2013 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

1-25-2013

USA v. Quality Formulation Lab Inc

Precedential or Non-Precedential: Non-Precedential

Docket No. 11-4511

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NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

________________

Nos. 11-4511, 11-4512 & 11-4513

________________

UNITED STATES OF AMERICA 

v.

QUALITY FORMULATION LABORATORIES, INC;

AMERICAN SPORTS NUTRITION INC; MOHAMED S. DESOKY,

Appellants (No. 11-4511)

OMAR DESOKY,

Appellant (No. 11-4512)

AHMAD DESOKY,

Appellant (No. 11-4513)

________________

Appeal from the United States District Court

for the District of New Jersey

(D.C. Civil Action Nos. 2-10-cr-00699-001/2/4/5/6)

District Judge: Honorable Garrett E. Brown, Jr.

________________

Argued January 8, 2013

Before: SCIRICA, AMBRO, and FUENTES, Circuit Judges

(Opinion filed: January 25, 2013)

Eric R. Breslin, Esquire

Marco A. Gonzalez, Jr., Esquire (Argued)

Duane Morris
2

1037 Raymond Boulevard

One Riverfront Plaza, Suite 1800

Newark, NJ 07102

Counsel for Appellants

Quality Formulation Labs,

American Sports Nutrition Inc.,

Mohamed S. Desoky

Lisa Van Hoeck, Esquire (Argued)

Office of Federal Public Defender

220 South Clinton Avenue

Station Plaza #4, 4th Floor

Trenton, NJ 08609

Counsel for Omar Desoky, Appellant

Ricardo Solano, Jr., Esquire (Argued)

Friedman, Kaplan, Seiler & Adelman

One Gateway Center, 25th Floor

Newark, NJ 07102

Counsel for Ahmad Desoky, Appellant

Mark E. Coyne, Esquire

David E. Dauenheimer, Esquire

Office of United States Attorney

970 Broad Street, Room 700

Newark, NJ 07102

Paul J. Fishman

 United States Attorney

Stuart F. Delery

 Acting Assistant Attorney General

Patrick R. Runkle, Esquire (Argued)

United States Department of Justice

Office of Consumer Litigation

P.O. Box 386

Washington, DC 20044

Counsel for Appellee
3

________________

OPINION

________________

AMBRO, Circuit Judge

Appellants—three companies and three individuals—jointly appeal their 

convictions for criminal contempt and Appellants Omar and Ahmad Desoky appeal their 

sentences. We affirm the convictions but vacate and remand Omar and Ahmad Desoky’s 

sentences for further findings. 

I. Background

In 2010, following a civil suit, Mohamed Desoky and the three dietary supplement 

companies he ran—Quality Formulations Laboratories (QFL), American Sports Nutrition 

(ASN), and Sports Nutrition International (SNI)—entered into a court-approved Consent 

Decree with the federal Food and Drug Administration (FDA) halting production at the 

companies’ Paterson, New Jersey manufacturing facility. The Consent Decree provided

that

[QFL, ASN, SNI and Mohamed Desoky] and each and all of their officers, agents, 

employees, successors, and assigns, and any persons in active concert or 

participation with any of them who receive notice of this Decree, are permanently 

restrained and enjoined . . . from directly or indirectly receiving, manufacturing, 

preparing, packing, labeling, and distributing at their plant located [in] . . . 

Paterson, New Jersey . . . or any new location(s) at which the Defendants receive, 

manufacture, prepare, pack, label, hold, or distribute articles of food, any article of 

food unless and until [described] conditions have been met[.]

App. at 78, Consent Decree, para. VII. It also required that

[QFL, ASN, SNI and Mohamed Desoky] shall notify FDA in writing at least thirty 

(30) calendar days before any change [in] ownership, name, or character of their 

business, including reorganization, relocation, dissolution, assignment, or lease or 
4

sale of the business or any asset of the business, such as buildings, equipment, or 

inventory, that may affect compliance with the obligations arising from this 

Decree.

Id. at 92, Consent Decree, para. XV. 

Pursuant to the Consent Decree, the Paterson facility was shut down. 

Subsequently, manufacture of Appellants’ products began at a facility in Congers, New 

York owned by ADH Health Products (―ADH‖). On discovering this manufacturing, the 

FDA filed an order to show cause alleging criminal contempt by Mohamed, the three 

companies, and Mohamed’s two sons and company employees, Ahmad and Omar. The 

Government alleged that Appellants willfully violated the Consent Decree by 

manufacturing products at the Congers facility. Appellants asserted a good faith defense, 

arguing that they contracted with ADH to manufacture QFL products, and they believed 

this third-party manufacturing was permitted by the Consent Decree. 

Evidence presented at trial showed that the Congers facility manufactured QFL 

products, that Appellants sent raw material and equipment from Paterson to Congers, that 

former and current QFL employees worked on the products in Congers, and that QFL 

paid those employees in cash. Appellants did not disclose the activities at Congers to the 

FDA, including during two FDA inspections of the Paterson facility. 

In addition to the activities at Congers, some raw ingredients were shipped to the 

Paterson facility, Ahmad brought some products manufactured at ADH to the Paterson 

facility to be shipped to customers, and Ahmad loaded two pallets of product from the 

Paterson facility to a truck owned by Performance Food Centers. The Government 
5

alleged that these actions also violated the Consent Decree, and Appellants asserted a 

good faith defense to these charges as well. 

Appellants were convicted of criminal contempt. Mohamed was sentenced to 40 

months’ imprisonment. Ahmad and Omar were each sentenced to 34 months’ 

imprisonment, and the companies were fined. All appeal.1

II. Discussion

Appellants raise four challenges to their convictions and one to a sentencing 

enhancement applied to Omar and Ahmad Desoky. 

A. Exclusion of Mary Richardson’s Testimony

The District Court excluded Appellants’ offered testimony of Mary Richardson, an 

expert consultant they hired to help them comply with the FDA’s requirements in order to 

avoid and then lift the production shut-down. Richardson would not have testified about 

the charged conduct. Instead, her testimony related solely to Appellants’ efforts to 

remediate the issues identified at the Paterson facility. 

We review a district court’s decision to admit evidence for abuse of discretion. 

United States v. Givan, 320 F.3d 452, 460 (3d Cir. 2003). Some evidence of earlier 

―good acts‖ evidence may be admissible to show a defendant lacked wrongful intent in 

later behavior. See United States v. Garvin, 565 F.2d 519, 522 (8th Cir. 1977) (evidence 

of correctly submitted applications for approximately 18 insurance policies admissible to 

show lack of intent to commit a scheme to defraud); United States v. Shavin, 287 F.2d 

 

1

The District Court had jurisdiction pursuant to 18 U.S.C. § 3231, and we have appellate 

jurisdiction under 28 U.S.C. § 1291.
6

647, 654 (7th Cir. 1961) (evidence of properly submitted medical bills admissible to 

show lack of intent to defraud with later medical bills). 

But Richardson’s testimony is not of this sort. Evidence that Appellants 

undertook ameliorative efforts at Paterson does not negate the Government’s theory—

apparently adopted by the jury—that Appellants engaged in simultaneous efforts to 

improve the Paterson plant and to continue manufacturing elsewhere, with the latter 

actions violating the Consent Decree.

In addition, Richardson’s testimony would have raised ancillary issues about the 

initial problems at Paterson and the Appellants’ ameliorative efforts. The District Court 

concluded this outweighed any potentially probative value of the testimony. We agree,

and, moreover, discern no harm in excluding Richardson’s testimony. United States v. 

Berrios, 676 F.3d 118, 131 (3d Cir. 2012). Appellants provided uncontradicted evidence 

at trial about their efforts at Paterson, and their counsel were able to argue to the jury that 

these efforts demonstrated their lack of willfulness to violate the decree. In this context, 

the District Court did not err in excluding the testimony. 

B. Jury Instruction on a Good Faith Defense

Appellants also challenge two aspects of the jury charge on their good faith 

defense. They argue that the Court improperly instructed the jury: (1) that an honest 

misunderstanding of the order must be plausible; and (2) that a defendant does not act in 

good faith if he also knowingly made false statements, representations, or purposeful 

omissions. The first part we review de novo because Appellants objected to the language 

at trial. United States v. Berrios, 676 F.3d at 136. Appellants contend that we should 
7

review the false statements instructions de novo because they omit key language in their 

requested charge. While we doubt that merely requesting an instruction contrary to the 

one given sufficiently informs the Court of the specific objection, thus preserving the 

issue for appeal, Fed. R. Crim. P. 30(d); United States v. Russell, 134 F.3d 171, 178–79 

(3d Cir. 1998), we discern no error under either a de novo or plain error review. 

The language used by the District Court on plausibility comes from our analysis of 

a good faith defense in Taberer v. Armstrong World Industries, Inc., 954 F.2d 888, 909 

(3d Cir. 1992). Although Appellants allege error in this instruction, we consider jury 

instructions as a whole, and here find that the jury was properly instructed that a 

defendant did not commit criminal contempt if he acted under an honest, although 

incorrect, misunderstanding of the court order. United States v. Gross, 961 F.2d 1097, 

1103 (3d Cir. 1992) (―[T]he good faith instruction [i]s simply a reiteration that the 

government must carry its burden in demonstrating that the accused acted knowingly and 

willfully . . . .‖). We also find no error in the Court’s instruction that a defendant does 

not act in good faith if he makes false statements, representations, or purposeful 

omissions. As such, there is no support for Appellants’ argument that the jury might

have determined that they were not entitled to a good faith defense because of a false 

statement or omission unrelated to the charged conduct. 

C. Sufficiency of the Evidence on the Aiding and Abetting Charge

Omar and Ahmad challenge the sufficiency of the evidence that they aided and 

abetted the other Appellants’ failure to notify the FDA of the companies’ relocation from 

Paterson to Congers. When reviewing a jury verdict for insufficiency of evidence, we 
8

consider the evidence in a light most favorable to the Government, and will affirm unless 

no reasonable jury could find the essential elements of the charged offense beyond a 

reasonable doubt. United States v. Gatlin, 613 F.3d 374, 380 (3d Cir. 2010). Aiding and 

abetting has four elements. ―First, the person who is being aided must be intentionally 

committing a crime; second, the aider or abettor must know that the other is committing a 

crime; third, the aider or abettor must have the purpose to aid that other to commit the 

crime; and, finally, fourth, the aider must in fact render aid or assistance.‖ United States 

v. Nolan, 718 F.2d 589, 592 (3d Cir. 1983). Sufficient evidence was presented at trial 

for a reasonable jury to conclude that all four elements were met. Omar and Ahmad 

knew that Mohamed had failed to inform the FDA of the move to Congers, a violation of 

the Consent Decree, and they successfully assisted him and the other Appellants in 

concealing the relocation. 

D. Closing Arguments

Appellants also argue that the prosecutors made a number of improper statements 

during closing argument. We review a district court’s ruling on contemporaneous 

objections to the statements for abuse of discretion. United States v. Brennan, 326 F.3d 

176, 182 (3d Cir. 2003). To determine whether a district court abused its discretion, we 

must consider whether the prosecutor engaged in misconduct, and, if so, whether the 

remarks were harmless. United States v. Rivas, 493 F.3d 131, 139–40 (3d Cir. 2007). 

We review statements to which Appellants did not object for plain error. Brennan, 326 

F.3d at 182. Although we are troubled by the prosecutor’s reference to defense counsels’ 

attack on a witness’s credibility as ―disgusting‖ and ―ridiculous,‖ we do not think this 
9

statement alone, or in combination with the other challenged comments, prejudiced

Appellants. The other challenged comments do not amount to misconduct, nor have 

Appellants shown prejudice as a result of these statements, alone or in combination.

E. Sentencing Enhancement Applied to Omar and Ahmad

Omar and Ahmad also challenge the District Court’s application of a three-level 

enhancement under section 3B1.1(b) of the United States Sentencing Guidelines. We 

review the factual findings supporting a district court’s application of the Guidelines for 

clear error, and exercise plenary review over a court’s interpretation of the Guidelines. 

United States v. Grier, 475 F.3d 556, 570 (3d Cir. 2007) (en banc). Section 3B1.1(b) 

provides for an enhancement ―[i]f the defendant was a manger or supervisor‖ and the 

criminal activity was extensive. U.S.S.G. § 3B1.1(b). It is applicable in two situations. 

First, the enhancement is proper if the defendant is a ―manager, or supervisor of one or 

more other participants.‖ § 3B1.1(b) cmt. 2. A participant is defined as someone who is 

―criminally responsible for the commission of the offense‖ even if not convicted. 

§ 3B1.1(b) cmt. 1; United States v. Katora, 981 F.2d 1398, 1404–05 (3d Cir. 1992). In 

addition, the defendant must have more than legal management responsibility over the 

participant; he must have actually managed or supervised the participant’s illegal 

conduct. United States v. DeGovanni, 104 F.3d 43, 44 (3d Cir. 1997) (―[O]ne is only a 

supervisor under U.S.S.G. § 3B1.1(c) when he is so involved in, and connected to, the 

illegal activity of others that he actually supervises their illegal conduct . . . .‖). 

Alternately, the role enhancement applies if the defendant ―exercised management 
10

responsibility over the property, assets, or activities of a criminal organization.‖ § 3B1.1 

cmt. 2. 

Here the District Court determined that the criminal activity was extensive, but did 

not make any factual findings regarding whether Omar or Ahmad managed or supervised

the unlawful activities of a criminally culpable participant or that a criminal organization 

existed over which Omar and Ahmad exercised management responsibility. Moreover, 

the Court did not determine whether the two unindicted employees the Government 

asserts were managed or supervised were criminally culpable. To sort matters out, we 

remand so the District Court can make necessary factual determinations.

We thus affirm Appellants’ convictions. However, we vacate Omar and Ahmad

Desoky’s sentences, and remand for further factual findings.