Court Opinion

ID: 4295515
Source: CourtListenerOpinion
Date Created: 2018-07-18 21:00:25.880642+00
Date Added: 2024-06-11T14:40:19.116058
License: Public Domain

United States Court of Appeals
                     For the First Circuit

No. 17-1597

                   UNITED STATES OF AMERICA,

                           Appellee,

                               v.

                      MUSTAFA HASSAN ARIF,
                     Defendant, Appellant.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF NEW HAMPSHIRE

        [Hon. Landya B. McCafferty, U.S. District Judge]

                             Before

                 Torruella, Lynch, and Kayatta,
                         Circuit Judges.

     Benjamin Brooks, with whom Michael Schneider and Good
Schneider Cormier & Fried were on brief, for appellant.
     Seth R. Aframe, Assistant United States Attorney, with whom
Scott W. Murray, United States Attorney, was on brief, for
appellee.

                         July 18, 2018
           LYNCH, Circuit Judge.           Mustafa Hassan Arif operated a

very profitable online business from Lahore, Pakistan, selling

non-prescription drug products that purported to treat or cure

hundreds of different diseases and medical conditions.               He created

and   operated    over   1,500   websites      containing   altered      clinical

studies, fabricated testimonials, and false indicia of origin to

induce consumers in the United States and elsewhere to purchase

his   products.     Through      his   misdeeds,    Arif    gained   more      than

$11 million in revenues.          He conditionally pled guilty to wire

fraud in 2016, preserving two arguments for appeal that the

district court had rejected in two thoughtful memoranda.                        See

United States v. Arif (Arif I), No. 15-cr-057 (D.N.H. Sept. 16,

2016); United States v. Arif (Arif II), No. 15-cr-57, 2016 WL

5854217 (D.N.H. Oct. 6, 2016).          Arif was sentenced to seventy-two

months of imprisonment.

           On    appeal,   Arif's      primary   argument    is   that    he    was

prosecuted under the wrong statute.              We reject Arif's argument

that prosecutions such as his must be pursued exclusively by the

Federal Trade Commission ("FTC") as false advertising cases, and

not by the Department of Justice ("DOJ") as wire fraud cases.1                   As

      1   Arif never maintained in district court that the
criminal provisions of the Federal Trade Commission Act, 15 U.S.C.
§§ 52-57, must be prosecuted by the FTC. Rather, he argued that
the DOJ may only initiate a prosecution for violations of these
provisions upon certification from the FTC under 15 U.S.C. § 56(b).
The district court rejected this argument, and Arif has abandoned

                                       - 2 -
an issue of first impression, we hold that Congress did not

impliedly repeal the wire fraud statute, 18 U.S.C. § 1343, as to

prosecutions       that   also      fall      within   the    reach   of   the   1938

Wheeler-Lea       Amendment        to   the    Federal    Trade     Commission   Act

("FTCA"), 15 U.S.C. §§ 52-57.2

               Arif also argues that, as a matter of law, he could not

have committed fraud because he "held an honest and sincere belief

in the efficacy of his products," and he correctly identified their

ingredients.

               Arif's remaining arguments are that his seventy-two

month       sentence   must   be    vacated     because      the   district   court's

Guidelines calculation as to the loss amount was erroneous and,

further, because the court did not "adequately account" in its

sentence for the fact that his penalty would have been lower had

he been charged under the FTCA.

               All of Arif's arguments are without merit.              Accordingly,

we affirm both his conviction and sentence.

it on appeal. See Small Justice LLC v. Xcentric Ventures LLC, 873
F.3d 313, 323 n.11 (1st Cir. 2017) (holding that arguments not
raised in appellant's opening brief are waived).

        2 One motivation for Arif's argument seems to be that under
the FTCA, there is a six-month maximum penalty for a first offense,
and a one-year maximum for a second offense.         See 15 U.S.C.
§ 54(a). In contrast, there is a twenty-year maximum sentence for
fraud under the wire fraud statute. See 18 U.S.C. § 1343.

                                           - 3 -
                                   I. Facts

           The following facts are drawn from Arif's conditional

guilty plea and from the district court's findings of fact.

           Arif    ran   an   elaborate,       multi-million-dollar     online

business from Lahore, Pakistan, selling non-FDA-approved drugs

that purported to cure hundreds of different diseases and medical

conditions.       He   primarily    operated    his   business    through   MAK

International, a "parent company" he owned.           Arif also worked with

CCNow, a third-party payment processor based in the United States.

           To sell his products, Arif created, maintained, and

controlled more than 1,500 websites.           Over 1,000 of these websites

directly offered drugs for sale, with each individual website

selling a single drug that purported to treat a single disease or

medical   condition.       The     remaining    400   or   so   websites    were

"referral"    sites,     which     purported     to   be   "independent      and

impartial," but were, in fact, conduits to one or more of Arif's

websites selling his products.

           Arif organized his websites into subnetworks or groups,

each with a unique brand name and color scheme.                 These included

Berlin Homeo (comprising more than 250 sites), Botanical Sources

(comprising more than 200 sites), Gordon's Herbal Research Center

(comprising more than 120 sites), Healing Plants Ltd. (comprising

more than 60 sites), Oslo Health Network (comprising more than 300

sites), and Solutions by Nature (comprising more than 70 sites).

                                     - 4 -
He also created two referral networks: "Society for the Promotion

of Alternative Health" and "Toward Natural Health."     In general,

each website within a group "contained the same verbiage," with

"the only material difference being the name of the disease or

medical condition, the name of the drug, and the variations in the

purported ingredients."

          All of the websites contained misleading mail-forwarding

addresses that were "intended to make customers more comfortable

purchasing the drugs."    For instance, websites in the Berlin Homeo

network included an address in Germany.      Websites in the other

networks contained forwarding addresses in Italy, New Zealand,

Australia, Norway, Denmark, England, and Scotland.     In fact, all

of the drugs originated in Pakistan.

          Most of the websites also contained various other false

and misleading statements.     For instance, many websites in the

Solutions by Nature group contained the following (completely

fabricated) treatment statistics:

          [Name of drug] has been shown in clinical
          trials to provide a complete [name of disease
          or medical condition] cure rate for 90% of
          subjects. [Name of drug] has been proven an
          effective   [name  of   disease   or   medical
          condition] medication for 95% of people,
          significantly improving their condition. Like
          no other product, has also been shown to be a
          highly effective [name of disease or medical
          condition] treatment in people with severe
          cases, a response rate of 85%.

                                - 5 -
Additionally, certain websites contained links to plagiarized

research papers, which "were not written about the drugs they

purported to reference."   And many touted fictitious testimonials

by customers.

           Arif sold the drugs globally, generating approximately

$12 million in sales between 2007 and 2014, more than $9 million

of which came from customers in the United States. CCNow processed

his customers' online payments and then sent the proceeds from its

bank account in Minnesota to Arif's bank accounts in Pakistan and

the United Kingdom via wire transfers through JP Morgan Chase.

           On April 8, 2015, a federal grand jury in the District

of New Hampshire indicted Arif on one count of wire fraud and

aiding and abetting the same, in violation of 18 U.S.C. §§ 1353

and 2, and two counts of shipment of misbranded drugs in interstate

commerce, in violation of 21 U.S.C. §§ 331(a), 333(a)(2), and

352(a).3   A superseding indictment was filed on September 9, 2015,

     3    The briefs provide no information on the origins of the
investigation into Arif's businesses. However, Arif's indictment
and pre-trial briefing offer the following account. On or about
April 14, 2010, an undercover agent from New Hampshire purchased
a product from one of Arif's websites. When Arif landed in New
York City on February 2, 2014, Department of Homeland Security
special agents were notified and drafted a criminal complaint
charging Arif with wire fraud.      The agents appeared before a
magistrate judge in the district of New Hampshire on February 7th,
and an arrest warrant was issued that same day.       The original
February 2014 criminal complaint against Arif was sealed until he
was arrested in the Southern District of New York.

                               - 6 -
adding two additional counts of shipment of misbranded drugs in

interstate commerce and aiding and abetting the same.

           Arif waived his right to a jury trial.    He filed two

pre-trial motions asking the district court to rule, as a matter

of law, on his good faith defense (that he lacked the requisite

intent to defraud), and on his jurisdictional defense (that the

1938 amendment to the FTCA "preempted" the wire fraud statute as

to his offense).   The district court denied the motions in two

separate orders.

           On October 11, 2016, Arif pled guilty to one count of

wire fraud, pursuant to Rule 11(a)(2) of the Federal Rules of

Criminal Procedure, reserving the right to appeal the district

court's adverse rulings.   He was sentenced to seventy-two months

of imprisonment on May 26, 2017.   On appeal, Arif challenges his

conviction and sentence.

                           II. Analysis

A.   The FTCA Does Not Impliedly Repeal the Wire Fraud Statute

           Throughout his briefing, Arif couches his argument as

one of the "preemptive effect" of the FTCA over the wire fraud

statute.   We believe that this categorization is incorrect.     In

the end, the issue is one of congressional intent.      "The proper

mode of analysis" in situations such as this, when there is an

alleged conflict between an earlier and a later statute is "that

                              - 7 -
of implied repeal."   State of Rhode Island v. Narragansett Indian

Tribe, 19 F.3d 685, 703 (1st Cir. 1994).

           "The cardinal rule is that repeals by implication are

not favored."   Posadas v. Nat'l City Bank of N.Y., 296 U.S. 497,

503 (1936); see also Narragansett, 19 F.3d at 703.    The federal

judiciary must faithfully adhere to this rule of construction not

only as a matter of logic, but also, of principle.   It serves to

honor the doctrine of separation of powers by showing respect for

the legislative branch.

          A steady adherence to [the implied repeal
          doctrine]   is    important,    primarily   to
          facilitate not the task of judging but the
          task of legislating.      It is one of the
          fundamental ground rules under which laws are
          framed. Without it, determining the effect of
          a bill upon the body of preexisting law would
          be inordinately difficult, and the legislative
          process would become distorted by a sort of
          blind gamesmanship, in which Members of
          Congress vote for or against a particular
          measure according to their varying estimations
          of whether its implications will be held to
          suspend the effects of an earlier law that
          they favor or oppose.

United States v. Hansen, 772 F.2d 940, 944 (D.C. Cir. 1985)

(Scalia, J.).

          We put aside the fact, inconvenient to Arif,4    that the

FTCA provision said to impliedly repeal the wire fraud statute was

     4    Arif's premise that an earlier Congress can preclude a
later Congress from enacting new laws is itself unsound. See Ray
v. Spirit Airlines, Inc., 767 F.3d 1220, 1225 (11th Cir. 2014)
(holding that "[r]egardless of whether the FAA established a

                               - 8 -
enacted in 1938, see 15 U.S.C. § 54, long before the wire fraud

statute came into effect in 1952, see 18 U.S.C. § 1343.                       Because

the wire fraud statute was premised on the mail fraud statute,

however, and that statute was first enacted in 1872, see Skilling

v.   United    States,   561   U.S.    358,    399    (2010),    we    will    assume

arguendo, in Arif's favor, that the wire fraud statute came first

and that the usual rules for evaluating implied repeal apply.

              The   Supreme    Court   has     long    held     that    repeals    by

implication may not be found "unless [Congress's] intent to repeal

is 'clear and manifest.'"         Rodriguez v. United States, 480 U.S.

522, 524 (1987) (per curiam) (quoting United States v. Borden Co.,

308 U.S. 188, 198 (1939)).             This, in turn, requires either a

showing that "the later act covers the whole subject of the earlier

one and is clearly intended as a substitute," Posadas, 296 U.S. at

503, or that an "irreconcilable conflict" exists between the

provisions of the two statutes, Rodriguez, 480 U.S. at 524.

              Under the first test, this is plainly not a situation

where a later statute (here, assuming arguendo, the FTCA is later),

covers the same subject matter as an earlier statute (again,

assuming      arguendo   the    wire    fraud        statute    is     earlier)    so

comprehensively that it is meant as a substitute.

'comprehensive federal regulatory scheme governing air carriers,'"
the "1958 FAA could not have repealed any part of the
yet-to-be-born 1970 RICO statute" (quoting Musson Theatrical, Inc.
v. Fed. Express Corp., 89 F.3d 1244, 1250 (6th Cir. 1996))).

                                       - 9 -
             So we focus instead on the second test: whether there is

an "irreconcilable conflict" between the two statutes.     We find no

such conflict on the face of the statutes.5    To state the obvious,

the FTCA and the wire fraud statute address different activities.

The wire fraud statute requires the use of "wires"; the FTCA does

not.       Compare 18 U.S.C. § 1343 (proscribing "[f]raud by wire,

radio, or television"), with 15 U.S.C. § 52 (proscribing the

"[d]issemination of false advertisements").       Further, the FTCA

applies only to false advertising, whereas the wire fraud statute

covers fraud generally.6      See, e.g., United States v. Meléndez-

González, 892 F.3d 9, 13-14, 20 (1st Cir. 2018) (affirming wire

fraud conviction for submitting false information to the military

in order to obtain recruitment bonuses).

       5  Since the text of the statutes is clear, we do not resort
to examining the legislative history. See Star Athletica, L.L.C.
v. Varsity Brands, Inc., 137 S. Ct. 1002, 1010 (2017) (holding
that a "controlling principle" of statutory interpretation is "the
basic and unexceptional rule that courts must give effect to the
clear meaning of statutes as written" (quoting Estate of Cowart v.
Nicklos Drilling Co., 505 U.S. 469, 476 (1992))). However, in an
abundance of caution, we add that the legislative history of the
two statutes, as described in the parties' briefing, does not even
begin to show any conflict. The arguments are described later in
the text of this opinion.
       6  Indeed, "both Congress and the Supreme Court have
repeatedly placed their stamps of approval on expansive use of the
mail fraud statute," the predecessor to the wire fraud statute at
issue in this case. See Jed S. Rakoff, The Federal Mail Fraud
Statute, 18 Duquesne L. Rev. 772-73 (1980).

                                - 10 -
               Even if the two statutes do overlap in some situations,

such as this one, "[that] is not enough to establish" an implied

repeal; the FTCA "may be merely affirmative, or cumulative or

auxiliary" to the wire fraud statute.               Ray v. Spirit Airlines,

Inc., 767 F.3d 1220, 1225 (11th Cir. 2014) (quoting Wood v. United

States, 41 U.S. 342, 363 (1842)).              That Arif cannot point to any

"positive repugnancy" between the two statutory provisions is

fatal to his claim of implied repeal.             Wood, 41 U.S. at 363.

               Further, the Supreme Court has held that "[w]hen two

statutes are capable of co-existence, it is the duty of the courts,

absent     a    clearly   expressed    Congressional     contention   to   the

contrary, to regard each as effective."             FCC v. NextWave Personal

Commc'ns Inc., 537 U.S. 293, 304 (2003) (quoting J.E.M. AG Supply,

Inc. v. Pioneer Hi-Bred Int'l Inc., 534 U.S. 124, 143-44 (2001)).

Co-existence is more than possible here.

               Arif purports to find support for the contrary in the

Supreme Court's decision in Dowling v. United States, 473 U.S. 207

(1985).        But Dowling is not a case about implied repeal at all.

It dealt with an issue of statutory interpretation: whether the

felony provision of the National Stolen Property Act, 18 U.S.C.

§ 2314, extended to the interstate transportation of bootlegged

records.        See Dowling, 473 U.S. at 208.         Because the statutory

language was ambiguous, the Court turned to legislative history.

See id. at 218.       It concluded that "Congress had no intention to

                                      - 11 -
reach copyright infringement when it enacted § 2314," id. at 226,

given its later enactment of amendments to the Copyright Act, which

included criminal penalties for infringement.             See id. at 225-26.

The Court's approach in Dowling to statutory interpretation is

inapplicable here because the text of the wire fraud statute is

clear.    And Arif makes no argument that the plain language of the

statute does not embrace his conduct.

              Arif   nevertheless      insists     that   we    turn      to     the

legislative history of the FTCA because he says that it shows

Congress intended the FTC to have sole enforcement authority over

false advertising cases.           He cites to three cases that he argues

establish, as a matter of statutory construction, that the wire

fraud statute cannot be read to reach his conduct: Tamburello v.

Comm-Tract Corp., 67 F.3d 973 (1st Cir. 1995), United States v.

Boffa, 688 F.2d 919 (3d Cir. 1982), and Holloway v. Bristol-Myers

Corp., 485 F.2d 986 (D.C. Cir. 1973).                None of these cases are

helpful to him.

              Tamburello     and    Boffa   both     concern     unfair        labor

practices, defined by the National Labor Relations Act ("NLRA"),

which    is   administered    by    the   National    Labor    Relations       Board

("NLRB").     See Tamburello, 67 F.3d at 976; Boffa, 688 F.2d at 927.

But the NLRA and FTCA are not analogous. Congress clearly intended

the NLRA to be a "uniform, nationwide body of labor law interpreted

by a centralized expert agency -- the [NLRB]."                  Tamburello, 67

                                      - 12 -
F.3d at 976. And the Supreme Court has long recognized the primary

jurisdiction of the NLRB.           See Nat'l Licorice Co. v. NLRB, 309

U.S. 350, 365 (1940).

             Here, were we forced to consider it, the legislative

history of the 1938 Wheeler-Lea Amendment shows quite the opposite

of what Arif argues.      The House Report supporting the amendment's

enactment clearly states that the "criminal offenses will not be

prosecuted    by   the   Federal    Trade     Commission,   but   through   the

Department of Justice." H.R. Rep. No. 75-1613, at 6 (1937). There

is no indication whatsoever that Congress intended all cases

involving false advertising to be prosecuted solely by the FTC

under the FTCA and no other criminal statute.

             Arif cites Holloway, but that case only held that the

FTCA does not create a private right of action, 485 F.2d at 999,

an issue not presented here.         The D.C. Circuit gave an informative

description of the FCTA and the 1938 Wheeler-Lea Amendment, no

part of which suggests that Congress intended to preclude criminal

wire fraud prosecutions for conduct also covered by the FTCA.               See

id. at 992-97.

             It is true that the Third Circuit held in Boffa that the

mail fraud statute does not extend to deprivations of rights which

are created only by section 7 of the NLRA.              688 F.2d at 930.    But

that case is inapposite here.         The FTCA created no rights, unlike

the   statutory    creation    in    the    NLRA   of    the   duty   of    fair

                                     - 13 -
representation, which was enforced by the NLRB in a comprehensive

scheme.        Further, Boffa itself expressly held that the NLRA did

not impliedly repeal the mail fraud statute as to conduct that was

"arguably prohibited" by the NLRA and "independently prohibit[ed]"

by the mail fraud statute.         Id. at 932.

               Tamburello is also plainly inapposite.       It concerned the

reach     of    the    NLRB's   primary    jurisdiction   over   a    private,

non-governmental cause of action alleging a RICO extortion claim.

See Tamburello, 67 F.3d at 976.            As we held there, the NLRB had

exclusive jurisdiction because none of the conduct "[was] illegal

without reference to the NLRA.             It is the NLRA that prohibits

employers       from    creating   intolerable    working    conditions     to

discourage union activities."             Id. at 978 (citations omitted).

That is not at all the situation here.

               To the extent Arif tries to find significance in the

lower penalties associated with prosecutions under the FTCA, his

argument also goes nowhere.          The Supreme Court squarely rejected

this notion in United States v. Batchelder, 442 U.S. 114 (1979).

There, the Court held that "when an act violates more than one

criminal statute, the Government may prosecute under either so

long as it does not discriminate against any class of defendants."

Id. at 123-24.

               We have also rejected arguments of implied repeal of the

wire fraud statute by another statute on this basis.                 In United

                                     - 14 -
States v. Brien, 617 F.2d 299 (1st Cir. 1980), we held that the

Commodities Futures Trading Act, a statute targeting the specific

type of fraud in that case, did not impliedly repeal the general

mail and wire fraud statutes, even though it carried a lesser

maximum sentence.       See id. at 309-310, 310 n.14.             We further noted

that "[t]he government's election to prosecute appellants under

the statute which, at the time, provided the more severe penalty,

was   an   exercise     of   discretion      that      violated    no   rights    of

appellants."     Id. at 310-11.

            Other circuits have adopted similar reasoning.                       See

Hansen,    772   F.2d   at    945   (government        could   charge    defendant

criminally under 18 U.S.C. § 1001 for making false statements,

instead of under the Ethics in Government Act, which only imposes

civil penalties); United States v. Zang, 703 F.2d 1186, 1196 (10th

Cir. 1982) (misdemeanor provisions of the Emergency Petroleum

Allocation Act did not impliedly repeal the mail and wire fraud

statutes as to conduct that violated both); United States v.

Burnett, 505 F.2d 815, 816 (9th Cir. 1974) (government could charge

defendant criminally under § 1001, instead of under a specific

misdemeanor      statute     for    making     false    statements      to   obtain

unemployment benefits).

            This case provides a good example for why Congress has

vested discretion in the prosecutorial agencies as to which statute

to employ.       The offense here was not a run-of-the-mill false

                                      - 15 -
advertising of a single product.         Arif, in order to make millions,

mounted an elaborate worldwide scheme to defraud: he deliberately

posted numerous false and misleading statements on over a thousand

websites that he created and maintained in order to gull those

with medical ailments into purchasing his products.                The FTCA

penalties for first or second offenders would hardly have been an

adequate deterrent for such egregious conduct.         Crime must be made

not to pay.

B.   Rejection of Arif's Defense as to Intent to Defraud

           Arif   next   argues   that    the   district   court   erred   in

rejecting his defense that he did not commit wire fraud because he

was pure of heart and mind as to the efficacy of his products.

           Both parties requested that the district court rule on

this defense before trial, based on the agreed-upon stipulated

facts.7   The court also considered Arif's assertions in his pro se

briefs, which the court construed in his favor (such as accepting

Arif's assertion that he had a good-faith belief in the efficacy

     7    Arif's counsel presented, but refused to endorse, Arif's
good faith defense in its trial briefing.      Consequently, Arif
sought leave to argue his good faith defense pro se. The district
court permitted him to do so. Arif then filed a pre-trial motion
asking the district court to rule on the issue as a matter of law.
Shortly after the district court denied this motion, Arif pled
conditionally guilty, reserving the right to challenge the
district court's ruling.

                                  - 16 -
of the drugs8 that he had sold on his websites).   Arif insists on

appeal, as he did before the district court, that he is entitled

to a finding that he lacked the requisite intent to commit wire

fraud as a matter of law.

          The well-established elements of wire fraud are: "(1) a

scheme or artifice to defraud using false or fraudulent pretenses;

(2) the defendant's knowing and willing participation in the scheme

or artifice with the intent to defraud; and (3) the use of the

interstate wires in furtherance of the scheme."    United States v.

Appolon, 715 F.3d 362, 367 (1st Cir. 2013).     The district court

correctly rejected Arif's legal defense that the elements of the

wire fraud statute were not met because he did not subjectively

intend to commit fraud.

          Arif's argument misapprehends the nature of his charged

offenses. The trial judge accurately ruled that Arif was not being

charged "with selling drugs that did not work as intended . . . or

for harming his customers."   Rather, he was charged with "making

misrepresentations on his websites," which were designed to give

false comfort to buyers, in order to induce their purchases.

Specifically, Arif pled guilty to knowingly misrepresenting, inter

     8    The district court used the definition of "drug" in the
Food, Drug, and Cosmetic Act ("FDCA"), 21 U.S.C. § 321(g)(1).
Arif's brief uses the language "homeopathic and naturopathic
herbal remedies," but he does not deny that the products are drugs
under the FDCA.

                              - 17 -
alia, that: (1) there was clinical research showing outstanding

results for the drugs he sold, including specific cure rates; (2)

actual customers attested to the efficacy of the drugs; and (3)

his businesses were operating from various western countries.

              Those admissions are more than enough to satisfy the

intent requirement.       In United States v. Mueffelman, 470 F.3d 33

(1st Cir. 2006), this court expressly held that a wire-fraud

defendant cannot "knowingly . . . make false statements to secure

money from clients" even if he subjectively "believe[s] that his

enterprise w[ill] succeed."9          Id. at 37.      So too here.     Arif's

belief   in    the   efficacy   of   his   products   does   not   negate   his

fraudulent intent when he knowingly made false statements that

went to the heart of his customer's purchases.

              Arif counters that the district court erred in relying

on Mueffelman because that case dealt with financial fraud, whereas

his case concerns "a form of alternative medicine."            We do not see

     9    Our Mueffelman ruling is in accord with the ruling of
other circuits that a defendant's subjective good-faith belief in
the efficacy of the product does not negate his intent to defraud
when the defendant has made false statements to induce purchase.
See United States v. Spirk, 503 F.3d 619, 622 (7th Cir. 2007)
(holding that a good-faith belief that investors would profit does
not negate defendant's intent to defraud); United States v. Benny,
786 F.2d 1410, 1417 (9th Cir. 1986) (holding that although an
honest belief in the truth of misrepresentations may negate an
intent to defraud, a good-faith belief that the victim will suffer
no loss is "no defense at all"); accord United States v. Stull,
743 F.2d 439, 446 (6th Cir. 1984); Sparrow v. United States, 402
F.2d 826, 828 (10th Cir. 1968); United States v. Painter, 314 F.2d
939, 943 (4th Cir. 1963).

                                     - 18 -
this supposed distinction.           A lie is a lie, whether it is in the

form of a falsified financial statement or a falsified clinical

study of a drug.      There was no error.

            Further, Arif's reliance on the Sixth Circuit's opinion

in Harrison v. United States, 200 F. 662 (6th Cir. 1912) -- a

more-than-a-century-old decision that predates both the FTCA and

the wire fraud statute -- is also misplaced.                   Arif asserts that

Harrison           stands          for        the        proposition         that

"misrepresentations . . . relating to the advertised efficacy" of

a product are merely "a form of puffery or exaggeration," as long

as "there [is] an 'inherent utility' to the product sold."                    Not

so.   Harrison       never   held    as    much.      Arif's   proposed   reading

contradicts the substantial body of law that establishes that the

demarcation line is between misrepresentations that go to the

essence of a bargain and those that are merely collateral.                   See,

e.g., United States v. Regent Office Supply Co., 421 F.2d 1174,

1179-1181 (2d Cir. 1970).

            Here, the misrepresentations Arif made were plainly

material.     By falsifying the origin of his products, clinical

studies    about    them,    and    customer       testimonials,   Arif   clearly

intended to deprive his victims of the "facts obviously essential

in deciding whether to enter the bargain."                     United States v.

                                         - 19 -
London, 753 F.2d 202, 206 (2d Cir. 1985).          This is not a case of

mere exaggeration or puffery.10

              We also reject Arif's argument that the disclaimer on

the third-party credit-card processor's website shows that the

trial judge erred.      That disclaimer stated, in pertinent part:

              [T]he product(s) purchased are not intended to
              diagnose, mitigate, treat, cure or prevent any
              disease or health condition, and I will not
              use any information or statements contained on
              the website through which this product is
              purchased, or contained on or in such
              product(s), for such purposes.

Arif argues that after reading this statement, any potential

customer of "reasonable prudence" would have known not to rely on

the   other    statements   made   on   his   websites;   therefore,   "the

misrepresentations did not persist through the point of sale."

But reliance is not an element of wire fraud.               Cf. Bridge v.

Phoenix Bond & Indem. Co., 553 U.S. 639, 642, 649-50 (2008)

(holding that "a showing of reliance" is not required for mail

fraud).    Accordingly, the presence of a disclaimer does not defeat

Arif's criminal liability under the wire fraud statute. See United

      10  Also beside the point is Arif's argument that the trial
judge erred in not drawing a distinction "between a lie or
misrepresentation[] and a specific intent to defraud."        This
assertion boils down to an argument that Arif's misrepresentations
were not material. As explained above, these misrepresentations
in sum were plainly material. We do not disaggregate the different
types of misrepresentations charged, and so do not reach questions
of whether any one of them, independently, would suffice.      Nor
does Arif make such an argument.

                                   - 20 -
States v. Weaver, 860 F.3d 90, 95 (2d Cir. 2017); United States v.

Ghilarducci, 480 F.3d 542, 546-47 (7th Cir. 2007).

           Finally, Arif argues that even if his intent argument

was irrelevant, he nonetheless should have been able to present

his   good-faith   belief   to   the   fact   finder,   in   the   hopes    of

exoneration.     That is not how the issue was framed to the trial

court, so the argument is waived.       And there is no Sixth Amendment

right to present a defense based on irrelevant evidence.                   See

United States v. DeCologero, 530 F.3d 36, 72-74 (1st Cir. 2008).

           We add that, in any event, the argument is misplaced.

Arif chose not to take his case to a jury or to have a bench trial.

He chose to plead guilty, presumably because it would give him

some benefits.     After all, the prosecution agreed to dismiss the

remaining four counts of shipping misbranded drugs in commerce and

aiding and abetting the same, which each carried a maximum penalty

of three years of imprisonment, see 21 U.S.C. § 333(a)(2).                 By

pleading guilty, Arif reduced his potential sentence range.

C.    There Was No Guidelines Calculation Error

           We turn to address Arif's challenges to his sentence.

First, he contends that the district court erred in calculating

the Guidelines range by using Arif's total revenues, minus refunds,

as the loss figure.    Specifically, Arif argues that the sales from

one group of websites, Botanical Sources, should have been excluded

from the loss amount because those websites did not contain any

                                  - 21 -
misrepresentations      about    the    products,   only    a   misleading

forwarding address.     He also argues that the government failed to

prove   that   his   customers   were   dissatisfied   or   suffered   any

pecuniary harm, as there were only five complaints out of over

128,000 transactions, and "only a small percentage of customers"

sought refunds "even though the product was clearly marked as being

from Pakistan."      We see no error.

           Under this court's decision in United States v. Alphas,

785 F.3d 775 (1st Cir. 2015), "a sentencing court may use the face

value of the claims as a starting point in computing loss," where,

as here, "defendant's claims were demonstrably rife with fraud."

Id. at 784.     "The burden of production will then shift to the

defendant, who must offer evidence to show (if possible) what

amounts represent legitimate claims."        Id.

           Here, the district court gave Arif the opportunity to

show that a portion of the revenue obtained was not infected by

the fraudulent misrepresentations and it concluded that he had

presented insufficient evidence to that effect. There was no clear

error in that factual conclusion.          That some customers may not

have been dissatisfied after making purchases from sites with false

information has no bearing on the loss amount, which is intended

to reflect the revenue from sales that were induced by Arif's

fraudulent misrepresentations.

                                  - 22 -
          In any event, even if the loss calculation was in error,

there would have been "no reasonable probability" of prejudice.

Molina-Martinez v. United States, 136 S. Ct. 1338, 1346 (2016).

The sentencing judge departed substantially downward from the

Guidelines range.   The judge explained that regardless of the

Guidelines calculation, she would have "reach[ed] the same result

with respect to the appropriate sentence, via this variance"

because "a 72-month sentence is a fair and just sentence based

on . . . the totality of circumstances and totality of facts in

the record."   Accordingly, any error would have been harmless.

See id. at 1347; United States v. Romero-Galindez, 782 F.3d 63, 70

(1st Cir. 2015).

D.   The Sentence Was Substantively Reasonable

          Next, Arif argues that his sentence was substantively

unreasonable because the trial judge "failed to take adequate

account" of the six-month maximum sentence under the FTCA. Despite

his failure to object at sentencing, we assume, favorably to Arif,

that our standard of review is for abuse of discretion. See United

States v. Tanco-Pizarro, 892 F.3d 472, 483 (1st Cir. 2018).

          His argument clearly fails under any standard.      The

district court obviously was not restricted to the FTCA range of

penalties, and it had been made well aware of that range.      In

imposing the seventy-two-month sentence, the court noted that

Arif's colloquy at sentencing failed to demonstrate "complete and

                             - 23 -
utter total remorse."   Nevertheless, the trial judge still imposed

a sentence well below the recommended Guidelines range of 134 to

168 months.

          There was no error at all in the sentence; it was not

unreasonably long.

          Affirmed.

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