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United States v. Rathburn

United States District Court, E.D. Michigan, Southern Division

May 9, 2018

UNITED STATES OF AMERICA, Plaintiff,
v.
D-1 ARTHUR RATHBURN Defendant.

          ORDER DENYING DEFENDANT'S MOTION FOR JUDGMENT OF ACQUITTAL, FOR NEW TRIAL, OR TO DISMISS

          PAUL D. BORMAN, UNITED STATES DISTRICT JUDGE

         Background

         On January 22, 2018 Defendant Arthur Rathburn was found guilty by a jury of seven counts of wire fraud, 18 U.S.C. §1343, (Counts 1, 2, 3, 6, 7, 8, 9) and one count of illegal transportation of hazardous material (Count 10). Rathburn was acquitted on Counts 4 and 5 (wire fraud) and Count 13 (False Statement). The Court dismissed Count 12 at the conclusion of the trial. The Government chose to not proceed with Count 11.

         On February 19, 2018, Defendant filed the above-styled Motion. On March 13, 2018, the Government filed a Response.

         Federal Rule of Criminal Procedure 29(c)(1) provides for the filing of a Motion for Judgment of Acquittal to set aside a jury verdict. Federal Rule of Criminal Procedure 33 provides for the filing of a Motion for a New Trial on newly discovered evidence or any other ground in the interest of justice.

         Defendant moves this Court to grant relief (acquittal, new trial, dismiss the counts of conviction) because:

A. There was insufficient evidence to support the jury's verdict on each count he was convicted of, and the verdicts are against the great weight of the evidence,
B. The convictions violate Rathburn's due process rights under the Fifth Amendment,
C. The trial court's rulings deprived Rathburn of his constitutional right of confrontation, to present a defense, and right to trial by jury.

         Defendant's Motion, Dkt. #136, P.2.

         Discussion

         As to Fraud Counts 1-3, the government relied on the testimony of Dr. Samuel Lee, a periodontist, and the documents related to a course Dr. Lee taught on March 26, 2011, that utilized human body parts provided by Rathburn, to wit, a specimen identified as BRCIL 0210002, that had screened reactive for Hepatitis B. Dr. Lee had ordered head specimens from Rathburn's business, International Biological, Inc. - (IBI). Dr. Lee's contact person and his correspondence with IBI was with Beth Rathburn, Defendant's then-wife, and his employee Jeanette Knutson. The Service Agreement, [1] drafted by IBI set forth that the anatomical materials provided had been screened for HIV½, surface antigen, Hepatitis B and Hepatitis C virus antibody. The Material Request Form (MRF)[2] drafted by IBI stated that the anatomical materials were procured under “clean, ” not “sterile” conditions and tested for HIV, Hepatitis A, B and C, and also noted the above-mentioned screening.

         Fraud Counts 6, 7, 8, and 9 related to Dr. Kevin Vorenkamp and his course held in Washington, D.C. in October, 2012, and the specimen identified as BRC 2011005. Dr. Vorenkamp was an anesthesiologist and director of a pain medicine training program in Seattle, Washington. His interpretation of the Service Agreement with IBI was that the specimens would be screened for HIV, Hepatitis B and C, and he expected that the cadavers would not have had positive results for those diseases.

         Count 10, charged Defendant with illegal transportation of hazardous material. This dealt with a shipment of human heads in violation of U.S. Department of Transportation-regulated (DOT) hazardous substances. The transit permit (Exh. 23A) “indicated the cause of death” of one of the heads was “aspirational pneumonia, bacteria not identified and sepsis, bacterial (sic) not identified.” R. 129, Pg. ID 1131, Dkt. #136, Gov't Brief, P.8). Defendant contends that the documents provided by BRC, the provider of the head to Defendant's IBI “stated that the cause of death was Parkinson's disease and respiratory failure, without any mention of sepsis or pneumonia.” Id. At Pp. 8-9. Defendant further contends that “there was no serology test for sepsis performed at the time of death for the specimen. There was no test of the specimen BRC 1006024 for any infectious virus or bacteria once DOT took possession of it.” Id. at 9.

         As to Counts One through Three, Dr. Lee testified that he had received a specimen identified as BRCIL 0210002(02) that had tested positive for Hepatitis B. IBI had provided Dr. Lee 16 head specimens, which included the 02 specimen.

         As noted supra, the IBI Service Agreement stated, inter alia, that “unless otherwise expressly set forth on the MRF, the anatomical materials to be provided hereunder will have been screened for HIV½, surface antigen, Hepatitis B and Hepatitis C virus antibody . . .”. Dr. Lee testified that he interpreted that to mean that he would not get a specimen that had tested positive for HIV, Hepatitis A, B and C. R. 127, TR. 1/11/18, Page ID 1395-96.

         The IBI Material Request Form (MRF), as noted supra, which was part of the Application for Anatomical Materials provided that the anatomical materials were procured under “clean” not “sterile” conditions and tested for HIV, Hepatitis A, B and C (Government Exhibit 12E, Appendix Exhibit B).

         Defendant contends that it was improper for Dr. Lee to interpret these provisions to mean that he would not receive specimens infected with these diseases. The Court disagrees with Defendant's argument. Screen means screen out: like putting a screen on your window to keep out mosquitos. If it was just screening for IBI's in house purposes, there would be no reason to put it in the Service Agreement.

         With regard to the provision in the MRF Form, Page 3, that the anatomical materials “are procured under ‘clean, ' not ‘sterile' conditions, Defendant cites Dr. Lee's testimony that “clean” is a very subjective term, and contends that “clean” not “sterile” is a vague, subjective term - that Dr. Lee interpreted thee photos of the hygiene state of the Grinnell Street Warehouse according to his standard, and this is too subjective to support testimony regarding sanitary conditions. The Court concludes that Dr. Lee's opinion testimony was admissible as to what the photographs revealed, and further that the photographs of the conditions were provided to the jury for their determination of whether that contract provision language - clean, not sterile - was met.

         Defendant's claims with regard to Counts Six, Seven, Eight and Nine related to anesthesiologist Dr. Kevin Vorenkamp's use of IBI contracted specimens. Dr. Vorenkamp interpreted the MRF's screening language to mean that the part that the anatomical specimens he received would have been screened for HIV, Hepatitis B and Hepatitis C, and that meant to him that he could expect they would not have tested positive for those diseases. The Court concurs with his logical interpretation. Further, the invoice for 2011005 from IBI's supplier BRC to IBI evidenced a discount because the specimen had tested positive.

         As for Count Ten, regarding the transportation into this country of hazardous materials, Defendant contends while that specimen BRC 1006024 had a transit permit (Gov't Exh. 23A) which indicated that the cause of death was aspirational pneumonia bacteria not identified and Sepsis bacterial not identified, BRC had provided documents stating that the cause of death was Parkinson's disease and respiratory failure. The Court finds the transit permit, that was placed into evidence before the jury was satisfactory evidence of the medical condition of that specimen, to support the conviction on Count 10.

         The fraud counts were based upon human specimens that had tested positive for HIV and Hepatitis B, and had been provided by IBI to the end user doctors without disclosing the positive results of the screening.

         Defendant contends that the end users received specimens, completed their courses without any injury to the doctors or their students, so there was no material misrepresentation of a material fact. The Court disagrees. There was fraud in Defendant passing off diseased specimens as not diseased, as the doctors had requested, expected, and were entitled to under the contract. The fact that neither of the doctors or their students contracted any diseases, does not absolve Defendant, after agreeing to provide specimens screened for diseases, of being guilty of fraudulently providing diseased specimens under the IBI contracts.

         As noted supra, the IBI Material Request Form (MRF) for specimens to be used in each of the medical courses ...


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