Are Enhanced Criminal Penalties Warranted?

ISSUE OF THE CASE

When an individual pleaded guilty to federal violations of structuring cash transactions to evade reporting requirements and agreed to forfeit specified assets and then the trial court increased his sentence because of his role in the matter, will his challenge to that act of increasing the sentence succeed?

FACTS OF THE CASE

A spousal team opened a pharmacy in a Mid-Atlantic state, with the wife being the licensed pharmacist and the husband being an intern. He had completed pharmacy school but had not successfully passed the licensure exam. That notwithstanding, he functioned as the chief executive officer of the pharmacy.

The Drug Enforcement Administration (DEA) and the Internal Revenue Service teamed up to search the home of an individual suspected of being the head of a drug trafficking organization, leading to him agreeing to serve as a confidential informant. He linked up with the couple’s pharmacy because it honored prescriptions from out-of-state prescribers. The informant said that after dealing with the pharmacy for about 4 months, the husband made 2 suggestions: Have the in-state prescribers issue companion prescriptions for noncontrolled substances, a move meant to lower the chances of alerting the DEA to what was occurring, and have the transactions be cash-only purchases by patients.

The DEA agents arranged for the informant to make 2 controlled purchases of oxycodone and other medications from the pharmacy. To complete the first, the husband, whose decisions and actions indicated that he knew he was dealing with a trafficker, charged the informant $1100 more than he had for an identical prescription, a huge mark-up. He also asked what was being done with medication containers. When told the vials were burned, he said “OK.” Further, he removed “dosing receipts,” which identify the pharmacy, before handing over the containers, saying that he did not want to leave a paper trail.

The pharmacy also was linked to another drug distribution ring, with patients visiting the pharmacy 2 or 3 times a week to present 5 or 6 prescriptions for oxycodone during each visit. The transactions were always in cash, except for 1 occasion when 200 oxycodone tablets were exchanged for ownership of a Nissan Maxima. Oxycodone tablets constituted 70% of the total dosage units dispensed at the pharmacy in 1 year.

In addition, once when the husband went to the bank to make a cash deposit of $16,000, the teller began to complete a currency transaction report form, which under federal law is required when a cash transaction exceeds $10,000. The husband inquired how he could avoid that requirement. He then proceeded to open accounts at several local banks, all with deposits under the $10,000 triggering limit. His explanation to banking personnel was that the cash came from operation of the pharmacy where he did not accept checks or credit cards.

Following execution of a search warrant at the pharmacy and discovery of large stashes of cash and containers of oxycodone, a federal grand jury indicted the husband. The charges included money laundering and structuring financial transactions to avoid reporting requirements, and the key indictment alleged that he engaged in conspiracy to distribute oxycodone outside the usual course and scope of professional practice and not for legitimate medical purposes.

More than 6 months after his arrest, the husband signed an agreement to enter a guilty plea to 2 counts of structuring cash deposits to evade reporting requirements. His first appearance in court to assent to the plea agreement adjourned without him agreeing to it, but he subsequently did agree to it.

A probation officer recommended a double 2-level enhancement to the proposed penalties based on the defendant being the leader of the initiative and because of “abusing a position of public or private trust.” The husband objected to those increases in the recommended penalty, but the trial court judge adopted the recommendations. The defendant appealed to the federal court of appeals.

THE RULING

The federal appellate court affirmed the decision of the trial court judge, endorsing both 2-level enhancements of the penalty.

THE COURT’S REASONING

The appellate court reviewed the rationale of the trial court judge in adopting the enhancements and found that the defendant played a leadership role in the nefarious activity. Further, his status as a pharmacy intern gave him the ability and authorization to do things that noninterns cannot do. As a result, the appellate court upheld the ruling of the lower court.