Opinion ID: 453009
Heading Depth: 2
Heading Rank: 2

Heading: The Conspiracy Scenario

Text: 9 While it represents no illegality in itself, the diversion industry clearly presents unique opportunities for the development of fraudulent practices. The appellants, most of whom were established diverters, were convicted of using the interstate mail and wires to misrepresent themselves to pharmaceutical manufacturers as nonprofit or export organizations in order to obtain pharmaceuticals. That mail and wire fraud is the crime with which this appeal is concerned. We turn to the proof put on by the government at trial. 10 In May, 1975, John Berkey, a commodities broker, was authorized to establish an American branch of Opus Christi, a legitimate, nondenominational, charitable organization headquartered in Rome, Italy and dedicated to the distribution of medicines and foodstuffs to developing countries. Berkey registered Opus Christi as a nonprofit corporation in the District of Columbia and opened offices in the Watergate complex. Uneducated in the pharmaceutical business, Berkey contacted David Pollard, another commodities broker, and indicated to Pollard that, through Opus Christi's status as a charitable organization, Berkey would be able to acquire pharmaceutical products at preferential prices. Berkey merely required expertise as to which pharmaceutical products to purchase and at what prices. Pollard, responding to Berkey's request, contacted Philip Weinstein, Peter Fixler, and Lionel Harris, parties whom Pollard felt would be interested in Berkey's proposition because of their acquaintance with the diversion industry. Weinstein, Fixler and Harris, in response to Pollard's information, formed American Medicinal International, Ltd. (AMI) as an outlet for the sale in the diversion market of pharmaceutical products obtained by Berkey through Opus Christi. Berkey, Pollard, Weinstein, Fixler, and Harris agreed to share the profits of the pharmaceutical diversion among themselves. These events occurred between May and November, 1975. 11 In November, 1975, (then) Wilhelmina Harich joined AMI as a secretary. Over the course of time her involvement with the company apparently increased until she became Weinstein's de facto partner. 12 At trial, the government sought to prove that, beginning in July, 1975, Berkey, at the behest of AMI, began soliciting pharmaceutical products from manufacturers, purportedly on behalf of Opus Christi. He sent a form letter through the mail to approximately twenty companies and represented that Opus Christi, a charitable organization, would export all merchandise obtained from manufacturers and that this merchandise was to be used in the charitable undertakings of the organization. Upon certain of the manufacturers' further inquiries about the nature of the charity, Berkey provided, via the U.S. mail, misrepresentative documentation about Opus Christi America. 13 At approximately the same point in time, Lionel Harris, one of the principals of AMI, introduced Peter Fixler and Philip Weinstein to Stanley Kowitt, an established diverter of pharmaceutical products in southern Florida. At that time Mr. Kowitt owned and operated American Drug Brokers, later renamed Majestic Sales, Inc. Mr. Kowitt would soon come to purchase the substantial majority of all pharmaceuticals diverted through Opus Christi to AMI. 14 The government sought to prove at trial that, once these entities and characters were in place, Kowitt would place an order with AMI directing delivery of pharmaceutical products be made to Majestic Sales. David Pollard would then telex or mail this information to John Berkey. Additionally, the order information would be typed onto an AMI purchase order and sent to Berkey. Berkey would then prepare an Opus Christi purchase order for the benefit of the manufacturer and direct that the manufacturer deliver the merchandise to a specified warehouse. The merchandise would then be shipped by truck or air to Florida, either to Weinstein at AMI or directly to Kowitt at Majestic Sales. Payment for these transactions was demanded upon delivery by the manufacturers. Initially, the principals of AMI advanced money to Berkey who, prior to delivery, paid the manufacturer. Upon delivery of the merchandise to Majestic Sales, Kowitt would issue a check to AMI which would be deposited immediately. Weinstein would withdraw cash sufficient to pay Berkey and Pollard their respective shares and Pollard or Weinstein would then fly to Washington to deliver Berkey's share. Later cash flow contributions were obtained from another appellant, Robert Falvo, in return for 25% of Berkey's share in Opus Christi. Falvo also subsequently obtained 50% of Pollard's income from Berkey as remuneration for similar financing. 15 By the end of 1975, Pollard and Fixler had dropped out of the diversion scheme. As a consequence, the operation was simplified. Kowitt would transmit Majestic Sales purchase orders directly to AMI. AMI and the Weinsteins dealt with Berkey at Opus Christi, who in turn dealt with the manufacturers. 16 In early 1976, certain manufacturers became aware that merchandise supplied to Opus Christi was appearing in the domestic market. In response to a perceived reluctance on the part of these manufacturers to deal with Opus Christi, John Berkey arranged to do business with a second charitable organization, Inter-Church Medical Assistance (IMA). Like Opus Christi, IMA was a well-known and well-regarded umbrella organization acting on behalf of protestant churches in the solicitation of pharmaceutical supplies and the distribution of those supplies to sponsored medical missions in developing nations. Berkey began to use IMA as a purchasing agent on behalf of Opus Christi. With this advent, the purchases were made through purchase orders by Majestic Sales and AMI to Opus Christi. Opus Christi then sent its purchase orders to IMA. IMA in turn prepared purchase orders for the manufacturers. This procedure continued until pharmaceutical companies began to make inquiries at IMA about pharmaceutical products purchased by IMA for Opus Christi which were later returned for refund to the manufacturers from merchants in the United States. 17 In June, 1976, a new charitable organization, the Church of God World Missions, Inc. (Church of God), was established with offices and a warehouse in Alexandria, Virginia. The government sought to prove that Church of God was a continuation of Opus Christi under a new name. The Church of God warehouse was rented by Opus Christi; the solicitation letters bearing the Church of God logo were Opus Christi letters that Berkey and assistants altered by changing names and enclosing different brochures; furthermore, the day-to-day business of the Church of God was handled by the Weinsteins at AMI. The organization set up a Church of God checking account, drawn on a Virginia bank, which was maintained by AMI. Evidence establishes that Philip Weinstein conducted the Church of God activities, and in doing so adopted the name Dr. Philip Adamelli. 18 Contemporaneously with these activities, David Pollard became acquainted with Solomon Richman, a business associate of Robert Falvo. It was Falvo's opinion that Richman, who was the director of a Brussels company, S.P.R.L. GABAR (GABAR), would be well suited to handle distribution of pharmaceuticals acquired through Opus Christi. Subsequently, GABAR was used as an export front in continuation of the diversion scheme. Weinstein, on behalf of GABAR, would solicit merchandise from pharmaceutical companies at export prices for sale overseas. Weinstein referred to GABAR as an associate firm of AMI. In February, 1977, one of the manufacturers with whom Opus Christi and the other charitable organizations had dealt, Wyeth Company, notified Richman and GABAR that it would not complete GABAR's order because products shipped to GABAR for sale in Zaire had been found in the United States. Richman assured Wyeth that sales made to GABAR were legitimately for resale in Zaire. In March, 1977, Richman visited AMI in Miami and inspected Philip Weinstein's operation. In June, 1977, Richman authored a letter to Weinstein complaining of Weinstein's indiscretion in conducting the diversion enterprise. 19 This synopsis of evidence at trial establishes the nature of the conspiracy sought to be proved by the government. John Berkey, purportedly acting under the auspices of legitimate charitable organizations, would obtain pharmaceutical products at preferential prices. Through the medium of AMI and Philip Weinstein, Wilhelmina Weinstein (nee Wilhelmina Harich), Peter Fixler and Lionel Harris, these pharmaceutical products would be diverted for resale in the United States. Financing for this arrangement came initially from the principals of AMI and, at a later time, from Robert Falvo. The ultimate domestic resale was accomplished through Majestic Sales and Stanley Kowitt, or through GABAR and Solomon Richman. Interstate mails and wires were used to commit fraud upon manufacturers in furtherance of this conspiracy.