Case: 4:12-cr-00009-RWS Doc. #: 122 Filed: 08/28/12 Page: 1 of 75 PageID #: 1033
`
`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF MISSOURI
`EASTERN DIVISION
`
`UNITED STATES OF AMERICA,
`
` Plaintiff,
`
` v.
`
`
`JAMES R. NEWCOMB,
`
` Defendant.
`
`
` )
`
`)
` )
`)
` )
`)
` ) No. 4:12-CR-9 RWS
`
`)
`)
` )
`
`SENTENCING HEARING
`
`BEFORE THE HONORABLE RODNEY W. SIPPEL
`UNITED STATES DISTRICT JUDGE
`AUGUST 23, 2012
`
`APPEARANCES:
`
`For Plaintiff:
`
`
`For Defendant:
`
`
`
`
`
`Reported By:
`
`Andrew J. Lay, Esq.
`
`OFFICE OF THE U.S. ATTORNEY
`111 South 10th Street, 20th Floor
`St. Louis, MO 63102
`
`James G. Martin, Esq.
`ARMSTRONG TEASDALE, LLP
`7700 Forsyth Boulevard, Suite 1800
`Clayton, MO 63105
`
`Thomas W. McNamara, Esq.
`BALLARD SPAHR, LLP
`655 W. Broadway, Suite 1600
`San Diego, CA 92101
`
`
`
`
`SHANNON L. WHITE, RMR, CRR, CSR, CCR
`Official Court Reporter.
`United States District Court
`111 South Tenth Street, Third Floor
`St. Louis, MO 63102
`(314) 244-7966
`
`
`PRODUCED BY COURT REPORTER COMPUTER-AIDED TRANSCRIPTION
`
`
`
`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF MISSOURI
`EASTERN DIVISION
`
`UNITED STATES OF AMERICA,
`
` Plaintiff,
`
` v.
`
`
`JAMES R. NEWCOMB,
`
` Defendant.
`
`
` )
`
`)
` )
`)
` )
`)
` ) No. 4:12-CR-9 RWS
`
`)
`)
` )
`
`SENTENCING HEARING
`
`BEFORE THE HONORABLE RODNEY W. SIPPEL
`UNITED STATES DISTRICT JUDGE
`AUGUST 23, 2012
`
`APPEARANCES:
`
`For Plaintiff:
`
`
`For Defendant:
`
`
`
`
`
`Reported By:
`
`Andrew J. Lay, Esq.
`
`OFFICE OF THE U.S. ATTORNEY
`111 South 10th Street, 20th Floor
`St. Louis, MO 63102
`
`James G. Martin, Esq.
`ARMSTRONG TEASDALE, LLP
`7700 Forsyth Boulevard, Suite 1800
`Clayton, MO 63105
`
`Thomas W. McNamara, Esq.
`BALLARD SPAHR, LLP
`655 W. Broadway, Suite 1600
`San Diego, CA 92101
`
`
`
`
`SHANNON L. WHITE, RMR, CRR, CSR, CCR
`Official Court Reporter.
`United States District Court
`111 South Tenth Street, Third Floor
`St. Louis, MO 63102
`(314) 244-7966
`
`
`PRODUCED BY COURT REPORTER COMPUTER-AIDED TRANSCRIPTION
`
`
`
`Case: 4:12-cr-00009-RWS Doc. #: 122 Filed: 08/28/12 Page: 2 of 75 PageID #: 1034
`
`WITNESSES
`
`
`
`BRIAN MCCLUNE
`
`Direct Examination by Mr. Lay ..................... 12
`Cross-Examination by Mr. Martin ................... 23
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`(PROCEEDINGS STARTED AT 2:03 PM.)
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`(THE FOLLOWING PROCEEDINGS WERE HELD IN OPEN COURT AND WITH
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`THE DEFENDANT PRESENT:)
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`THE COURT: Good afternoon. We're here this
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`afternoon in the case styled United States of America against
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`James Newcomb, Cause No. 4:12-CR-9.
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`Honor.
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`Would counsel make their appearances, please?
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`MR. LAY: Andrew Lay for the United States, Your
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`MR. MARTIN: Your Honor, Jim Martin, Armstrong
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`Teasdale, on behalf of the defendant, and Tom McNamara,
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`Ballard Spahr, on behalf of defendant.
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`THE COURT: And Mr. Newcomb is present; is that
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`correct?
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`MR. MARTIN: Yes, Your Honor.
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`THE COURT: Counsel, have you and Mr. Newcomb had the
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`opportunity to read, review, and discuss the presentence
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`report in this matter?
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`MR. MARTIN: Yes, Your Honor.
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`MR. LAY: Yes, sir.
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`THE COURT: On behalf of Mr. Newcomb, are there any
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`objections to the factual statements in the presentence
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`report?
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`MR. MARTIN: Your Honor, as you may have noted, we
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`filed a total of 14 objections. Nine of those were
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`nonguideline objections.
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`THE COURT: Right.
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`MR. MARTIN: Out intent here today is to avoid having
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`fights over the facts, and they would be fights over the facts
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`as much as possible, and move on to, as much as we can,
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`talking about who we believe Jim Newcomb is.
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`So in that regard we noted that the U.S. Attorney's
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`office has, in their response to our objections, specifically
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`noted that nine of 14 of the objections do not go to
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`calculation of the guidelines, and therefore, the Court does
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`not need to make a determination of those facts.
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`We're going to go along with that legal position and
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`ask that we not bother arguing the facts. And so since the
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`Court does not need to determine those nine objections and the
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`Government is content not having the Government determine
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`those, we would leave it at that for those nine.
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`THE COURT: You're correct in that the Court doesn't
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`need to make a -- even if you argued it, I could say since
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`that objection doesn't affect the guideline calculation, I
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`make no ruling. Is that what you want me to note for the
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`record; that as to those paragraphs, the Court neither
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`sustains nor denies the objection to that paragraph as made by
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`the defendant?
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`MR. MARTIN: We're very comfortable with that, yes.
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`THE COURT: That way you wouldn't have any confusion
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`at a later time that it was, in fact, a finding. Never
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`knowing for sure what the future will bring us, out of an
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`abundance of caution I would hate to say as a matter of law
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`this was true.
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`If you had an objection and I didn't rule on the
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`objection, I would rather the record note that the Court made
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`no finding as to the objection so that if for some reason that
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`none of us perhaps can even conjure up today that that doesn't
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`come back around as a judicial fact at a later time.
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`MR. MARTIN: And that's what we would be looking for,
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`Your Honor.
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`THE COURT: So let me just go through so I make sure
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`that we count them correctly. Paragraphs 14 and 18 to which
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`there was an objection don't have any impact on the guideline
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`calculation. Then 15, 17, and 30 don't have any effect
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`regardless of the Court's ruling on the guideline calculation.
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`Do you want me to go through what those are?
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`MR. MARTIN: No. No need to.
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`THE COURT: Paragraphs 20 and 50 would have an impact
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`on the guideline calculation. Paragraph 22 would not.
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`Paragraph 25 would not. Paragraph 31 would not. It's
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`believed by the probation office that the original objection
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`to paragraph 36 has been amended to satisfy any objection; is
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`that correct?
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`MR. MARTIN: That is true. Those would be the nine:
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`Case: 4:12-cr-00009-RWS Doc. #: 122 Filed: 08/28/12 Page: 6 of 75 PageID #: 1038
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`14, 18, 15, 17, 30, 22, 25, 31, and 36.
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`THE COURT: Okay. So what that leaves us is the
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`groups of objections that would affect the guideline range,
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`which is probably what you just said, 20 and 50; 38 and 49;
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`33, 44 and 54; 38 and 51; and 41 and 53.
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`MR. MARTIN: Yes, but those combined for only a total
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`of five objections.
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`THE COURT: Right. They're grouped.
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`MR. MARTIN: Correct, correct.
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`THE COURT: So, Mr. Lay, Mr. Newcomb has objected to
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`paragraphs 20 and 50 as his first objection. As you know --
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`MR. MARTIN: And, Judge, we have some comments on
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`some of the objections we're continuing with also that
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`still -- that impact the guidelines.
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`THE COURT: Well, but the United States Attorney has
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`the burden of proof.
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`MR. MARTIN: Well, on two of them we called the
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`United States Attorney yesterday and said that we were going
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`to withdraw those objections.
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`THE COURT: Okay.
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`MR. MARTIN: As they relate specifically to role in
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`the offense and sophisticated means, we are withdrawing those
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`objections.
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`There are two others that -- which are related to the
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`administrative order out of California and obstruction of
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`Case: 4:12-cr-00009-RWS Doc. #: 122 Filed: 08/28/12 Page: 7 of 75 PageID #: 1039
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`justice. As the Court would note, those two objections are to
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`enhancements proposed by the presentence report that were not
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`part of the plea agreement. And the Government has reaffirmed
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`with us during a call yesterday that they are not going to
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`advocate for either of those enhancements.
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`And therefore, we would suggest in order to save
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`time, in order to move on, and in order to not lose focus on
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`what I think is most important, that as to those two
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`objections that the only point we would like to make at this
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`point is that they were not part of the plea agreement. The
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`Government is not advocating for them. The Government was
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`aware of those facts and did not argue that they should be
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`included in the plea agreement, and therefore, our argument is
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`simply they weren't part of the plea agreement.
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`I know the Court still has the authority to impose
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`them anyhow, but our argument is one of fairness and benefit
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`of the bargain. We would ask the Court to not add those
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`enhancements.
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`THE COURT: So before I turn to Mr. Lay, you're
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`withdrawing your objections to the enhancement in paragraph 51
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`for use of a sophisticated means.
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`MR. MARTIN: Correct.
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`THE COURT: You're withdrawing your objection to
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`paragraph 53, which is an adjustment for a role in the offense
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`as a manager of the --
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`MR. MARTIN: Correct.
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`THE COURT: And then, Mr. Lay, it's been described by
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`Mr. Martin that the other enhancement's for mass marketing.
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`MR. MARTIN: No. That one we haven't addressed yet.
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`That's the one we haven't addressed yet.
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`THE COURT: Okay. So which ones -- I guess I'll let
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`Mr. Lay tell me which ones he's not going to put on evidence
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`and which ones he's not going to pursue on behalf of the
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`United States Attorney.
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`MR. LAY: Your Honor, there's two of those. The
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`first is in paragraph 50. That's the violation of a prior
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`administrative order.
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`THE COURT: All right.
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`MR. LAY: Given our plea agreement deal, the
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`Government does not advocate for that enhancement and will not
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`provide any evidence today about it.
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`The second of the two objections that are
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`enhancements that were not discussed in the plea agreement is
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`paragraph 54, obstruction of justice. Again, the Government
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`is not advocating for that enhancement and will not present
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`any evidence today --
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`THE COURT: All right.
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`MR. LAY: -- on that enhancement.
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`THE COURT: So that leaves -- other than those
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`offense level calculations agreed to in the plea agreement,
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`leaves an open question as to paragraph 48 as to the amount of
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`the loss, right?
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`MR. MARTIN: I think there is an agreement as to the
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`amount.
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`THE COURT: Is there?
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`MR. LAY: I believe that's true, Your Honor.
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`THE COURT: Okay.
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`MR. LAY: I think the parties are sticking with
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`what's in the plea agreement, which is a gain of between one
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`hundred twenty and two hundred thousand dollars.
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`THE COURT: So there's no objection to paragraph 48?
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`MR. MARTIN: That is correct, Your Honor.
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`THE COURT: And the United States Attorney is not
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`going to present any evidence to the contrary?
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`49.
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`MR. LAY: True.
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`THE COURT: And that leaves us with then paragraph
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`MR. MARTIN: Mass marketing.
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`THE COURT: Which is an enhancement for mass
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`marketing and adding two levels under 2B1.1(b)(2)(A)(ii).
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`MR. LAY: The Government is prepared to present a
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`brief amount of evidence on that specific enhancement as the
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`plea agreement enables it to do so.
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`MR. MARTIN: Your Honor, I think I can shortcut that
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`also because I think during our phone call yesterday we
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`actually had an agreement -- not we didn't have an agreement,
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`but I think we were in agreement as to what the facts were
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`related to mass marketing.
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`The Government handed me what they would anticipate
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`as introducing to the Court, which the vast majority of
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`this -- and by that, I think Andy would agree the vast, vast
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`majority of this is a spreadsheet, a spreadsheet of
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`oncologists across the country. There are over 3,000 of them
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`listed in this spreadsheet.
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`I believe the Government agrees with our reading of
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`the document that Mr. Newcomb and the people that he worked
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`with looked at and considered a little over 650 of those over
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`3,000 doctors to give consideration to possibly approaching
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`for marketing purposes.
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`That number gets whittled down further because I
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`believe the Government agrees that of those 650 or so, our
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`count is 370 of them were disqualified under the standards,
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`the pedigree set up by this operation for who they would
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`solicit based on their size, their operation, were they
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`connected with a hospital or not, and other items.
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`And so 370 more were not solicited for sales of the
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`650 or so, which leaves you less than 300, and I think we're
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`in agreement on that, less than 300 doctors that were ever
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`solicited for business, 300 oncologists.
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`Now, this list that the Government is relying on of
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`3,000 that gets winnowed down to less than 300 is based on the
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`contacts made over a four-year period; so over a four-year
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`period less than 300 doctors were ever marketed to.
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`Mr. Lay discussed last night -- and we don't disagree
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`with him -- to some of those less than 300 doctors multiple
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`e-mails were sent to them. To Dr. Nisar probably, ten
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`different faxes were sent to him. Different prices as
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`circumstances changed. After he was already a customer, he
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`would get new faxes.
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`But the mass marketing guideline language says it's
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`if you use mass marketing techniques to induce large numbers
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`of individuals in your sales pitch.
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`Our argument is not factual. It's legal. It's the
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`interpretation that large number of individuals for soliciting
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`for a business of 300 over a four-year period simply cannot
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`match large numbers and, therefore, can't be mass marketing.
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`So I don't know if there's a need for testimony. I
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`think it's just a matter of we disagree on the interpretation
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`of what the guideline calls for.
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`THE COURT: Mr. Lay?
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`MR. LAY: Judge, I don't mean to be difficult or to
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`spend unnecessary Court resources, but I think it would be
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`helpful --
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`THE COURT: I mean, there was some evidence, I
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`thought, of blast faxes and other cold calls in this case, not
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`just your contact with specific doctors on a specific
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`shipment, but I can be wrong. I mean, I don't have any
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`substantive evidence in front of me to establish that, but I
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`at some point formed that opinion.
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`MR. LAY: I think it would be the Government's strong
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`preference to proceed with very brief testimony.
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`witness.
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`THE COURT: Okay. Please proceed.
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`You may be seated. And, Mr. Lay, call your first
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`MR. LAY: Your Honor, the Government calls Special
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`Agent Brian McClune. Your Honor, may I approach with bench
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`copies of the exhibits?
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`THE COURT: That's paragraph 38, the facts there
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`state that there were blast faxes. I was trying to figure out
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`where I gathered that information.
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`(WITNESS SWORN BY THE CLERK.)
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`BRIAN MCCLUNE,
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`HAVING BEEN FIRST DULY SWORN, WAS EXAMINED AND TESTIFIED AS
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`FOLLOWS:
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`DIRECT EXAMINATION
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`BY MR. LAY:
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`Q
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`Agent McClune, can you please tell the Court where you're
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`employed?
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`Q
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`The Food and Drug Administration.
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`The Office of Criminal Investigation part?
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`Q
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`That's correct, sir.
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`Before that did you work at DEA in the Fish and Wildlife
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`Service?
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`A
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`Q
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`A
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`Q
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`Q
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`DEA and the U.S. Forest Service.
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`Were you a police officer before that?
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`Yes, sir.
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`Are you the case agent for this case?
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`Yes, sir. I am.
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`Let's talk about mass marketing. Have you examined
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`what's previously been marked as Government's Exhibit 1 before
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`today?
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`Q
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`Yes, sir. I have.
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`Where did you find this document?
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`This document during an e-mail search warrant to Google
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`for e-mail content was located during the review of e-mails.
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`Q
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`Was it -- what kind of document is it? In plain
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`language, is it a memo? Is it a --
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`A
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`It's an e-mail, and attached to that e-mail is an Excel
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`19
`
`spreadsheet listing various doctors throughout the country.
`
`20
`
`Q
`
`Who is the e-mail from, and who is it going to? And if
`
`21
`
`it's going to someone that hasn't been indicted in this case,
`
`22
`
`can you use just the first name, please?
`
`23
`
`A
`
`Sure. Sandy B., an employee of Jim Newcomb, and Alexis
`
`24
`
`in Canada.
`
`25
`
`Q
`
`It's from Sandy and it's to Alexis in Canada. Who does
`
`
`
`Case: 4:12-cr-00009-RWS Doc. #: 122 Filed: 08/28/12 Page: 14 of 75 PageID #: 1046
` 14
`
` 1
`
`the e-mail have a signature from on it?
`
` 2
`
` 3
`
`A
`
`Q
`
`Three different individuals. Sandy, Miriam, and Jim.
`
`We were talking about a spreadsheet. What generally are
`
` 4
`
`the columns on this spreadsheet?
`
` 5
`
`A
`
`The columns list various information for oncologists
`
` 6
`
`throughout the United States -- their name, practice name,
`
` 7
`
`address, city, state, telephone numbers, and also comment
`
` 8
`
`section.
`
` 9
`
`Q
`
`How many doctors from how many states are approximately
`
`10
`
`listed in this spreadsheet?
`
`11
`
`12
`
`13
`
`14
`
`A
`
`Q
`
`A
`
`Q
`
`Approximately 2,500.
`
`How many states are we talking about?
`
`Approximately 47.
`
`Previously we were talking about the spreadsheet and the
`
`15
`
`columns on the spreadsheet. Is there a column for comments?
`
`16
`
`17
`
`A
`
`Q
`
`Yes, sir. There is.
`
`Who generally does the investigation suggest would fill
`
`18
`
`in the comment section of spreadsheets like this?
`
`19
`
`20
`
`A
`
`Q
`
`Employees associated with Jim Newcomb's business.
`
`Can you tell the Court some of the sample comments you
`
`21
`
`see in Exhibit 1 about contacting these doctors?
`
`22
`
`A
`
`Yes. These would be quotes directly from that comment
`
`23
`
`section and this spreadsheet, beginning: Confirmed buyers
`
`24
`
`Tammy and Chris. One location. Chemo, fax, two MDs. After
`
`25
`
`Google research, located in a Catholic University, although
`
`
`
`Case: 4:12-cr-00009-RWS Doc. #: 122 Filed: 08/28/12 Page: 15 of 75 PageID #: 1047
` 15
`
` 1
`
`private. Per Sandy, too risky.
`
` 2
`
`Another, beginning: "X" account does not wish to
`
` 3
`
`deal with us anymore. Waiting time too long. Uncomfortable
`
` 4
`
`with offshore.
`
` 5
`
`Q
`
`How many doctors are on Exhibit 1 from the state of
`
` 6
`
`Missouri approximately?
`
` 7
`
` 8
`
` 9
`
`10
`
`A
`
`Q
`
`A
`
`Q
`
`Approximately 77.
`
`What's the date on this version of this spreadsheet?
`
`October 26, 2010.
`
`So placing in context for the Court, please, when did Dr.
`
`11
`
`Nisar start buying drugs from defendant's business?
`
`12
`
`13
`
`14
`
`15
`
`A
`
`Q
`
`A
`
`Q
`
`Approximately February of 2010.
`
`When did he stop approximately?
`
`December of 2010.
`
`In the subject line it says: List for fax blast October
`
`16
`
`27, 2010. Based on the investigation, what is a fax blast?
`
`17
`
`MR. MARTIN: Where are you reading this from?
`
`18
`
`Q
`
`Page 1 of Exhibit 1 in the subject line.
`
`19
`
`So can you tell the Court what a blast fax or fax
`
`20
`
`blast is?
`
`21
`
`A
`
`My opinion is the fax blast is a marketing or recruitment
`
`22
`
`device used to send to, in this case, oncologists throughout
`
`23
`
`the United States.
`
`24
`
`MR. MARTIN: Your Honor, if all we're getting is the
`
`25
`
`agent's opinion, I'm going to object to that.
`
`
`
`Case: 4:12-cr-00009-RWS Doc. #: 122 Filed: 08/28/12 Page: 16 of 75 PageID #: 1048
` 16
`
` 1
`
`THE COURT: Lay a better foundation.
`
` 2
`
`Q
`
`Did FDA recover documents from a number of doctors'
`
` 3
`
`offices that did business with defendant?
`
` 4
`
` 5
`
`A
`
`Q
`
`Yes.
`
`Were there a number of communications, including fax
`
` 6
`
`price lists, in those doctors' offices?
`
` 7
`
` 8
`
`A
`
`Q
`
`Yes.
`
`What do you think defendant was doing with blast fax
`
` 9
`
`lists like the one shown in Exhibit 1?
`
`10
`
`11
`
`A
`
`Q
`
`Recruiting doctors to purchase oncology drugs.
`
`And what kind of faxes did these doctors get? What's the
`
`12
`
`content of them?
`
`13
`
`A
`
`They would get information about the discounted drugs,
`
`14
`
`the price of them, a price sheet.
`
`15
`
`Q
`
`When we look at Government Exhibit 2, where did this
`
`16
`
`document come from?
`
`17
`
`A
`
`This document was also retrieved during review of the
`
`18
`
`e-mail search warrant content.
`
`19
`
`Q
`
`During an interview with Sandy Behe, an employee of the
`
`20
`
`defendant, did she discuss what these criteria were and how
`
`21
`
`they were used by BDMI?
`
`22
`
`23
`
`A
`
`Q
`
`Yes.
`
`Could you explain to the Court what Exhibit 2 is and how
`
`24
`
`it was used by BDMI?
`
`25
`
`A
`
`This here is a list of categories for the research on
`
`
`
`Case: 4:12-cr-00009-RWS Doc. #: 122 Filed: 08/28/12 Page: 17 of 75 PageID #: 1049
` 17
`each doctor, and depending on what they've discovered, they
`
` 1
`
` 2
`
`can fall into any of these particular categories.
`
` 3
`
`Q
`
`What kind of doctors should not be contacted according to
`
` 4
`
`Exhibit 2?
`
` 5
`
`A
`
`Physicians affiliated with a government agency, those
`
` 6
`
`with a high profile, those that will not buy international
`
` 7
`
`product, professors, or oncologists who are a policy maker
`
` 8
`
`with a high profile.
`
` 9
`
`Q
`
`The Court is already familiar with Dr. Nisar. Did he fit
`
`10
`
`any of these "do not contact" criteria?
`
`11
`
`12
`
`A
`
`Q
`
`No.
`
`If we go back to Exhibit 1, previously you testified that
`
`13
`
`there were approximately 2,500 total doctors. In the comment
`
`14
`
`section were you able to determine how many of these doctors
`
`15
`
`had calls, voice mails, or faxes associated with them?
`
`16
`
`17
`
`A
`
`Q
`
`Yes.
`
`What's the approximate total number of doctors that are
`
`18
`
`doing more than just being listed on a spreadsheet but have
`
`19
`
`some kind of call, voice mail, or fax associated with them?
`
`20
`
`21
`
`A
`
`Q
`
`Approximately 250.
`
`Would that be a number for just people that had voice
`
`22
`
`mails or faxes, or would that be any type of comments?
`
`23
`
`24
`
`A
`
`Q
`
`That would just be voice mails or faxes or calls.
`
`So looking at the comments, how many doctors have
`
`25
`
`specific information that appears to be from a call to voice
`
`
`
`Case: 4:12-cr-00009-RWS Doc. #: 122 Filed: 08/28/12 Page: 18 of 75 PageID #: 1050
` 18
`
` 1
`
`mail or a fax to BDMI?
`
` 2
`
` 3
`
`A
`
`Q
`
`I'm sorry. Repeat.
`
`Looking at the spreadsheet in the comment section, how
`
` 4
`
`many doctors approximately have information obtained from them
`
` 5
`
`through BDMI calling them, voice mailing them, or faxing them?
`
` 6
`
`A
`
`Approximately 450 were called, given a voice mail, faxed,
`
` 7
`
`or information was confirmed on them.
`
` 8
`
`Q
`
`And out of that 400, how many of the comments would you
`
` 9
`
`say had very specific information about office personnel, the
`
`10
`
`setup of the office, and other types of information you would
`
`11
`
`need to call to find out about each of these doctors?
`
`12
`
`13
`
`A
`
`Q
`
`Approximately 250.
`
`So let's take a look at Government Exhibit 3. Where did
`
`14
`
`the documents in this group exhibit come from?
`
`15
`
`16
`
`A
`
`Q
`
`Also discovered during e-mail search warrant review.
`
`What kind of documents generally are in Government
`
`17
`
`Exhibit 3? What's going on with these documents?
`
`18
`
`A
`
`This is marketing material or recruitment material that
`
`19
`
`is sent to doctors advertising oncology medications at lower
`
`20
`
`prices.
`
`21
`
`Q
`
`The step one would be what we see in Government's Exhibit
`
`22
`
`1, which would be to get a huge number of oncologists in the
`
`23
`
`United States?
`
`24
`
`25
`
`A
`
`Q
`
`Correct.
`
`Step two would be screen the doctors, sometimes through
`
`
`
`Case: 4:12-cr-00009-RWS Doc. #: 122 Filed: 08/28/12 Page: 19 of 75 PageID #: 1051
` 19
`calls, voice mails, or faxes to find out specific information
`
` 1
`
` 2
`
`about which ones were most likely to be receptive to the sales
`
` 3
`
`pitch?
`
` 4
`
` 5
`
`A
`
`Q
`
`Correct.
`
`And then Exhibit 3, is this the type of material that
`
` 6
`
`would be blast faxed to qualified doctors?
`
` 7
`
` 8
`
` 9
`
`10
`
`A
`
`Q
`
`A
`
`Q
`
`Yes.
`
`Did you interview Dr. Nisar's nurse?
`
`Yes.
`
`What, if anything, did she say about receiving a fax
`
`11
`
`similar to what's seen in Government's Exhibit 3 with a price
`
`12
`
`list on it?
`
`13
`
`14
`
`A
`
`Q
`
`That she had received a fax.
`
`Looking at Government Exhibit 3, are these the only
`
`15
`
`versions of these types of price lists and promotional
`
`16
`
`documents that the investigation discovered?
`
`17
`
`18
`
`A
`
`Q
`
`No.
`
`Looking at Exhibit 1, was this the only spreadsheet that
`
`19
`
`was in use at BDMI?
`
`20
`
`21
`
`A
`
`Q
`
`No.
`
`I know you can't give a precise number, but could you
`
`22
`
`give the Court just a rough approximation of how much
`
`23
`
`marketing materials and fax lists there are?
`
`24
`
`MR. MARTIN: Judge, the only objection I'm going to
`
`25
`
`have to that is if he's going to refer to some sort of account
`
`
`
`Case: 4:12-cr-00009-RWS Doc. #: 122 Filed: 08/28/12 Page: 20 of 75 PageID #: 1052
` 20
`of documentation that's never been provided to us, I would say
`
` 1
`
` 2
`
`that's outside the bounds of this hearing.
`
` 3
`
`Q
`
`Let me try the question another way. Did Mr. Newcomb,
`
` 4
`
`through a subpoena production for his corporation, produce a
`
` 5
`
`large amount of documents to the United States?
`
` 6
`
` 7
`
`A
`
`Q
`
`Yes.
`
`Were there a number of fax and promotional materials in
`
` 8
`
`there?
`
` 9
`
`10
`
`A
`
`Q
`
`Yes.
`
`Were there more than just the exhibits before the Court
`
`11
`
`today in that set of documents?
`
`12
`
`13
`
`A
`
`Q
`
`Yes.
`
`Let's take a look at Exhibit 4. Where did that come
`
`14
`
`from?
`
`15
`
`A
`
`These documents were seized in December of 2010 from Dr.
`
`16
`
`Nisar's office.
`
`17
`
`Q
`
`In the first page of Exhibit 4 there is a discussion
`
`18
`
`about a conversation with Sandy. Who do you believe that was?
`
`19
`
`20
`
`A
`
`Q
`
`Sandy B.
`
`So we talked about the different steps, you know, finding
`
`21
`
`lots of doctors, figuring out which ones should get a fax. We
`
`22
`
`saw in Exhibit 3 the type of faxes they got. After the fax is
`
`23
`
`sent, what kind of activity would Sandy do with doctors like
`
`24
`
`Dr. Nisar?
`
`25
`
`A
`
`Follow-up information. She would typically send a
`
`
`
`Case: 4:12-cr-00009-RWS Doc. #: 122 Filed: 08/28/12 Page: 21 of 75 PageID #: 1053
` 21
`welcome packet as I call this, giving them information about
`
` 1
`
` 2
`
`the company, how to order. Typically, credit card information
`
` 3
`
`or payment information would be exchanged during this time and
`
` 4
`
`usually a price sheet.
`
` 5
`
`Q
`
`If you look at the bottom left corner of page 2, there's
`
` 6
`
`a confidentiality notice. Who does this document say the
`
` 7
`
`information is being provided from?
`
` 8
`
` 9
`
`10
`
`11
`
`A
`
`Q
`
`A
`
`Q
`
`It says prepared by BDMI.
`
`Who's the founder and owner of BDMI?
`
`James Newcomb.
`
`If you look at the last page of Government's Exhibit 4,
`
`12
`
`what is this?
`
`13
`
`14
`
`15
`
`16
`
`A
`
`Q
`
`A
`
`Q
`
`This is a cash discount coupon.
`
`Did Dr. Nisar actually receive this cash discount coupon?
`
`Yes.
`
`Hypothetically, if Dr. Nisar or other doctors got one of
`
`17
`
`these coupons, what could they do with it when they
`
`18
`
`hypothetically purchased $1,000 from defendant's business?
`
`19
`
`20
`
`A
`
`Q
`
`Use it as a discount for their purchase.
`
`Did you obtain similar documents to what's seen in
`
`21
`
`Exhibit 4 from other doctor customers of defendant?
`
`22
`
`23
`
`A
`
`Q
`
`Yes.
`
`Finally, could you tell the Court what Government's
`
`24
`
`Exhibit 5 is?
`
`25
`
`A
`
`I'm sorry?
`
`
`
`Case: 4:12-cr-00009-RWS Doc. #: 122 Filed: 08/28/12 Page: 22 of 75 PageID #: 1054
` 22
`Could you please tell the Court what Government Exhibit 5
`
` 1
`
`Q
`
` 2
`
`is?
`
` 3
`
`A
`
`Yes. Packet of multiple e-mails regarding the topic of
`
` 4
`
`marketing, recruitment.
`
` 5
`
`Q
`
`Where generally did the e-mails in Government's Exhibit 5
`
` 6
`
`come from?
`
` 7
`
` 8
`
` 9
`
`10
`
`A
`
`Q
`
`A
`
`Q
`
`Review of e-mail search warrants.
`
`Produced from internet service providers like Google?
`
`Yes. Yes, sir. Google.
`
`Could you give the Court a brief overview of what kind of
`
`11
`
`things are happening in the e-mails shown in Exhibit 5?
`
`12
`
`A
`
`This is going through all these e-mails. There's
`
`13
`
`dialogue between individuals employed by Newcomb talking about
`
`14
`
`the recruitment and the marketing of their products to doctors
`
`15
`
`and the procedures that they plan on following.
`
`16
`
`Q
`
`Three pages into Government Exhibit 5, is this showing
`
`17
`
`fax activity in February 2011 to a variety of doctors?
`
`18
`
`19
`
`A
`
`Q
`
`Yes.
`
`And this would be at a time frame after what we were
`
`20
`
`looking at in Exhibit 1, which was October 2010 generally?
`
`21
`
`22
`
`A
`
`Q
`
`Correct.
`
`What did the participants to these e-mails -- describe
`
`23
`
`generally what these type of materials have in the subject
`
`24
`
`line on the first e-mail of Government Exhibit 5.
`
`25
`
`A
`
`It says "marketing materials."
`
`
`
`Case: 4:12-cr-00009-RWS Doc. #: 122 Filed: 08/28/12 Page: 23 of 75 PageID #: 1055
` 23
`
` 1
`
`Q
`
`Looking at all of these exhibits and what the
`
` 2
`
`investigation has discovered, what was the primary means of
`
` 3
`
`communication between defendant's business and doctors in the
`
` 4
`
`United States?
`
` 5
`
` 6
`
`A
`
`Q
`
`Phone and fax.
`
`Summarizing the materials, what was the primary pitch
`
` 7
`
`from defendant about why doctors should buy drugs from him?
`
` 8
`
` 9
`
`10
`
`11
`
`12
`
`13
`
`A
`
`Q
`
`A
`
`Q
`
`A
`
`Q
`
`I'm sorry? The primary?
`
`What is the primary pitch? What was the sales pitch?
`
`Cheaper drugs.
`
`Using Dr. Nisar as an example, who contacted who first?
`
`Individuals associated with BDMI contacted Dr. Nisar.
`
`If Dr. Nisar had not received one of these blast faxes or
`
`14
`
`the welcome packet that's Exhibit 4, could he have traveled to
`
`15
`
`a brick and mortar location and bought drugs from defendant
`
`16
`
`during 2010?
`
`17
`
`A
`
`No.
`
`18
`
`19
`
`20
`
`21
`
`MR. LAY: I have no further questions, Judge.
`
`THE COURT: Cross-examination, Mr. Martin?
`
`MR. MARTIN: Thank you, Your Honor.
`
`CROSS-EXAMINATION
`
`22
`
`BY MR. MARTIN:
`
`23
`
`Q
`
`Agent McClune, let me make sure that we have our facts
`
`24
`
`correct. You have Exhibit 1 is a very large stack of an Excel
`
`25
`
`spreadsheet, correct?
`
`
`
`Case: 4:12-cr-00009-RWS Doc. #: 122 Filed: 08/28/12 Page: 24 of 75 PageID #: 1056
` 24
`
` 1
`
` 2
`
` 3
`
` 4
`
`A
`
`Q
`
`A
`
`Q
`
`Correct.
`
`It has thousands of doctors' names on it, right?
`
`Correct.
`
`But you only identified 450 that had any contact by Jim
`
` 5
`
`Newcomb or anyone else working with Jim Newcomb; is that
`
` 6
`
`correct?
`
` 7
`
` 8
`
`A
`
`Q
`
`According to this particular document.
`
`So all the other 5,000 that are on that list were never
`
` 9
`
`contacted as far as you know by anybody related to this
`
`10
`
`operation?
`
`11
`
`12
`
`A
`
`Q
`
`I'm not sure what happened with those other contacts.
`
`Okay. But of those 450, the record you're looking at,
`
`13
`
`Exhibit 1, at least 200 of them were actually disqualified
`
`14
`
`with preliminary questions, right? Because you got the number
`
`15
`
`down to 250.
`
`16
`
`A
`
`Of the 2,500 doctors that I counted, there were
`
`17
`
`disqualifications, D&Qs.
`
`18
`
`19
`
`20
`
`21
`
`22
`
`Q
`
`A
`
`Q
`
`A
`
`Q
`
`Out of the 450, many of the 450 were DQ'd, right?
`
`Correct.
`
`A majority of the 450?
`
`Give or take.
`
`Okay. And they were DQ'd before they were ever
`
`23
`
`solicited, correct?
`
`24
`
`25
`
`A
`
`Q
`
`I don't know.
`
`Well, the notes that you were reading were simply
`
`
`
`Case: 4:12-cr-00009-RWS Doc. #: 122 Filed: 08/28/12 Page: 25 of 75 PageID #: 1057
` 25
`
` 1
`
`inquiries as the type of operation they were, not a
`
` 2
`
`solicitation of sales, correct?
`
` 3
`
`A
`
`Outside of their comments, I'm not sure what they did
`
` 4
`
`with this.
`
` 5
`
`Q
`
`No. I know. But you referenced the comments. And the
`
` 6
`
`comments that you even read when Mr. Lay asked you to read a
`
` 7
`
`couple weren't sales pitches. They were inquiries as to the
`
` 8
`
`type of operation they had, whether they were associated with
`
` 9
`
`a hospital, were they a large organization. And didn't Sandy
`
`10
`
`Behe tell you that if they made a call to a doctor's office
`
`11
`
`and after preliminary questions they didn't fit the criteria,
`
`12
`
`they would never solicit them for a sale?
`
`13
`
`14
`
`MR. LAY: Objection. Compound.
`
`THE COURT: Overruled. You can answer it if you
`
`15
`
`understand it.
`
`16
`
`17
`
`A
`
`Q
`
`Could you repeat the question, please?
`
`Didn't Sandy Behe tell you that they called many of those
`
`18
`
`450 doctors' offices but didn't try to sell them because when
`
`19
`
`they asked preliminary questions, they didn't qualify for the
`
`20
`
`sales?
`
`21
`
`A
`
`I would have to refer to reports of interview based on my
`
`22
`
`conversations with Sandy to agree with that.
`
`23
`
`Q
`
`Well, then I'm going to ask you to do that because I
`
`24
`
`think -- I mean, let's see if we can get around this because
`
`25
`
`I'm trying to move this along. But isn't it true that many of
`
`
`
`Case: 4:12-cr-00009-RWS Doc. #: 122 Filed: 08/28/12 Page: 26 of 75 PageID #: 1058
` 26
`
` 1
`
`those 450 did not have a sales pitch made to them?
`
` 2
`
` 3
`
`A
`
`Q
`
`I don't know if I can agree with that.
`
`But on the other hand, you can't disagree with it either,
`
` 4
`
`can you?
`
` 5
`
` 6
`
` 7
`
` 8
`
`A
`
`Q
`
`A
`
`Q
`
`No.
`
`You don't know?
`
`No.
`
`Of the
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