United States v. Cadden

2020 | Cited 0 times | First Circuit | July 9, 2020

United States Court of Appeals For the First Circuit

Nos. 17-1694, 17-1712, 17-2062


Appellee, Cross-Appellant,



Defendant, Appellant, Cross-Appellee.


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


Barron, Stahl, and Lipez, Circuit Judges.

Bruce A. Singal, with whom Michelle R. Peirce, Lauren E. Dwyer, and Barrett & Singal, P.C. were on brief, for appellant/cross-appellee. David M. Lieberman, Attorney, Criminal Division, Appellate Section, United States Department of Justice, with whom Andrew E. Lelling, United States Attorney, Amanda P. Strachan, Assistant United States Attorney, George P. Varghese, Assistant United States Attorney, Brian A. Benczkowski, Assistant Attorney General, and Matthew S. Miner, Deputy Assistant Attorney General, were on brief, for appellee/cross-appellant.

July 9, 2020

BARRON, Circuit Judge. For years, the New England

Compounding Center ("NECC") was a growing pharmacy business

engaged in the practice of "compounding," which involves combining

drugs with other substances to produce specialized medications for

use by patients. In the fall of 2012, however, patients across

the country became seriously ill -- and many eventually died --

after receiving injections of NECC-compounded medications that had

been contaminated by fungi and bacteria. A federal criminal

investigation into NECC's compounding practices soon followed,

which then led to the convictions and punishments that are at issue

in the two related appeals that are now before us.

The first of these appeals is brought by Barry Cadden,

who was the founder and part-owner, as well as the president, of

NECC at the time that the company manufactured and distributed the

contaminated medications from its facilities in Framingham,

Massachusetts. He challenges his 2017 federal convictions in the

United States District Court for the District of Massachusetts for

one count of racketeering, see 18 U.S.C. § 1962(c); one count of

racketeering conspiracy, see id. § 1962(d); fifty-two counts of

mail fraud, see id. § 1341; and three counts of violating the

Federal Food, Drug, and Cosmetic Act, see 21 U.S.C. §§ 331(a),

333(a). He also challenges the $7.5 million forfeiture order that

the District Court imposed on him. The other appeal that we

address is brought by the government. It takes aim at both the

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District Court's forfeiture order against Cadden and the 108-month

prison sentence that he received.

We affirm each of the convictions that Cadden challenges

on appeal. We vacate and remand his prison sentence due to the

errors that the government correctly points out that the District

Court made in calculating Cadden's recommended sentencing range

under the United States Sentencing Guidelines ("Guidelines"). We

also vacate and remand the forfeiture order in consequence of

separate errors that Cadden and the government, respectively,

identify in the way that the District Court determined the amount

of the forfeiture.


For years, NECC produced large volumes of compounded

medications and sold them without incident to hospitals and other

medical facilities throughout the United States. In the early

fall of 2012, however, patients across the country started to fall

sick with fungal meningitis, spinal or paraspinal infections, and

other seemingly related illnesses. Over time, additional cases of

patients suffering from these illnesses arose throughout the

United States that seemed to be tied to the earlier ones.

A federal investigation into this unusual outbreak of

seemingly related illnesses ensued. It traced the outbreak's cause

to patients having been injected with a heavily contaminated

medication that NECC had compounded. That medication was

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methylprednisolone acetate ("MPA"), which is a steroid that is

injected primarily into the backs or knees of patients to help

them to alleviate their pain.

At that point, federal investigators began looking into

NECC's compounding practices. The investigators discovered what

they determined were significant deficiencies in the clean room

where NECC had compounded the contaminated MPA as well as in other

aspects of NECC's operations. Among the deficiencies were apparent

violations of Chapter 797 of the "United States Pharmacopeia," or,

as it is otherwise known, "USP-797," which the Massachusetts

Pharmacy Board requires pharmacists to follow, see 247 Mass. Code

Regs. 901(3), and which regulates the compounding of "high-risk"

sterile medications like MPA. Such medications are so deemed due

to the nature of the harm that can befall patients who use them if

they have not been properly prepared. The investigation also

revealed that NECC had employed a pharmacy technician, Scott

Connolly, who did not have a license that the Massachusetts

Pharmacy Board required in order for him to be permitted to engage

in the compounding work that he performed for the company.

Based on the investigation, a federal grand jury

indicted Cadden on December 16, 2014, in the District of

Massachusetts for a broad range of criminal conduct. These charges

included fifty-three counts of mail fraud in violation of 18 U.S.C.

§ 1341, one count of racketeering in violation of 18 U.S.C.

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§ 1962(c), one count of racketeering conspiracy in violation of 18

U.S.C. § 1962(d), one count of conspiracy to defraud the United

States in violation of 18 U.S.C. § 371, and forty-one counts of

Federal Food, Drug, and Cosmetic Act ("FDCA") violations, see 21

U.S.C. §§ 331(a), 333(a).

Many of the charges centered on fraudulent

representations that NECC representatives had allegedly made to

customers about the safety standards that the company followed in

compounding various medications -- including the contaminated MPA

-- that were shipped to customers between March 25, 2010, and

September 27, 2012. In particular, each of the fifty-three mail

fraud counts identified a specific shipment of compounded

medications that NECC sent to one of its customers after having

made inaccurate representations to that customer about the

standards NECC would adhere to in preparing those medications.

The racketeering and racketeering conspiracy charges,

too, were based on a "pattern of racketeering activity," 18 U.S.C.

1961(5), that centered on mail fraud, see id. § 1961(1)(B) (defining mail fraud as a "racketeering activity"). The

racketeering offense itself alleged seventy-eight separate acts of

racketeering as part of that pattern, of which the lion's share

-- fifty-three acts -- were mail fraud acts that matched the

alleged mail fraud acts set forth in the corresponding counts that

charged Cadden with mail fraud as a stand-alone offense. The

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racketeering conspiracy charge, moreover, alleged that Cadden

conspired with others to commit a racketeering violation involving

a pattern of racketeering activity consisting of predicate acts of

racketeering involving mail fraud, although it did not identify

any of those acts of mail fraud specifically.

Even though many of the charges against Cadden centered

on alleged misrepresentations about NECC's compounding practices

to its customers, the one for racketeering was not based only on

such allegations. And, as we will explain, a number of the issues

that Cadden raises on appeal concern the fact that the racketeering

charge alleged not only that Cadden's pattern of racketeering

activity involved fifty-three predicate acts of mail fraud but

also that it involved twenty-five predicate acts of second-degree

murder, which is itself a racketeering activity. See id.

§ 1961(1)(A). Each of these alleged predicate acts of second-

degree murder was associated with a death of a patient that

allegedly had been caused by that individual having been injected

with the contaminated MPA that NECC had compounded. (By the time

of Cadden's trial, 753 patients had been identified as having been

afflicted in the outbreak that had been traced to NECC's

contaminated MPA, of whom sixty-four had died in consequence of

having been injected with that medication.)

The indictment charged thirteen others along with Cadden

for their roles in alleged criminal conduct connected to NECC's

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compounding operations. The District Court severed Cadden's

trial, however, from those for the others. Moreover, near the end

of Cadden's ten-week trial, the District Court dismissed one of

the stand-alone mail fraud counts that Cadden faced, as well as

the alleged predicate act of racketeering involving mail fraud

that corresponded to that stand-alone mail fraud count.

The jury ultimately found Cadden guilty of the

racketeering and racketeering conspiracy counts, all fifty-two of

the remaining stand-alone mail fraud counts, and three of the FDCA

violations, each of which related to the introduction of misbranded

drugs into interstate commerce. Cadden was found not guilty both

of conspiring to defraud the United States and of the other FDCA

counts. In a special verdict form, moreover, the jury indicated

that, with respect to the racketeering charge, it did not

unanimously find beyond a reasonable doubt any of the alleged

predicate acts of racketeering involving second-degree murder.

The special verdict form further indicated that the jury found

forty-seven of the fifty-two alleged predicate acts of

racketeering involving mail fraud, and thus it was on the basis of

those mail-fraud-based predicate acts of racketeering alone that

the jury's finding that there was a "pattern of racketeering

activity" depended.

The District Court entered judgments of conviction and

sentenced Cadden to a prison term that was at the very high end of

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the range that it had calculated under the Guidelines: 108 months'

imprisonment. Based on Cadden's racketeering and racketeering

conspiracy convictions, the District Court also imposed a

forfeiture order on him in the amount of $7,545,501. Cadden's

appeal and the government's appeal followed.


Cadden first takes aim at the sufficiency of the evidence

to support the allegations of mail fraud that underlie thirty of

his fifty-two stand-alone mail fraud convictions1 as well as his

two convictions for, respectively, racketeering2 and racketeering

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

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conspiracy.3 In challenging these convictions on this ground,

Cadden zeroes in on whether the evidence sufficed to support, with

respect to any of these convictions, a finding beyond a reasonable

doubt that the alleged fraudulent representation by an NECC

representative on which each conviction depended in fact had been

made. In the alternative, he contends that the evidence did not

suffice to show that the representation -- even if made -- was

material, as it must have been for the government to prove the

alleged mail fraud. Thus, he contends on the basis of these

arguments that each of these convictions must be reversed.

We begin our analysis with the challenges that Cadden

brings to the stand-alone mail fraud convictions. We then turn to

the essentially identical challenges that Cadden makes to his

racketeering and racketeering conspiracy convictions. We find no

merit to any of them.

[i]t shall be unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of racketeering activity or collection of unlawful debt. 18 U.S.C. § 1962(c). 3 The racketeering conspiracy statute states that "[i]t shall be unlawful for any person to conspire to violate any of the provisions of subsection (a), (b), or (c) of this section." 18 U.S.C. § 1962(d). Cadden was alleged to have conspired to violate 18 U.S.C. § 1962(c).

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For the thirty stand-alone mail fraud convictions at

issue, the government needed to prove beyond a reasonable doubt:

"(1) a scheme to defraud based on false pretenses; (2) [Cadden's]

knowing and willing participation in the scheme with the intent to

defraud; and (3) the use of interstate mail . . . communications

in furtherance of that scheme." United States v. Soto, 799 F.3d

68 , 92 (1st Cir. 2015) (alteration in original) (quoting United

States v. Hebshie, 549 F.3d 30 , 35 (1st Cir. 2008)); see also 18

U.S.C. § 1341.4 We start with the ten stand-alone mail fraud

convictions that concern, respectively, ten separate shipments of

cardioplegic solution that NECC had made between March 25, 2010,

and August 8, 2012, and that had been produced with the assistance

of the NECC pharmacy technician, Scott Connolly, who lacked a

license from the Massachusetts Board of Pharmacy that

Massachusetts law required him to have to engage in the work that

he performed for the company. We then address the twenty other

stand-alone mail fraud convictions that Cadden challenges. Each

of these convictions is for a count that rests on alleged

fraudulent representations concerning other shipments that NECC

4While the jury convicted Cadden on all fifty-two of the mail fraud counts and found that he committed forty-seven of the corresponding predicate acts, it did not find that he committed five charged predicate acts of mail fraud relating to shipments of expired drugs -- even though it found Cadden guilty of the five mail fraud counts relating to those same shipments.

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made to its customers between July 7, 2011, and September 27, 2012.

These convictions were premised on allegedly fraudulent

representations that NECC's representatives made to customers of

the company that have nothing to do with either Connolly's

involvement in the compounding process or technician licensure at

the company more generally. Instead, these convictions were

premised on alleged fraudulent representations about, among other

things, the company's compliance with USP-797.


Cadden's challenges to each of the ten Connolly-related

convictions rest on the contention that the evidence in the record

does not suffice to show that NECC had falsely represented to the

customer that received any of the shipments associated with these

convictions that only licensed pharmacy technicians were involved

in compounding them. Cadden acknowledges that Connolly, who was

not licensed, helped in compounding the medications contained in

those shipments. But, he contends that there is no basis for

finding that each of the shipments had been distributed pursuant

to a scheme to defraud. That is so, he contends, because, by the

government's own account, the fraudulent scheme alleged in these

ten mail fraud counts involved as a necessary component the company

falsely representing to its customers that only licensed

technicians had been used in compounding its medications.

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Our review of this preserved challenge is de novo. See

United States v. Diaz, 300 F.3d 66 , 77 (1st Cir. 2002). In

undertaking this review, though, we must assess the record evidence

"in the light most favorable to the prosecution" and affirm so

long as the "body of proof, as a whole, has sufficient bite to

ground a reasoned conclusion that the government proved each of

the elements of the charged crime beyond a reasonable doubt."

United States v. Lara, 181 F.3d 183 , 200 (1st Cir. 1999).

Cadden's sufficiency challenge plainly fails as to the

three Connolly-related convictions that were based on the

shipments of cardioplegic solution that NECC sent to Sunrise

Medical Center. The record includes the testimony of Wilson Chu,

the pharmacy director at Sunrise Medical Center. Chu testified

that NECC's use of an unlicensed pharmacy technician would have

been a "red flag" if he had known about it and his employer would

not have done business with NECC in consequence. The record also

includes Chu's testimony that communications from NECC led him to

"[d]efinitely" think that such technicians would be licensed while

working there. No more was needed to permit a juror reasonably to

find the allegedly fraudulent representations about technician

licensure on which these three convictions depend had been made.

Representatives of the customers who received the

shipments at issue in the seven remaining Connolly-related

convictions did not testify -- in the way that Chu had testified

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with respect to the shipments to Sunrise Medical Center -- about

what NECC had represented to them about technician licensure. But,

we conclude, the circumstantial evidence in the record was strong

enough to make up for that evidentiary gap. We thus reject

Cadden's sufficiency challenges to these convictions, too.

Kenneth Boneau, a salesperson for NECC, testified that

the company was keenly aware in making its pitches to prospective

customers that they might be reluctant to purchase from a

compounding pharmacy like NECC, due in part to concerns about price

and in part to concerns about the need for every medication ordered

from NECC to be matched to a patient who would be receiving a

requested medication that the company would compound. Thus, Boneau

testified, an important part of NECC's pitch to its prospective

customers was that, as an outside pharmacy, it had a "commitment

to quality" that better ensured that the products that it produced

would not be contaminated than the hospitals or medical facilities

could ensure if they were to make such products on their own. In

fact, to that end, Boneau testified, NECC presented itself to

prospective customers as "the Rolls-Royce of compounding."

In addition, the government put forth evidence that

directly addressed the representations that the company made -- in

making this pitch about quality control -- to prospective customers

about pharmacy technician licensure. Here, the government's case

consisted not only of the testimony from Chu described above but

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also of Boneau's testimony about a particular exhibit that the

government introduced at trial and in which he described the

exhibit as "our marketing material . . . for hospitals."

The cover page of that exhibit was labeled with the NECC

logo and the word "Hospital," and the material inside indicated

that it included a "Company Overview" of NECC. Boneau also

explained in his testimony that he personally "would bring" this

material with him on visits to potential customers and that, over

the course of his time working for NECC, he "[l]eft it behind . . .

probably hundreds of times." He further testified that while

"oftentimes" he left it at "an ophthalmology department or a pain

department within a hospital . . . most of the time" he left it at

a hospital's "inpatient pharmacy."

Significantly, this marketing material, as part of the

"Company Overview," made representations about the qualifications

of NECC's "Personnel." Those representations included the

statement that NECC's personnel included "Highly Specialized and

Extensively Trained Compounding Pharmacists and Certified

Technicians." (emphasis added).

The reference to the use of "Certified Technicians"

permitted the inference that those technicians, because they were

certified, would have had a license that a state pharmacy board

required them to have. Nor does Cadden dispute that the customers

who received the shipments on which these seven convictions

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depended were "hospitals" within the meaning of Boneau's


Thus, we conclude that a juror reasonably could find

that there was a sufficient circumstantial basis to draw the

inference that the allegedly fraudulent representations concerning

technician licensure had been made in each instance for these seven

convictions, notwithstanding the absence of direct evidence to

that effect. See United States v. Ridolfi, 768 F.3d 57 , 61 (1st

Cir. 2014) (noting that a jury may make "reasonable, common sense

inferences drawn from the evidence"). Accordingly, Cadden's

sufficiency challenge to these seven Connolly-related convictions

for the stand-alone offense of mail fraud fails, just as it fails

as to the other three Connolly-related stand-alone mail fraud


Cadden does separately contend that the evidence did not

suffice to show that any of the customers who received shipments

on which the ten Connolly-related convictions depend -- Sunrise

Medical Center included -- received the supposedly fraudulent

representation about technician licensure after NECC had hired

Connolly. But, Cadden identifies no evidence to indicate that,

once Connolly came on board, NECC, through any of its

representatives (including Cadden himself), corrected any prior

representation that licensed pharmacy technicians would be used

even though Connolly was not licensed. A juror reasonably could

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find, therefore, that NECC's decision to produce and ship

medications compounded by someone who was not a licensed pharmacy

technician after the company had represented otherwise to its

customers itself constituted a use of the mails in furtherance of

a fraudulent scheme.

Finally, Cadden shifts his angle of attack and focuses

on what he contends is the lack of record evidence sufficient to

show that any of the misrepresentations concerning technician

licensure induced any customer to make a purchase from NECC. But,

there is no force to this contention, which takes aim at the

evidentiary support for the materiality element of mail fraud.

See United States v. Prieto, 812 F.3d 6 , 13 (1st Cir. 2016) (noting

the existence of a materiality requirement).

To secure a mail fraud conviction, the government "need

not prove that the decisionmaker actually relied on the falsehood,"

so long as the falsehood that was made is a "material" one. Id.

(first quoting United States v. Appolon, 715 F.3d 362 , 368 (1st

Cir. 2013)). To prove materiality, the government need only show

that the false statement "had 'a natural tendency to influence, or

[was] capable of influencing'" its target's decision. Id. (quoting

Appolon, 715 F.3d at 368); see also United States v. Berroa, 856

F.3d 141 , 149-50 (1st Cir. 2017) (explaining that, under the mail

fraud statute, the defendant's fraud must be "the mechanism

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naturally inducing" the victim to act (quoting Loughrin v. United

States, 573 U.S. 351 , 363 (2014))).

Reviewing the sufficiency of the evidence of materiality

de novo, see United States v. Sebaggala, 256 F.3d 59 , 63 (1st Cir.

2001), we find that the evidence sufficed here. Chu's testimony

about the importance of pharmacy technician licensure to his

hospital's purchasing decisions clearly permitted a reasonable

juror to find the materiality element satisfied as to the three

Connolly-related convictions that involved shipments of NECC

medications to Sunrise Medical Center. But, that same testimony

-- in combination with the emphasis placed on "Certified

Technicians" in the marketing materials that Boneau testified that

NECC routinely used to pitch its products to hospitals -- also

supported the reasonable inference that a representation about

pharmacy technician licensure would have mattered to such NECC

customers generally. Accordingly, we reject Cadden's materiality

challenge to these ten convictions.


Having rejected Cadden's challenges to the ten Connelly-

related convictions, we now come to his challenges to the twenty

other stand-alone mail fraud convictions that he asks us to reverse

for insufficient evidence. Here, too, his contention is that the

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evidence did not suffice to show that the fraudulent

representations on which they depended had been made.5

The government contends that our review is only for

plain error, but Cadden's reply below to the government's

opposition to the motion for judgment of acquittal raised these

same challenges. Thus, our review is de novo, although we still

must review the evidence in a verdict-friendly light. See Diaz,

300 F.3d at 77 ; Lara, 181 F.3d at 200 .

The government identifies a range of allegedly

fraudulent representations for each of these twenty convictions

that it contends were adequately supported by the record evidence.

But, we need not focus on what the evidence showed as to whether

each of those allegedly fraudulent representations had been made.

It is enough, as we will explain, that the evidence sufficed to

support a juror finding that the allegedly fraudulent

representations concerning NECC's compliance with USP-797 had been

made. And that is because, as Cadden does not dispute, the mail

fraud count for each of these twenty convictions alleged that such

a representation had been made to the customer who received the

5 Cadden does not contest that the record evidence supportably showed that each customer involved in the remaining twenty-two mail fraud counts received a fraudulent representation. He limits his challenge to the twenty counts he identifies because no representatives from customers of shipments identified in these counts testified at trial about the representations they received from NECC.

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shipments referenced in each of those counts. See United States

v. Gaw, 817 F.3d 1 , 5 (1st Cir. 2016) (holding that where

"alternative, independently sufficient grounds" exist for

upholding a conviction, "adequate proof of one obviates any need

for proof of the other" and the conviction can be affirmed on one

ground alone (quoting United States v. Cruz–Arroyo, 461 F.3d 69 ,

73 (1st Cir. 2006))).

Specifically, the record shows that numerous NECC

salespersons testified that NECC touted the company's adherence to

the USP-797 standards in their communications with customers, and

that one salesperson, Boneau, even testified that USP-797

compliance was "a big selling point" for NECC that Cadden himself

had emphasized. In addition, the evidence contained NECC marketing

materials that highlighted the company's supposed compliance with

USP-797, and several NECC customers testified that they received

representations from marketing materials and company

representatives that indicated that NECC was following the

standards laid out in USP-797.

We thus reject Cadden's contention that the evidence

failed to suffice to permit a juror reasonably to find that a

fraudulent representation concerning USP-797 compliance had been

made to each of the customers, for each of the referenced

shipments, for these twenty stand-alone mail fraud convictions.

Instead, we conclude that the evidence sufficed to permit a juror

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to draw such an inference in finding Cadden guilty of each of the

twenty counts on which these twenty convictions were based. See

Ridolfi, 768 F.3d at 61 (expressing approval of the jury's use of

"reasonable, common sense inferences drawn from the evidence").

Cadden does also contend that these twenty convictions

must be reversed because the evidence did not suffice to show that

the false representation about USP-797 compliance -- even if made

-- was material as to any of the shipments involved. But, here,

too, the record shows otherwise.

Many NECC customers testified that they relied on the

company's representations that it was producing quality products

that were USP-compliant, and the evidence made clear that such

representations were a "big selling point." We thus have no

trouble concluding that a juror reasonably could find that the

representations regarding USP-797 compliance had a natural

tendency to induce NECC's customers to purchase its products,

especially given that this particular safety standard applied to

those compounded medications that -- if prepared improperly --

posed such a risk of harm to patients.


That leaves only Cadden's sufficiency challenges to his

racketeering and racketeering conspiracy convictions, insofar as

these challenges also take aim at whether there was adequate

evidence that the fraudulent representations on which these

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convictions depended -- given that they were for a pattern of

racketeering activity based on mail fraud -- had been made. Cadden

does not contend, however, that the mail fraud alleged to support

these racketeering-related convictions is any different from the

mail fraud alleged to support the thirty stand-alone mail fraud

convictions that we have just addressed. Thus, because the only

arguments that Cadden makes to us as to why the evidence did not

suffice to support those allegations of mail fraud are without

merit, we must reject his sufficiency challenges to these two

convictions as well.


Cadden has one last set of sufficiency challenges to his

convictions that we need to address. This set concerns only his

convictions for racketeering and racketeering conspiracy. As to

the racketeering conviction, Cadden contends that, even if the

evidence sufficed to support the predicate acts of racketeering

involving mail fraud that underlie it, it still must be reversed

because the evidence did not supportably show that those mail-

fraud-based predicate acts of racketeering, taken together, formed

a "pattern of racketeering activity." 18 U.S.C. § 1962(c). He

then further contends that this same weakness in the government's

case also renders his racketeering conspiracy conviction

insufficiently supported. But, we do not agree.

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For there to be a "pattern of racketeering activity"

there must be "at least two acts of racketeering activity." Id.

§ 1961(5). In addition, those predicate acts, each of which must

have occurred within ten years of one another, see id., (1) must be "related" to each other, and (2) must "amount to or pose a

threat of continued criminal activity." H.J. Inc. v. Nw. Bell

Tel. Co., 492 U.S. 229 , 239 (1989).

Cadden argues that the evidence did not suffice to show

that the predicate acts of racketeering that the jury found

satisfied, when considered together, either the "relatedness" or

the "continuity" requirements. He thus contends his racketeering

conviction must be reversed because the evidence did not suffice

to satisfy the "pattern" element of that racketeering offense.

We first address the proper standard of review. We then

consider, in turn, his contentions regarding what the record shows

about relatedness and continuity. We conclude, as we will explain,

that there is no merit to any of them.


The government contends that our review is only for plain

error because Cadden failed to raise his "pattern of racketeering

activity"-based challenge that he now presents to us on appeal in

the motion for acquittal that he made below pursuant to Federal

Rule of Criminal Procedure 29. But, Cadden's post-verdict motion

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for judgment of acquittal incorporated by reference his challenge

to "the lack of relatedness or continuity of the remaining isolated

mailings," which he had previously aired to the District Court in

his motion to dismiss each of these racketeering-related counts.

Our review of this challenge, therefore, is de novo, though, of

course, we still must consider the evidence in the light most

favorable to the verdict. See Diaz, 300 F.3d at 77 ; Lara, 181

F.3d at 200 .


We begin with Cadden's arguments about the insufficiency

of the evidence as to the relatedness requirement. The test for

showing relatedness, however, "is not a cumbersome one." Feinstein

v. Resolution Tr. Corp., 942 F.2d 34 , 44 (1st Cir. 1991). It

merely requires "[a] showing that predicate acts 'have the same or

similar purposes, results, participants, victims, or methods of

commission, or otherwise are interrelated by distinguishing

characteristics and are not isolated events.'" Id. (quoting H.J., 492 U.S. at 240). We conclude that the evidence sufficed to show

that test was met here.

Cadden argues otherwise, first, by pointing to what he

contends is an inconsistency in the state of mind of the defendant

that the government was required to prove for second-degree murder

compared to mail fraud. But, while it is true that the indictment

alleged both types of predicate acts of racketeering activity in

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the racketeering charge, the special verdict form makes clear that

the jury did not rely on the alleged predicate acts of racketeering

activity based on second-degree murder to find the requisite

"pattern of racketeering activity." See United States v. Torres

Lopez, 851 F.2d 520 , 523 (1st Cir. 1988) (using a special jury

form to determine which predicate acts the jury found for the

purposes of a federal racketeering conviction).

Thus, we do not see how the mere fact that predicate

acts of racketeering involving second-degree murder were alleged

bears on whether the evidence sufficed to satisfy the relatedness

test based on the predicate acts of racketeering involving mail

fraud that the jury actually found. Nor does Cadden develop any

argument as to how they might. As a result, the key question for

us concerns only whether the evidence sufficed to permit a juror

reasonably to find that the predicate acts of mail fraud that the

jury found were themselves related to one another.

Cadden contends that the evidence did not so suffice

because those predicate acts of mail fraud included both some that

were based on fraudulent representations about technician

licensure -- mirroring the mail fraud allegations set forth in the

ten Connolly-related, stand-alone mail fraud counts that we

earlier addressed -- and some based on fraudulent representations

that involved NECC's failure to produce these drugs in compliance

with USP-797. But, even if we assume that it would not be enough

- 25 -

for two or more of the predicate acts within one of these distinct

sets of predicate acts of mail fraud to be related to one another,

the argument that Cadden advances still lacks merit.

These predicate acts -- even though involving

fraudulent representations concerning technician licensure and

compliance with the USP -- all reflect the same crime (mail fraud),

the same category of victims (medical providers), the same purpose

(profit), similar fraudulent misrepresentations (claims of

compliance with regulatory schemes), similar methods of

communicating those representations (NECC marketing materials),

similar participants (employees of NECC), and the same method of

commission (medication sales through NECC). They also all occurred

within the same time frame. Thus, a juror reasonably could find

that they were related, despite their differences. See Feinstein,

942 F.2d at 44 (recognizing that predicate acts with the "same or

similar purposes, results, participants, victims, or methods of

commission" or that are "otherwise . . . interrelated by

distinguishing characteristics and . . . not isolated events" are

related (quoting H.J., 492 U.S. at 240 )).


We proceed, then, to consider Cadden's contention that

the evidence did not suffice to permit a juror reasonably to find

the continuity requirement met. Once again, though, we are not


- 26 -

The government may satisfy the continuity requirement by

demonstrating either closed-ended continuity, which refers to "a

closed period of repeated conduct," or open-ended continuity,

which encompasses "past conduct that by its nature projects into

the future with a threat of repetition." H.J., 492 U.S. at 241 .

Cadden contends that the evidence did not suffice on either score.

But, even assuming that it did not suffice to show closed-ended

continuity, we find that it did suffice to show open-ended


There are at least two types of racketeering enterprises

that, by their nature, extend into the future and therefore

demonstrate open-ended continuity: those that "involve a distinct

threat of long-term racketeering activity, either implicit or

explicit" and those where "the predicate acts or offenses are part

of an ongoing entity's regular way of doing business." Id. at

242. The latter type not only includes enterprises that are wholly

criminal but also those in which the predicate acts of racketeering

"are a regular way of conducting defendant's ongoing legitimate

business." Id. at 243. The record suffices to permit a juror reasonably to find

that, at least as of 2012, it was "business as usual" at NECC to

distribute medications to customers by representing to them that

the medications had been compounded in compliance with standards

- 27 -

that the company was not meeting. Thus, the record suffices to

establish open-ended continuity.

Specifically, the record shows that NECC employees

testified that the company "[r]outinely" sent out medications

subject to USP-797 to customers prior to testing them, even though

USP-797 forbade that practice; that the practice of "botching lots"

to mix old, tested medications with new, untested ones and labeling

the resulting USP-797-covered mixture with the old label was

"prevalent" as of 2012 and occurred prior to that time, even though

USP-797 required otherwise; and that "[i]t was kind of protocol"

for NECC to ship even USP-797-covered medications that used expired

ingredients, despite USP-797's contrary command. Evidence also

showed that NECC had sterilized its compounded medications subject

to USP-797 for an insufficient amount of time under that standard

since at least 2009, and that it had a practice of failing to use

biological indicators for those compounded medications, when USP-

797 dictated otherwise.

Moreover, these facts and others led the government's

expert witness to testify that he had concluded that NECC's method

for sterilizing large lots of MPA was "completely inconsistent

with the requirements of" USP-797. In addition, the evidence

sufficed to permit a reasonable juror to find, for the reasons set

forth above, see supra at 19-21, that, despite this evidence of a

pattern of NECC failing to adhere to USP-797, NECC routinely

- 28 -

advertised to customers through its sales staff and standard

marketing materials that it was in compliance with that standard

when it was not.

As we also have explained, the record supportably shows

that, during this same time period, NECC had permitted some of its

products to be compounded by an unlicensed pharmacy technician in

violation of state law. Yet, the record also supportably showed,

as we have explained, that NECC routinely represented to customers

during this time that it was permitting only certified technicians

to engage in such work, given the marketing materials that Boneau,

the sales representative for NECC, had described in his testimony.

A juror thus could reasonably find from such evidence

that, as of 2012, the mail fraud alleged in each of the predicate

acts of racketeering that the jury found was "part of an ongoing

entity's regular way of doing business." H.J., 492 U.S. at 242 .

Accordingly, a juror reasonably could find that the evidence

demonstrated open-ended continuity.

Cadden does stress that, at least on his account of the

record, the company had regularly produced safe products prior to

2012. But, because the evidence that it was a routine business

practice of NECC to market its medications through fraudulent

misrepresentations about the standards that its operations met was

strong, a juror reasonably could find that the company's pattern

of conduct as of 2012 would continue into the future.

- 29 -

Cadden does also contend that his acquittal on most of

the FDCA counts and the conspiracy to defraud the United States

count indicates that the jury found him not guilty of participating

in an open-ended racketeering operation. To make that case, he

urges us to infer from those acquittals that the jury necessarily

found that Cadden lacked the mens rea necessary to commit fraud.

But, the jury necessarily found that Cadden intended to defraud

when it found that he committed the mail fraud alleged in the mail-

fraud-based predicate acts of racketeering. And, Cadden does not

dispute that the evidence sufficed to permit a reasonable juror to

so find. Nor is there any inherent inconsistency in the jury

having made such findings while acquitting him of the FDCA counts

and the conspiracy to defraud the United States count, given that

the elements of those distinct crimes differ from the elements of

mail fraud. See 18 U.S.C. § 371; 21 U.S.C. §§ 331(a), 333(a)(2),



For these reasons, we reject Cadden's sufficiency-of-

the-evidence challenges to his racketeering conviction insofar as

he challenges the sufficiency of the evidence to support the

"pattern of racketeering" element of that offense. And, because

his sufficiency-of-the-evidence challenges to his racketeering

conspiracy conviction rely on the same unpersuasive arguments, we

reject them, too.

- 30 -


We next consider a set of challenges in which Cadden

takes aim at each of his convictions, rather than only a subset of

them. Moreover, in these challenges, he seeks merely to vacate

-- rather than to reverse -- each of these convictions, as he

contends that each was tainted by a trial error that so prejudiced

the jury's finding of guilt in each instance that the resulting

conviction cannot stand.

Cadden's focus here is on what he contends was the unduly

prejudicial effect of certain evidence that the government

introduced at trial that related to the persons who died, or fell

ill, from using the contaminated MPA that NECC had shipped to its

customers. That evidence includes photographs of patients who

died after having been injected with the contaminated MPA, which

the government displayed during opening and closing arguments,

testimony given by three family members of such patients, and

graphic testimony and photographs illustrating the harm that the

MPA did to the patients.

Cadden does not clearly spell out the legal authority

that grounds these challenges in his briefing to us. But, he does

appear to be challenging the admission of this evidence under

Federal Rule of Evidence 403. See Fed. R. Evid. 403 ("The court

may exclude relevant evidence if its probative value is

substantially outweighed by a danger of . . . unfair prejudice

- 31 -

. . . ."). Insofar as the government disputes whether Cadden has

in fact advanced this argument on appeal, we may proceed on the

assumption that he did. For, even if this Rule 403 challenge is

properly before us and was preserved below, such that our review

is for abuse of discretion, see United States v. Merritt, 945 F.3d

578 , 586 (1st Cir. 2019), we find no merit to it.


Cadden argues that the patient-related evidence, which

he contends bore at most on the alleged predicate racketeering

acts involving second-degree murder, lacked enough probative value

to outweigh its obvious prejudicial effect. In pressing this

contention, Cadden at various points actually goes so far as to

assert that there was not enough evidence of either the causation

or mens rea elements of second-degree murder to support a finding

of that offense at all and that the patient-related evidence could

not itself make up for those fatal evidentiary gaps in the

government's case on that score. Notably, that contention would

suggest that there was no probative value to the patient-related

evidence, such that there would be no need to engage in the

traditional weighing of the probative value of evidence against

its prejudicial impact. See Fed. R. Evid. 104(b) ("When the

relevance of evidence depends on whether a fact exists, proof must

be introduced sufficient to support a finding that the fact does

exist."). But, as we will explain, that contention is not

- 32 -

supported by the record. In fact, it is evident that the patient-

related evidence was quite probative of at least the mens rea

element of second-degree murder. We then go on to explain why, in

light of the probative value of this evidence, the District Court

did not err under Rule 403 in permitting the jury to hear it,

notwithstanding the danger of unfair prejudice.


Although Cadden asserts that sufficient evidence to

permit a finding as to the causation element of second-degree

murder was lacking, we fail to see why. He concedes that the MPA

that NECC compounded caused the deaths associated with the alleged

predicate acts of racketeering involving second-degree murder. In

fact, he offered to stipulate as much and then conceded that aspect

of causation at trial. Cadden also does not dispute that the

record shows that deficient means were used by NECC in compounding

the contaminated MPA that led to the deaths at issue in those

alleged predicate acts. Nor does he dispute that the evidence

presented at trial sufficed to permit a reasonable juror to find

that the risks of contamination associated with the poor practices

that NECC engaged in were high even compared to other non-USP-797-

compliant compounding pharmacies.6

6 Consider in this regard that there was substantial expert witness testimony that NECC's operations were "completely inconsistent with the requirements" imposed by USP-797, the

- 33 -

Against that evidentiary backdrop, a juror could

reasonably infer that the deficient compounding practices by NECC

must have been the cause of such a singular mass casualty outbreak

as the one that occurred here. After all, an official with the

United States Centers for Disease Control testified at trial that

the outbreak caused by the contaminated MPA compounded by NECC was

a "public health tragedy" that in his fifteen years of work

investigating outbreaks had only been matched by the Ebola epidemic

-- and was unmatched (at least at that time) in terms of

consequences within the United States. See United States v.

O'Brien, 14 F.3d 703 , 708 (1st Cir. 1994) ("[I]n . . . choosing

from among competing inferences, jurors are entitled to take full

advantage of their collective experience and common sense. There

are limits to coincidence." (internal citations omitted)).

Cadden does contend that the evidence still failed to

suffice to show that he personally took any action that resulted

governing rules for sterile compounding facilities, and that the company "repeatedly, week after week after week . . . had excursions and data that told them that their facility was out of a state of control" but nevertheless "ignored that for weeks and weeks and weeks on end." Consider, too, that there was also expert testimony that asserted that the USP standards that the evidence supportably showed that Cadden was consciously flouting were of the utmost importance because "in the event there is a nonsterile event . . . it can harm a lot of patients," possibly leading to "[m]ass casualty." In fact, still other expert testimony stated that the USP-797 cleaning requirements that NECC was not adhering to were necessary because "contamination" of the clean room environment "can make its way into the final preparation and harm or kill patients."

- 34 -

in the contamination of the MPA with which those patients were

injected. But, he does not dispute that he knew of the alleged

deficiencies with NECC's compounding practices. In addition, the

record supportably shows that Cadden claimed to have "direct[ed]

sales" for NECC and to have made "every important decision [for

the company] on a daily basis." The record further suffices to

illustrate specific instances of his directing the shipment of

orders. Thus, a reasonable juror could conclude that Cadden caused

the deaths of patients by directing the shipment of the deficiently

prepared medications that caused the deaths, even though a juror

reasonably could also find otherwise.


The evidence as to the mens rea element also sufficed,

contrary to Cadden's contention. Regarding this element, the

District Court provided the jury with seven different sets of

instructions on the state of mind necessary for second-degree

murder -- one for every state where a patient identified in a

murder allegation was located -- and asked the jury to apply to

each murder allegation the mens rea standard of the state in which

the patient had resided. Nevertheless, despite the distinct

language used in the seven separate instructions, the District

Court concluded that the mens rea standard was functionally

identical between the states, and neither party on appeal

identifies any material differences between the standards.

- 35 -

In fact, in its briefing to us, the government presents

the Michigan second-degree murder standard, applicable to eight of

the murder charges, as representative of the appropriate mens rea

standard for all twenty-five instances of second-degree murder,

and Cadden does not contend otherwise. Under Michigan law, a

defendant must act with "malice" to be guilty of second-degree

murder, which requires, for our purposes, a showing that the

defendant "inten[ded] to do an act in wanton and wilful disregard

of the likelihood that the natural tendency of such behavior is to

cause death or great bodily harm." People v. Goecke, 579 N.W.2d

868 , 878 (Mich. 1998). We thus apply the Michigan standard in

reviewing Cadden's challenge to the sufficiency of the evidence of

mens rea, and we find that the evidence sufficed to meet it.

In addition to the expert testimony described above

concerning the risks associated with not complying with USP-797,

other testimony indicated that in 2002, Cadden was informed by an

investigator for the United States Food and Drug Administration of

the risk that, if NECC's compounded medications were contaminated,

"people can get really sick or die." This testimony provided

support for a finding that Cadden was well aware of the type of

risk that he was running by operating NECC in an unsafe manner and

then permitting a high-risk sterile compounded medication like MPA

to be distributed under the false representation that it had been

compounded in accord with USP-797. So, too, did the extensive

- 36 -

number of people potentially endangered by Cadden's conduct over

a lengthy period of time, cf. 2 Wayne R. LaFave et al., Substantive

Criminal Law § 14.4(a) (3d ed. 2019) ("[T]he situation may be such

that the risk of death is too slight for murder where only one

person is endangered by defendant's conduct, whereas the risk is

sufficient where several are thus hazarded . . . ."), and the vivid

accounts of the suffering endured by those who received injections

of the contaminated MPA, as those accounts permitted a juror to

assess Cadden to have been indifferent to the harm that such

fraudulent shipping of such a deficiently compounded, high-risk

sterile compounded medication could have caused.

Cadden does point to evidence that showed that NECC had

produced MPA and other similar steroids in large quantities since

2006 without problems. But, as Cadden concedes, the evidence

supportably showed that problems at NECC had gotten significantly

worse by 2012, as NECC increased its production. For instance, an

NECC employee testified that the practice of mislabeling lots to

cover up the use of untested medications became much more prevalent

in 2012, and cleaning became much less frequent. The evidence

also showed that, in 2012, NECC sent eye-block to a hospital that

contained insufficient anesthetic, leading to pain and headaches.

A juror thus would have been justified in concluding from this

evidence that NECC's record prior to 2012 was of limited relevance

to Cadden's mens rea during that year.

- 37 -


In finding that the evidence sufficed to permit a

reasonable juror to find the predicate acts of racketeering

involving second-degree murder, we in no way mean to second-guess

the jury's determination, made apparent on the special verdict

form, that the government did not prove them. Such a determination

by the jury was based on a consideration of a wealth of evidence

during an extensive trial that lasted more than two months. It is

also the final word as to whether the government proved the serious

allegations contained in the racketeering count that sets forth

the alleged predicate acts involving second-degree murder. But,

while there is no question the jury's actual finding on that score

was that the government had not proved its case against Cadden,

that finding is not determinative of whether he is right in

pressing his Rule 403 challenge. For, in the aspect of that

challenge at issue, he contends that a juror would not have had a

sufficiently supportable evidentiary basis for finding second-

degree murder on this record given the lack of evidence of

causation and mens rea and thus that the patient-related evidence

offered in support of it was simply not probative at all because

it could not itself fill in those evidentiary gaps. The jury's

finding does not speak to that issue.

Similarly, we are aware that, at sentencing, the

District Court commented on the weakness of the government's case

- 38 -

for finding that Cadden's conduct constituted second-degree

murder. But, the District Court was not addressing whether the

evidence of the second-degree murder predicate acts was so

inadequate that it precluded a juror from finding them as a matter

of law. Thus, the District Court was not addressing the contention

that Cadden now makes in pressing his Rule 403 challenge about the

probative value of the patient-related evidence.7


That the murder predicates were sufficiently supported,

and that the patient-related-evidence offered to prove those

predicates had probative value because of its capacity to show his

mens rea, does not, of course, determine in and of itself whether

the District Court violated Rule 403 by admitting that evidence.

There remains the question whether the prejudicial impact of that

evidence so outweighed its probative value that it should have

7For these same reasons, we reject Cadden's challenge insofar as he means to make a claim of retroactive misjoinder -- as the government understands him to be making. For, even assuming there are no other obstacles to that argument, it is premised on the evidence of second-degree murder having been insufficient, which we conclude it was not. See United States v. Jones, 16 F.3d 487 , 493 (2d Cir. 1994) (explaining that "'[r]etroactive misjoinder' arises where joinder of multiple counts was proper initially, but later developments -- such as a district court's dismissal of some counts for lack of evidence . . . -- render the initial joinder improper"); cf. United States v. Mubayyid, 658 F.3d 35 , 72 n.39 (1st Cir. 2011) ("Retroactive misjoinder occurs where joinder was proper initially because of a conspiracy allegation, but where later developments . . . appear to render the initial joinder improper." (quoting United States v. Deitz, 577 F.3d 672 , 693 (6th Cir. 2009))).

- 39 -

been excluded nonetheless. But, we conclude that the District

Court did not abuse its discretion in answering that question as

it did.

Cadden is right that he conceded at trial -- after

offering to make a stipulation -- that each of the twenty-five

patients tied to each of the alleged second-degree murder predicate

acts of racketeering was injected with MPA from one of the

contaminated lots compounded by NECC, that each of those patients

received at least one contaminated injection, and that each of

those patients died from receiving a contaminated injection of

MPA. We thus agree with Cadden that, in consequence, the patient-

related evidence could have at the most only marginal probative

value to the causation showing that the government had to make to

prove the second-degree-murder-based predicate acts of

racketeering. Moreover, while the government is right that the

United States Supreme Court has recognized that "the availability

of alternative proofs of [an] element . . . , such as an admission"

by the defendant that the element exists, does not make direct

evidence of that element wholly irrelevant, Old Chief, 519 U.S. at

179 , Cadden is also right to point out that "a lack of dispute or

concession of a central allegation may significantly reduce the

probative value of particular evidence," Kilmartin, 944 F.3d at

335 ; see also Old Chief, 519 U.S. at 184 (concluding that "what

counts as the Rule 403 'probative value' of an item of evidence

- 40 -

. . . may be calculated by comparing evidentiary alternatives").

Indeed, given the "delicate balance between" the "probative value"

of evidence and "the risk that the evidence will inflame the

jurors' passions," Kilmartin, 944 F.3d at 336 , we have recognized

that agreement between the parties on a key fact might sometimes

tip the balance against admissibility of evidence of that fact, at

least where the risk of unfair prejudice is especially high, see

United States v. Ford, 839 F.3d 94 , 109-10 (1st Cir. 2016).

Nonetheless, largely for the reasons we have already

explained, we agree with the argument that the government made in

its opposition to Cadden's motion in limine below, though, oddly,

not in its brief to us on appeal: the patient-related evidence

was "highly probative" of Cadden's "extremely reckless behavior."

See United States v. Brown, 669 F.3d 10 , 21 (1st Cir. 2012) ("[W]e

may affirm a district court's evidentiary ruling on any ground

apparent in the record . . . ."). Testimony from the patients'

family members, for example, explained why the patients were

reliant on the drugs compounded by NECC and the pain and suffering

caused by the contaminated drugs that were injected into their

bodies. In contrast, the concession mirroring the bare-bones

stipulation was not a complete substitute for one of the

government's primary instruments for explaining the danger that an

experienced pharmacist like Cadden was disregarding by operating

his pharmacy in an unsafe manner. See United States v. Balsam,

- 41 -

203 F.3d 72 , 84 (1st Cir. 2000) (explaining that the government is

usually entitled to present "evidence creating a coherent

narrative of [the defendant's] thoughts and actions in

perpetrating the offense for which he is being tried" (quoting Old

Chief, 519 U.S. at 192 )); see also United States v. Morales-

Aldahondo, 524 F.3d 115 , 120 (1st Cir. 2008) ("The court is not

required to scrub the trial clean of all evidence that may have an

emotional impact, where the evidence is 'part of the Government's

narrative.'" (quoting United States v. Dean, 135 F. Supp. 2d 207 ,

209-10 (D. Me. 2001))).

To be sure, the District Court was obliged to take

account of the potential prejudicial impact of the patient-related

testimony, which was sure to pack an emotional punch. But, the

District Court was not insensitive to this concern. In fact, it

limited the government to presenting only three family members of

patients as witnesses and precluded the government from

introducing graphic autopsy photographs of the patients to

mitigate the risk of prejudice.

Thus, keeping in mind that "the district court must be

ceded considerable latitude in steadying the balance which Rule

403 demands," United States v. Rodriguez-Estrada, 877 F.2d 153 ,

156 (1st Cir. 1989), we identify no abuse of discretion in the

District Court's balancing under Rule 403 of the probative value

- 42 -

of the evidence against its potential for prejudice. We thus

reject this ground for overturning Cadden's convictions.


Cadden next seeks to vacate his convictions based on

another claimed trial error -- the District Court's partial denial

of his pre-trial motion to "preclude [the] government from relying

on environmental monitoring requirements other than those in USP

797."8 But, here, too, we find no error.


The motion at issue related to environmental monitoring

data that NECC collected from its clean rooms during the period

that the contaminated lots of MPA were produced. NECC gathered

this data by measuring the level of microbial growth in different

parts of its clean rooms.

At trial, the government repeatedly compared the results

of this measuring to particular "alert" and "action" levels for

microbial activity laid out in NECC's Standard Operating

Procedures ("SOPs"). The government asserted that those levels

signaled the possibility of a "drift from normal operating

conditions" concerning the cleanliness of the clean rooms.

For example, during closing argument, the government

presented a PowerPoint slideshow that highlighted each week in

8 The District Court granted the motion as to requirements predating January 2012.

- 43 -

2012 in which either air or surface monitoring results exceeded

the action or alert levels in the SOPs. The evidence supportably

showed that NECC did not take responsive action.

Cadden's motion below asked the District Court to

preclude the government from making arguments that relied on this

comparison between the environmental monitoring results in one of

NECC's clean rooms and the alert and action levels of the SOPs.

In support of that motion, Cadden contended to the District Court

-- as he contends to us -- that he was charged with making

fraudulent representations related to compliance with USP-797, not

the SOPs. Cadden thus argued below -- as he does to us -- that he

was not charged with falsely claiming to comply with the SOPs in

connection with any of the mail fraud allegations underlying any

of the counts he faced. He also argues that, under the terms of

the SOPs themselves, the levels set out in the SOPs were not

operative in 2012, given that NECC had recently transferred many

of its operations to a new clean room and that it needed time

before establishing new levels specific to that clean room.

Rather, he asserts that, until NECC had gathered enough data to

establish a baseline tailored to its new facilities, the SOPs

designated the less stringent action levels outlined in the USP-

797 as the operative levels.

As a result, according to Cadden, the government's

repeated references to the triggering of the SOP "alert" and

- 44 -

"action" levels were problematic in two respects. They were

irrelevant to any material issue in the case and were unfairly

prejudicial, and they also were likely to mislead the jury into

thinking there was a failure to comply with the SOPs when, because

they were not operative, there was not.

At oral argument, Cadden's attorney characterized his

challenge to the denial of the motion as one that concerned the

relevance and unfairly prejudicial nature of certain of the

evidence that had been admitted. But, Cadden's motion to the

District Court was styled as a motion to "preclude the government

from relying on" certain "environmental monitoring requirements,"

not one to exclude any evidence. As we read Cadden's brief to us,

moreover, he does not appear to be challenging the admission of

evidence regarding the SOPs or the environmental monitoring

results. Rather, he challenges the government's repeated

references to, and reliance on, the SOPs, particularly in opening

and closing argument.

We need not resolve the precise nature of the challenge,

though. The government does not dispute Cadden's contention that

we should review the District Court's denial of the motion as if

it had been properly preserved or that we should review its denial,

as Cadden contends we must, for an abuse of discretion. We thus

proceed on the basis of that shared view in reviewing Cadden's

challenge as, even if we do, it fails. The reason is that, as we

- 45 -

will explain, the challenge -- however it is best characterized

-- rests on a fatally mistaken premise about what the government

was trying to prove by referencing the deviations from the SOPs.


In front of the District Court, the government argued

that the comparison between NECC's environmental monitoring

results and the standards outlined in the SOPs was probative not

just of Cadden's commission of mail fraud, but also of his "extreme

recklessness" -- the mens rea standard it needed to show to prove

the second-degree murder predicate acts. And, notably, even on

Cadden's own account, the action and alert levels set forth in the

SOPs were the ones used in NECC's old clean room. Thus, even if

we accept Cadden's contention that the SOPs were not formally in

effect in 2012, the District Court did not err in permitting the

government to make the case to the jury that those levels set a

reasonable benchmark by which to assess the cleanliness of a

compounding facility, that Cadden himself was well aware of them

at the time NECC made the fatal shipments of contaminated MPA, and

thus that deviations from them were probative of his reckless state

of mind. For, even if NECC had not yet collected enough data to

determine baseline measurements for the new facility, it was

entirely reasonable for the government to turn to the action and

alert levels that NECC had relied on for its old clean room to

- 46 -

make the case to the jury that Cadden was aware its new one was


As the government put it to the District Court,

Cadden's failure to properly monitor his clean room or come up with a plan for doing so effectively, as he was required to do by the USP, should hardly be the basis for an order excluding the [environmental monitoring] results showing contamination in his clean rooms from evidence; he simply should not be allowed to pretend that his consistent violations of his own policies, especially beginning in early 2012, did not happen.

Nor does Cadden develop any argument to the contrary, as he makes

no contention that the content of the SOP-standards reference was

so obviously misleading as a measure of the state of NECC's new

clean room as to require the District Court to exclude all mention

of those standards even if they could have been probative of the

second-degree murder predicate acts. Thus, his challenge

necessarily fails. See United States v. Zannino, 895 F.2d 1 , 17

(1st Cir. 1990) ("[I]ssues adverted to in a perfunctory manner,

unaccompanied by some effort at developed argumentation, are

deemed waived.").


Cadden's final set of challenges to his convictions

targets the District Court's denial of his motion for a new trial

based on allegations of prosecutorial misconduct at trial. In

seeking to vacate his convictions on this basis, Cadden first

- 47 -

argues that, in several instances, the government presented false

evidence to the jury that suggested that he had failed to take

adequate action even after he learned about the existence of the

contaminated MPA that caused the 2012 outbreak. He next takes

issue with a binder of evidence that the government gave to the

jury without either his or the District Court's knowledge. Our

review of the District Court's denial of his motion for a new trial

on these grounds is for abuse of discretion, see United States v.

Casas, 425 F.3d 23 , 39 (1st Cir. 2005), and we see none.


We have held that "a prosecutor 'may not knowingly use

false evidence, including false testimony, to obtain a tainted

conviction regardless of whether the prosecutor solicits false

evidence or . . . allows false evidence to go uncorrected when it

appears.'" United States v. Flores-Rivera, 787 F.3d 1 , 31 (1st

Cir. 2015) (alteration in original) (quoting United States v.

Mangual–Garcia, 505 F.3d 1 , 10 (1st Cir. 2007)). Such a conviction

"must be set aside if there is any reasonable likelihood that the

false testimony could have affected the judgment of the jury."

United States v. Bulger, 816 F.3d 137 , 158 (1st Cir. 2016) (quoting

United States v. Agurs, 427 U.S. 97 , 103 (1976)).

The most troubling allegations concern the testimony of

Wendy Huffman, the director of an entity -- the South Bend Clinic

-- that purchased medications from NECC. We thus begin with those

- 48 -

allegations. We then consider two other alleged uses of false

evidence by the government that Cadden identifies.


Huffman testified at trial that, on September 21, 2012,

she received a call from Cadden, in which he allegedly told her

that she should pull the MPA that NECC had sold to the South Bend

Clinic from its shelves. The government put forth Huffman's

testimony to show that Cadden had known about the contamination on

September 21 and thus well before September 26, when other evidence

showed that he notified his other customers of the problem.

The Huffman testimony was potentially damning. It

suggested that Cadden attempted to conceal evidence of the

contamination from his other customers, which in turn supported

the government's theory that he possessed the state of mind

necessary for second-degree murder.

On February 5, 2017, shortly after Huffman testified,

Cadden moved to strike Huffman's testimony on the ground that it

was clearly false. Cadden based his motion, in part, on telephone

records that indicated that Huffman had not received a call from

Cadden on the date that she testified she had and on what he

contended was the inconsistency between her testimony and other

evidence about NECC's response to the outbreak.

The District Court denied that motion on the ground

that it was the jury's responsibility to sort through the parties'

- 49 -

factual dispute on the issue. On March 3, 2017, however, near the

close of the government's case, the District Court held a

conference with counsel. At the conference, the District Court

asked counsel for the government whether it "shouldn't consider

withdrawing [Huffman's] substantive testimony about a call on the

21st of September," as "[n]one of your other evidence is consistent

with" Huffman's receipt of a recall notice on that date.

In response, on March 7, the government filed a brief

that opposed Cadden's earlier motion to strike the Huffman

testimony and requested that the District Court strike Cadden's

evidence on this point. On March 8, the District Court again

concluded that "whatever its private opinion may be, contested

issues of fact are for the jury" and declined to strike any of the

contested evidence.

At the close of the defense's case on March 13, though,

Cadden once again moved to strike evidence relating to the Huffman

call. Again, the District Court denied the motion, noting to

Cadden that "[y]ou have an awfully strong argument, I think, on

the point to the jury," but concluding that "it's a factual issue

that I don't think I have the power to shape at this point."

Finally, Cadden in his post-verdict motion for judgment

of acquittal moved for a new trial based on the government's

putting forth the Huffman testimony despite the evidence

indicating that it was false. This time, the District Court

- 50 -

rejected Cadden's argument on somewhat different grounds. It held

that any misconduct that the government committed did not prejudice

Cadden and so did not warrant a new trial.

Before reaching that conclusion, however, the District

Court found that it was "clear that . . . [Huffman] had confused

a call from a patient advocate inquiring about an appointment . . .

with the warning call she did receive from Cadden the following

week." And while the District Court did not make an express

finding of misconduct by the government in relying on the evidence

despite the indications that it was false, it stated that the

government's "persistence in defending the Huffman testimony," in

spite of Cadden's repeated objections and its own explicit

suggestion that the government retract the evidence, was

"perplexing at best, and at worst, inconsistent with the obligation

of the government to serve the higher interest of justice."

We share the District Court's concern about the

government's conduct. In fact, the government does not attempt on

appeal to rebut the substance of Cadden's objections to the

accuracy of Huffman's testimony. The government notes instead

only that it "is not forbidden to call witnesses whose reliability

in one or many particulars is imperfect or even suspect." United

States v. McGovern, 499 F.2d 1140 , 1143 (1st Cir. 1974). But, the

leeway afforded the government to present flawed testimony does

not sanction its "knowing reliance upon false evidence." Id.

- 51 -

Nonetheless, like the District Court, we may resolve this challenge

without deciding whether the government's conduct was proper,

because Cadden has not shown the requisite prejudice.

Huffman's testimony was introduced to prove Cadden's

state of mind for the purpose of proving only the second-degree-

murder-based predicate acts of racketeering. The government made

no argument that her testimony was otherwise probative. Yet, the

jury, after having heard all the competing evidence that Cadden

relies on concerning Huffman's testimony, did not find those

predicate acts of racketeering proved.

At the very least, then, we find no indication in the

jury verdict that the jury disagreed with what we read the

overwhelming weight of the evidence to indicate about Huffman's

testimony -- it was inaccurate. We thus have no reason to be

concerned that, despite having been extensively rebutted, her

testimony influenced the jury with respect to the only issue for

which it was put forward by the government.

Nor is the Huffman testimony the sort of evidence that

in its nature is likely to spill over and interfere with the jury's

deliberations over the other counts (or predicate acts), such as

those concerning mail fraud, that it was not put forward to prove.

The straightforward testimony of Huffman, about a phone call that

she allegedly received, was not likely -- at least after having

been so thoroughly undermined -- to "'evoke an improper emotional

- 52 -

response' and distract[] 'from careful consideration of the

relevant issues.'" Kilmartin, 944 F.3d at 335 (quoting United

States v. Fulmer, 108 F.3d 1486 , 1498 (1st Cir. 1997)). That being

so, it would be too speculative to conclude, contrary to the

District Court, that the Huffman testimony so tainted the trial

that the verdicts for which the evidence was not presented must be


Cadden contends that his ability to introduce evidence

that Huffman's testimony was false does not wipe away the

possibility of prejudice. He points out that much of the evidence

supporting his rebuttal of Huffman's testimony only came out six

weeks later during the presentation of his evidence. Cadden

presents no support, however, for the notion that a delay between

the government's case and the defense's case -- a standard feature

of criminal trials -- prejudices defendants by making their case

less persuasive in the eyes of the jury. We thus decline to base

a prejudice finding on such an assertion.


The two other incidents in which Cadden alleges that the

government relied on false testimony are less concerning. We

consider each in turn.

First, at trial, Annette Robinson, an NECC employee,

testified that Cadden instructed her to do fungal testing, a

request he had not made before, "a few weeks before the outbreak."

- 53 -

Cadden contends that the testing records show that testing only

began on September 27, 2012, however, which could suggest that

Robinson was wrong that testing had begun earlier than the date of

the outbreak.

But, it was not clear precisely when "the outbreak"

occurred or how long "a few weeks" might be. There was also a

lack of evidence about how long it took NECC to ship medications

to the testing facility. We thus cannot conclude that Robinson's

testimony was false, let alone that the government relied on it

while knowing that it was.

Second, two witnesses from another clinic that had

purchased medications that NECC compounded -- Michigan Pain

Specialists -- testified at trial that Cadden had failed to notify

their clinic on September 26, when he recalled the contaminated

MPA from NECC's other customers. The testimony suggested that

there was a gap between when Cadden was aware of the contamination

-- even assuming that he first became aware of it on September 25

-- and when he took action to notify at least one of his customers.

Contrary to the witnesses' testimony, however, a

document admitted at trial showed that NECC had faxed over a recall

notice to Michigan Pain Specialists on September 26. Cadden

contends on that basis that the testimony from the Michigan Pain

Specialists witnesses was false and that the government committed

misconduct by advancing it at trial.

- 54 -

But, Cadden concedes that, at trial, his attorney

succeeded in "surpris[ing]" one of the clinic's witnesses with a

copy of the fax. There is no indication that the government knew

of this document when it presented the witness, thus making it

hard to see how there is a basis for finding that the government

engaged in misconduct.

In any event, the jury heard the same evidence that

would allow us to conclude that the government's evidence was

false. The special verdict form also shows that the jury did not

accept the government's theory of second-degree murder. Yet the

contested testimony was admissible to prove the alleged predicate

acts of racketeering based on that racketeering activity. Thus,

for substantially the same reasons that lead us to find that the

admission of Huffman's testimony does not provide grounds for a

new trial, we reject Cadden's challenge regarding the Michigan

Pain Specialists testimony as well, given the minimal inherent

risk of prejudice that it posed once undermined.


Cadden also brings a misconduct-based challenge to his

convictions because the prosecution gave the jury, without his

knowledge or the knowledge of the District Court, a binder of

admitted evidence that the government assembled. It is troubling

that this binder, which was not itself admitted into evidence

though the exhibits within it were, made its way to the jury for

- 55 -

deliberations unbeknownst to Cadden or the District Court until

after the jury had rendered its verdict. The District Court

acknowledged as much. But, we conclude that the District Court

did not err in determining that, due to a lack of prejudice, there

was no ground for a new trial.


The binder compiled evidence that had already been

introduced throughout the trial, and it purported to prove

deficiencies in the medications that corresponded to many of the

stand-alone mail fraud counts and predicate acts of racketeering

involving mail fraud. The binder was divided into three parts.

Each part related to a different set of the stand-alone mail fraud

counts that Cadden was charged with committing. Each part also

contained admitted exhibits that related to test results that

indicated that shipments that were at issue in each of those mail

fraud counts were nonsterile or subpotent. The binder did not

include evidence that Cadden had introduced at trial to prove that,

contrary to the government's allegations, some of the shipments at

issue contained medications that were in fact sterile.

The first mention of this binder at trial occurred during

closing argument. That is when the government highlighted the

existence of a government-created binder to the jury by describing

it as "a binder that we put together for you where we've collected

- 56 -

the test results that are in evidence for these [fraudulent]


Cadden apparently did not notice or object to the binder

when the government referred to it, even though no such binder had

been admitted into evidence or had otherwise been approved to go

the jury. The government then provided the binder to the court

clerk, who transmitted it to the jury room without giving any

additional notice to Cadden or the District Court.

On the third day of jury deliberations, the jury

requested exhibits that related to ten of the predicate acts of

racketeering involving mail fraud, some of which the binder

contained. At the District Court's request, the parties assembled

responsive exhibits. The District Court organized these exhibits

and submitted them to the jury.

On the same day, during a conversation between counsel

and the District Court about a response to a different jury

question, Cadden's counsel objected to the government's

transmission of the binder and the jury's reliance on it. By then,

he apparently had learned that the jury had obtained a binder

filled with exhibits of government-friendly test results.

In response, counsel for the government claimed not to

be aware of the location of the binder. The District Court relied

on that representation in mistakenly concluding that the binder

- 57 -

had not been sent to the jury and declining to take additional

action at the time.

After the jury returned its verdict, however, it became

clear that government attorneys had, in fact, provided the binder

to the jury. The government later conceded the same.

Cadden now argues, as he did to the District Court in a

motion for a new trial, that the government's provision of the

binder to the jury and denial that it had done so constitutes

misconduct that warrants a new trial. The District Court denied

Cadden's motion.

The District Court conceded that the binder's presence

in the jury room without court approval was a "mistake." However,

the District Court did not find that it was the product of

intentional misconduct by the government. Rather, the District

Court bypassed a definitive ruling on that issue and found that

the binder, even though received by the jury without the knowledge

of Cadden or the District Court, was not so prejudicial as to

require a new trial. Among the District Court's reasons for so

finding were that all of the documents contained in the binder had

been admitted into evidence and that the District Court would have

admitted the completed binder into evidence if the government had

requested that it do so.

- 58 -


In general, government "misconduct alone is insufficient

to reverse a conviction absent a showing of prejudice." United

States v. Gentles, 619 F.3d 75 , 81 (1st Cir. 2010); see also United

States v. Best, 939 F.2d 425 , 429 (7th Cir. 1991) (en banc)

(asking, in a similar situation, whether "there was some prejudice

or substantial right affected by the presence of the binders in

the jury room during deliberations"). Nor does Cadden argue that

the provision to the jury of a government binder that had not

itself been admitted into evidence is presumptively prejudial to

the defendant, let alone that one that contains only documents

that themselves have been admitted into evidence is.9 See Best,

939 F.2d at 430 . Instead, he contends that the binder presented

the evidence that it contained in a manner favorable to the

government's position and, for that reason, caused prejudice that

necessitates a new trial.

To support this challenge, Cadden highlights the title

of the binder, "Nonsterile and Sub/Super-Potent Results." He

contends that title could be read to suggest that the binder

9 Cadden also does not frame his claim as one rooted in the jury's "improper exposure to extrinsic material," United States v. Pagán-Romero, 894 F.3d 441 , 446 (1st Cir. 2018), and the District Court did not treat it as one. We thus apply the standards that have been developed for reviewing claims of prosecutorial misconduct rather than the somewhat distinct standards for reviewing claims of exposure to extrinsic evidence. See id. at 446-47.

- 59 -

included all the relevant test results, rather than only the

government's preferred evidence concerning testing.

As the District Court itself noted, however, the jury

specifically requested "exhibits already allegedly included in the

binder." The jury's request strongly suggests that it did not

rely on the binder to the exclusion of other evidence, or assume,

as Cadden's argument for prejudice would imply, that the

government's binder contained the only exhibits about testing

relevant to the mail fraud counts in question.

Moreover, the very title of the binder that Cadden

complains of implies, not, as he suggests, that the binder includes

all test results that relate to the shipments at issue in the mail-

fraud-based counts, but rather, that it includes only all

"Nonsterile and Sub/Super-Potent Results" that relate to those

counts. Cadden's evidence of competing test results, however, was

also introduced. Those results purported to show that the

shipments contained medications that were sterile. It would be

too speculative to conclude that the jury would have assumed a

binder explicitly labeled as including "Nonsterile . . . Results"

would have been the sole place to look to find the non-trivial

number of exhibits that showed that the medications were sterile,

especially when Cadden repeatedly had highlighted those exhibits

at trial and when the jury requested exhibits concerning test

results that were in the binder.

- 60 -

We note, too, that the government flagged the existence

of the government-produced binder for the jury during closing

argument and described it as presenting its evidence. Thus, the

jury was on notice that it would have access to a binder produced

by the government that contained evidence of test results

introduced to prove the instances of mail fraud alleged in the

indictment. In fact, the binder had the United States Department

of Justice seal on the front cover, and the District Court

reasonably found the presence of the seal "would have made it clear

to the jury that the exhibits had been assembled by the


Further supporting the District Court's no-prejudice

finding is the fact that Cadden, when faced at closing argument

with the government's assertion that it intended to present the

jury with a binder full of government evidence regarding the

fraudulent shipments of medications, neither objected nor took the

opportunity to assemble a comparable binder of defense evidence.

Cadden asserts that his counsel believed that the government was

alluding to other binders that had been admitted into evidence

during trial. But, he identifies no other binders that match the

description offered by the government. The silence by Cadden's

counsel at that moment thus accords with the District Court's

assessment that the binder was not of a sort that would cause

- 61 -

prejudice merely by having been given to the jury for its


The District Court's determination as to prejudice also

accords, as the government contends, with the most analogous

precedent: Best. There, a sharply divided Seventh Circuit held

en banc that, under somewhat similar circumstances, improper entry

of a binder of admitted evidence into the jury room was not

prejudicial. See 939 F.2d at 430-31 . In fact, the record here

reveals, if anything, less prejudice than was present there.

The dissenters in Best were understandably concerned

that the binder at issue there was "a roadmap to a guilty verdict,"

id. at 433 (Posner, J., dissenting), and we see much force in their

views. But, this binder was different. It merely grouped the

admissible evidence that it contained by shipment and thus deployed

a commonsense -- rather than a tendentious -- organizational

scheme. In fact, the District Court itself expressed concern about

"the confusion that the erratic numbering of government and defense

exhibits caused during the trial," urged the parties to organize

the evidence into binders, and indicated that, notwithstanding the

structure of the binder, it would have allowed it into evidence


The dissenters in Best also emphasized that the record

there strongly suggested that the jury relied heavily, although

perhaps not exclusively, on the government's binder of evidence.

- 62 -

Id. at 432-35. But, nothing in the record suggests comparable

reliance on the binder by the jury in this case. In fact, the

jury's request for exhibits that related to each of several counts

addressed by the binder suggests the exact opposite.

To be sure, Cadden was deprived of knowing that the

binder went to the jury and thus of choosing how to respond to

that fact. But, he has not explained, and we do not see, what

responsive action he could have taken that would show that he was

so prejudiced by being denied the chance to take it that the

District Court acted beyond its discretion in denying the motion

for new trial. In fact, the record shows that the jury was aware

that the binder was produced by the government and contained its

evidence and that his counsel made no objection to the jury being

provided the binder when the government first stated its intention

to provide it.10

10 Aside from the false testimony and the binder incident, Cadden identifies a slew of other examples of what he deems to be government misconduct. However, as stated in Cadden's opening brief, he only "summarized" these events "briefly" in order to show that "the government's behavior" regarding the primary incidents "was not an aberration." In his reply brief, he reiterated that he "points to this litany [of alleged instances of misconduct] to demonstrate the pattern [of misconduct] and that the pattern was deliberate." Because we do not resolve the question of what state of mind the government attorneys possessed in taking the primary actions Cadden complains of, as Cadden has not demonstrated that any instances of potential misconduct resulted in prejudice, we do not need to address the other incidents that Cadden highlights that allegedly show their behavior was deliberate. Even to the extent that Cadden does mean

- 63 -


We have, to this point, addressed and rejected all the

challenges that Cadden brings to his convictions. We thus now

turn to the challenges that concern his punishment. We begin with

the challenges to his prison sentence, which are brought solely by

the government in its appeal. We then turn to the challenges that

Cadden, in his appeal, and the government, in its, bring to the

order of forfeiture.


The District Court determined that Cadden's total

offense level under the Guidelines was twenty-nine. Based on that

determination and Cadden's lack of any prior criminal history, the

District Court calculated a sentencing range under the Guidelines

of 87-to-108 months' imprisonment and handed down a sentence at

the top end of that range.

for these other incidents to serve as distinct grounds for a new trial, he has not developed any of the arguments or their prejudicial effects in sufficient detail, either in front of the District Court or in front of us, and has thus waived them. See Zannino, 895 F.2d at 17 ("[I]ssues adverted to in a perfunctory manner, unaccompanied by some effort at developed argumentation, are deemed waived."). We also reject Cadden's suggestion that, even if none of the alleged instances of misconduct prejudiced him in isolation, the sum total of the alleged misconduct amounts to cumulative prejudice warranting a new trial. For the reasons already discussed, none of the instances of possible misconduct Cadden identifies resulted in prejudice. Thus, even when combined with one another, they do not require vacatur of any of Cadden's convictions.

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The government contends that the District Court erred by

understating the loss attributable to Cadden's offenses, see

U.S.S.G. § 2B1.1(b)(1), and by failing to apply two enhancements

that would have increased Cadden's total offense level, see id. §§

2B1.1(b)(16), 3A1.1(b). We review the District Court's

"interpretation and application of the sentencing guidelines" de

novo, United States v. Flores-Machicote, 706 F.3d 16 , 20 (1st Cir.

2013), and factual findings, including the District Court's

"calculation of the amount of loss, for clear error," United States

v. Ihenacho, 716 F.3d 266 , 276 (1st Cir. 2013).


The District Court calculated the loss attributable to

Cadden's offenses as $1,427,000, which led to a fourteen-level

increase in Cadden's total offense level. See U.S.S.G.

§ 2B1.1(b)(1)(H). The calculation was based on the "[a]ctual loss"

suffered by victims, which refers to "the reasonably foreseeable

pecuniary harm that resulted from the offense." See U.S.S.G.

§ 2B1.1 cmt. n.3(A)(i).

The District Court limited the loss calculation to the

total value of shipments of medications that had been identified

as deficient in some manner and that were listed in five trial

exhibits. These shipments were deficient either because the

medications were expired, contaminated, nonsterile, sub-potent,

super-potent, or compounded by an unlicensed technician.

- 65 -

The government contends, however, that all NECC sales of

medications during the period in question constituted pecuniary

harm suffered by NECC's customers. For that reason, the government

contends that the loss amount should have been at least $75.6

million. If the loss amount were that high, then the loss

enhancement would have increased Cadden's total offense level an

additional ten levels from twenty-nine to thirty-nine. See id.

§ 2B1.1(b)(1)(M). That increase would have shifted his Guidelines

sentencing range upward dramatically. See id. ch. 5, pt. A.11

Insofar as NECC sold a product using a fraudulent

representation, there is a strong argument that the entire value

of the product constituted a "loss" for Guidelines purposes. See

U.S.S.G. § 2B1.1 cmt. n.3(F)(v) ("In a case involving a scheme in

which . . . goods for which regulatory approval by a government

agency was required but not obtained . . . loss shall include the

amount paid for the property . . . with no credit provided for the

value of those items . . . ."); United States v. Gonzalez-Alvarez,

277 F.3d 73 , 80 (1st Cir. 2002) ("[C]onsumers here who reasonably

believed they were purchasing milk compliant with all government

health regulations, but in fact received a different product of

11 While the government initially took issue with the time period adopted by the District Court, in its reply brief, the government concedes that, at least for purposes of this appeal, it merely argues that "the racketeering period started no later than 2010 -- as the district court's written orders contemplate." Thus, we do not address its arguments on this point.

- 66 -

unknown safety, were denied the benefit of their bargain and

suffered an actual loss."). But, trial evidence showed that NECC

produced a number of products in a separate area from the area in

which NECC's sterile compounding took place. The government makes

no developed attempt to explain how conditions were such in other

areas in NECC's facilities that sales of all the products produced

in those areas also were fraudulently sold. Thus, we do not see

how the District Court erred in finding that not all products sold

by NECC were sold fraudulently.

The government separately appears to argue that, even if

some of NECC's sales were not made via fraudulent representations,

those sales would still constitute a "loss." The government's

theory is that if these customers had "known that NECC's production

methods violated the USP and NECC's safety assurances, they would

have never purchased the drugs." But, the cases that the

government relies are ones in which the buyer did not receive the

benefit of the anticipated bargain. See Gonzalez-Alvarez, 277

F.3d at 80 ("Where a product has a value of zero as a matter of

law, but consumers pay for the product as if it had value, the

buyers have been robbed of the benefit of their bargain."); United

States v. Bhutani, 266 F.3d 661 , 670 (7th Cir. 2001) ("[T]here was

indeed loss to consumers because consumers bought drugs under the

false belief that they were in full compliance with the law.");

United States v. Marcus, 82 F.3d 606 , 610 (4th Cir. 1996) ("Given

- 67 -

the unchallenged finding that consumers would not purchase a drug

of unknown safety and efficacy at any price, the district court

correctly concluded that [the company's] gross sales were the

appropriate measure of the actual loss suffered by consumers

. . . ."). Those precedents provide no support for finding that

a customer has experienced a pecuniary loss when, as here, he gets

exactly what he was told he was paying for from the seller but he

might have reconsidered the choice to become a customer at all if

he had been aware of the seller's other fraudulent sales. See

U.S.S.G. § 2B1.1 cmt. n.3(A)(iii) ("'Pecuniary harm' means harm

that is monetary or that otherwise is readily measurable in


The government also contends that the District Court's

loss amount fails to account for even all of the medications that

NECC shipped that, at a minimum, were made with false

representations concerning compliance with USP-797. The District

Court perhaps could have swept up additional sales in its

calculation of loss for this reason, just as the government

contends. But, the record shows that the government only advanced

at sentencing its flawed theory that all NECC sales in the relevant

period should be included in the loss calculation, even including

those that were not sold fraudulently. The government did not

identify or attempt to document a narrower loss figure that would

reflect the actual losses suffered by fraud victims but that would

- 68 -

have been greater than the loss amount that the District Court


Thus, given the information presented to the District

Court, it did not commit clear error in relying on the value of

the shipments that it could pin down with reasonable certainty as

fraudulent to determine the "loss" amount.12 See U.S.S.G. § 2B1.1

cmt. n.3(C) ("The court need only make a reasonable estimate of

the loss . . . . [T]he court's loss determination is entitled to

appropriate deference."); United States v. Flete-Garcia, 925 F.3d

17 , 28 (1st Cir. 2019) ("[A] loss calculation need not be precise:

the sentencing court need only make a reasonable estimate of the

range of loss."). We note in this regard that, even on appeal,

the government still has not identified that amount. Nor has it

explained how it was denied a fair opportunity to provide that

amount below. We thus reject the suggestion that the government

made in its briefing to remand Cadden's sentence for the District

Court to redo the loss calculation to account for potential

12Contrary to the government's suggestion that the District Court demanded proof that medications contained in the shipments were "defective or dangerous" before it included them in the loss calculation, the District Court included in the loss amount the value of shipments of medications that were compounded by an unlicensed technician, even though there was no evidence that all of the medications he compounded were in some way defective or dangerous. This conclusion aligns with the District Court's statement that it included all shipments that were "potentially contaminated or degraded," not merely those that were shown to be. (emphasis added).

- 69 -

additional fraudulent sales. See United States v. Mayendía-

Blanco, 905 F.3d 26 , 34 (1st Cir. 2018) (applying plain error

review to a challenge to a loss calculation not made below);

Zannino, 895 F.2d at 17 ("It is not enough merely to mention a

possible argument in the most skeletal way, leaving the court to

do counsel's work, create the ossature for the argument, and put

flesh on its bones.").


We next take up the government's challenge to the

District Court's refusal, at sentencing, to apply a two-level

enhancement because Cadden's "offense involved . . . the conscious

or reckless risk of death or serious bodily injury." U.S.S.G.

§ 2B1.1(b)(16).13 The District Court reasoned that this

enhancement was only based on "the offense of conviction" and not

"on acquitted or even relevant conduct." Thus, to find the

enhancement applicable, the District Court concluded that, given

the nature of the offense of mail fraud, it would have to find

that Cadden had committed second-degree murder, and although

Cadden may have been "negligen[t]" or "even gross[ly]

negligen[t]," the evidence did not "c[o]me close to establishing

. . . that he acted with [the] state of knowledge that a conviction

for second-degree murder under relevant state law requires."

13 At the time of sentencing, the enhancement was codified at U.S.S.G. § 2B1.1(b)(15).

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The government now challenges that determination on the

ground that the District Court incorrectly focused on whether

Cadden had committed second-degree murder, instead of whether his

"relevant conduct" in the commission of his mail fraud offense

carried with it the requisite risk of death under the Guidelines.

See U.S.S.G. § 2B1.1(b)(16). We agree.

For the purpose of determining whether Cadden's

"offense" involved the requisite risk under § 2B1.1(b)(16), the

District Court should have looked at not only Cadden's "offense[s]

of conviction" -- which included mail fraud and racketeering

premised on mail fraud -- but also at all of his "relevant conduct"

as defined by the Guidelines. Id. § 1B1.1 cmt. n.1(I) (defining

"offense"). Under the Guidelines, the "relevant conduct" for which

Cadden is held accountable includes "all acts and omissions

committed, aided, abetted, counseled, commanded, induced,

procured, or willfully caused by the defendant . . . that occurred

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

§ 1B1.3 (a)(1)(A). The Guidelines base a defendant's sentence on

a range of actions that may extend beyond those the government

must prove to secure a conviction because "[t]he focus [of the

Sentencing Guidelines] is on the specific acts and omissions for

which the defendant is to be held accountable . . . rather than on

whether the defendant is criminally liable for an offense . . . ."

Id. § 1B1.3 cmt. n.1.

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Thus, if Cadden's acts during the commission of mail

fraud -- for instance, by directing the shipment of medications he

knew to be substandard and highly dangerous in consequence --

"involved . . . the conscious or reckless risk of death or serious

bodily injury," id. § 2B1.1(b)(16), then the District Court should

have found that the enhancement applied.14 That is true even if,

as the District Court apparently found, his "offense of conviction"

did not itself inherently involve that risk.

We also cannot accept Cadden's contention that we may

treat the District Court as having concluded that the relevant

conduct associated with the mail fraud did not involve a

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

The District Court did state that the evidence did not establish

that Cadden had the requisite mens rea for second-degree murder.

But, in so concluding, the District Court stated that Cadden did

not act "with actual knowledge that his acts, or more accurately

his failures to act, were almost certain to result in the death of

another." (emphases added). As the government points out, the

District Court in doing so at no point directly addressed in

sentencing whether a preponderance of the evidence nonetheless

established that Cadden's relevant conduct associated with the

14The government has made no argument that any actions Cadden took in relation to his convictions for introducing misbranded drugs into commerce carried the requisite risk for the risk-of- death enhancement to apply.

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mail fraud involved a "conscious or reckless risk of death or

serious bodily injury." U.S.S.G. § 2B1.1(b)(16); cf. United

States v. Lucien, 347 F.3d 45 , 56-57 (2d Cir. 2003) (concluding

that a conscious risk is one "known to the defendant" while a

reckless risk is "the type of risk that is obvious to a reasonable

person and for which disregard of said risk represents a gross

deviation from what a reasonable person would do"). To be sure,

the District Court found that the government was not "close" to

showing the mens rea required for second-degree murder. But, here,

too, the District Court did so without directly referencing the

Guidelines standard in connection with Cadden's relevant conduct

in committing the mail fraud.

Thus, we remand for the District Court to do what it has

not yet done: directly address the narrow issue of whether

Cadden's actions warranted the application of the risk-of-death

enhancement based on the appropriate mens rea standard and scope

of relevant conduct. In doing so, we pass no judgment on whether

Cadden did in fact possess the state of mind necessary for the

enhancement to apply, or whether any other barriers to the

application of the enhancement might exist.15

15The government additionally argues that the District Court mistakenly held that the only "victims" that could matter for the purpose of the risk-of-death enhancement were the direct victims of Cadden's mail fraud crimes, namely the hospitals who purchased drugs from NECC. We are not convinced that the District Court

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

sentence imposed by the District Court. It concerns another

enhancement that the District Court declined to apply: the

"vulnerable victim" enhancement. This enhancement bumps up the

offense level by two "[i]f the defendant knew or should have known

that a victim of the offense was a vulnerable victim," U.S.S.G.

§ 3A1.1(b)(1), and raises it by another two if "the offense

involved a large number of [such] vulnerable victims," id.

§ 3A1.1(b)(2). The District Court declined to apply the enhancement.

It ruled that, for the purposes of the Guidelines provision in

question, "the victims at issue, given the nature of the jury's

verdict, were the purchasers of the drugs," rather than the

patients who received the drugs.

The Guidelines do not define the word "victim" as it is

used in the vulnerable victim enhancement. But, they do make clear

that a "victim" means "a person . . . who is a victim of the

offense of conviction and any conduct for which the defendant is

rested its holding on this alternative ground. However, insofar as it matters on remand, we agree with the government that nothing in the Guidelines restricts the scope of the relevant "risk of death or serious bodily injury" analysis to those individuals who were directly defrauded by a defendant's illegal scheme. See U.S.S.G. § 2B1.1(b)(16).

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accountable under § 1B1.3 (Relevant Conduct)." U.S.S.G. § 3A1.1

cmt. n.2.

We have previously read this language to indicate that

"[t]o come within the guidelines' definition" of "victim," "one

need not be a victim of the charged offense so long as one is a

victim of the defendant's other relevant conduct." United States

v. Souza, 749 F.3d 74 , 86 (1st Cir. 2014). As we have previously

explained, Cadden's "relevant conduct" included, among other

things, any actions that he took to direct the shipment of

contaminated medications to hospitals during the commission of

mail fraud.16 The "victims" of that conduct could plausibly include

the patients who foreseeably would use those contaminated

medications. Thus, we agree with the government that the District

Court committed an error of law in holding that, due to the nature

of Cadden's convictions, the reach of the vulnerable victim

enhancement is necessarily limited to those "victims" who were

defrauded -- namely, the customers of NECC itself. See United

States v. Sidhu, 130 F.3d 644 , 655 (5th Cir. 1997) ("[A]

physician's patients can be victimized by a fraudulent billing

scheme directed at insurers or other health care providers.").

16 The government does not argue that any of Cadden's conduct during the commission of his FDCA offenses for introducing misbranded drugs into commerce harmed any vulnerable victims.

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Cadden argues that, in any event, we may affirm the

District Court's determination on the alternative ground that the

patients, even if "victims," were not "vulnerable." But the

District Court determined that the patients were necessarily not

"victims" at all. So, it has not yet passed on the question of

their vulnerability. We thus decline to do so in the first

instance. Instead, we leave it for the District Court to

determine, on remand, whether, for example, Cadden is comparably

situated to a defendant who "market[s] an ineffective cancer cure"

and who would warrant the enhancement, U.S.S.G. § 3A1.1 cmt. n.2,

and what effect, if any, the presence of the intermediary medical

facilities who purchased the medications on behalf of their

patients should have on the assessment of the patients'



Because we find that the District Court's reasons for

declining to apply two enhancements were legally erroneous, the

District Court may on remand find that the enhancements should

have been applied and that the Guidelines range it originally

calculated requires modification. If it updates the Guidelines

range to account for the application of one or both of these

enhancements, it should of course consider the parties' updated

arguments for what Cadden's sentence should be in light of the

modified range. The District Court may not, however, reconsider

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on remand other enhancements or aspects of its initial sentencing

calculation beyond those issues narrowly required by its

reconsideration of the two enhancements that we have identified.


We turn, finally, to the challenges that are before us

that concern the forfeiture order of $7,545,501 that the District

Court imposed pursuant to 18 U.S.C. § 1963(a)(3). That provision

requires defendants convicted of racketeering offenses to forfeit

"any property constituting, or derived from, any proceeds which

the person obtained, directly or indirectly, from racketeering

activity." The District Court determined the forfeiture amount

based on "the total amount of NECC proceeds that were paid to Barry

Cadden personally during the life of the racketeering enterprise,

that is, from March 26, 2010 to October 31, 2012."

We start with the government's challenges and then

consider Cadden's. "[W]e review pure 'questions of law de novo,

but, to the extent factual issues are intermingled, consider mixed

questions of law and fact under the more deferential clear error

standard.'" United States v. Ponzo, 853 F.3d 558 , 589 (1st Cir.

2017) (quoting United States v. Ferrario-Pozzi, 368 F.3d 5 , 8 (1st

Cir. 2004)).


Cadden contends that the District Court erred in finding

that all NECC proceeds obtained during the relevant period were

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"obtained" "from racketeering activity." When property interests

are "in a" racketeering enterprise, they are subject to forfeiture

"in their entirety, regardless of whether some portion of the

enterprise is not tainted by the racketeering activity." United

States v. Angiulo, 897 F.2d 1169 , 1211 (1st Cir. 1990). Property

interests "outside the enterprise," on the other hand, are "subject

to a rule of proportionality," and are only forfeitable "to the

extent they are tainted by the racketeering activity." Id. at

1211-12. We have held that "proceeds or profits" of racketeering

activity are "outside interests . . . subject to a rule of

proportionality."17 Id. at 1212. Thus, their treatment "is in

17 The racketeering statute has been modified from the one applied by the Angiulo court. At the time the forfeiture order at issue in Angiulo was issued, racketeering proceeds were treated as forfeitable because they were considered to be "interest[s]" that the defendant "has acquired or maintained in violation of section 1962," which laid out the substantive racketeering offenses. 18 U.S.C. § 1963(a)(1) (1982); see Angiulo, 897 F.2d at 1211-12 . Today, however, "property constituting, or derived from, any proceeds which the person obtained, directly or indirectly, from racketeering activity . . . in violation of section 1962" is explicitly identified as a ground for forfeiture under the statute. 18 U.S.C. § 1963(a)(3). Neither party argues that Congress's decision to explicitly identify "proceeds" as a type of forfeitable property has any practical effect on the analysis. But, to the extent it matters, the current statute presents a stronger case for imposing a proportionality rule on proceeds, as it limits forfeiture to "proceeds which the person obtained . . . from racketeering activity," id. (emphasis added), not the broader racketeering enterprise.

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contrast to the treatment of interests in an enterprise, which are

forfeitable regardless of percentage of taint." Id.

The government suggests, based on Angiulo, that Cadden's

proceeds may constitute interests in the racketeering enterprise

rather than interests outside of it. But, the government offers

no support for this broad definition of interests in an enterprise,

particularly given that the government's authority to seek and

obtain "interests in" the enterprise arises from a distinct

statutory provision that the government did not rely on in seeking

a forfeiture order against Cadden. See 18 U.S.C. § 1963(a)(2)(A)

(requiring the forfeiture of "any interest in . . . any enterprise

which the person has established, operated, controlled, conducted,

or participated in the conduct of, in violation of section 1962").

Nor does the government explain how we may ignore the clear command

of Angiulo that "proceeds . . . are only subject to forfeiture to

the extent they are tainted by the racketeering activity." 897

F.2d at 1212 .

In the alternative, the government contends as follows.

Even if a proportionality rule should have been applied, as Cadden

argues, it was harmless not to apply it. The government argues

that all the medications that NECC manufactured during the relevant

period were subject to forfeiture, as they were all tainted by

racketeering activity.

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In making this argument, the government contends that

all of NECC's medications were produced fraudulently and that,

even if they were not, customers would not have purchased the

legitimately produced medications had they known about NECC's

history of fraud. As we have already explained, however, the

District Court supportably found at sentencing that the government

failed to prove that all of NECC's sales over the period in

question were generated by fraud. The government likewise presents

no authority for the proposition that profits from non-fraudulent

sales of NECC could be considered "proceeds which [a] person

obtained, directly or indirectly, from racketeering activity." 18

U.S.C. § 1963(a)(3). Given that these profits were not obtained

from the racketeering activity of mail fraud that formed the basis

of Cadden's convictions, but rather from legitimate, non-

racketeering activity, we see no reason to adopt the government's

expansive reading of the forfeiture statute. Nor did the

government develop an argument below for why all the proceeds of

Cadden's from NECC were tainted by racketeering activity, and thus

the District Court made no findings on this precise point.

Accordingly, while we do not make a finding about what specific

amount of Cadden's proceeds were tainted by racketeering activity,

we cannot agree with the government on the basis of this record

that all of them were, and we are thus unable to affirm the District

Court on this alternative basis. We therefore vacate and remand

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for the District Court to assess in the first instance the

arguments of Cadden and the government, based on this record, about

the portion of Cadden's earnings from NECC over the relevant time

period that were tainted by racketeering activity and therefore

subject to forfeiture.


Next, we consider Cadden's contention that the District

Court erred in calculating the forfeiture amount without deducting

the amount in taxes that he paid on those proceeds. We disagree.

In general, the word "proceeds" in the forfeiture

statute refers to gross proceeds, not net profits. United States

v. Hurley, 63 F.3d 1 , 21 (1st Cir. 1995). In addition, per the

statute, "property should be regarded as 'obtained' . . . when it

has merely been held in custody" before being "passed along to its

true owner." Id. Cadden clearly "obtained" the amount of funds

subject to forfeiture before they were subject to taxation. We

thus do not see why that gross amount is not subject to forfeiture,

even though the amount he obtained was itself taxable.

Cadden does argue that the ease of calculating Cadden's

net proceeds, because of the clear evidence of his tax liability,

renders this case one in which his forfeiture should be based on

net proceeds instead of gross proceeds. But, Hurley did not merely

establish a fallback procedure for estimating the value of proceeds

in the face of a messy factual record. It purported to interpret

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the words "proceeds" and "obtain[]" in a statute, 18 U.S.C. § 1963.

See 63 F.3d at 21 . Thus, while Hurley noted the concern that net

proceeds would be difficult to calculate, we read it to have based

its reading of the statute on other rationales -- including the

legislative history indicating Congress's desire to give the

statute a broad reach, among others -- that are no less relevant

when applied to the circumstances of Cadden's gains. See 63 F.3d

at 21 ; see also Clark v. Martinez, 543 U.S. 371 , 380 (2005) ("It

is not at all unusual to give a statute's ambiguous language a

limiting construction called for by one of the statute's

applications, even though other of the statute's applications,

standing alone, would not support the same limitation. The lowest

common denominator, as it were, must govern.").

Finally, Cadden points to Seventh Circuit cases that, he

contends, "used a net proceeds approach when the relevant figures

were readily ascertainable." See United States v. Genova, 333

F.3d 750 , 761 (7th Cir. 2003) (defining "proceeds" as "profits net

of the costs of the criminal business"); United States v. Masters,

924 F.2d 1362 , 1369-70 (7th Cir. 1991) ("[T]he proceeds to which

the statute refers are net, not gross, revenues . . . ."). We

have previously recognized, however, that in this respect, the

Seventh Circuit's precedent is in conflict with our own. See

United States v. Iacaboni, 3 63 F.3d 1 , 4 (1st Cir. 2004). Because

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these cases reach a different conclusion than what our own

precedent requires, they are of no assistance to Cadden.18


The government, for its part, takes issue with another

aspect of the District Court's forfeiture calculation. Cadden's

wife Lisa, like Cadden, was a part-owner of NECC, and, like Cadden,

she received proceeds in consequence of her ownership stake in the

company. These proceeds were deposited in a bank account that

Lisa Cadden jointly controlled with Cadden. The District Court

declined to require Cadden to forfeit the amounts attributable to

his wife's earnings, however, reasoning that the sought-after

forfeiture order would impermissibly claw back from Cadden gains

that were properly attributable to someone else -- his wife.

So long as the proceeds in question were tainted by

racketeering activity, we agree with the government that the

forfeiture amount should not have been limited to the NECC-derived

proceeds that were attributable to Barry rather than Lisa Cadden.

While Barry Cadden may not have personally earned any of the

18 Cadden does not argue that our conclusion in Hurley is affected by United States v. Santos, 553 U.S. 507 (2008), superseded by statute, Fraud Enforcement and Recovery Act of 2009, Pub. L. No. 111-21, § 2(f)(1), 123 Stat. 1617, 1618, in which five justices of the Supreme Court agreed that the word "proceeds" in a different forfeiture statute, 18 U.S.C. § 1956, did not mean "gross profits." Cf. United States v. Bucci, 582 F.3d 108 , 122- 24 (1st Cir. 2009) (considering whether Santos affects the "gross profits" issue in another forfeiture statute). We thus assume Hurley remains good law.

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tainted proceeds stemming from his wife's involvement in NECC, he

"obtained" them "from racketeering activity" within the meaning of

18 U.S.C. § 1963(a)(3).

The key preliminary question is whether Cadden

"obtained" the NECC earnings that Lisa Cadden deposited in their

joint account at all. And, on this point, we see little doubt.

The Supreme Court has noted that, during the time period in which

§ 1963(a)(3) was enacted, "the verb 'obtain' was defined as 'to

come into possession of' or to 'get or acquire,'" and "[t]hat

definition persists today." Honeycutt v. United States, 137 S.

Ct. 1626, 1632 (2017) (quoting Random House Dictionary of the

English Language 994 (1966)). And, we have held that a person

obtains property even when the property is merely "held in custody"

before being "passed along to its true owner." Hurley, 63 F.3d at

21 . Given Barry Cadden's status as a party to the joint account

he shared with his wife, he had "the right to withdraw all the

funds" from the account, "or any portion of them," and therefore

could "effectively exercise control over the entire interest, or

any part of it, and divest totally or partially, the interest of"

his wife. United States v. U.S. Currency, $81,000.00, 189 F.3d

28 , 34 (1st Cir. 1999) (quoting Heffernan v. Wollaston Credit

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Union, 567 N.E.2d 933 , 937 (Mass. App. Ct. 171)).19 This was more

than sufficient for acquisition purposes.

It is true that a racketeering offender is not required

to forfeit all of the "proceeds" he "obtained," but only those

that he "obtained, directly or indirectly, from racketeering

activity." 18 U.S.C. § 1963(a)(3). It is also true that the

racketeering activity itself must have led to the acquisition of

the proceeds. See Angiulo, 897 F.2d at 1213 (noting that

"defendants' racketeering activities must be shown to be 'a cause

in fact of the acquisition or maintenance of [forfeitable]

interests,'" including proceeds (quoting United States v. Horak,

833 F.2d 1235 , 1243 (7th Cir. 1987))). But, even accepting,

favorably to Cadden, that the forfeiture statute imposes not merely

a but-for causation requirement but a proximate causation

requirement as well, we do not see how this additional limitation

would support the District Court's holding.

The District Court has not yet determined what amount of

the NECC proceeds Lisa Cadden obtained were tainted by racketeering

activity -- an issue that, as noted, it will need to resolve on

remand -- but we may assume that at least some of her earnings can

19 The government asserts that Massachusetts law governs, and Cadden does not dispute this assertion. In any case, however, we see no reason to think that Cadden would not have "obtained" the funds deposited in his jointly controlled account regardless of which state's law applied, given his ability to withdraw and spend the funds.

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be traced to fraudulent NECC sales. Insofar as that is the case,

the record shows that Cadden would have been well aware that the

mail fraud would generate profits that would accrue to him via his

wife's ownership share in NECC. Lisa Cadden had been a co-owner

of the company since its inception in 1998, and the record shows

that over that time period, she deposited the shareholder

distributions that she received into bank accounts she jointly

owned with her husband. There is little doubt that, as her husband

and the head of NECC, Barry Cadden would have been aware of this,

and he does not contend otherwise. Thus, it was a direct and

foreseeable consequence of Barry Cadden's mail fraud activity that

some NECC earnings attributable to that fraud would pass on to

Lisa Cadden and into the bank account she shared with him, such

that any proximate cause limitation imposed by the forfeiture

statute is satisfied here. See CSX Transp., Inc. v. McBride, 564

U.S. 685 , 701 (2011) (discussing different definitions of

proximate cause).

Cadden's arguments to the contrary are not persuasive.

He contends that a party to a joint account does not necessarily

"own" the account. But, the test is whether he "obtained" the

funds, and, as noted, a party does not need to have owned property

to have obtained it for the purposes of § 1963(a)(3). See Hurley,

63 F.3d at 21 . He also contends that, in line with Honeycutt,

forfeiture under § 1963(a)(3) "is limited to property the

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defendant himself actually acquired as the result of the crime."

137 S. Ct. at 1635 . Because Lisa Cadden was an "innocent" party,

he argues that it would unfair to penalize him on the basis of her

earnings. Even assuming that this holding of Honeycutt applies to

§ 1963(a) -- and is not limited to the statute at issue there, 21

U.S.C. § 853 -- it provides no support for Cadden's position,

however, because as a party to the jointly controlled account,

Cadden himself "actually acquired" the funds at issue. Because we

hold that Cadden "obtained" the NECC "proceeds" that Lisa Cadden

deposited in the couple's joint bank account, we remand for the

District Court to consider what amount of Lisa Cadden's earnings

should be included in Barry Cadden's forfeiture order because they

were tainted by racketeering activity.


This case was extremely complex. The District Court was

faced with a number of novel issues and emotionally fraught

evidence concerning the most serious type of allegations. We

commend its handling of this difficult case, and, for the reasons

stated above, affirm Cadden's convictions, though we vacate and

remand Cadden's sentence, and vacate and remand the forfeiture

order entered against him.

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