UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WASHINGTON AT TACOMA

Transcription

1 Case :-cr-0-rbl Document 0 Filed 0// Page of 0 0 UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WASHINGTON AT TACOMA UNITED STATES OF AMERICA, v. Plaintiff, RICHARD MARSCHALL, Defendant. The Honorable Ronald B. Leighton NO. CR-RBL GOVERNMENT S SENTENCING MEMORANDUM Sentencing Date: October 0, 0 Richard Marschall is before this Court to be sentenced for his second felony conviction in six years for nearly identical offenses related to prescribing misbranded drugs. Following his federal felony conviction for introduction of misbranded drugs in 0, the defendant continued to violate the Food Drug and Cosmetic Act s prohibitions related to the receipt, sale and interstate delivery of prescription drugs, because he placed his interpretation of appropriate patient care above the constraints of the law. The defendant s instant conviction warrants a sentence of imprisonment. The government respectfully requests that the Court sentence the defendant to a term of imprisonment of six () months, followed by the statutory maximum of one () year of supervised release, and a fine of four thousand dollars ($,000), subject to all of the conditions recommended by the Probation Office. Sentencing Memorandum / - United States v. Richard Marschall, CR-RBL UNITED STATES ATTORNEY 00 STEWART STREET, SUITE 0 SEATTLE, WASHINGTON 0 (0) -0

2 Case :-cr-0-rbl Document 0 Filed 0// Page of 0 0 I. PROCEDURAL HISTORY On July, 0, the defendant pled guilty to a one-count information charging him with introducing misbranded drugs into interstate commerce, pursuant to U.S.C. (a), (a)(). The defendant has been released on bond since that date. There have been no bond violations. II. BACKGROUND A. FDCA Statutory Framework. The statutory background for this criminal prosecution involves certain provisions of the Food Drug and Cosmetic Act (FDCA) related to drugs, which are summarized in this section. The FDCA defines drugs as, among other things, articles intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease in man or other animals; articles (other than food) intended to affect the structure or any function of the body of man or other animals; and articles intended for use as a component of any such articles. U.S.C. (g). A drug intended for use in humans, which, because of its toxicity, or other potentiality for harmful effect, or the method of its use, or the collateral measures necessary to its use, is not safe for use except under the supervision of a practitioner licensed by law to administer such drug, can only be dispensed by a practitioner licensed by law pursuant to a lawful prescription. U.S.C. (b)(). These drugs are commonly known as prescription drugs. Dispensing a prescription drug without a valid prescription written by a licensed practitioner is deemed by statute to be an act which caused the drug to be misbranded. U.S.C. (b). A drug is also misbranded if, among other things, its labeling is false or misleading in any particular, or if the labeling on the drug does not bear adequate directions for use. U.S.C. (a), (f)(). Adequate directions for use means directions under which a layman could use a drug safely and for the purposes for which it was intended without a doctor s supervision. C.F.R. 0.. Prescription drugs Sentencing Memorandum / - United States v. Richard Marschall, CR-RBL UNITED STATES ATTORNEY 00 STEWART STREET, SUITE 0 SEATTLE, WASHINGTON 0 (0) -0

3 Case :-cr-0-rbl Document 0 Filed 0// Page of 0 0 dispensed without a valid prescription by a licensed provider are per se misbranded because they lack adequate directions for use, and do not meet a statutory exception. U.S.C. (b)(). Under the FDCA, the following acts are prohibited (among others): a. The introduction into interstate commerce of any misbranded drug ( U.S.C. (a)); b. The receipt in interstate commerce of any misbranded drug, and the delivery or proffered delivery thereof for pay or otherwise ( U.S.C. (c)); and; c. The doing of any act with respect to a drug, if such act was done while the drug was held for sale (whether or not the first sale) after shipment in interstate commerce, which resulted in the drug being misbranded ( U.S.C. (k)). B. Human Chorionic Gonadotropin (HCG). Human Chorionic Gonadotropin (HCG) is a hormone produced in women during pregnancy. HCG intended for therapeutic uses or to affect the structure or function of the human body is a drug under U.S.C. (g). Certain prescription drugs containing HCG are approved by the FDA for the treatment of infertility or other hormonal disorders. No HCG drug has been approved by the FDA to treat obesity or promote weight loss. Any injectable HCG drug intended to treat obesity or promote weight loss is a prescription drug. C. Richard Marschall s Prior Felony Conviction and License Revocation. Richard Marschall was charged and convicted in this Court for introduction of misbranded drugs in interstate commerce, pursuant to U.S.C. (a) and (a)() in 0. United States v. Richard Marschall, CR-BHS ( Marschall I ). In the defendant s plea agreement in that case he admitted to ordering HCG from overseas, using it to treat patients with whom he only consulted by phone, and to lying to the FDA investigator to get that agency to release impounded HCG. See Exhibit A (Marschall I Plea Agreement) (b)-(h). Defendant was sentenced to months of probation and a $000 fine. See Marschall I, Dkt. (Judgment). Sentencing Memorandum / - United States v. Richard Marschall, CR-RBL UNITED STATES ATTORNEY 00 STEWART STREET, SUITE 0 SEATTLE, WASHINGTON 0 (0) -0

4 Case :-cr-0-rbl Document 0 Filed 0// Page of 0 0 In part as a result of the defendant s conviction, the Washington State Department of Health (DOH) initiated proceedings to suspend defendant s doctor of naturopathy license. That order became final on November, 0. See Exhibit B (Stipulated Findings of Fact, Conclusions of Law, and Agreed Order, Case No. M00-), at. Approximately two years later, the Board determined Dr. Marschall had practiced on a suspended license, and issued a cease and desist order prohibiting the defendant from engaging in any conduct constituting the practice of naturopathic medicine. See Attachment C (Stipulated Findings of Fact, Conclusions of Law and Agreed Order To Cease and Desist, Case No. M0-). At the same time, DOH issued an order prohibiting Dr. Marschall for applying for reinstatement of his naturopathy license for at least months. Dr. Marschall has not possessed a license to practice medicine at any point between November, 0 and the present. See Plea Agreement (c). D. 0 Investigation and Interstate Shipment of HCG to Undercover. The investigation that resulted in the criminal conviction before the Court was initiated by DOH, based on that Agency s renewed concerns that Dr. Marschall continued to practice on a suspended license in violation of the cease and desist order. The DOH learned that, notwithstanding his license suspension, the defendant was continuing to prescribe HCG for weight loss and initiated an investigation. On September, 0, two DOH investigators posing as potential patients met Marschall and discussed HCG. Marschall stated that he could provide treatment that would result in weight loss at a rate of 0 pounds within to 0 days with injections of HCG. Marschall stated that he would set up injection treatments at his office and then provided instructions about how to conduct the injections. FDA-OCI became involved in the fall of 0. Defendant communicated with an undercover (UC) FDA-OCI agent in October 0. After the UC told Dr. Marschall she Washington State is one of seventeen states that license naturopathic doctors. See American Association of Naturopathic Physicians, at (last accessed October, 0). Sentencing Memorandum / - United States v. Richard Marschall, CR-RBL UNITED STATES ATTORNEY 00 STEWART STREET, SUITE 0 SEATTLE, WASHINGTON 0 (0) -0

5 Case :-cr-0-rbl Document 0 Filed 0// Page of 0 0 was in Portland and interested in his advertised weight loss services, he responded by So, I use a natural, bio-identical hormone. It MUST be injected. It's painless, uses a / needle as thin as an acupuncture needle, you can easily do it yourself, it goes into the area inches on either side of the belly button where there are almost no nerve endings. It goes under the skin only, not into the muscles where the nerves are. Diabetics do it times a day without issue. It releases,00 calories a day for days. You eat a protein, vegetable and fruite [sic] for lunch and dinner. You're not hungry and the hormone causes you to release fat ONLY from the hips, buttocks, thighs, belly, breasts, arms and legs, the secure fat reserves. Most diets release fat from the muscles and even worse protein from the muscles because they can't get into this storage fat area for months. I am the first naturopathic clinic to offer and teach this program to my colleagues in the United States going on years now. You get my page book that has all the instructions on how to do the program. You get a special multiple vitamin-mineral and a trace mineral. You get a prescription grade garlic antibiotic to remove yeast, bacteria, parasites, viruses that harm the appetite and metabolism regulating center in the hypothalamus. You also get an actual human strain good bacteria capsule imported from England (there are NO human strain products available in the United States currently due to poor FDA regulation). The program starts with a one hour phone consult and continues with a phone consult every weeks throughout stage one and stage two ( weeks total). The cost for all of this is only $. If you ever have to do it again the cost is $ because you already have the book and require less coaching. You're also my patient now for life if you ever need help with any other issues; I have 0 years of experience. Dr. Marschall then asked the UC to complete some new patient forms and conducted an approximately one-hour hour phone consultation with the UC. The UC then paid $0 by credit card to Marschall s clinic. A few days later, Dr. Marschall sent her the HCG from Port Angeles, Washington to an address in Portland, Oregon. Records obtained during the subsequent investigation demonstrated that Dr. Marschall had obtained HCG and other prescription drugs from a number of compounding pharmacies throughout the United States. He made material misrepresentations and omissions to these pharmacies, both about the status of his Sentencing Memorandum / - United States v. Richard Marschall, CR-RBL UNITED STATES ATTORNEY 00 STEWART STREET, SUITE 0 SEATTLE, WASHINGTON 0 (0) -0

6 Case :-cr-0-rbl Document 0 Filed 0// Page of 0 0 license, and the physician-patient relationship he maintained with the individuals to whom he prescribed the drugs. Between February 0 and February 0, Dr. Marschall prescribed injectable HCG to approximately 0 individuals for weight loss. He did not inform these patients that he did not possess an active and valid naturopathic license, and that the drugs were therefore misbranded under the FDCA. Plea Agreement (g), (h). III. ADVISORY GUIDELINES RANGE The Probation Office has made the following Guideline calculations: Base Offense Level (USSG N.(a)). Conviction under U.S.C. after sustaining a prior conviction under this Section (USSG N.(b)()). Abuse of position of public or private trust (USSG B.). Acceptance of responsibility (USSG E.). () Total Offense Level 0 The defendant s 0 conviction under the same statute results in one criminal history point and a Category I Criminal History. As a result, the Probation Office has determined that the defendant s Guidelines range for imprisonment is - months. The government agrees that this is the correct Guidelines range in this case. Defendant has not filed objections to any of the above Guideline calculations. In the plea agreement, the government agreed to recommend a sentence of imprisonment no greater than six () months, and the defendant agreed to recommend a term of custody of no fewer than sixty (0) days. Plea Agreement. This agreement is not binding on the Court. The statutory maximum for the count of conviction is three years. Sentencing Memorandum / - United States v. Richard Marschall, CR-RBL UNITED STATES ATTORNEY 00 STEWART STREET, SUITE 0 SEATTLE, WASHINGTON 0 (0) -0

7 Case :-cr-0-rbl Document 0 Filed 0// Page of 0 0 IV. SENTENCING RECOMMENDATION The government recommends a sentence of six months to be followed by one year of supervised release. As set forth in the Supreme Court s decision in United States v. Booker, S. Ct. (00), this Court is required to consider the sentencing range calculated under the United States Sentencing Guidelines, together with the other factors set forth in Title, United States Code, Section (a) ( (a) factors ), including: () the nature and circumstances of the offense and the history and characteristics of the defendant; () the need for the sentence imposed (a) to reflect the seriousness of the offense, to promote respect for the law, and to provide just punishment for the offense, (b) to afford adequate deterrence to criminal conduct, (c) to protect the public from further crimes of the defendant, and (d) to provide the defendant with educational and vocational training, medical care, or other correctional treatment in the most effective manner; () the kinds of sentences available; () the kinds of sentences and the sentencing range established for the offense as set forth in the Guidelines; () any pertinent policy statement; () the need to avoid unwarranted sentence disparity among defendants involved in similar conduct who have similar records; and () the need to provide restitution to victims. In the instant case, consideration of all the above factors suggests that a sentence at the low-end of the Guidelines range is a reasonable and just sentence. A number of the relevant Section (a) factors are discussed in more detail below.. The Nature and Circumstances of the Offense are Aggravating. The defendant has blatantly flouted the requirements of the FDCA for more than eight years, as the investigation that lead to his 0 conviction began in 00. For purposes of this prosecution, that statute requires, simply, that prescription drugs be prescribed by a licensed provider, otherwise they are misbranded. The shipment of such drugs in interstate commerce is a violation of the statute. When such distribution occurs after a prior conviction under the same statute, or with the intent to defraud or mislead, the violation is a felony. Sentencing Memorandum / - United States v. Richard Marschall, CR-RBL UNITED STATES ATTORNEY 00 STEWART STREET, SUITE 0 SEATTLE, WASHINGTON 0 (0) -0

8 Case :-cr-0-rbl Document 0 Filed 0// Page of 0 0 Dr. Marschall s crime here is not victimless. The government anticipates that Dr. Marschall will tout satisfied patients, including a number who have completed impact statements and character letters. Myopic focus on these cherry-picked representatives misses the point of this prosecution, the FDA s oversight responsibility, and Dr. Marschall s significant history of regulatory non-compliance with DOH. Congress has determined that there is a health risk when a certain class of drugs are prescribed to patients by unlicensed individuals. It is well within the scope of the FDA to make that determination, and Congress has legislated that prohibition by statute. In this case, the government does not come to the Court with examples of physical patient harm resulting from Dr. Marschall s criminal conduct, though this outcome is not far-fetched. The defendant was an unlicensed provider, instructing patients to mix and then self-inject a hormone into their bodies, for a non-fda approved purpose, without so much as a face-to-face meeting. The greater harm in this case is to patients trust that their health care provider will be licensed with the State, and if such license is suspended, that the provider will disclose that suspension and abide by the law s requirements resulting from the suspension. Dr. Marschall blatantly failed to do this and thereby abused his patients trust. See, e.g., Exhibit D (Interview Report of W.B.), at ( SA Zigler asked [W.B.] if he/she would have gone to Marschall if he/she knew that Marschall was an unlicensed physician, and [W.B.] replied hell no. [W.B.] stated that he/she was embarrassed that he/she went to an unlicensed physician and he/she felt duped. ); Exhibit E (Interview Report of S.M.), at ( [S.M.] said he/she would never see anyone for her/his health care needs who was not licensed. ). The medical (and in Washington state, naturopathic) licensing and pharmacy systems in this country are set up to ensure that the FDCA requirements for obtaining and distributing prescription drugs are followed. Because of this, the defendant necessarily Exhibits D and E are filed under seal as they contain confidential health information of witnesses. Sentencing Memorandum / - United States v. Richard Marschall, CR-RBL UNITED STATES ATTORNEY 00 STEWART STREET, SUITE 0 SEATTLE, WASHINGTON 0 (0) -0

9 Case :-cr-0-rbl Document 0 Filed 0// Page of 0 0 deceived his patients and the pharmacies in order to obtain and prescribe HCG. The deception of the patients was quite simple: the defendant never notified his patients that he was unlicensed and could not legally provide the drugs he was prescribing. The deception of the pharmacies to obtain prescription drugs in the first place was a bit more involved. Evidence obtained from various compounding pharmacies around the country established that Dr. Marschall ordered prescription drugs, including but not limited to HCG, following his November 0 license suspension through February 0. In some cases these drugs were shipped to Dr. Marschall s clinic in Port Angeles, and in other cases they were shipped directly to out-of-state patients. Dr. Marschall affirmatively misled the compounding pharmacies to believe that he was a licensed naturopath possessing an active DEA license when he was not and did not. Evidence of this deception is includes the following: Marschall provided KRS Pharmacy licensure documentation in October 0 showing his ND license as active (despite the fact that almost two months earlier Marschall had signed an agreed order with DOH suspending his license). Compare Exhibit F (Account Opening Documents provided by Richard Marschall to KRS Pharmacy), at with Exhibit B, at. He then failed to notify the pharmacy that his license was officially suspended in November 0. In October 0, Marschall provided KRS Pharmacy a voided prescription pad listing his DEA number and ND license number, despite the fact that his DEA registration had been surrendered in October 0 and he had agreed to surrender his ND license. Exhibit F, at. On October 0, 0, the defendant provided KRS Pharmacy a signed document entitled Physician Statement: Doctor/Patient Relationship, which contained Dr. Marschall s agreement that all prescriptions sent to KRS met certain criteria, including that a physical examination has been performed. Dr. Marschall voluntarily surrendered his DEA registration in October 0 after twice being admonished for failing to disclose administrative actions taken by DOH against his license on the DEA registration renewal form. Sentencing Memorandum / - United States v. Richard Marschall, CR-RBL UNITED STATES ATTORNEY 00 STEWART STREET, SUITE 0 SEATTLE, WASHINGTON 0 (0) -0

10 Case :-cr-0-rbl Document 0 Filed 0// Page 0 of 0 0 Exhibit F, at. Of course, in this case, his prior federal conviction, and in DOH proceedings, Dr. Marschall has admitted that he regularly prescribed prescription drugs without a physical examination. Marschall confirmed to Falls Compounding Pharmacy that he had an active license when he did not. See Exhibit G (Interview of Britney Enemark), at. The deception inherent in the instant offense conduct is not new or isolated conduct for Dr. Marschall. Rather, it has been a consistent aspect of his professional life for at least the last eight years. In the events leading to his 0 federal conviction, Dr. Marschall lied to FDA investigators about his intended use of HCG. Exhibit A. Between November 0 and the present, he continued to solicit patients, practice naturopathy and prescribe drugs on a suspended license, deceiving the DOH and his own patients. He also failed to disclose his state license issues to the DEA on two occasions. Finally, even today, Dr. Marschall s practice website lists his credentials, N.D. See Exhibit K (Homepage for Natural Healing Clinic, at (last accessed October, 0). These credentials are, at best, misleading, in light of his indefinitely suspended license, and may be a violation of law. Washington State law prohibits a person from practicing naturopathy or representing himself or herself as a naturopath without first applying for and receiving a license. RCW.A.00. A person represents himself as a naturopath when, among other things, that person adopts or uses a title ND. Id. An individual is involved in the unlicensed practice of a profession (including naturopathy) when he does so without a valid... and unsuspended license to do so. RCW.0.00() (emphasis added). Read together these provisions suggest that a valid, unsuspended license is required to operate a business using the title N.D., which is exactly what Dr. Marschall continues to do. This will ultimately be an issue for the Department of Health; however, the government Sentencing Memorandum / - 0 United States v. Richard Marschall, CR-RBL UNITED STATES ATTORNEY 00 STEWART STREET, SUITE 0 SEATTLE, WASHINGTON 0 (0) -0

11 Case :-cr-0-rbl Document 0 Filed 0// Page of 0 0 suggests the defendant s website is misleading, and that his bond should be modified to require removal of the term N.D. from his online and physical business locations.. Defendant s Personal Characteristics. Defendant s history and characteristics, on balance, do not weigh in favor of a lesser sentence than that recommended by the government. Without question, Dr. Marschall is long-time practitioner in the health care field with devoted patient base. Many of these patients accept, and even celebrate, that Dr. Marschall s passion for helping patients became more important than understanding federal regulations and following the law as it has been interpreted. See Character Letter of B.G., at. While this characteristic has endeared Dr. Marschall to certain of his friends and patients, it is not a viable option in a society where doctors (medical or naturopathic) are governed by state licensure requirements and federal restrictions related to prescription drugs. Until November of 0, the defendant had been licensed as a naturopath in Washington State since. For most of that time he has owned and operated the Natural Healing Clinic, located in Port Angeles, Washington. During that time, the defendant s professional relationship with the Department of Health s Board of Naturopathy the body responsible for professional oversight and licensure of naturopaths has been rocky. In DOH suspended the defendant s license for thirty months and fined him $,000 for treating patients online and by phone. The conduct at issue in this order occurred between and. The period of suspension was stayed based on Dr. Marschall s agreement not to treat out-of-state patients without regular physical examinations. See Exhibit H (Stipulated Findings of Fact, Conclusions of Law, and Agreed Order, Case No. M-0).. The defendant has complied with the bond condition that his website inform patients he is not licensed and that he cannot prescribe prescription drugs. See Release Status Report. Sentencing Memorandum / - United States v. Richard Marschall, CR-RBL UNITED STATES ATTORNEY 00 STEWART STREET, SUITE 0 SEATTLE, WASHINGTON 0 (0) -0

12 Case :-cr-0-rbl Document 0 Filed 0// Page of 0 0 In November 0, the defendant s license was suspended indefinitely and he was fined $0,000, based on the facts underlying his criminal conviction in this Court, in addition to the fact that he prescribed HCG to patients whom he had never met in person. See Exhibit B (Case No. M00-).-.. Following the November 0 DOH Order, Marschall sought reinstatement of his license. In September 0, the Department of Health received a complaint that the defendant was holding himself out as a practicing naturopath, soliciting patients and prescribing drugs. See Exhibit C.. The DOH investigation established that Marschall was continuing to prescribe drugs during his suspension. Id. at.. Marschall admitted he had engaged in the unlicensed practice of naturopathy. In an agreed order, his license was suspended for an additional months on September, 0. He was fined $,000. Id. at.. This criminal case followed. Dr. Marschall s history as a healthcare provider, while touted by certain patients, is not complete without a sober view of his non-compliance with state and federal regulations.. The Court s Sentence should Promote Respect for the Law, Afford Adequate Deterrence, and Protect the Public from Further Crimes of the Defendant. At Dr. Marschall s sentencing hearing slightly more than six years ago, he told Judge Settle: I felt, knowing that it was at least a misdemeanor to do so [order HCG from foreign sources], that in my belief system, according to the philosophy I was trained under at the University of Santa Clara, you can break a civil law in pursuit of a higher moral law. See Exhibit I (Marschall I, Sentencing Transcript, dated September, 0), at :-. Judge Settle recognized the dangerous road suggested by the defendant s comments: [I]t concerned me that you might think that in the interest of serving your patients, that if regulations were to interfere with your ability to do that, you d just simply do it.... [T]hat gives the Court some concern about where you are Sentencing Memorandum / - United States v. Richard Marschall, CR-RBL UNITED STATES ATTORNEY 00 STEWART STREET, SUITE 0 SEATTLE, WASHINGTON 0 (0) -0

13 Case :-cr-0-rbl Document 0 Filed 0// Page of 0 0 going to head from here. Id. at :-. As the next six years have shown, Judge Settle s concern about the defendant s respect for the law was well founded. Under the government s recommended sentence, the defendant will serve six months in prison to be followed by one year of supervised release. This recommended disposition, if imposed by the Court, will provide a short respite from defendant s unlawful conduct, which he appears intent on continuing. After at least two license suspension proceedings and one cease and desist proceeding with DOH, and a prior criminal conviction, the defendant has shown he is not easily deterred. Beyond the Court s sentence, the DOH must closely monitor the defendant. The government will work with DOH, so that agency imposes the strictest oversight of defendant at its disposal following his term of supervision. As the past five years have shown, a criminal conviction does not assure that the defendant will not continue to solicit and treat patients in violation of Board of Naturopathy standards, hold himself out as a naturopath, and prescribe drugs. The Court s sentence should be sufficient to deter him from violating federal law when he does so.. The Need to Avoid Unwarranted Sentencing Disparity. The most apt comparative case in this District is Dr. Marschall s own prior conviction. The facts of that case were slightly different; however, the gist of the offense, the misbranded drug at issue, and the role of deception in the offense were the same. He received a sentence of two years probation in that case, and the punishment for a repeat offense should unquestionably be more severe. A second reference point comes from the Eastern District of Washington. In 0, Donna Kay Whitney was charged with introduction of misbranded drugs in interstate commerce, under U.S.C. (a) and (a)(), among other crimes. See United States v. Whitney, CR-LRS (E.D. Government counsel has reviewed this case with Susan Gragg, the program manager of the Board of Naturopathy. The Board will review defendant s conviction when final to determine whether to initiate proceedings to permanently revoke his license, which remains in suspended status. The Board may also consider whether Dr. Marschall s continued use of N.D. on his website violates Washington law related to the unlicensed practice of naturopathy. Sentencing Memorandum / - United States v. Richard Marschall, CR-RBL UNITED STATES ATTORNEY 00 STEWART STREET, SUITE 0 SEATTLE, WASHINGTON 0 (0) -0

14 Case :-cr-0-rbl Document 0 Filed 0// Page of 0 0 Wash), Dkt. (Indictment). According to the plea agreement in that case, Ms. Whitney sold injectable HCG over the internet for purposes of weight loss. She had no medical license. The HCG bore false labeling indicating it had come from FDA certified facilities. See Exhibit J (United States v. Whitney Plea Agreement), at -. Whitney was sentenced to six months imprisonment. Whitney, Dkt. No.. V. RESTITUTION AND CRIMINAL FINE The government is not seeking restitution in this matter for the patients who paid for prescriptions of HCG, despite the fact that Dr. Marschall was unlicensed. The government provided impact statements to the last known address of all patients to whom the defendant prescribed HCG following his license suspension. No requests for restitution were returned. Although restitution may be available under the statute, the process of determining to whom restitution is owed and how much would overly burden and prolong the sentencing process. Complexities exist in identifying the specific patients to whom restitution would be owed, amounts paid, and whether each drug was introduced into interstate commerce. The government believes that complex issues of fact related to the cause or amount of the victims losses would complicate or prolong the sentencing process, and does not seek restitution. See U.S.C (a)()(b)(); A(c)()(B). A fine is appropriate however. Dr. Marschall s previous criminal fine was $,000. The Department of Health has imposed fines of $,000, $0,000, and $,000 for the various agreed license suspension and cease and desist orders. The government proposes a fine of $,000 in this case. This is the low-end of the fine guidelines for this offense. See USSG E.(c)(). Dr. Marschall reports to receive $,000 in monthly income from his practice. PSR. Although Dr. Marschall has significant consumer and educational debt, he does have the income to pay a small fine. In fact, he is paying his wife (from whom he is legally separated) $,000 per month in alimony, despite the fact the two still live on the same property, which they own outright. See PSR 0, 0,. A small fine is appropriate in this case. Sentencing Memorandum / - United States v. Richard Marschall, CR-RBL UNITED STATES ATTORNEY 00 STEWART STREET, SUITE 0 SEATTLE, WASHINGTON 0 (0) -0

15 Case :-cr-0-rbl Document 0 Filed 0// Page of 0 0 VI. CONCLUSION Based on all the factors outlined above, the government recommends a sentence of six months of imprisonment, followed by one year of supervised release with the conditions recommended by the United States Probation Office, and a criminal fine in the amount of $,000. DATED this th day of October, 0. Respectfully submitted, ANNETTE L. HAYES United States Attorney /s/ Matthew D. Diggs MATTHEW D. DIGGS Assistant United States Attorney 00 Stewart Street, Suite 0 Seattle, WA 0- Telephone: (0) -0 Fax: (0) -0 matthew.diggs@usdoj.gov Sentencing Memorandum / - United States v. Richard Marschall, CR-RBL UNITED STATES ATTORNEY 00 STEWART STREET, SUITE 0 SEATTLE, WASHINGTON 0 (0) -0

16 Case :-cr-0-rbl Document 0 Filed 0// Page of 0 0 CERTIFICATE OF SERVICE I hereby certify that on October, 0, I electronically filed the foregoing with the Clerk of Court using the CM/ECF system which will send notification of such filing to the attorney(s) of record for the defendant(s). s/anna Chang ANNA CHANG Paralegal United States Attorney=s Office 00 Stewart Street, Suite 0 Seattle, Washington 0- Telephone: (0) -0 Facsimile: (0) -0 Sentencing Memorandum / - United States v. Richard Marschall, CR-RBL UNITED STATES ATTORNEY 00 STEWART STREET, SUITE 0 SEATTLE, WASHINGTON 0 (0) -0

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33 LAW ENFORCEMENT SENSITIVE - FOR OFFICIAL USE ONLY Case :-cr-0-rbl Document 0- Filed 0// Page of Food and Drug Administration OFFICE OF CRIMINAL INVESTIGATIONS MEMORANDUM OF INTERVIEW CASE NUMBER: CASE TITLE: DOCUMENT NUMBER: PERSON INTERVIEWED: PLACE OF INTERVIEW: DATE OF INTERVIEW: TIME OF INTERVIEW: INTERVIEWED BY: 0-SEW--0 RICK MARSCHALL 0 Britney Enemark Via Telephone 0/0/0 :0 a.m. SA Angela Zigler OTHER PERSONS PRESENT: N/A On April 0, 0, BRITNEY ENEMARK, President of NYBERG HEALTH ENTERPRISES d/b/a THE FALLS COMPOUNDING PHARMACY, was interviewed by SA Angela Zigler, U.S. Food and Drug Administration, Office of Criminal Investigations (FDA/OCI) via telephone number ENEMARK was advised that the purpose of the interview was to discuss RICK MARSCHALL s contacts with THE FALLS COMPOUNDING PHARMACY (FCP), Snoqualmie, WA. ENEMARK agreed to answer questions and provided the following information in substance: MARSCHALL worked with FCP for years and years. FCP would not have questioned MARSCHALL's license, but ENEMARK believed a comment was made by MARSCHALL or one of MARSCHALL s patients that made FCP check to see if there was an action taken against MARSCHALL. FCP checked the Washington State Board website, under the provider credential search, and it stated that MARSCHALL s license was not active. FCP questioned MARSCHALL about this and MARSCHALL told FCP that his license was active. ENEMARK stated that MARSCHALL s fax number had to be removed from their system due to MARSCHALL's inactive license status as well. FCP prescription refill requests were automatically generated and sent to the physician to be signed and returned to FCP. When MARSCHALL continued to receive patient refill requests from FCP, MARSCHALL continued to sign them and return them to FCP. Therefore on January, 0, FCP wrote a note in MARSCHALL s profile that stated Removed fax number from spot lost license. Cannot fill anything for him until license is reupped. ENEMARK stated that MARSCHALL continued to fax prescriptions to FCP that FCP did not fill due to MARSCHALL s inactive license. ENEMARK believed MARSCHALL told his patients that his license was active because MARSCHALL s patients then contacted FCP expecting their prescription. FCP told MARSCHALL s patients that MARSCHALL was not licensed and that their prescriptions were not going to be filled. The patients then got mad at FCP. ENEMARK stated that the patients were under the impression that MARSCHALL was a licensed naturopath. ENEMARK stated that this happened with approximately five or so of MARSCHALL s patients. ENEMARK stated that FCP eventually called the Board of Naturopathic Medicine for verification about MARSCHALL s license because of the statements made by MARSCHALL and MARSCHALL's patients. LAW ENFORCEMENT SENSITIVE - FOR OFFICIAL USE ONLY

34 LAW ENFORCEMENT SENSITIVE - FOR OFFICIAL USE ONLY Case :-cr-0-rbl Document 0- Filed 0// Page of 0-SEW--0 Page of On August, 0, a note was placed on MARSCHALL s profile with FCP. The note stated, Board of Naturopathic Medicine Rep says earliest reinstatement is November, 0 assuming he has met all the conditions stipulated by the Board. ENEMARK was under the impression that MARSCHALL used another pharmacy after FCP stopped filling prescriptions written/signed by MARSCHALL. SUBMITTED: Electronically submitted by ANGELA ZIGLER ANGELA ZIGLER, SPECIAL AGENT DATE: 0/0/0 APPROVED: Electronically approved by STEPHEN JACKSON STEPHEN JACKSON, RESIDENT AGENT IN CHARGE DATE: 0/0/0 DISTRIBUTION: Orig: SFRO CC: SEW ATTACHMENTS: None. LAW ENFORCEMENT SENSITIVE - FOR OFFICIAL USE ONLY

35 Case :-cr-0-rbl Document 0- Filed 0// Page of Exhibit I

36 Case :-cr-0-rbl Document 0- Filed 0// Page of UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA 0 UNITED STATES OF AMERICA, ) Docket No. CR-BHS ) Plaintiff, ) Tacoma, Washington ) vs. ) September, 0 ) RICHARD MARSCHALL, ) ) Defendant. ) ) APPEARANCES: For the Plaintiff: TRANSCRIPT OF SENTENCING HEARING BEFORE THE HONORABLE BENJAMIN H. SETTLE UNITED STATES DISTRICT COURT JUDGE NICHOLAS W. BROWN Assistant United States Attorney 00 Stewart Street, Suite 0 Seattle, Washington 0-0 For the Defendant: Probation Officer: Court Reporter: KENNETH S. KAGAN Carney Badley Spellman 0 Fifth Avenue, Ste 00 Seattle, Washington 0-00 BECKY MILLER Teri Hendrix Union Station Courthouse, Rm 0 Pacific Avenue Tacoma, Washington 0 () - Proceedings recorded by mechanical stenography, transcript produced by Reporter on computer.

37 Case :-cr-0-rbl Document 0- Filed 0// Page of 0 0 MONDAY, SEPTEMBER th, 0 - :0 P.M. * * * THE COURT: Please be seated. Good afternoon. THE CLERK: This is in the matter of the United States of America versus Richard Marschall, Cause No. CR-BHS. Counsel, please make an appearance for the record. MR. BROWN: Good afternoon, Your Honor, Nicholas Brown for the United States. THE COURT: Good afternoon. MR. KAGAN: Good afternoon, Your Honor. Kenneth Kagan for Richard Marschall. Dr. Marschall is here as you can see on my right. He got injured last night, so he's in considerable pain, but he's able to participate. THE COURT: Very well. Good afternoon. That being the case, Dr. Marschall will not have to stand, if he should choose to address the Court for sentencing. This matter has been set on for sentencing this afternoon, and the first thing I want to do is inquire, are you satisfied with the services you received from your attorney here? THE DEFENDANT: Very much. THE COURT: Do you believe you've had sufficient opportunity then to prepare for this hearing with him by going over the government's sentencing memorandum, your own sentencing memorandum and, of course, the presentence report

38 Case :-cr-0-rbl Document 0- Filed 0// Page of 0 0 that was developed on your behalf? THE DEFENDANT: Yes, sir. THE COURT: I have also gone through and reviewed all of those documents. In addition, I have read your statement in the presentence report. There were a number of statements solicited, what we refer to as victim impact statements, and then some letters that were written on your behalf by various patients. Are there any other documents the Court needs to review? MR. BROWN: Not from the government, Your Honor. MR. KAGAN: I brought with me, Your Honor, a letter that was written by a patient, that I received this morning and I gave it to the courtroom deputy to give it to you. I hope you had a chance to read that. THE COURT: I did review that as well. Now, I want to go over -- MR. KAGAN: Your Honor, excuse me, one more thing, and that is on Dr. Marschall's behalf, I transmitted to you a few weeks ago a letter accepting responsibility. THE COURT: Yes, that is what I mentioned was a letter from him. I have read that. Now, I want to go over the sentencing parameters here. This is the offense to which he pled guilty, is causing introduction of misbranded drugs. Now, this is a Class E felony. It carries a maximum of three years imprisonment.

39 Case :-cr-0-rbl Document 0- Filed 0// Page of 0 0 The base offense level, the parties are in agreement, is. There also is an agreement that there should be a reduction of two for acceptance of responsibility. There is, I believe, a dispute about the abuse of trust, whether or not two levels should be added to that. I can hear argument on this, Mr. Kagan, but my review of the notes under B., indicate that this is the type of case that would entail the application of an abuse of trust adjustment, so I will be happy to hear from you. MR. KAGAN: Your Honor, do you prefer for me to go to the podium? THE COURT: Please. MR. KAGAN: I agree with the Court that this is the type of case that would normally lend itself to a two-point adjustment upward for violation of a public trust, in the sense that he is a medical professional who treats patients and who is governed by certain rules that apply to the practice of his profession. The reason that I believe this is not a violation or an abuse of a position of trust, first of all, I think that we need to establish clearly that there is nothing unlawful about his use of HCG in his practice, and that is not what has been alleged here. What was alleged here was that he caused the introduction into commerce of HCG that came from overseas rather than being

40 Case :-cr-0-rbl Document 0- Filed 0// Page of 0 0 produced or obtained domestically. It came from a Canadian pharmaceutical supplier and it was made in either India or China. That is the gravamen of the offense, not the use of HCG. So it is our position that he did not use his position to get patients to take something that he did not have the authority to offer them or to prescribe for them. He does have that authority. The difference is the use of something coming from overseas. Dr. Marschall reasonably believed that the drug was safe and effective, and there has never been a single allegation that anyone was harmed because they took HCG that was produced overseas or that any of the HCG from overseas was defective or harmful in any way. So when I look at the case and the notes in that section as well, I believe that this would apply in a case where he, or a physician or a health care provider, was prescribing something and not telling the patients what it was, giving them something that was harmful, profiting in some way that was inappropriate. This is just simply a matter of bringing something into commerce that violated regulation. But he's entitled to use HCG. So if it was a banned substance, for example, or something that was a contraband of some kind, like it was exceeding his authority to prescribe a narcotic or something

41 Case :-cr-0-rbl Document 0- Filed 0// Page of 0 0 like that, I would agree. But here, I think it is not an abuse of trust because if he could give his patient HCG that was manufactured in Tennessee, then if he believes that he can get HCG from another source and it is the same HCG that's the same substance, I don't believe that to be an abuse of trust. THE COURT: Mr. Brown. MR. BROWN: Thank you, Your Honor. Obviously, we would concur in the Court's initial reading that the conduct for which Dr. Marschall pled guilty does in fact constitute an abuse of a position of trust. Clearly, there's probably no other greater position than being a doctor, physician or naturopathic doctor. That carries with it the burden and the duty to be ethical and honest in your vehemence. What the defendant has pled guilty to, if you look at specifically the elements of the offense, is he knowingly imported a misbranded drug and did so with the intent to deceive. Now, the statute contemplates two different types of deception. One can be to the FDA or the people regulating the drug, the other can be to the patients who are then prescribed the drug. In either case, the underlying offense was done so with the intent to deceive. Any time you have someone licensed by the State of Washington to provide medical care, who has pled to an offense

42 Case :-cr-0-rbl Document 0- Filed 0// Page of 0 0 that includes an element of deception, you have an abuse of that position of trust. I also think that if you look at the conduct itself and what followed, what followed was lies by Dr. Marschall to the FDA compliance officer about what he was doing and the purposes for importing that drug. The combination of that, to the government, is clearly one that constitutes an abuse of a position of trust. So I think for all those reasons, that should apply. It doesn't ultimately affect what the government's recommendation is in this case, but it does apply for purpose of a sentencing recommendation. THE COURT: Thank you, Mr. Brown. I agree, and that was my initial impression when I go over and look at the statement of facts in the plea agreement, and the very charge involves a deception here and a knowing deception, of course. That is something that he was enabled to do. He was in a professional capacity, and I think also the patients have every right to expect that when procuring this, that he would procure it lawfully. He acknowledged that he deceived through this misbranding. So I believe that it does apply, and I find that it does, and that then puts the basic offense level at. Now, Dr. Marschall has no criminal history, therefore no criminal history points. This puts him in a criminal history category of I, and the guidelines suggest here as punishment, zero to

43 Case :-cr-0-rbl Document 0- Filed 0// Page of 0 0 six months. Of course, we know this is advisory and not binding upon the Court. The Court has the discretion to impose any sentence in this case up to the maximum, of course, which is three years. Are there any other matters before I proceed to hear argument? MR. BROWN: Not from the government. MR. KAGAN: No. THE COURT: Then I will hear from the government on its recommendation. MR. BROWN: Thank you, Your Honor. As we noted in our sentencing memorandum, we are recommending a sentence of months in prison -- excuse me, probation, a $,000 fine, 00 hours of community service in this case. I think it is important to start off by reminding Dr. Marschall, as well as highlighting to the Court, a couple things in the plea agreement in this case because as I read his letter to the Court and I read the defendant's sentencing memorandum, I was a little bit troubled. As we just highlighted, the elements of this offense are very clear. Dr. Marschall imported a misbranded drug, that he did so knowingly, and that he did so with the intent to deceive. And then when you turn to the statement of facts in this case, Your Honor, there are a couple things I want to

44 Case :-cr-0-rbl Document 0- Filed 0// Page 0 of 0 0 again highlight today. If you look at paragraph E on page five of the plea agreement, it says some very clear things that the parties have agreed on in support of Dr. Marschall's plea agreement. He acknowledges he was prescribing HCG for weight loss purposes; he purchased the drug from a Canadian website in the past. He further admitted that he knew the drugs came from India. He then admitted that he had lied in his February 00 to the FDA which he claimed that he needed the HCG to treat infertile patients. He further acknowledged he had never treated any patients for infertility with HCG. We then turn to paragraph G which is at the bottom of page and continuing to page, the last sentence of that paragraph says, "he further admitted to lying to the inspector in 00 to try to convince her to release the package stating that I was distracting her, I was diverting her." And then in the last sentence of paragraph H, defendant acknowledges that he caused the introduction of these misbranded drugs with the intent to deceive. The reason I think it is important to highlight those again today, Your Honor, is because as I read his letter and I read the defendant's sentencing memorandum, it seems to the government at least that he's somewhat equivocating about what happened here. First of all, as I read the defendant's sentencing

45 Case :-cr-0-rbl Document 0- Filed 0// Page of memorandum, he hesitates to acknowledge the fact that he admitted to lying to the FDA inspector. The plea agreement states explicitly that he acknowledged that he did, in fact, lie to the inspector. So I don't think he can have it both ways. His letter to the Court also says that he came to realize that the drugs he was buying from this Canadian website were done so illegally. The question the government has is when did he come to realize that, because as he agreed in the plea agreement, he did so knowingly with the intent to deceive. So it wasn't something that he came to realize after the fact. Pursuant to the plea agreement, he did this knowing that he shouldn't be doing it, and he did it repeatedly over a course of months. So I have trouble with the way he's set forth what he did right and what he did wrong as laid out in his letter to the Court as well as in his sentencing memorandum. There are also a number of letters the Court has read from patients who claim they have suffered side effects from the drugs they were administered by Dr. Marschall, and also a number of them claim that they were never advised of the potential side effects. Dr. Marschall again takes issue with this in his sentencing memorandum saying again unequivocally that there were no side effects, or for those people who had particular health problems, he did advise them. That is not the

46 Case :-cr-0-rbl Document 0- Filed 0// Page of 0 0 perception the government has in the letters that were provided to the Court. A number of the patients -- former patients -- of Dr. Marschall said very clearly that they were never advised of the side effects, no matter if they had low side effects or if they had health problems that would make them aggravated. THE COURT: Is there a dispute as to whether or not there were prescriptions filled over the telephone without a physical exam and, if that is so, what, if any, violation is that of the standard of practice or ethics? MR. BROWN: I think if you look at the plea agreement, Your Honor, again the statement of facts in paragraph G, Dr. Marschall in fact acknowledged that he was still treating many patients over the telephone. Now, the government's view of that is that that is probably not consistent with the Department of Health guidelines that they had imposed on him following his suspension of that. I don't think that that alone constitutes a separate criminal act. The Department of Health may have their own sanctions that may follow this. THE COURT: I didn't take it at all to be a criminal act. I was curious as to whether it constituted a violation of the standard of practice and ethics. It wasn't clear to me in reviewing the file what the effect of that is. MR. BROWN: I don't want to say definitively it is,