Court Opinion

ID: 3043679
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:11:57.90719+00
Date Added: 2024-06-11T12:46:39.011725
License: Public Domain

United States Court of Appeals
                            FOR THE EIGHTH CIRCUIT
                                    ___________

                                    No. 07-1010
                                    ___________

United States of America,                *
                                         *
             Appellee,                   *
                                         * Appeal from the United States
      v.                                 * District Court for the
                                         * Northern District of Iowa.
Thomas A. Hanny;                         *
Thomas A. Hanny, M.D.,                   *
                                         *
             Appellant.                  *
                                    ___________

                              Submitted: September 24, 2007
                                 Filed: December 12, 2007
                                  ___________

Before MURPHY, MELLOY, and SMITH, Circuit Judges.
                          ___________

SMITH, Circuit Judge.

       Dr. Thomas Hanny pleaded guilty to conspiring to distribute controlled
substances outside the course of normal medical practice and engaging in a monetary
transaction over $10,000 derived from the proceeds of this activity, in violation of 21
U.S.C. § 846 and 18 U.S.C. § 1957 respectively. The district court1 sentenced Hanny
to 33 months' imprisonment. Hanny appeals, arguing that the district court incorrectly
calculated his Guidelines range by improperly applying a sentencing enhancement for

      1
      The Honorable Linda R. Reade, Chief Judge, United States District Court,
Northern District of Iowa.
distributing controlled substances through mass-marketing by means of an interactive
computer service. We affirm.

                                    I. Background
       Dr. Thomas Hanny, a physician licensed in Connecticut, ended his 30-year
career as a surgeon in October 2003. Following his retirement, Hanny received an
offer to work for Pharmacom, a company that sold prescription drugs over the
Internet. Pharmacom wanted Hanny to authorize prescriptions to its Internet
customers. Hanny questioned the business's legality and consulted an attorney. The
attorney, although disclaiming any specialized knowledge about Internet prescriptions,
also expressed doubt about the business's legitimacy. Despite his initial misgivings,
and his attorney's doubts, Hanny began working for Pharmacom in early 2004. Hanny
did not seek additional advice from an attorney more familiar with the Internet
prescription business.

       Pharmacom's business model was simple. The company sponsored a website
that allowed customers to order controlled substances over the Internet. The Internet
customers selected and paid for the controlled substances online using credit or debit
cards. Once the customers' payments were verified, the orders were sent to
participating physicians, such as Hanny, for review. To authorize the sale, the
physician would add his electronic signature to the order. The physicians were not
required to physically examine the patients as part of their order review. After the
electronic order was approved by a physician, the order would then be sent to a
participating pharmacy to fill the prescription. While working for Pharmacom, Hanny
authorized over 2,400 prescriptions. Hanny kept a portion of each sale, earning
approximately $14,600 for his services. During his time with Pharmacom, Hanny
never examined any of the patients who sought prescriptions. Law enforcement
became aware of Pharmacom's operations and shut down the company in 2004.

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      After Pharmacom ceased operations, Hanny began working for Jive,2 another
company that illegally sold prescription drugs over the Internet. Hanny's
responsibilities at Jive were very similar to his responsibilities at Pharmacom; Hanny
approved prescription requests based on a questionnaire completed by the customer.
Hanny never reviewed the customers' medical records. While working at Jive, Hanny
authorized the dispensing of at least 110,110 dosage units of Schedule III controlled
substances and at least 880,590 dosage units of Schedule IV controlled substances.
For his services to Jive, Hanny earned approximately $42,700.

       In January 2005, the Missouri Board of Medicine contacted Hanny and
informed him that his actions as a Jive employee, as it related to Missouri customers,
constituted the illegal practice of medicine in Missouri. The letter demanded that
Hanny cease and desist, but Hanny disregarded the communication and continued
prescribing for Jive until April 2005.

      The United States charged Hanny with conspiring to distribute controlled
substances outside the course of normal medical practice and engaging in a monetary
transaction over $10,000 derived from the proceeds of this activity in violation of
21 U.S.C. § 846 and 18 U.S.C. § 1957 respectively. Hanny pleaded guilty to two
counts of conspiracy to distribute and one count of engaging in an illegal monetary
transaction. After accepting his guilty plea, the district court sentenced Hanny to 33
months' imprisonment.

       In reaching Hanny's sentence, the court first determined Hanny's offense level
for the drug charges. The court looked to U.S.S.G. § 2D1.1 and applied a base offense
level of 20. The court determined that Hanny's drug offense involved the distribution
of a controlled substance through mass-marketing by means of an interactive
computer service and, therefore, applied a two-level enhancement to Hanny's base

      2
       Jive also operated under the names Pill Works and Pill Network.

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offense level under § 2D1.1(b)(5). After adding the money laundering offense and
applying several other adjustments,3 both upward and downward, the court set
Hanny's total offense level at 19 and his criminal history classification at Category I,
making Hanny's Guidelines range 30 to 37 months' imprisonment. The court departed
downward from the advisory range after the government filed a substantial assistance
motion under U.S.S.G. § 5K1.1, resulting in a final advisory Guidelines range of 27
to 33 months. The court heard arguments regarding the appropriateness of granting
a variance from the Guidelines but found that no § 3553(a) factor warranted a
variance. After denying the variance, the court sentenced Hanny to 33 months'
imprisonment.

        Hanny appeals the applicability of the § 2D1.1(b)(5) upward adjustment that
set his initial offense level. He argues that had the adjustment not been applied his pre-
departure Guidelines range would have been 27 to 33 months, and the court would
have sentenced him to a shorter sentence after granting the 5K1.1 departure.

                                      II. Discussion
       The sole issue raised by this appeal is whether the record evidence supports the
district court's application of U.S.S.G. § 2D1.1(b)(5). We review the district court's
interpretation and application of the Sentencing Guidelines de novo. United States v.
Holthaus, 486 F.3d 451, 454 (8th Cir. 2007).

      In establishing a base offense level, the Guidelines require a two-level
enhancement if the defendant's crime involved the distribution of any controlled
substance "through mass-marketing by means of an interactive computer service."
U.S.S.G. § 2D1.1(b)(5).4 Neither we nor any other appellate court have had the

      3
       None of these adjustments are at issue in this appeal.
      4
       Subsection (b)(5) has not been construed by an appellate court. However,
section 2B1.1 contains a similar enhancement for theft and fraud crimes. Under

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occasion to address this Guidelines section; however, the application notes to the
Guidelines provide some guidance to its use. The application notes define "mass-
marketing by means of interactive computer service" as "the solicitation, by means of
an interactive computer service, of a large number of persons to induce those persons
to purchase a controlled substance." U.S.S.G. § 2D1.1(b)(5), cmt. n.22. "Interactive
computer service" means "any information service, system, or access software
provider that provides or enables computer access by multiple users to a computer
server, including specifically a service or system that provides access to the Internet
and such systems operated or services offered by libraries or educational institutions."
See U.S.S.G. § 2D1.1(b)(5), cmt. n.22; 47 U.S.C. § 230(f)(2).

       Hanny's contention is that Jive's internet activities do not justify an application
of subsection (b)(5). It is undisputed that the trial court properly imputed Jive's actions
to Hanny when considering the application of this subsection. As a conspirator, Hanny
is accountable for the actions of his co-conspirators at Pharmacom and Jive who
illegally sold controlled substances. United States v. Brown, 148 F.3d 1003, 1008 (8th

subsection 2B1.1(b)(2)(A)(ii), a court must apply a two-level enhancement if the
defendant committed a property offense through "mass-marketing." Mass-marketing
is defined, in part, as "a plan, program, promotion, or campaign, that is conducted
through solicitation by . . . the Internet . . . to induce a large number of persons to . .
. purchase goods or services." U.S.S.G. § 2B1.1(b)(2)(A)(ii), app. n.4. Hanny cites to
United States v. Pirello, 255 F.3d 728 (9th Cir. 2001), addressing § 2B1.1(b)(2)(A)(ii)
to support his contention that to prove solicitation, the government must show the
defendant affirmatively placed an ad on the Internet or sent spam emails to promote
the sale of the illegal items. However, this is not the holding of Pirello; in fact Pirello
did not address what facts are necessary before solicitation is proven. However,
Pirello is helpful to the present case in that it provides an example of a defendant who
is guilty of solicitation by the Internet. In Pirello, the defendant defrauded purchasers
by placing a classified ad on the Internet offering goods for sale that he did not own.
Id. at 730. The court stated that "by placing a classified ad on the Internet, Pirello was
able to solicit funds instantaneously and continuously from over 200 million
individuals worldwide." Id. at 731.

                                           -5-
Cir. 1998) (stating that a defendant convicted of conspiracy is properly held
accountable for all reasonably foreseeable acts and omissions of any co-conspirator
taken in furtherance of that conspiracy); U.S.S.G. § 1B1.3(a)(1)(B).

       This appeal turns on the interpretation of U.S.S.G. § 2D1.1(b)(5). We do not
find the Guidelines ambiguous. The application notes provide examples of scenarios
that do and that do not qualify as solicitation for purposes of § 2D1.1(b)(5). The notes
clearly state that subsection (b)(5) applies to a defendant who "operated a web site to
promote the sale" of a controlled substance. U.S.S.G. § 2D1.1(b)(5), cmt. n.22. The
example in note 22 makes clear that the subsection does not apply if the only use of
the interactive computer service is for the parties to communicate with each other in
furtherance of the offense. Id.

       Hanny interprets the first example in the application notes as requiring
affirmative proof that Jive used the website to promote the sale of the controlled
substance. According to Hanny's interpretation, subsection (b)(5) only applies in cases
where the government shows that a defendant placed an ad or sent emails to generate
sales. Hanny argues that any other interpretation would render the use of the words
"promote" and "solicit" in the mass-marketing definition superfluous. Hanny's
argument mainly rests on the idea that each word in a sentence should be given effect.
Hanny also relies on the dictionary definitions of "solicitation."

        The government, on the other hand, asserts that the application notes support
its interpretation of the Guidelines. The government contends that interactive websites
that are generally accessible to the public, by their very nature, promote the website's
subject matter. According to the government, this subsection exists to combat the
increasing role interactive computer services play in the realm of drug trafficking.

    Subsection (b)(5) was added to the Guidelines in 2004 after the Sentencing
Commission "identified use of an interactive computer service as a tool providing

                                          -6-
easier access to illegal products." U.S.S.G. app. C., amend. 667, reason for amend. ¶ 2.
According to the Sentencing Commission, an interactive computer service provides
criminals an easier method to market their products and makes it more difficult for law
enforcement to uncover the crime and punish the offenders. Id.

       We hold that the government's proof sufficiently established a factual basis for
imposition of the enhancement in this case. A public, interactive website reachable by
an ordinary web search engine is, at the least, a billboard on the information
superhighway. As operated, the Jive site not only allowed the general public to read
the products offered for sale, but the site also allowed visitors to actively shop for,
select, and purchase controlled substances. Operation of an illegal internet pharmacy
of this variety through an interactive website is sufficient conduct to warrant the
application of U.S.S.G. § 2D1.1(b)(5).

       We are careful, however, to note that the mere use of a website is not sufficient
to trigger this enhancement. As correctly pointed out by Hanny, a person "solicits"
when he entices another to take an action. The operation of an interactive website
devoted to the illegal sale of controlled substances that is freely accessible to all
members of the public is sufficiently enticing to constitute solicitation. Offering
controlled substances for sale was not a minor part of Jive's website. It was the very
reason the site existed. Under these facts, we cannot say that the district court erred
in applying the two-level mass-marketing enhancement to Hanny's base offense level.

                                 III. Conclusion
      Accordingly, we affirm the judgment of the district court.
                     ______________________________

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