United States v. Scully
170 F. Supp. 3d 439
E.D.N.Y2016Background
- Defendant William (Liam) Scully was tried on a 75-count superseding indictment charging fraud, misbranding/unapproved-drug distribution, receipt/delivery of misbranded drugs, and related offenses arising from Pharmalogical, Inc./MDK and Taranis Medical’s importation and sale of foreign prescription drugs.
- After a five-week jury trial with ~40 witnesses, the jury convicted Scully on 66 felony counts and explicitly rejected his advice-of-counsel defense on those counts.
- Scully moved under Fed. R. Crim. P. 29 for judgment of acquittal (insufficiency of evidence) and under Rule 33 for a new trial (constitutional right to present a defense; prejudicial spillover).
- Central factual disputes concerned: whether Scully honestly sought and fully disclosed facts to counsel (Richard Gertler and Peter Tomao), whether he actually followed counsel’s advice in good faith, and whether he intended to defraud customers/FDA/consumers.
- The Court reviewed the record in the light most favorable to the government, found ample evidence undermining the advice-of-counsel defense (including withheld facts, deceptive shipping/import methods, and continued sales after warnings), and evaluated sufficiency challenges customer-by-customer.
- Result: Rule 29 granted in part — convictions on Counts 45 and 62 (FDCA counts tied to a specific April 23, 2012 transaction) vacated and acquittal entered; all other Rule 29 claims denied. Rule 33 (new trial) denied in full.
Issues
| Issue | Plaintiff's Argument (Gov't) | Defendant's Argument (Scully) | Held |
|---|---|---|---|
| Whether Scully established an advice-of-counsel defense negating criminal intent | Jury should credit record showing omissions, misleading conduct, post-search resumption of sales, and other indicia that Scully did not meet the three Colasuonno elements | Scully argued he honestly sought, fully disclosed to, and relied on counsel’s advice (Gertler and Tomao) | Court: Jury could reasonably reject the defense; Rule 29 denied as to most counts (advice-of-counsel elements not met) |
| Admissibility/impact of Geoffrey Kaiser’s rebuttal testimony | Kaiser's testimony was relevant to whether Scully honestly believed counsel’s advice and showed concern raised within joint defense contacts | Scully argued Kaiser’s testimony confused jury and improperly suggested an attorney-client relation | Court: Kaiser’s testimony relevant and did not unfairly confuse jury; Rule 29 claim denied |
| Sufficiency of the evidence (fraud/FDA counts) generally and as to particular customers (e.g., Metro Pharmacy, SNCC, HOCI, SSNA, Kingston, Jersey) | Government: Evidence (advertising as FDA-approved, shipping misbranded/unapproved products, false representations, invoices, customer testimony) supported intent to defraud even where purchaser was an agent or continued ordering | Scully: Customers’ repeated purchases, investigative/agency status (undercover or aware), and attempts to contact FDA show lack of fraudulent intent; some transactions disputed (e.g., whether Altuzan was actually delivered) | Court: Viewing evidence for prosecution, jury verdicts largely sustainable; Rule 29 denied for those counts; specific acquittals granted where no substantial evidence product was misbranded for FDCA counts (Counts 45 & 62) |
| Rule 33: Whether exclusion of Scully’s testimony about Peter Tomao and admission of evidence tied to dismissed counts caused manifest injustice | Government: Excluding one-sided hearsay about Tomao was proper under Rule 403 because declarant was available and cross-examination necessary; evidence about importation/counterfeiting was relevant to the counts tried | Scully: Exclusion prevented him from presenting full advice-of-counsel defense; evidence relating to dismissed counts prejudiced the jury (spillover) | Court: No manifest injustice; exclusion was a permissible exercise of Rule 403 and defendant failed to show compelling prejudicial spillover; Rule 33 denied |
Key Cases Cited
- Jackson v. Virginia, 443 U.S. 307 (1979) (standard for reviewing sufficiency of evidence: whether any rational trier of fact could have found guilt beyond reasonable doubt)
- United States v. Colasuonno, 697 F.3d 164 (2d Cir. 2012) (elements for advice-of-counsel defense: honest/good-faith request, full disclosure, good-faith reliance)
- United States v. Beech-Nut Nutrition Corp., 871 F.2d 1181 (2d Cir. 1989) (advice-of-counsel does not shield one who willfully violates law or remains willfully blind)
- United States v. Temple, 447 F.3d 130 (2d Cir. 2006) (deference to jury in sufficiency review; court must view evidence in government’s favor)
- United States v. Milstein, 401 F.3d 53 (2d Cir. 2005) (FDCA intent to defraud can encompass intent to deceive regulators and the consuming public)
- United States v. Truman, 688 F.3d 129 (2d Cir. 2012) (credibility issues and accomplice testimony weight are for the jury)
- United States v. Guadagna, 183 F.3d 122 (2d Cir. 1999) (standard for Rule 29 acquittal; evidence must be nonexistent or meager)
- United States v. Dhinsa, 243 F.3d 635 (2d Cir. 2001) (after admitting hearsay under an exception, court must still perform Rule 403 balancing to exclude unreliable hearsay)
- United States v. Quinones, 511 F.3d 289 (2d Cir. 2007) (district court has broad discretion under Rule 403; trial judge best positioned to assess prejudice)
- United States v. Ferguson, 246 F.3d 129 (2d Cir. 2001) (Rule 33 new-trial standard: only in exceptional circumstances to prevent miscarriage of justice)