A federal appeals court has affirmed an 87-month prison sentence and a $508,000 restitution order for a Chinese citizen who pleaded guilty to distributing counterfeit prescription medication.
On Monday in U.S. v. Zhou, the U.S. Court of Appeals for the Tenth Circuit affirmed District of Colorado Judge Philip Brimmer’s June 2011 sentence. In January 2011, Shengyang Zhou pleaded guilty to trafficking and attempted trafficking of counterfeit versions of the "Alli" weight loss drug, admitting to selling commercial quantities of the fake products to various U.S. re-distributors, but challenged the length of his sentence.
More than $417,000 of the restitution is slated for the pharmaceutical company GlaxoSmithKline PLC, which makes the genuine drug.
Senior Judge Stephanie Seymour wrote the opinion, joined by judges Paul Kelly Jr. and Timothy Tymkovich. "The district court did not err in relying on the specific offense guideline rather than the general attempt guideline," Seymour wrote.
Brimmer’s findings were specific enough to support the conclusion that Zhou was a leader or organizer of the criminal activity, she added. The court affirmed a two-level sentencing increase based on Brimmer’s finding that Zhou’s conduct involved "the conscious or reckless risk of death or serious bodily injury."
The court noted that Zhou discussed U.S. Food and Drug Administration warnings with undercover agents in Bangkok and Hawaii and via email before those meetings.
Finally, it rejected Zhou’s challenge to $385,000 of the restitution for GSK, to cover its expenses in responding to the counterfeiting, including hiring a crisis-management firm. He did not challenge $32,000 in restitution for lost sales.
Seymour wrote that "this damage was not incidental or consequential to Mr. Zhou’s counterfeiting, but rather, as determined by the district court, was ‘direct,’ causing actual losses to GSK."
Zhou was disappointed at the ruling, according to his lawyer, Jessica Yates, a Denver associate at Snell & Wilmer.
"Mr. Zhou continues to believe that the law of attempt applies when calculating the infringement amount for purposes of deciding the length of a sentence in a criminal copyright infringement case," Yates said.
The Denver U.S. attorney’s office did not respond to a request for comment. Assistant U.S. Attorney James Murphy argued for the government.
Sheri Qualters can be contacted at firstname.lastname@example.org.