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United States v. Benjamin Muoghalu

May 5, 2011

UNITED STATES
v.
BENJAMIN MUOGHALU



The opinion of the court was delivered by: Judge Virginia M. Kendall

MEMORANDUM OPINION AND ORDER

On April 9, 2009, a jury convicted Defendant Benjamin Muoghalu ("Muoghalu") of conspiring to solicit and receive illegal kickbacks in violation of 18 U.S.C. § 371, soliciting and receiving illegal kickbacks in violation of 42 U.S.C. § 1320a-7b(b)(1)(B), and engaging in a mail fraud scheme to defraud and deprive Aventis Pharmaceuticals ("Aventis") of money and property and Provena St. Joseph's Medical Center ("St. Joseph's") of its right to his honest services in violation of 18 U.S.C. §§ 1341 and 1346. On December 1, 2010, the Court sentenced Muoghalu to a prison term of 22 months. Muoghalu filed a notice of appeal on December 14, 2010, and filed this Motion for Release Pending Appeal pursuant to 18 U.S.C. § 3143(b). For the following reasons, the Court denies Muoghalu's Motion.

BACKGROUND

In April 2003, two Aventis employees, Katy Kennedy ("Kennedy") and Frank A. Matos ("Matos") filed a qui tam lawsuit against Aventis. See United States ex rel. Kennedy v. Aventis Pharmaceuticals, Inc., No. 03 C 2750 (N.D. Ill.). In their complaint, the two employees alleged that Aventis marketed one of its drugs, Lovenox, for off-label use, allowing physicians to submit false reimbursement claims to Medicare in violation of the False Claims Act, 31 U.S.C. § 3729 et seq.*fn1

(R. 80, Mem. Op. and Order at 2.)

The government declined to intervene on the employees' behalf, but its three-year investigation uncovered Muoghalu's criminal conspiracy. (Id.) Muoghalu was the pharmacy director at Saint Joseph's and was responsible for deciding which pharmaceutical products would be available in the hospital's formulary. (Id.) Beginning in 2001, he solicited and received $18,000 in kickbacks from Joseph Levato ("Levato"), the Aventis area business manager responsible for selling Lovenox to St. Joseph's. (Id. at 4.) After Aventis transferred Levato to a different sales territory in 2002, two other sales representatives, Shari Lendy ("Lendy") and Kathy Prieto ("Prieto") continued paying kickbacks to Muoghalu totaling $14,000. (Id. at 5.) In exchange for the $32,000 in kickbacks, Muoghalu agreed to recommend the continued purchase of Lovenox to the director of pharmacy at each of St. Joseph's branch hospitals. (Id. at 4.) Muoghalu never disclosed these payments to St. Joseph's, despite being required to do so. (Id. 5.)

After the grand jury indicted Muoghalu and Levato on November 14, 2007, the government disclosed to Muoghalu memoranda of interviews with Aventis employees, including Kennedy and Matos, among other documents. (Id. at 6.) These interview memoranda stated the name of the qui tam suit, the case number, and the factual information supporting the complaint's allegations. (Id.) In particular, they specifically detailed allegations of off-label Lovenox marketing and misuse of Aventis expense accounts to give physicians valuable items in exchange for prescribing Lovenox.

(Id.) On May 12, 2008, after Levato agreed to cooperate with the government, the government sent Muoghalu, among other documents, a memorandum summarizing Levato's proffer. (Id.)

On December 11, 2008, Levato pled guilty to one count of conspiracy to pay kickbacks in violation of 18 U.S.C. § 371. (Id. at 7.) Muoghalu proceeded to trial. Prior to trial, the Court granted the government's motion in limine to exclude as irrelevant any evidence or argument that Muoghalu's prosecution was motivated by its investigation into the off-label marketing of Lovenox. (Id.) Nevertheless, at trial Muoghalu's attorney mentioned the government's broader investigation into Aventis's Lovenox marketing in his opening statement and on cross-examination. (Id.)

On April 9, 2009, the jury convicted Muoghalu of all three counts of the indictment. On September 11, 2009, the government disclosed to Muoghalu's counsel for the first time investigative memoranda written by HHS Special Agent William Luczak (the "HHS Memoranda"). (Id. at 8.) In part, the HHS Memoranda detailed the following investigative findings: (1) several patient deaths linked to the administration of Lovenox; (2) "substantiated" kickbacks from three Aventis sales representatives to the former St. Joseph's pharmacy director; (3) the existence of an open qui tam investigation by HHS in Miami, Florida into alleged Medicaid fraud by Aventis; (4) Levato and Muoghalu's indictment; (5) Levato's proffer and cooperation with the government; (6) Levato's guilty plea; (7) the close of the government's investigation into the civil qui tam lawsuit; and (8) Muoghalu's conviction by a jury. (Id. at 8--9.)

In response to the government's disclosure, Muoghalu filed a Motion for New Trial Based on Newly Discovered Evidence and for an Evidentiary Hearing on September 14, 2009, which this Court denied on August 9, 2010. On December 1, 2010, the Court sentenced Muoghalu to a prison term of 22 months. On December 14, 2010, Muoghalu filed a notice of appeal regarding his sentence, and filed this Motion for Release Pending Appeal pursuant to 18 U.S.C. § 3143(b).

In his Motion, Muoghalu argues that: (1) he does not pose a flight risk or a danger to the community; and (2) his appeal will raise a substantial question of law or fact within the meaning of 18 U.S.C. § 3143(b)(1)(B). For the reasons set forth below, the Court denies Muoghalu's Motion.

STANDARD OF REVIEW

Because the statute governing release of a defendant pending appeal, 18 U.S.C. ยง 3143(b), directly guides the Court's analysis, the ...


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