FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW
HAMPSHIRE [Hon. Landya B. McCafferty, U.S. District Judge]
Benjamin Brooks, with whom Michael Schneider and Good
Schneider Cormier & Fried were on brief, for appellant.
R. Aframe, Assistant United States Attorney, with whom Scott
W. Murray, United States Attorney, was on brief, for
Torruella, Lynch, and Kayatta, Circuit Judges.
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.
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. As 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. §§
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.
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.
Arif's arguments are without merit. Accordingly, we
affirm both his conviction and sentence.
following facts are drawn from Arif's conditional guilty
plea and from the district court's findings of fact.
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.
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
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). 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
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.
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%.
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.
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.
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). A superseding indictment was
filed on September 9, 2015, adding two additional counts of
shipment of misbranded drugs in interstate commerce and
aiding and abetting the same.
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.
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 ...