Overview
In an opinion published on September 22, 2025, the Second Circuit affirmed the convictions of Dr. Seth Fishman and Lisa Giannelli for their roles in two conspiracies to manufacture and distribute adulterated and misbranded performance‑enhancing drugs (PEDs) to racehorse trainers, while vacating restitution and forfeiture orders entered against Fishman. The ruling examines how fraud‑based intent provisions apply when the deception targets regulatory bodies other than the primary federal enforcer, and the limits on restitution and forfeiture where multiple actors and intermediaries are involved.
Facts
Fishman, a licensed veterinarian, and Giannelli, his longtime salesperson, were convicted in the Southern District of New York for conspiring over nearly two decades to manufacture and sell unapproved, "untestable" performance‑enhancing drugs to racehorse trainers in the U.S. and abroad. The drugs — including blood‑builders, vasodilators, and "bleeder pills" — were designed to evade anti‑doping tests and were distributed without prescriptions, in violation of the Food, Drug, and Cosmetic Act.
Fishman developed and produced the drugs, concealing their origin through a Panama shell company, falsified labels, entered into non‑disclosure agreements, and submitted false statements to regulators. Giannelli incorporated Fishman's company, Equestology, opened and managed its accounts, and acted as the primary sales representative, supplying trainers directly and earning commissions for those sales. Trainers credited the PEDs with significant race wins, including the 2019 Dubai Golden Shaheen won by XY Jet, a horse later found dead from a heart attack.
Intent to Defraud or Mislead – Scope of Victims
On appeal, Fishman and Giannelli argued that the "intent to defraud or mislead" element in 21 U.S.C. § 333(a)(2) applies only when the deception is directed at consumers, purchasers, or the FDA, and cannot be satisfied by an intent to mislead state horse racing regulators. They contended that the FDCA's purpose is consumer protection, not enforcement of racing rules.
The Second Circuit rejected that argument, holding that § 333(a)(2) contains no language limiting the class of victims. The Court explained that the felony provision is an aggravator to the FDCA's strict‑liability misdemeanor for misbranding or adulteration under § 333(a)(1). The misdemeanor applies even to unintentional violations; the felony applies when the conduct is deliberate and designed to deceive or mislead. The Court held that fraudulent intent is satisfied where it is "connected — related in time, causation or logic — to the commission of the misbranding or adulteration offense," regardless of the victim’s identity.
Here, the misbranding and adulteration were not peripheral to the evasion of state racing rules. Instead, they were engineered to achieve the evasion of those rules. The drugs' "untestable" formulations, deliberately opaque labeling, and compartmentalized product lines existed to exploit the limits of racing commission oversight. The scheme could function only if those commissions remained unaware that non‑FDA‑approved drugs were being administered to racehorses. In holding that § 333(a)(2) encompasses deception of any regulator whose enforcement authority is sufficiently tied to the misbranding, the Court made clear that the statute’s focus is on the functional relationship between the deception and the offense, not the formal identity of the deceived body.
The consequence is a broader prosecutorial aperture. When federal and state regulators both oversee the same conduct, a false statement to the state may, in some circumstances, carry similar felony exposure as a false statement to the federal agency. In Fishman, the Court held that § 333(a)(2) is not limited to deception of consumers or federal authorities. Where a state regulator's rules apply to the misbranded product, and the deception is closely connected in time and purpose to the misbranding or adulteration, that deception can be enough to satisfy the statute's "intent to defraud or mislead" requirement. The decision indicates there may be little practical distinction between misleading the FDA and misleading other federal or state regulators with overlapping authority when their rules bear directly on the underlying violation. Evidence of misrepresentations to a state racing commission, licensing board, or industry association — if sufficiently linked to the offense conduct — could be used to establish fraudulent intent in a federal prosecution. In multi‑regulator environments, concealment from one regulator might in some cases be treated as concealment from others. However, the Fishman Court's interpretation of "intent to defraud or mislead" is tied to the FDCA's specific language and framework, and does not directly address how similar provisions might be applied under more frequently charged statutes such as wire fraud.
Restitution – Requirement of Actual Loss
The Court vacated the $25 million restitution order payable to racetracks, finding that, on the record, there was insufficient evidence that the racetracks themselves suffered a direct financial loss. Under the Mandatory Victims Restitution Act, restitution generally requires proof that the recipient was actually deprived of property. Here, the evidence suggested the racetracks would have paid out the same purses regardless of which horses won, and there was no statutory or contractual obligation requiring the racetracks to pass those funds to losing competitors. The record did not indicate that the racetracks intended or were in a position to do so.
The opinion reflects that, in certain multi‑participant schemes, the government may face difficulty in designating an industry intermediary as a "victim" for restitution purposes unless that entity can be shown to have absorbed a quantifiable loss. This reasoning could be relevant in cases involving exchanges, clearinghouses, or payment processors that handle proceeds but are not themselves financially harmed. The Court's analysis emphasizes that restitution is intended to compensate the party that actually suffered the loss, not to redistribute funds absent clear authority and proof of harm. In similar circumstances, prosecutors may need to establish both the intermediary's loss and a mechanism ensuring that restitution reaches the true victims, while defense counsel may seek to challenge awards that risk creating windfalls.
Forfeiture
The Court vacated the forfeiture order, concluding that, in this case, 21 U.S.C. § 334 — which governs seizure and condemnation of misbranded or adulterated drugs — did not operate as a "civil forfeiture statute" within the meaning of 28 U.S.C. § 2461(c). Section 334 is structured to remove unsafe or mislabeled drugs from commerce, rather than to confiscate property as punishment or to require disgorgement of illegal proceeds.
The Court's reasoning distinguishes between regulatory seizure authority and forfeiture authority in the criminal context. Section 334’s remedial framework — allowing condemned drugs to be destroyed, exported, or brought into compliance — was viewed as inconsistent with the punitive and revenue‑recovery purposes of forfeiture statutes. On the facts before it, the Court declined to apply criminal forfeiture procedures, including substitute‑asset provisions under § 853(p), to a statute that does not expressly authorize such remedies. The decision illustrates that not all statutory "seizures" will be treated as forfeitures in criminal proceedings; unless Congress has clearly provided for forfeiture, courts may be reluctant to infer it from a regulatory scheme. In similar situations, this may limit the government’s ability to reach unrelated assets when the alleged violation arises under a non‑forfeiture statute, and could be a point of focus for both settlement negotiations and asset‑protection planning.
Read the opinion here.
