United States v. Tanner
942 F.3d 60
2d Cir.2019Background
- Valeant placed employee Gary Tanner onsite at Philidor (a specialty pharmacy run by Andrew Davenport) to manage the commercial relationship; Tanner secretly aided Philidor and provided competitor intelligence to Davenport.
- Tanner used his Valeant role to steer business to Philidor, gave Philidor incremental discounts, and shared confidential Valeant due‑diligence information during acquisition talks; Davenport paid Tanner about $9.7 million (plus a $750 hotel stay), routed through shell companies.
- In Jan 2017 both were charged with honest‑services wire fraud and conspiracy, Travel Act conspiracy (based on New York commercial bribery), and money‑laundering conspiracy; a jury convicted both on all counts; each was sentenced to 366 days and ordered restitution and forfeiture.
- District Court ordered joint-and-several restitution of $11,855,683.35 (including $8 million tied to the POA price increase) and ordered each defendant to forfeit $9,703,995.33; total forfeiture award exceeded the actual criminal proceeds.
- On appeal the Second Circuit affirmed the convictions, rejected challenges to jury instructions and evidentiary rulings as either correct or harmless, but vacated and remanded parts of the restitution and forfeiture orders.
- The court held the restitution methodology was unsound (vacated the $8 million component) and that forfeiture must be limited so defendants together forfeit no more than $9,703,995.33; Honeycutt did not bar joint liability here because each defendant had possessed tainted proceeds.
Issues
| Issue | Government's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Sufficiency — honest‑services fraud | Payments, timing, concealment and use of shells show quid pro quo bribery/kickback | Acts were within Tanner's job or constituted undisclosed self‑dealing/ownership interest, not quid pro quo | Affirmed: evidence sufficed to prove corrupt intent and quid pro quo |
| Sufficiency — Travel Act | New York hotel payment and interstate facilities support conspiracy to commit bribery in NY | No proof the bribery conspiracy occurred in New York | Affirmed: evidence (hotel payment) adequate for jury to find NY nexus |
| Jury instruction — mens rea | Charge required knowing, willful participation and specific intent to deprive Valeant of honest services | Instruction failed to require proof of Davenport's corrupt intent separately | Rejected: charge read as to both defendants; no reversible error |
| Restitution & Forfeiture | Restitution approximates Valeant loss; forfeiture of each reflects proceeds possessed | $8M restitution unsupported by sound methodology; Honeycutt bars joint/several forfeiture where defendant didn't possess proceeds | Partial vacatur: restitution remanded to compute actual loss with sound methodology; forfeiture reduced—defendants jointly and severally liable for no more than $9,703,995.33; Honeycutt not controlling here |
Key Cases Cited
- Skilling v. United States, 561 U.S. 358 (honest‑services are limited to schemes involving bribery or kickbacks; requires quid pro quo)
- Honeycutt v. United States, 137 S. Ct. 1626 (Supreme Court rule limiting joint‑and‑several forfeiture to defendants who possessed tainted proceeds)
- United States v. Finazzo, 850 F.3d 94 (defendant's gain is not automatically the victim's loss for restitution)
- United States v. Zangari, 677 F.3d 86 (restitution must tie to victim's actual, provable loss)
- United States v. Gushlak, 728 F.3d 184 (restitution must be a reasonable approximation supported by a sound methodology)
- United States v. Rosen, 716 F.3d 691 (payments and concealment can support inference of a quid pro quo)