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United States v. Zhang

United States District Court, S.D. Indiana, Indianapolis Division

September 25, 2017




         This cause is before the Court on the Defendant's motion to dismiss (Dkt. No. 57). The motion is fully briefed, and the Court, being duly advised, GRANTS IN PART AND DENIES IN PART the motion for the following reasons.


         Hongxing Zhang is charged in a 21-count Superseding Indictment with wire fraud, identity theft, export-information violations, alleged false statements to a government agency, and money laundering predicated on the underlying wire fraud charges. Specifically, the Government alleges that in his capacity as a pharmacist, Zhang defrauded Dr. H., using false pretenses to induce Dr. H. to write prescriptions for drugs Zhang wanted. The Government alleges that, using prescriptions he obtained through fraud on Dr. H., Zhang procured prescription drugs from, among other places, companies in Canada and Germany, and that in doing so, Zhang made more false representations, indicating to the companies that the prescriptions were legitimate when they were not.

         The Government alleges that Zhang imported the drugs from Canada and Germany and subsequently exported them to pharmaceutical companies in China and that the drugs never went to Dr. H.'s patients because Zhang had fraudulently created the patients' need for the drugs in the first place. Throughout the relevant period, the Government alleges, Zhang repeatedly made use of United States wires to carry out aspects of his fraud scheme.

         The Superseding Indictment also alleges that Zhang used the name and date of birth of another person, Y.Z., to carry out separate crimes and that he engaged in such identity fraud at least three times. Further, the Superseding Indictment alleges that Zhang engaged in international money laundering several times, ultimately laundering well over $100, 000. Finally, and also in connection with his other crimes, Zhang is alleged to have made false statements, including on customs forms.


         Zhang moves to dismiss various counts of the Superseding Indictment. Each argument is addressed, in turn, below.

         A. Wire Fraud Counts

         1. Duplicity

         Zhang first argues that the wire fraud counts are duplicitous because more than one offense is charged in a single count. As he notes, a duplicitous indictment creates the possibility of offending the command of the Sixth Amendment that the accused be “informed of the nature and cause of the accusation” and of the Fifth Amendment that he not “be twice put in jeopardy.” United States v. Zeidman, 540 F.2d 314, 316 (7th Cir. 1976) (quotation and citation omitted). He also points to the possible denial of the clear concurrence of all jurors as to each offense charged as the basis of the conviction and the danger that the jury might find him guilty of some offenses charged in the duplicitous count and not guilty as to others. See id.

         The Government responds that each wire fraud count charges a single offense carried out through different means. Rather than a count charging separate offenses, the Government argues, the actions alleged in each count constitute a single scheme and single course of conduct.

         The Court agrees that the wire fraud counts are not duplicitous. A unitary scheme to defraud can consist of multiple separately chargeable acts, so long as those acts share a close enough nexus that they can be fairly characterized as one scheme. Zeidman, 540 F.2d at 317. Because the line between multiple distinct offenses and a single continuing offense is often difficult to draw, the decision must be initially left to the discretion of the prosecution. United States v. Berardi, 675 F.2d 894, 898-99 (7th Cir. 1982) (citations omitted).

         Here, there is an adequate nexus between the acts that the Government alleges as a unitary scheme. The Government explains that each act taken within an individual count was in support of a single course of conduct for that count and each count was a single scheme with a single goal. Each scheme involved multiple communications. Accordingly, the motion to dismiss on this ground is denied.

         2. Extraterritorial Application

         Next, Zhang argues that the wire fraud statute has no extraterritorial application, making it inapplicable to the conduct in this case. The Supreme Court has laid out a two-step framework for analyzing extraterritoriality issues.

         Zhang and the Government agree with regard to the first step: the language of 18 U.S.C. § 1343 does not appear to rebut the presumption against extraterritoriality. ...

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