In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 19-2890

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v.

PAUL ELMER,

Defendant-Appellant.

____________________

Appeal from the United States District Court for the

Southern District of Indiana, Indianapolis Division.

No. 1:17-cr-113 — James R. Sweeney, II, Judge.

____________________

ARGUED SEPTEMBER 16, 2020 — DECIDED NOVEMBER 19, 2020

____________________

Before EASTERBROOK, MANION, and SCUDDER, Circuit 

Judges.

SCUDDER, Circuit Judge. Paul Elmer owned and operated 

multiple healthcare-related companies including Pharmakon 

Pharmaceuticals. His pharmacy produced and distributed 

drugs that Elmer knew were dangerous. Rather than halting 

manufacturing or recalling past shipments, sales continued 

and led to the near death of an infant. Federal charges followed for Elmer’s actions in preparing and selling drugs that 
2 No. 19-2890

contained more or less of their active ingredient than advertised. A jury returned a guilty verdict on all but one count. 

Elmer now appeals several of the district court’s rulings related to the evidence admitted at trial and his sentence. The 

evidence before the jury overwhelmingly proved Elmer’s 

guilt. And the district court’s imposition of a sentence of 33 

months’ imprisonment was more than reasonable given the 

gravity of Elmer’s crimes. We therefore affirm.

I

Through a process known as compounding, Pharmakon 

mixes and distributes drugs—including potent opioids like 

morphine and fentanyl—to hospitals across the United States. 

Federal regulations require such compounding pharmacies to 

comply with “Good Manufacturing Practices” regarding the 

potency of drugs and the sterility of the mixing and manufacturing process. Potency refers to the amount of the active ingredient in the drug. By way of an everyday example, consider Tylenol. The potency of Tylenol advertised as having 

500mg of its active ingredient—acetaminophen—refers to 

whether each pill contains that precise amount of acetaminophen. Industry standards generally require compounded 

drugs like the ones Pharmakon produced to be within a potency range of 90–110%. Taking our Tylenol example, a 500mg 

pill would need to have between 450mg and 550mg of acetaminophen to comply with federal regulations. Test results 

showing compounded drugs outside of the required potency 

range are considered “out of specification.” 

Pharmakon conducted its own internal potency testing 

and contracted with a third party to perform additional testing to evaluate whether its compounded drugs had too little 

of the active ingredient (called “under-potent” drugs) or too 
No. 19-2890 3

much (called “over-potent” drugs). Between 2014 and 2016,

testing showed 134 instances of under- or over-potent drugs 

being distributed to customers. 

The sale of these out-of-specification drugs risked disastrous consequences. In March 2014 Pharmakon shipped a sedative called Midazolam to a Community Health Network hospital in Indianapolis. The drug was twice as potent as indicated on the label, and before anyone caught the error, Community Health staff gave the drug to 13 infants in the hospital’s neonatal intensive care unit. The administration of the 

overly potent Midazolam risked causing severe respiratory 

distress, as the infants who received the drug were already on 

ventilators. Fortunately, none of the babies died or went into 

respiratory arrest.

Two years later, in February 2016, Pharmakon again sent 

Community Health an over-potent batch of drugs—this time 

morphine sulphate. The doses contained 25 times the amount 

of morphine indicated on the label. Once again unaware of 

Pharmakon’s egregious compounding error, a Community 

Health nurse gave this ultra-concentrated morphine to a 12-

month-old child. The infant immediately went into respiratory arrest and survived only because doctors were able to administer three different doses of Narcan, a medication for reversing the effects of opioid overdose.

These events did not go unnoticed. Community Health reported the incidents to the Food and Drug Administration. 

Upon receiving the first of these reports in April 2014, the 

FDA sent investigators to Pharmakon, despite having just 

completed a routine inspection the prior month. During the 

inspection Caprice Bearden, Pharmakon’s Director of Compliance, lied to FDA officials when telling them that the 
4 No. 19-2890

company had not received any out-of-specification test results. Bearden, in turn, told Elmer of this deception, and he 

too lied to the inspectors during the April investigation. 

Bearden and Elmer repeated the falsehoods multiple times, 

all as part of seeking to conceal the existence of out-of-specification results.

After Pharmakon’s over-potent morphine nearly killed 

the infant in February 2016, the FDA once again sent inspectors to the company’s Indiana campus. This time Elmer took 

a more active role in misleading the agency. He told Michelle 

Beland, a pharmacist at a related Pharmakon entity, to lie to 

the inspectors and pretend that she was the pharmacist at the 

facility under inspection. He also convinced Beland to try to 

prevent the actual pharmacist for that facility, Marcus Fields, 

from speaking to the inspectors, for Elmer worried that Fields 

would report Pharmakon’s recurring issues with producing 

and shipping over- and under-potent drugs. 

Elmer’s efforts to hide the truth ultimately failed. After 

Fields came clean to the FDA inspectors, Bearden and Beland

followed suit and eventually provided documentation revealing Pharmakon’s misconduct, foremost the out-of-specification test results. Confronted with this evidence, Elmer still refused to recall Pharmakon’s compounded drugs. The FDA responded by issuing a public safety alert and referred the case 

to the Department of Justice for criminal investigation.

In June 2016 a federal grand jury issued a ten-count indictment charging Elmer with conspiracy to defraud the FDA 

(18 U.S.C. § 371); introducing adulterated drugs into interstate commerce (21 U.S.C. §§ 331(a), 333(a)(1) & 351); and 

adulterating drugs being held for sale in interstate commerce 

(21 U.S.C. §§ 331(k), 331(a)(1) & 351). A superseding 
No. 19-2890 5

indictment added a charge for obstructing justice (28 U.S.C. 

§ 1505). Elmer chose to go to trial on all charges.

Several Pharmakon employees (including Bearden, 

Beland, and Fields) testified against him. So too did various 

FDA inspectors and Community Health Network medical 

staff testify at trial. The government also introduced emails 

from a Pharmakon employee who conducted internal testing. 

These emails showed Elmer being urged to address multiple 

instances of out-of-specification test results. He never did so. 

In short, the evidence that Elmer was aware of and directed 

the efforts to conceal out-of-specification test results from the 

FDA was overwhelming. 

The trial ended with the jury returning guilty verdicts on 

the conspiracy count and all nine counts related to the adulterated drugs. The jury acquitted Elmer on the obstruction 

count. The district court later sentenced him to 33 months’ imprisonment. Elmer now appeals.

II

Elmer challenges two of the district court’s evidentiary 

rulings. First, he contends the government, as part of proving 

the adulteration charges alleged in counts three through 

eleven, should not have been allowed to introduce evidence 

of 73 separate instances of out-of-specification test results. 

Second, he argues that the district court should never have allowed the jury to learn about the personal relationship he had 

with Pharmakon pharmacist Michelle Beland. We disagree on 

both fronts and see no abuse of discretion in the district 

court’s evidentiary rulings. See United States v. Buncich, 

926 F.3d 361, 367 (7th Cir. 2019) (explaining that abuse of discretion review is highly deferential and requires us to defer to 
6 No. 19-2890

the district court absent any reasonable basis supporting its 

view).

A

We start with Elmer’s challenge to the 73 out-of-specification test results. He insists these tests were evidence of prior 

bad acts inadmissible under Federal Rule of Evidence 404(b) 

and unrelated to the nine counts of making or distributing 

adulterated drugs. Had Elmer been charged with only those 

nine counts, he might have a point. What he overlooks, however, is the indictment’s conspiracy charge. The indictment alleged that Elmer’s efforts to hide these out-of-specification results were an object of the conspiracy. In clear and precise 

terms, count one alleged that the conspiracy aimed to conceal 

from the public that “Pharmakon was compounding and distributing numerous drugs that were under- and over-potent.” 

And therein lies the nexus with the evidence presented at 

trial: Elmer’s concealment of the 73 out-of-specification test 

results from the FDA were overt acts taken in furtherance of 

the charged conspiracy. 

The government stood on firm ground approaching proof 

of the charged conspiracy this way. Time and again we have 

said that “Rule 404(b) does not apply to direct evidence of the 

crime charged.” United States v. Ferrell, 816 F.3d 433, 443 (7th 

Cir. 2015). Even more, we have noted “[s]pecifically, evidence 

directly pertaining to the defendant’s role in a charged conspiracy is not excluded by Rule 404(b).” United States v. Adams, 

628 F.3d 407, 414 (7th Cir. 2010). In no way were these out-ofspecification test results prior bad act evidence: they constituted direct evidence of the conspiracy. The district court 

properly admitted this evidence.
No. 19-2890 7

B

Elmer fares no better in his challenge to Michelle Beland’s 

testimony. Recall that Beland worked as a Pharmakon pharmacist and testified that Elmer instructed her to lie to FDA 

inspectors. Beland testified that Elmer told her to pretend to 

be sick so she would not have to speak to the inspectors during the March 2014 inspection. He also directed her to hide 

the fact that she did not work in the exact facility under inspection. Finally, Elmer implored Beland to ask Marcus Fields 

to also lie to the FDA—urging him to tell the inspectors that 

Beland was the lead pharmacist at the facility being inspected

and to make no mention of the related facility where Beland 

actually worked.

Elmer does not challenge the admissibility of this testimony. Nor does he argue that the district court should have 

barred Beland from testifying altogether. He instead contends 

that the district court abused its discretion by allowing the 

government to elicit testimony of Beland’s personal relationship with him. In the days leading to the February 2016 inspection, and for a few months afterwards, Beland and Elmer 

communicated frequently through text messages and phone 

calls. Some of these communications contained “sexual talk” 

and “dirty jokes.”

Elmer moved before and during trial to exclude any reference to the nature of these communications, asking the district 

court to limit the government’s description of his relationship 

with Beland to that of a mentor or father figure. The government defended the admission of this testimony on the 

grounds that it was necessary to show why Beland was willing to follow Elmer’s instructions to lie to the authorities. The 

district court allowed Beland to offer limited testimony about 
8 No. 19-2890

these personal messages with Elmer. But the court prevented 

her from reading the content of any particular message. The 

government complied with the district court’s instructions 

and only generally referenced the personal and sexual content 

of some of the messages. The court likewise barred prosecutors from discussing any “salacious” details provided by 

Beland in a pre-trial interview.

We cannot say the district court abused its discretion in 

allowing but limiting Beland’s testimony this way. To be sure, 

the safer course would have been to prohibit the government 

from making any reference to the sexual banter. But Beland’s 

testimony on this topic was very general, lacking in prejudicial details and occupying less than ten pages in a 1,700-page 

trial transcript. See United States v. Miller, 688 F.3d 322, 329–30 

(7th Cir. 2012) (concluding that a “brief reference” to prejudicial evidence did not amount to an abuse of discretion). Even 

if this was an abuse of discretion, any error was harmless in 

light of the overwhelming evidence of Elmer’s guilt. See 

United States v. Taylor, 522 F.3d 731, 735 (7th Cir. 2008).

III

We come in closing to Elmer’s challenge to his sentence. 

He asserts the district court, in computing the advisory sentencing range under the Sentencing Guidelines, improperly 

applied certain enhancements while also refusing to award 

him credit for accepting responsibility for his offense conduct. 

Elmer also argues that the sentence was substantively unreasonable given his health issues and family obligations. 

The district court committed no error in applying a twolevel vulnerable victim enhancement under U.S.S.G. 

§ 3A1.1(b)(1). Elmer posits that the only victim of the charged 
No. 19-2890 9

conspiracy was the FDA. Not so. Elmer ignores the way the 

Guidelines and our case law have defined “victim.” The 

Guidelines commentary advises district courts that the enhancement applies to victims of “any conduct for which the 

defendant is accountable under § 1B1.3” if that victim is “unusually vulnerable due to age, physical or mental condition, 

or who is otherwise particularly susceptible to the criminal 

conduct.” U.S.S.G. § 3A1.1 cmt. 2. Our case law has clarified 

that a person who has “experienced some actual or intended 

harm” from the relevant conduct qualifies as a vulnerable victim. United States v. Johns, 686 F.3d 438, 460 (7th Cir. 2012). 

Multiple infants suffered actual harm and others faced astronomical risk as a result of Elmer’s deception. It affronts reality to suggest an absence of vulnerable victims. Elmer was 

on notice, moreover, that infant patients could (and did) receive his company’s drugs by no later than April 2014, when 

Community Health filed its first report of over-potency attributable to Pharmakon medications. Because these infant 

victims were “unusually vulnerable due to age,” the district 

court had more than enough to impose the two-level vulnerable-victim enhancement.

Nor do we see any error with the district court’s application of a two-level enhancement for Elmer’s abusing a position of trust or using a special skill. See U.S.S.G. § 3B1.3. Elmer 

bases his objection on the view that his role in the conspiracy 

did not require any of the special skills he possessed as a licensed pharmacist. While that point is debatable—for example, Elmer often relied on his pharmaceutical knowledge in 

rebuffing inquiries from regulators and his staff—his larger 

problem is that the district court did not apply the two-level 

enhancement based on any use of a “special skill,” but rather 
10 No. 19-2890

because Elmer abused a “position of trust.” Elmer entirely 

misses this point, even after the government pointed out this 

lapse in its briefing. Any challenge to the position-of-trust enhancement is therefore waived. See United States v. Cook, 

406 F.3d 485, 487 (7th Cir. 2005) (“[A] waiver is a deliberate 

decision not to present a ground for relief that might be available in the law.”).

The district court stood on equally sound ground in denying Elmer’s request for acceptance of responsibility credit. 

Elmer never admitted wrongdoing or accepted responsibility 

for his grievous offense conduct. To the contrary, he chose to 

contest his guilt at trial, all along continuing to blame everyone around him, including at sentencing and indeed throughout this appeal. Refusing to find that Elmer accepted responsibility under these circumstances is not clear error and comes 

nowhere close, as Elmer claims, to imposing a “trial tax” in 

violation of the Sixth Amendment right to a speedy and public trial. See United States v. Saunders, 973 F.2d 1354, 1363 (7th 

Cir. 1992) (“As long as the leniency decision is an individualized one, not based merely on the defendant’s decision to go 

to trial, a defendant’s constitutional rights are not impaired.”).

Finally, the district court’s imposition of a 33-month sentence was in no way substantively unreasonable. The sentence 

matched the low end of the advisory range and reflected the 

district court’s application of the mitigating factors required 

by 18 U.S.C. § 3553(a), including Elmer’s health conditions 

and his role as the sole caretaker for his wife who also suffers 

from serious medical conditions. The law required no more of 

the district court. If anything, Elmer’s sentence strikes us as 

meaningfully lower than the district court could have 
No. 19-2890 11

imposed given the extreme risks, including to infant patients, 

posed by his offense conduct. 

For these reasons, we AFFIRM.