Dr. Seth Fishman, a veterinarian, and his salesperson Lisa Giannelli, manufactured and distributed undetectable performance-enhancing drugs (PEDs) to horse trainers from 2002 to 2020, which the trainers used to gain an advantage in competitions. Both were convicted after separate trials on aggravated counts of conspiring to violate the Food, Drug, and Cosmetic Act (FDCA) under 21 U.S.C. § 331 by intentionally misbranding and adulterating drugs with intent to defraud or mislead state racing regulators.
On appeal, both defendants argued that the enhanced penalty provision under 21 U.S.C. § 333(a)(2) for intent to defraud or mislead applied only to fraudulent intent towards consumers—who, in this case, were either trainers that knew they were purchasing PEDs, or were horses, incapable of being defrauded—not to state horse racing regulators.
Relying primarily on a textualist analysis, the Second Circuit disagreed. The panel held that § 333(a)(2) contains no limitation on classes of victims. If misbranding was undertaken with the intent to deceive, the identity of the target is immaterial. The court also rejected Fishman’s arguments that the rule of lenity should apply and that the Horseracing Safety and Integrity Act of 2020 rules out § 333(a)(2) as a vehicle for prosecuting doping violations.
Next, the panel rejected Giannelli’s challenge under Rules 404(b) and 403 to the admission of evidence related to a dismissed 2011 Delaware investigation of a horse death, ruling that the investigation was not extrinsic evidence of other bad acts, but part of the very act charged.
Third, Fishman disputed the use of his gains as a proxy for actual loss in the guidelines calculation under USSG § 2B1.1(b)(1). The Court found no clear error, affirming that competitors who lost races to doped horses suffered actual, even if not readily quantifiable, loss, justifying the use of gain as a proxy. The $13 million gain figure was not plain error, especially considering the $25 million race winnings of just one of Fishman’s customers and coconspirators.
Fourth, the Court vacated the $25 million restitution order to racetracks, finding they did not suffer “actual loss” under the Mandatory Victims Restitution Act (MVRA) because they would have paid out purses regardless of whether the winning horses were doped.
Finally, the court vacated the forfeiture order against Fishman, holding that 21 U.S.C. § 334, which allows for seizure and condemnation of misbranded and adulterated drugs, is not a “civil forfeiture statute” within the meaning of 28 U.S.C. § 2461(c). Because the object of § 334 is to remove unsafe drugs from commerce, not confiscate property or impose an economic penalty, it does not support a criminal forfeiture money judgment.
Appeal from Southern District of New York.
Opinion by Robinson, joined by Lynch and Merriam.