approved domestic product.
- To conceal his activities, Milstein created fictitious supplier companies, used a New Jersey wholesaler license for his New York-based business, and lied to FDA agents during their investigation.
- Upon learning of the investigation, Milstein transferred over $400,000 in profits from the scheme to a bank account in Israel.
Procedural Posture:
- A grand jury returned an indictment charging Moshe Milstein with conspiracy, criminal trademark infringement, distribution of misbranded drugs, and other offenses in the U.S. District Court for the Eastern District of New York.
- After the trial jury was sworn, Milstein moved for acquittal on Count Four, arguing it was jurisdictionally defective for failing to allege interstate commerce.
- The government obtained a second superseding indictment mid-trial to correct the defect, and the district court incorporated the prior trial evidence into the record for the new indictment.
- The jury convicted Milstein on five counts, including conspiracy, trademark infringement, and misbranding.
- The District Court sentenced Milstein to 48 months in prison, imposed a fine, and ordered approximately $3.5 million in restitution.
- Milstein appealed his conviction and sentence to the United States Court of Appeals for the Second Circuit, where he is the appellant and the United States is the appellee.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a jury instruction that allows for conviction based on a theory of misbranding (contamination rendering a product non-sterile) not alleged in the indictment, which only specified misbranding via forged packaging, constitute a constructive amendment of the indictment in violation of the Fifth Amendment?
Opinions:
Majority - Per Curiam
Yes. Allowing the jury to convict on a theory of misbranding not alleged in the indictment constitutes an impermissible constructive amendment. The indictment specifically charged Milstein with misbranding by repackaging drugs with forged materials to pass them off as the original U.S. product. However, at trial, the government introduced evidence that the drugs were also misbranded because saline ampules labeled 'sterile' were contaminated. The district court's subsequent instruction allowing the jury to convict on this contamination theory broadened the possible bases for conviction beyond what the grand jury had charged, which is a per se violation of the Fifth Amendment's Grand Jury Clause. A defendant has the right to be tried only on the charges presented in the indictment. Because it is impossible to know whether the grand jury would have indicted based on the contamination theory, the conviction on this count (Count Three) must be vacated.
Analysis:
This decision reinforces the constitutional requirement that a defendant can only be tried on the specific charges returned by a grand jury, strictly prohibiting the government from broadening its theory of liability mid-trial. It clarifies the line between a permissible variance in proof and an unconstitutional constructive amendment, which is a per se reversible error. The case also provides an important interpretation of criminal trademark law, affirming that repackaging genuine goods with counterfeit marks to deceive consumers about their nature or regulatory status falls within the scope of 18 U.S.C. § 2320. Finally, the ruling solidifies the principle that equitable defenses like laches are unavailable against the government in criminal prosecutions.
Unlock the full brief for United States v. Milstein