“Establishes” Means More Than “Relevant Conduct”: First Circuit Requires Clear Findings Before Using Acquitted Conduct to Trigger the Fraud Guideline via FDCA Misbranding

1. Introduction

In United States v. Shafa (1st Cir. Apr. 24, 2026), the First Circuit reviewed convictions and sentences arising from a Massachusetts psychiatrist’s addiction-treatment practice that imported certain non–FDA-approved dosage forms (notably naltrexone pellet implants and disulfiram injections/implants) from a Hong Kong supplier. The shipments were accompanied by documents describing the contents as “plastic beads in plastic tubes” and misstating their value.

After a joint trial, Shafa’s wife was acquitted on all counts; Shafa was convicted of (i) three counts of international money laundering (18 U.S.C. §§ 1956(a)(2)(A), 2), (ii) three counts of importing merchandise contrary to law (18 U.S.C. §§ 545, 2), and (iii) one count of receipt and delivery of misbranded drugs (21 U.S.C. § 331(c)), with the jury specifically finding no “intent to defraud,” rendering the misbranding conviction a misdemeanor under 21 U.S.C. § 333(a).

The appeal presented two main clusters of issues: (1) evidentiary rulings affecting the trial record; and (2) sentencing—especially the district court’s decision to route the case through the FDCA misbranding guideline and then into the fraud guideline, notwithstanding acquittals on conspiracy and felony-misbranding theories. The First Circuit affirmed the convictions, vacated the misdemeanor-misbranding sentence as exceeding the statutory maximum, and remanded for clarification regarding the basis for applying the fraud guideline in light of the Sentencing Commission’s 2024 acquitted-conduct amendment to U.S.S.G. § 1B1.3(c).

2. Summary of the Opinion

• Convictions affirmed. The panel rejected multiple evidentiary challenges (exclusion of prior testimony; admission of clinic-condition testimony; lay/expert and legal-conclusion objections; cumulative-error claim).
• Misdemeanor misbranding sentence vacated. A 36-month concurrent term exceeded the one-year statutory maximum for misdemeanor misbranding (21 U.S.C. § 333(a)(1)); the government conceded error.
• Sentencing remand with retained appellate jurisdiction. The First Circuit could not determine on the existing record whether the district court’s application of U.S.S.G. § 2B1.1 (fraud) complied with the new acquitted-conduct limitation in U.S.S.G. § 1B1.3(c). The district court must clarify:
  1. what conduct it found “involved fraud,”
  2. whether Shafa was “acquitted” of that conduct via acquittals on felony misbranding and/or conspiracy to defraud,
  3. what the “instant offense of conviction” is for § 1B1.3(c), and
  4. why the fraud conduct “establishes, in whole or in part,” that offense.

3. Analysis

3.1. Precedents Cited

A. Former testimony and “similar motive” under Rule 804(b)(1)

The court’s refusal to admit Wayne Moran’s prior testimony from United States v. Gooberman turned on “similar motive” under Rule 804(b)(1), guided principally by United States v. Bartelho (quoting United States v. DiNapoli) and supported by United States v. Salerno.

• United States v. Bartelho: supplied the two-step “same side of the same issue” and “substantially similar interest/intensity” framework. The First Circuit applied it to conclude the government’s motive differed: in Gooberman, Moran was the government’s witness whose credibility the prosecution needed, reducing its incentive to probe weaknesses; in Shafa, Moran’s credibility was not similarly essential, increasing the prosecution’s incentive to challenge.
• United States v. DiNapoli (en banc, 2d Cir.): served as the quoted conceptual source for the “similar motive” test’s core inquiries.
• United States v. Salerno: reinforced the proposition that prosecutorial motives vary by case posture and evidentiary needs.

B. Completeness doctrine under Rule 106

Shafa’s Rule 106 completeness argument was evaluated through United States v. Boylan, which requires identifying a “fair and reasonably complete unit of material.” Because Moran’s Gooberman testimony was not part of, nor referenced by, the admitted email chain, the court held there was no completeness problem requiring admission.

C. Constitutional “complete defense” doctrine

Shafa’s reliance on Crane v. Kentucky and Chambers v. Mississippi failed because the excluded evidence was not analogous to the confession-like, highly reliable third-party admissions in Chambers. The panel stressed the attenuated nature of the proffer (an unnamed customs official’s statement, filtered through a deceased intermediary).

D. Review standards and evidentiary balancing

• United States v. Colón-Díaz: anchored abuse-of-discretion review for preserved evidentiary rulings.
• Bielunas v. F/V Misty Dawn, Inc.: emphasized the low relevance threshold under Rule 401 and the deference given to trial judges.
• Old Chief v. United States, United States v. Sabetta (quoting United States v. Smith): reinforced high deference under Rule 403 and the rarity of reversal on prejudice balancing.
• United States v. Cruz-Ramos: clarified that Rule 403 targets “unfair prejudice,” not merely harmful evidence.

E. Lay opinion vs expert testimony

• United States v. Pontz (quoting United States v. Maher): supported admitting lay opinions based on personal perception and “lay expertise” acquired through experience—here, medical trainees’ observations of clinic practices.
• United States v. Perrota (quoting Doty v. Sewall): provided the cumulative-evidence principle that undercut claims of substantial prejudice.

F. Witnesses stating law / regulatory framework testimony

• Nieves-Villanueva v. Soto-Rivera (quoting United States v. Newman): stated the baseline prohibition on witnesses instructing the jury on law.
• United States v. Galatis: supplied the counterweight—experts may, in appropriate contexts, explain a regulatory framework to aid the jury.
• United States v. Prigmore: flagged that expert testimony “solely to establish the meaning of a law” is presumptively improper, but the panel found no plain error on this record.

G. Plain error limits when factfinding was not requested

For Shafa’s claim that the court wrongly barred his own regulatory expert, United States v. Olivier-Diaz supplied a key constraint: an alleged error is not “clear or obvious” when it depends on a factual finding the defendant did not ask the trial court to make.

H. Cumulative error doctrine

• United States v. Sepulveda: established the cumulative-error framework; the panel rejected it because it found no errors (and, even assuming a couple arguable ones, no “critical mass”).
• United States v. Padilla-Galarza: reinforced that cumulative error fails when alleged errors collapse into none or one insufficient claim.

I. Sentencing standards and loss methodology

• Gall v. United States: identified miscalculation of the Guidelines as procedural error.
• United States v. Carvajal (quoting United States v. Ruiz-Huertas): set the standard of review for guideline application, facts, and “judgment calls.”
• United States v. Ihenacho: governed review of loss calculations (clear error for calculation; de novo for defining “loss”).
• United States v. Eisom: validated using uncharged conduct as relevant conduct when proved by a preponderance and part of the same course of conduct.
• United States v. Gonzalez-Alvarez and United States v. Kumar: supported treating payment for unlawful goods as “loss” with no offset for purported benefit—consistent with § 2B1.1 commentary for unapproved/regulatory-avoidance schemes.
• United States v. Griego: used as interpretive support for the meaning of “establishes” in another guideline cross-reference context, informing the panel’s skepticism that “establishes” equals broad “relevant conduct.”

J. Waiver and late-raised arguments

The opinion invoked United States v. Pizarro-Berrios (citing Piazza v. Aponte Roque) to treat a categorical-approach theory, raised at oral argument, as waived when not developed in the opening brief.

3.2. Legal Reasoning

A. Trial rulings: the court’s consistent use of deference and “plain error” filters

A dominant structural feature of the opinion is how standard-of-review doctrine effectively resolves many issues. Preserved evidentiary challenges were assessed for abuse of discretion (with substantial trial-court leeway under Rules 401 and 403), while several unpreserved ones were rejected under plain-error review. The panel repeatedly emphasized:

• Relevance is a low bar (Rule 401), especially where evidence helps the jury evaluate competing narratives about intent and motive.
• Rule 403 reversals are rare because appellate courts are reviewing “cold records” and trial judges are better positioned to gauge prejudice in context.
• Cumulative evidence undermines claims of substantial prejudice, especially where a qualified expert (Simone) covered much of the same material as the challenged lay testimony about sterility.

B. Rule 804(b)(1): “similar motive” turns on the prosecutor’s incentive to test a witness, not formal identity of issues

Shafa attempted to use Moran’s Gooberman testimony to support the defense narrative that a customs official suggested the “plastic beads” description. The First Circuit’s analysis underscores a practical reality of Rule 804(b)(1): when a prior witness is central to the government’s proof in the earlier case, the government’s incentive to impeach or probe weaknesses may be materially lower, defeating “similar motive.”

C. The sentencing core: acquitted-conduct amendment ambiguity and the meaning of “establishes”

The most consequential portion of the opinion is its treatment of the 2024 amendment to U.S.S.G. § 1B1.3(c), which excludes “conduct for which the defendant was criminally charged and acquitted in federal court” from “relevant conduct,” unless that conduct “also establishes, in whole or in part, the instant offense of conviction.”

The panel did not decide whether applying § 2B1.1 was ultimately wrong; instead, it held the record was too ambiguous to review. But it announced two important constraints that will shape remand proceedings and future cases:

• District courts must identify what the “fraud” is. A cross-reference to § 2B1.1 through § 2N2.1(c)(1) (“offense involved fraud”) cannot rest on impressionistic references to “secretive emails,” “misbranding,” or “mislabeling” without clear factual findings about the conduct deemed “fraudulent.”
• “Establishes” is not a synonym for “relevant conduct.” The court expressly rejected the government’s suggestion—“insofar as the government means to make it”—that “establishes” sweeps up all relevant conduct. This is a meaningful interpretive signal: after the 2024 amendment, courts must do more than label acquitted conduct as “relevant.” They must connect it to establishing the offense of conviction (in some legally significant way), not merely to surrounding context.

The panel also rejected the notion that the record compelled a finding that the “only way” the jury could have found unlawful importation was through false customs declarations. Because the unlawful-importation counts could be “contrary to law” via FDCA misbranding (e.g., missing “Rx only,” missing required labeling, lacking adequate directions) rather than necessarily via false classification (18 U.S.C. § 541), the jury verdict did not inherently resolve the “fraud” question.

In short, the First Circuit treated the acquitted-conduct amendment as a real constraint requiring analytic specificity, not a formality satisfied by broad assertions that “fraud” was intertwined with the convicted conduct.

3.3. Impact

A. Sentencing practice after the 2024 acquitted-conduct amendment

Shafa is an early and instructive appellate decision applying the amended § 1B1.3(c). Its likely effects include:

• More explicit sentencing findings. District courts applying cross-references that materially increase ranges (like routing FDCA cases into § 2B1.1) should expect to make detailed findings on:
  • the precise “fraud” conduct,
  • whether that conduct was “charged and acquitted,” and
  • how it “establishes” the offense(s) of conviction.
• Less reliance on verdict-ambiguity assumptions. Where a conviction could rest on multiple theories (e.g., “contrary to law” via misbranding versus false classification), a sentencing court may not assume the jury necessarily found a fraud-like mechanism unless the verdict form or instructions make that inference unavoidable.
• Sharper litigating incentives. Parties will likely press for:
  • clearer government arguments identifying the alleged “fraud” at sentencing,
  • defense demands for express acquittal-conduct determinations, and
  • more focused evidentiary presentations to satisfy the “establishes” standard.

B. FDCA-related criminal sentencing and the fraud guideline

The opinion does not reject the possibility that FDCA misbranding/unlawful importation cases can trigger § 2B1.1 via § 2N2.1(c)(1), but it signals that doing so—especially after acquittals on fraud-intent theories—requires a clear explanation of why the offense “involved fraud” without impermissibly reintroducing acquitted conduct.

C. Statutory maximum vigilance in multi-count sentences

The court’s straightforward vacatur of the misdemeanor-misbranding sentence underscores a recurring sentencing pitfall: concurrent sentences still must comply count-by-count with each offense’s statutory maximum. This component of the decision is a practical compliance reminder, independent of the more complex Guidelines dispute.

4. Complex Concepts Simplified

• Misbranding (FDCA): A prescription drug can be “misbranded” if its labeling lacks required features (e.g., “Rx only,” manufacturer/distributor info, adequate directions for use). Misbranding can be a misdemeanor absent intent to defraud or mislead.
• Rule 804(b)(1) “former testimony”: Prior testimony can come in if the witness is unavailable and the opposing party previously had a similar motive to examine the witness. If the government previously needed the witness’s credibility, it may not have had a similar motive to attack the witness then, making the testimony inadmissible later.
• Rule 106 “completeness”: You can require additional parts of a statement be admitted so the jury isn’t misled by a snippet. But it usually must be part of the same statement/communication (or a tightly connected unit), not a separate transcript from a different case.
• Plain error vs abuse of discretion: If an objection wasn’t made at trial, appellate courts generally reverse only if the error is clear/obvious and likely changed the outcome—an intentionally high bar.
• Acquitted-conduct amendment (U.S.S.G. § 1B1.3(c)): After 2024, federal courts generally may not use conduct the defendant was charged with and acquitted of to increase the Guidelines range—unless that same conduct also “establishes” the offense of conviction. Shafa emphasizes that “establishes” cannot be treated as synonymous with “relevant conduct.”

5. Conclusion

United States v. Shafa largely affirms trial-court discretion on evidentiary questions and illustrates how plain-error review narrows appellate relief in complex white-collar/regulatory prosecutions. But its lasting importance lies in sentencing: the First Circuit treated the Sentencing Commission’s 2024 acquitted-conduct amendment as a substantive constraint and required the district court to articulate—carefully and concretely—why the fraud guideline applied, what “fraud” conduct was found, whether that conduct was acquitted, and how it “establishes” the offense(s) of conviction.

At the same time, the court delivered a clear compliance holding: a misdemeanor FDCA misbranding sentence cannot exceed one year, even when imposed concurrently with longer sentences on other counts. The decision thus combines a practical statutory-maximum correction with an emerging, precedent-shaping insistence on analytic clarity in post-amendment acquitted-conduct sentencing.