Money laundering, drug trafficking convictions affirmed for two brothers operating medical clinics

United States v. Khan, 2021 WL 732348 (10th Cir., Feb. 25, 2021). (Wyo.) Dr. Khan and his brother, Nabeel, were convicted of drug trafficking and money laundering. Numerous issues were raised on appeal including the validity of the search warrants issued and executed at a business and two residences, the denial of a motion for a new trial, and errors while instructing the jury. The brothers unlawfully operated two pain clinics in Arizona and Wyoming. Dr. Khan maintained residences in both states, while Nabeel resided in Dr. Khan’s Arizona residence. Dr. Khan’s wife, Lyn, managed the Wyoming office, while Nabeel managed the Arizona office. Patients at both clinics were unlawfully prescribed controlled substances based on payment and not medical needs. The clinics operated on a cash only basis with the option of payment in personal property, including firearms. After the death of a patient, law enforcement began surveilling their operations. Search warrants were issued and executed at both residences and a separate business, called Vape World, owned by Dr. Khan and Lyn. At the Arizona residence, 51 patient files were seized pursuant to the warrant; along with one million dollars, over 40 firearms, and automobiles, items not listed on the warrant. All three were indicted. Lyn pled guilty to a conspiracy charge prior to trial. The defendants challenged the scope, seizures, and validity of the search warrants. They argued that the Arizona residence was not Dr. Khan’s primary residence and that the government failed to establish a nexus between this residence and evidence of a crime. Defendants further claimed that the warrant for the Wyoming residence lacked probable cause, while the affidavit for the business warrant also failed to prove a nexus of criminal activity and that specific business. As to the patient files, they contended that the affidavit in support of the warrant established probable cause for only eight patients. The defendants argued that the plain view doctrine was not applicable for two reasons: (1) there was insufficient probable cause that required additional investigation, and (2) the items were not inadvertently discovered. They asserted that officers had grossly exceeded the scope of the warrant based on the seizure of items not listed on the warrant. Defendants argued that the district court erroneously denied the motion for a new trial after unfairly prejudicial witness testimony referencing Dr. Khan’s incarceration was presented to the jury. Finally, they argued that the jury was not properly instructed on the good faith defense given the different evidence requirements imposed on each defendant. Dr. Khan specifically argued that the jury instruction on intent unfairly burdened his right to testify because the instruction directed the jury to disregard his testimony. The Court found that the searches of both residences and the business were proper since the magistrate judge’s findings of probable cause were supported by a substantial basis. The search warrant for the Arizona residence established an adequate nexus between evidence of a crime and the residence. There was probable cause to search the separate business given the numerous criminal related transactions that took place there, including a bank deposit of a patient’s check that was linked to that specific business. The seizure of the money and firearms was supported by the plain view doctrine. Since automobiles were the only items seized not listed on the warrant, the officers did not grossly exceed the scope of the warrant. Due to the overwhelming amount of evidence of guilt, there was no reasonable possibility that witness testimony affected Dr. Khan’s conviction. The Court noted that a mere reference to jail calls was no different to the prejudice suffered by a defendant who appears before the jury in shackles or prison clothing. The district court’s good faith instruction was proper because it is a defense to the lawfulness of a prescription and not mens rea as argued by the defendant. The district court also properly instructed the jury on intent as it did not direct the jury on how to weigh Dr. Khan’s testimony, but simply left the weighing of competing evidence entirely up to the jury.