United States v. Babich, 1:16-cr-10343-ADB

Defendants (executives at Insys) were indicted in a Second Superseding Indictment for RICO conspiracy alleging mail/wire fraud, honest-services fraud, and controlled-substance offenses related to marketing/distribution of Subsys.
Defendants moved to compel production of the legal instructions the Government gave the grand jury, arguing omitted allegations in the SSI show the Government misinstructed the grand jury on elements of predicate offenses and honest-services/insurance fraud.
Defendants identified three omission-based complaints: lack of an allegation that defendants agreed to divert Subsys for non-medical street use; absence of the source/intent elements for honest-services fraud; and omission of allegations that anyone affirmatively lied or concealed information from insurers.
The Government opposed, arguing the SSI is facially sufficient, that RICO conspiracy does not require pleading agreement to commit each element of each predicate act, and that defendants failed to show the particularized need required to breach grand-jury secrecy.
The Court applied Rule 6(e)’s secrecy standard and Douglas Oil’s particularized-need test, found defendants’ claims speculative, concluded the SSI adequately alleges RICO conspiracy elements, and denied the motion to compel.

Issue	Plaintiff's Argument (Gov't)	Defendant's Argument	Held
Whether court should order production of grand jury legal instructions	Disclosure not warranted absent particularized need; indictment is facially sufficient	Production necessary to test alleged misinstructions and to vindicate due process	Denied—defendants failed to show particularized need; secrecy upheld
Whether indictment must allege defendants agreed to divert Subsys for nonmedical/street use	RICO conspiracy need not allege agreement to commit each element of predicate offenses	SSI is deficient for not alleging agreement to divert for nonmedical use, implying grand-jury misinstruction	Denied—court found SSI facially sufficient; omission does not show misinstruction
Whether indictment needed to specify source/intent for honest-services fraud	Government need not plead every element of predicate acts in RICO conspiracy indictment	SSI’s lack of source-of-duty and intent allegations suggests erroneous grand-jury instruction	Denied—court rejected that omissions established improper instructions or basis for dismissal
Whether omission of allegations of affirmative lies/insurance concealment shows misinstruction	Indictment adequately alleges scheme to defraud insurers without detailing every act	Defendants say omission means prosecutors told grand jury omissions alone suffice	Denied—no particularized evidence of erroneous instruction; indictment stands

Douglas Oil Co. v. Petrol Stops Nw., 441 U.S. 211 (recognizes grand jury secrecy and articulates particularized-need test for disclosure)
Costello v. United States, 350 U.S. 359 (an indictment valid on its face is sufficient to require trial on the merits)
United States v. McMahon, 938 F.2d 1501 (1st Cir. 1991) (emphasizes importance of grand-jury secrecy)
United States v. George, 839 F. Supp. 2d 430 (D. Mass. 2012) (applicant bears burden to show particularized need for grand-jury materials)
United States v. Rodriguez-Torres, 570 F. Supp. 2d 237 (D.P.R. 2008) (speculative allegations insufficient to obtain grand-jury materials)
United States v. Singhal, 876 F. Supp. 2d 82 (D.D.C. 2012) (denying production where indictment facially valid and no particularized need shown)
United States v. Stevens, 771 F. Supp. 2d 556 (D. Md. 2011) (production allowed where transcripts showed likely erroneous instruction)