TABLE OF CONTENTS
Table of Contents........................................... i
Table of
Authorities...................................... iii
Introductory
Statement...................................... 1
Point I
Contrary to the
Government=s Response, the
Evidence Failed to Establish any Substantive Violations of ' 1084 and the
Jury Instructions as to These Counts Were Grievously in Error 4
A. Section 1084(b) Exempts the Transmission of
Wagering Information from New York, a Jurisdiction in Which it is Not a Crime
to Place a Bet......................... 5
B. The Government=s Newly-Revised
Position on Appeal Concerning the Status of Interstate Off-Track Betting
Glaringly Reveals How its Contrary
Position at Trial Effectively Eviscerated the Defense in the Eyes of the Jury.................................................. 14
C. The Government=s Contention that
Transmission of Wagering Instructions Constitutes Transmission of a Bet or
Wager Per Se is Entirely Without Merit...................... 19
D. The Government=s Newly Conceived
Argument that a Contract to Bet Entitles Both Parties to AMoney or Credit
as a Result of Bets or Wagers@ is Procedurally and Substantively Defective......................................... 23
E. The Evidence Failed to Establish that
Defendant AKnowingly@ Used a Wire
Communication Facility to Transmit Bets or Wagers in Foreign Commerce........................ 27
Point II
The Rule of
Lenity Mandates That Defendant=s Convictions
be Reversed and the Charges Against Him Dismissed 29
Point III
This Court is
Well-Positioned to Adopt the ACorrupt Motive@ Doctrine, Which
Continues to Occupy an Unsettled Area of Law in this Circuit and the Supreme
Court, Without Injecting Error Into Countless Conspiracy Convictions................................. 32
A. Numerous Federal Courts Have Endorsed the
Rationale Underlying the Powell Doctrine, Which Survives Feola 33
B. Neither This Court Nor the Supreme Court Has
Definitively Rejected the Powell Doctrine...................... 34
C. The Facts of this Case
Uniquely Implicate the
Powell Doctrine................................... 37
D. Embracing the Powell Doctrine Would Not
Inject Error into Countless Conspiracy Convictions.................. 40
Point IV
The Government=s Argument that
the District Court Properly Declined to Permit the Deposition of Gyneth
McAllister Misapprehends Both the Substance and Relevance of McAllister=s Proposed
Testimony 45
Point V
The Government=s Response to
Defendant=s Challenge to
the District Court=s Deficient Instructions on Aiding and Abetting
Effectively Advocates an Unconstitutional Constructive Amendment to the
Indictment............................................. 47
A. The Government=s Theory of
Aiding and Abetting Liability Was Predicated Solely Upon 18 U.S.C. ' 2(a)....... 47
B. Discussion........................................ 49
Conclusion................................................. 52
Certificate of
Compliance.................................. 53
TABLE OF AUTHORITIES
FEDERAL CASES
Cruz v. United States, 106 F.2d 828
(10th Cir. 1939)............................... 33, 34,
41
Fall v. United States, 209 F. 547
(8th Cir. 1913).................................... 33,
34
Huddleston v.
United States, 415 U.S. 814 (1974)........... 29
Landen v. United States, 299 F. 75
(6th Cir. 1924).................................... 33,
34
Montclair v.
Ramsdell,
107 U.S. 147 (1883)................. 25
Sagansky v. United States, 358 F.2d 195
(1st Cir. 1966)........................................ 21
United States v. Barker, 514 F.2d 208
(D.C. Cir. 1975)
(en banc)............................. 33
United States v. Best, 219 F.3d 192
(2d Cir. 2000)......................................... 51
United States v. Blair, 54 F.3d 639
(10th Cir. 1995)................................... 38,
42
United States v. Borgese, 235 F. Supp.
286
(S.D.N.Y. 1964)......................................... 6
United States v. Collado, 106 F.3d 1097
(2d Cir. 1997)......................................... 29
United States v. Crimmins, 123 F.2d 271
(2d Cir. 1941)............................. 35, 36, 38,
40
United States v. Danielson, 199 F.3d 666
(2d Cir. 1999)..................................... 49,
50
United States v. Daury, 215 F.3d 257
(2d Cir. 2000)......................................... 25
United States v. Eisenberg, 596 F.2d 522
(2d Cir. 1979)......................................... 42
United States v.
Feola,
420 U.S. 671 (1975). ii, 32-38, 40,
42
United States v. Floresca, 38 F.3d 706
(4th Cir. 1994)
(en banc).............................. 50
United States v.
Freed,
401 U.S. 601 (1971)................ 36
United States v. Helmsley, 941 F.2d 71 (2d
Cir. 1991),
cert. denied, 502 U.S. 1091
(1992)................. 25, 50
United States v. Herrera, 584 F.2d 1137
(2d Cir. 1978)......................................... 43
United States v.
Keegan,
325 U.S. 478 (1945)........... 39,
44
United States v. Kelley, 254 F. Supp. 9
(S.D.N.Y. 1966)...................................... 5,
6
United States v.
Lanier,
117 S. Ct. 1219 (1997)......... 30-31
United States v. Mack, 112 F.2d 290
(2d Cir. 1940)..................................... 35,
40
United States v. Mauro, 501 F.2d 45 (2d
Cir.)
cert. denied, 419 U.S. 969
(1974)...................... 36
United States v. McDougal, 25 F.Supp.2d 85
(N.D.N.Y. 1998), aff=d, 216 F.3d 1074
(2d Cir. 2000)
(table)................................. 43
United States v.
Menasche,
348 U.S. 528 (1955)............. 25
United States v. Mollica, 849 F.2d 723
(2d Cir. 1988)......................................... 50
United States v. Monteleon, Decision, 98 CR
812 (BDP)
(S.D.N.Y. Apr.
28, 1999)............................. 8,
9
United States v. Murray, 928 F.2d 1242
(1st Cir. 1991)........................................ 43
United States v. Podell, 519 F.2d 144
(2d Cir. 1975)......................................... 43
United States v. Previte, 648 F.2d 73
(1st Cir. 1981)................................ 33, 34,
41
United States v. Reminga, 493 F. Supp.
1351
(W.D. Mich. 1980)...................................... 34
United States v. Rochko, 969 F.2d 1
(2d Cir. 1992)......................................... 50
United States v. Ross, No. 98 CR 1174
(KMW),
1999 WL 782749
(S.D.N.Y. Sept. 16, 1999)........... 21,
22
United States v. Salameh, 152 F.3d 88 (2d
Cir. 1998),
cert. denied, 525 U.S. 1112
(1999).................. 42-43
United States v. Samaria, 239 F.3d 228,
2001 WL 55383
(2d Cir. 2001)......................................... 51
United States v. Thomas, 887 F.2d 1341
(9th Cir. 1989)........................................ 43
United States v. Todd, 735 F.2d 146
(5th Cir. 1984)........................................ 43
United States v. Tomeo, 459 F.2d 445
(10th Cir. 1972)....................................... 21
United States v. Truesdale, 152 F.3d 443
(5th Cir. 1998).................................... 21,
24
United States v. Vasquez, 116 F.3d 58
(2d Cir. 1997)......................................... 41
United States v. Wallace, 59 F.3d 333
(2d Cir. 1995)......................................... 50
United States v. Weiss, 752 F.2d 777
(2d Cir.),
cert denied, 474 U.S. 944
(1985)....................... 50
United States v. Zingaro, 858 F.2d 9498
(2d Cir. 1988)......................................... 50
Washington v. Schriver, ___ F.3d ___,
2001 WL 125332
(2d Cir. 2001)......................................... 46
STATE CASES
Meech v. Stoner, 19 N.Y. 26 (1859)......................... 10
New York Racing Ass=n v. Hoblock, 270 A.D.2d 31,
704 N.Y.S.2d 52
(1st Dep=t 2000)........................ 7
People v. Powell, 63 N.Y. 88,
2 Cow. Cr. Rep.
283 (1875)...................... ii,
32-44
People v.
Stedeker,
175 N.Y. 57, 67 N.E. 132 (1903)......... 9
People v. World Interactive
Gaming Corp.,
185 Misc. 2d.
852, 714 N.Y.S.2d 844
(Sup. Ct. N.Y.
Co. 1999)......................... 7,
8, 11
Watts v. Malatesta, 261 N.Y.S. 51,
237 A.D. 558
(Sup. Ct. N.Y.
Co. 1932)............................... 10
Watts v.
Malatesta,
262 N.Y. 80, 186 N.E. 210 (1933).... 9,
10
CONSTITUTIONAL PROVISION
U.S. Const.,
Amend. V....................................... 4
FEDERAL STATUTES AND RULES
15 U.S.C. ' 3001........................................... 17
15 U.S.C. ' 3002(3)........................................ 15
16 U.S.C. ' 3371, et seq................................... 43
18 U.S.C. ' 1084....................................... passim
18 U.S.C. ' 1084(a).................................... passim
18 U.S.C. ' 1084(b).................................... passim
18 U.S.C. ' 2.............................................. 48
18 U.S.C. ' 2(a).................................... ii,
47-50
18 U.S.C. ' 2(b)........................................ 47-48
18 U.S.C. ' 111............................................ 38
FRAP 32(a)(7)(C)........................................... 53
STATE STATUTES
N.Y. Exec. Law ' 63(12)................................ 10, 11
N.Y. Gen. Obl.
Law ' 5-401................................. 10
N.Y. Gen. Obl.
Law ' 5-411................................. 10
N.Y. Gen. Obl.
Law ' 5-413................................. 10
N.Y. Gen. Obl.
Law ' 5-415................................. 10
N.Y. Gen. Obl.
Law ' 5-419........................... 9-10, 21
N.Y. Penal Law ' 225.05..................................... 8
N.Y. Penal Law of
1965 ' 500.05............................ 10
OTHER AUTHORITIES
Black=s Law Dictionary
(6th ed. 1990)...................... 37
H.R. Rep. No. 87-967, 87th
Cong., 1st Sess. (1961),
reprinted in 1961
U.S.C.C.A.N. 2631............. 11-13,
26
Internet Gambling
Prohibition Act of 1999, S.692....... 19,
30
Internet Gambling
Prohibition Act of 2000, H.3125...... 19,
30
LaFave &
Scott, Criminal Law............................... 34
Letter From the Department
of Justice to Senator Leahy
Regarding S.692
(June 9, 1999)...................... 17-18
New York Attorney
General Opinion 84-F1.................... 10
New York State
Senate Bill No. S.2044...................... 13
New York State
Assembly Bill No. A.4350.................... 13
New York State Assembly,
Memorandum in Support
of Legislation,
Bill No. A.4350..................... 13-14
Pub. L. No.
106-553, ' 629, 114
Stat. 2762................. 15
Third Interim Report of the
State of New York Temporary
Commission on
Revision of the Penal Law and
Criminal Code
(1964) (Legislative Document No. 14)...... 6
Introductory Statement
In
response to the extensively-briefed legal issues presented by
Defendant-Appellant Jay Cohen (ADefendant@), and in defense
of what clearly amounts to a selective prosecution,[1]
the Government finds itself cobbling together marginally relevant authority,
abandoning legal positions it maintained before the district court, and, in its
effort to portray Defendant as contriving novel interpretations of law in order
to evade the provisions of 18 U.S.C. ' 1084, ignoring substantial
authority that undermines its position.
This
record unequivocally establishes that Defendant had a reasonable, good faith
belief that his conduct was not unlawful, based in no small part on the
undisputed fact that Defendant modeled World Sports Exchange (AWSE@) after Capital
Off-Track Betting (AOTB@), one of numerous off-track betting
enterprises that, at all relevant times, enjoyed no special protections from
the reach of ' 1084. Under
applicable legal principles, Defendant, therefore, could not have conspired to
violate this statute. Defendant=s undisputed belief, moreover, that only
information assisting in the placement of bets and wagers was transmitted via
interstate wires, undermines the mens rea requirements of both the substantive
statute and the conspiracy statute. The Government has cited no persuasive
authority to the contrary.
Perhaps
most unsettling, the Government begins its brief with a 30-page statement of
the case in which, while making limited use of citations to the record, it
advances numerous misstatements of fact.[2]
This Court should not be misled. As discussed in Appellant=s Brief and in
this Reply Brief, the relevant facts and authorities require reversal of
Defendant=s convictions on
all counts and dismissal of the charges.
POINT I
CONTRARY
TO THE GOVERNMENT=S RESPONSE, THE EVIDENCE
FAILED TO ESTABLISH ANY SUBSTANTIVE VIOLATIONS OF ' 1084 AND THE
JURY INSTRUCTIONS AS TO THESE COUNTS WERE GRIEVOUSLY IN ERROR
In
response to Defendant=s argument that the evidence failed to
establish any substantive violation of ' 1084 and
that the jury instructions were
defective as to the substantive counts, the Government mounts a multi-pronged
defense. First, the Government contends that the exemption set forth in ' 1084(b) does not
apply to this case because it is not Alegal@ to place a bet
in New York, despite the fact that New York prohibits only engaging in the business
of gambling.
Second,
the Government contends that Defendant violated the first clause of ' 1084(a), which
prohibits transmission of Abets or wagers,@ on the theory
that the transmission of wagering instructions constitutes transmission of bets
or wagers as a matter of law. In making this argument, the Government adopts a
position with respect to the regulation of interstate off-track betting that is
directly contrary to its position at trial, and which starkly reveals how
Defendant was wrongly deprived of a fair trial.
Third,
the Government contends that Defendant violated the third clause of ' 1084(a),
which prohibits transmission of Aa wire communication which entitles the
recipient to receive money or credit as a result of bets or wagers,@ reasoning that
every bet, once formed, entitles each party to the contract to money or credit.
Finally,
the Government defends the court=s instruction concerning the element of
knowledge by deeming Defendant=s argument a disguised effort to impute a
specific intent requirement into ' 1084.
Each of
the Government=s contentions is
without merit.
A. Section 1084(b) Exempts the Transmission of Wagering
Information from New York, a Jurisdiction in Which it is Not a Crime to Place a
Bet.
In
response to Defendant=s argument that the term Alegal@ in ' 1084(b) refers
to whether the act of placing a bet is prohibited by state criminal law, the
Government insists that it is not Alegal@ to place a bet
in New York because New York has a longstanding policy against gambling in
general. The Government, however, wholly ignores the equally deep-rooted
distinction in New York law between betting or wagering on the one hand, and
operating a gambling business, on the other. See Appellant=s Br. at 42-43.
The Government, moreover, fails to cite any meaningful authority to counter the
cases and legislative history cited by Defendant, all of which strongly
indicate that ' 1084(b)
exempts the transmission of wagering information from a jurisdiction in which
the act of placing a bet is not a crime.
The
cases cited by the Government in support of its claim that courts have Auniformly@ recognized that
it is not Alegal@ to place a bet
in New York reveal the tenuousness of the Government=s position. United
States v. Kelley, 254 F. Supp. 9 (S.D.N.Y. 1966), which actually supports
Defendant=s position,
simply does not address the question of whether placing a bet is legal in New
York. Rather, Kelley concerned a First Amendment challenge to ' 1084 from
defendants who were alleged to be engaged in the business of bookmaking. The
court, citing United States v. Borgese, 235 F. Supp. 286, 295-96
(S.D.N.Y. 1964), for the proposition that Agambling per se .
. . is contrary to the law of the state of New York,@ concluded that ' 1084 did
not infringe the guarantee of free speech because the Asubstantive evil@ that ' 1084 sought
to curtail was Athe use of a federally controlled means of
communication to violate state penal statutes.@ Kelley, 254 F. Supp. at 15 (emphasis
added). Accordingly, contrary to the Government=s contention, Kelley,
like the many other federal cases cited by Defendant, see Appellant=s Br. at 41-42,
actually supports Defendant=s argument that ' 1084 concerns
only conduct that violates state penal law.
Notably,
Borgese recognizes the fact that New York penal law neither prohibits
nor criminalizes the act of betting. The court cited the following summary of
the gambling laws of New York:
AThe substance of
this entire area of legislation, however, is that, no matter what form of
gambling is involved, the mere player, contestant or bettor is not
criminally liable, but that anyone who, in some capacity other than that of
a player, operates, promotes or advances an gambling enterprises or activity is
guilty of a crime.@
Borgese, 235 F. Supp. at
296 (quoting Third Interim Report of the State of New York Temporary Commission
on Revision of the Penal Law and Criminal Code [1964] [Legislative Document No.
14], at 25) (emphasis added).
The
New York State cases cited by the Government likewise do not support the
Government=s contention that
it is not Alegal@ to place a bet
in New York. New York Racing Ass=n v. Hoblock, 270 A.D.2d 31,
704 N.Y.S.2d 52 (1st Dep=t 2000), does not even begin to address this
proposition. Rather, Hoblock involved a challenge to New York=s Off-Track
Betting (AOTB@) Corporation=s audio-only
broadcasts of out-of-state horse races for telephone wagering purposes. This
required the court to construe the statutory definition of Asimulcast.@ In doing so, the
court, citing the state constitution and state penal law, simply noted the
general policy against gambling in New York and the rule that the simulcasting
statute must be strictly construed. 704 N.Y.S.2d at 55.
Nor
does People v. World Interactive Gaming Corp., 185 Misc. 2d. 852, 714
N.Y.S.2d 844 (Sup. Ct. N.Y. Co. 1999) stand for the proposition that it is not
legal to place a bet in New York. In contrast to the facts of this case, the
respondents in World Interactive Gaming included World Interactive
Gaming Corporation (AWIGC@), a Delaware corporation that maintained
corporate offices in New York, and Golden Chips Casino, Inc. (AGCC@), an Antiguan
subsidiary corporation wholly owned by WIGC and licensed to operate a
casino in Antigua. The New York Attorney General began investigating WIGC
because WIGC was attempting to sell WIGC stock by making cold calls to
prospective investors, including individuals located in New York, even though
neither the offering nor the cold-callers were properly registered with the
State of New York. The State subsequently expanded the investigation to include
GCC, which the court found to be completely dominated by WIGC. Respondents
argued that the court lacked subject matter jurisdiction because Internet
gambling fell outside the scope of New York state gambling prohibitions, since
the gambling occurred outside New York. The court rejected this argument
because GCC and WIGC actively promoted gambling in New York, in
violation of New York Penal Law ' 225.05, by having established the
gambling enterprise, advertising, and soliciting investors in New York.
Crucially, the court stated that A[t]he violation had occurred
long before a New York resident ever staked a bet.@ 185 Misc. 2d at 861 (emphasis added). The
case in no way turned upon a determination that it is not legal to place
a bet in New York.
In
fact, the only case cited by the Government which addresses the legality of
placing a bet in New York in the context of 18 U.S.C. ' 1084, United
States v. Monteleon, Decision, 98 CR 812 (BDP) (S.D.N.Y. Apr. 28, 1999),
has no precedential value. It fails, moreover, to consider the purposes and
history of ' 1084 as well as
the historical distinction in New York law between mere betting and engaging in
the business of gambling. See SA212-21. Specifically, Monteleon
consists of no more than an oral ruling denying defendant=s pretrial
motions, which was neither reduced to a written order nor reported in any
forum. Counsel=s research
indicates, moreover, that the decision has not been cited by any subsequent
court. Substantively, the Monteleon ruling considers neither federal
court interpretations of the term Alegal@ as used in ' 1084, the
legislative history of that provision, nor longstanding New York case law
articulating and applying the distinction between betting and profiting from a
gambling business. Monteleon, therefore, has no bearing on the questions
presented here.
Like
the court in Monteleon, the Government cites New York=s longstanding
policy against gambling, but entirely ignores the equally deep-rooted
distinction in New York law between engaging in the business of gambling and
merely betting. See Watts v. Malatesta, 262 N.Y. 80, 81-82, 186
N.E. 210, 210-11 (1933) (Watts II). As the New York Court of Appeals
observed as early as 1903:
There has always
been observed a distinction between betting or gambling and maintaining a
gambling house or a place to which people resorted to gamble. . . . The same
distinction has obtained in this state, where ordinary betting has never
been made a crime, though in some cases subject to small pecuniary mulcts,
while the keeping of a gambling house, selling lottery tickets, and the
profession of a common gambler have been subjected to severe punishment.
People v.
Stedeker,
175 N.Y. 57,62, 67 N.E. 132, 133-34 (1903) (emphasis added).
Not
only has it never been made a crime in New York to place a bet, but the New
York General Obligations Law, on which the Government so heavily relies,
actually permits recovery of wagered property by a mere bettor, but not by one
engaged in the business of gambling. N.Y. Gen. Obl. Law ' 5-419; Watts
II.
The
development and interpretation of the provisions of the General Obligations Law
cited by the Government, which were purposely removed from the New York Penal
Law,[3]
reveal the depth and significance of the distinction between placing a bet and
running a gambling business. At common law, the bettor and the person with whom
he placed his bet were considered in pari delicto. Meech v. Stoner,
19 N.Y. 26 (1859). This maxim, however, was abrogated by enactment of the
statute, now N.Y. Gen. Obl. Law ' 5-419, providing a remedy for the losing
party to recover the property wagered. Id. As a result, A[i]t is clear
that in the eye of the law the professional gambler and his customer do not
stand on the same place. They are not in pari delicto.@ Watts II, 262 N.Y. at 82, 186 N.E. at
211.[4]
The
Government=s citations to
New York Attorney General Opinion 84-F1 and to New York State Executive Law ' 63(12)
likewise ignore the distinction between mere betting and engaging in a gambling
business, and thus fail to support the Government=s position.
Attorney General Opinion 84-F1 simply opines that the Division of the Lottery
could not, consistent with the State Constitution, operate a game
involving betting on sporting events. The opinion does not address the legality
of betting in New York. Likewise, New York State Executive Law ' 63(12)
simply permits the Attorney General to enjoin illegal acts, which the Attorney
General has done to halt the operation of a gambling business in New
York. See World Interactive Gaming, discussed supra. The
Government cites no action by the Attorney General to enjoin the act of placing
a bet.
Perhaps
cognizant of the true significance of the distinction it ignores, the
Government contends, as a fallback argument, that, even if it is legal to place
a bet in New York, the process of Abetting@ is not legal in
New York because it Arequires one party to place bets and another to
offer and accept them, which is criminal.@ Gov. Br. at 57. The Government, however,
cites no authority relating this proposition to ' 1084. In
fact, this argument runs directly counter to both a plain reading of ' 1084(b) and its
legislative history. Consistent with an ordinary reading of the statute, the
House Committee Report clearly states that ' 1084(b) Awould exempt the
transmission of gambling information from a State where the placing of bets
and wagers on a sporting event is legal, to a State where betting on that
particular event is legal.@ H.R.
Rep. No. 87-967, 87th Cong., 1st Sess. (1961), reprinted in 1961
U.S.C.C.A.N. 2631, 2632 (emphasis added).
Moreover,
the Government=s claim that
portions of the House Report not cited by Defendant Aleave no doubt
that Congress regarded New York as state in which betting is not legal,@ Gov. Br. at 58,
shamelessly distorts this legislative history. As the Government well knows,
the example provided in the House Report is limited to off-track
betting, which, at the time, was legal only in Nevada. Thus, as the Report
makes clear, at the time ' 1084 was enacted, it was legal to place
a bet at a Nevada racetrack on a race being run in New York State, but it was
not legal to place a bet at a New York racetrack on a race being run in
Nevada, even though New York State law permitted parimutuel betting. See
H.R. Rep. No. 87-967, 1961 U.S.C.C.A.N. at 2632-33. Under these circumstances,
transmitting information from Nevada to New York, assisting with the placement
of bets in New York on Nevada races, would not fall within the
exemption. Id.
Currently,
of course, where New York law now permits parimutuel off-track wagering,
transmission of wagering information from Nevada to New York is protected
by the exemption. Hence Capital OTB in New York, which accepts wagering
instructions via telephone and the Internet from around the world, has operated
unfettered for decades. The Government=s claim that the House
Report concerning ' 1084 Adefinitively
forecloses@ Defendant=s argument and
that it Anotes
specifically that betting is illegal in New York,@ Gov. Br. at 51, plainly
misrepresents this legislative history.
Notwithstanding
its contentions to the contrary, it is the Government which fails to address
the portions of the House Report relevant to the question of whether Congress
intended ' 1084(b) to
exempt transmissions of wagering information from jurisdictions which have not
made the placement of a bet a criminal offense. Notably, the Government
wholly ignores Defendant=s reference to the legislative history of the
preemption portion of ' 1084, which establishes beyond question that
Congress was concerned with assisting the states in enforcement of its penal
laws. See H.R. Rep. No. 87-967, 1961 U.S.C.C.A.N. at 2633.
Likewise,
the Government fails to respond to the fact that, in keeping with this concept,
the New York State Senate passed a bill in 1999 that would require any foreign
corporation providing gambling or wagering services in New York via the
Internet to register with the state. See Appellant=s Br. at 43. At
the time Appellant=s Brief was filed, this bill, then numbered S.2044,
was pending in a committee of the New York State Assembly. The same bill, now
numbered A.4350, was introduced in the State Assembly on February 8, 2001, and
is currently under review by the Racing and Wagering Committee. According to
the sponsor=s memorandum,
[t]here are
dozens of companies on the world wide web which offer interactive wagering
programs. All of these companies are situated in foreign countries and market
their services to New York State residents. This bill would require internet
gambling companies to register as foreign corporation doing business in New
York so that residents of this State may easily reach such corporations for
service of process.
New York State
Assembly, Memorandum in Support of Legislation, Bill No. A.4350.[5]
The
continued viability of this bill, and the fact that the New York State Senate
passed it during the 1999 session, unequivocally attests that the lawmakers of
New York fully anticipate that individuals in New York will place bets with
offshore gambling entities. If such activity were indeed prohibited by New York
law, then any such legislation would not have passed the Senate and would not
continue to merit consideration year after year. Rather, it would have been
squelched immediately upon introduction.
The
simple fact is that the State of New York has never declared the mere bettor to
be an outlaw. To the contrary, state lawmakers recognize that modern bettors
can and will wager with offshore gambling corporations, and are taking steps to
protect them. Thus, to hold that ' 1084(b), which strives for parity with state
penal laws, does not exempt transmission of wagering information from New York,
would contravene New York=s status quo.
B. The
Government=s Newly-Revised Position on
Appeal Concerning the Status of Interstate Off-Track Betting Glaringly Reveals
How its Contrary Position at Trial Effectively Eviscerated the Defense in the
Eyes of the Jury.
En
route to its argument that the evidence established a violation of the first
clause of ' 1084(a), which
prohibits transmission of Abets or wagers@ in foreign
commerce, the Government states that ACohen does not dispute that
each of the Betting Counts was premised on bets that were placed and
unconditionally accepted via WSE=s >click and bet= website or
toll-free telephone lines.@ Gov.
Br. at 61. This is inaccurate. The evidence established that the ABetting Counts@ were premised on
wagering instructions that were transmitted via Internet or telephone to
WSE=s offices in
Antigua. A bet would be placed on the customer=s behalf in
Antigua only if the customer=s wagering account contained sufficient funds
to cover the bet and if WSE approved it.[6]
As
Defendant has previously explained, see Appellant=s Br. at 51-54,
the account wagering format implemented by WSE was identical to the
longstanding and unfettered practice of interstate offtrack betting in the
horseracing industry B a practice which, at the time of Defendant=s conduct, and
contrary to the district court=s instructions, A857, enjoyed no special
protection from the reach of ' 1084.[7]
Defendant=s uncontradicted
testimony established that he in fact modeled WSE after Capital OTB in New
York.
The
Government, presumably recognizing the potential power of such testimony,
insisted at trial that OTB was not regulated by ' 1084. While
Defendant presented the district court with extensive authority establishing
that what Defendant was doing was no different than what OTB had been doing for
years, the Government, taking advantage of the district court=s apparent
confusion[8]
and citing no support whatsoever, informed the court that Athere are
specific federal statutes dealing with telephone accounts and wagering in off
track betting and harness racing. It=s not the same.@ A538.[9]
The Government went on to ask the court Ato instruct the
jury that OTB is not regulated under Section 1084.@ A540.
Unfortunately
for Defendant, the district court embraced the Government=s view, and gave
the requested instruction.[10]
Now,
confronted with the force of Defendant=s argument on
appeal, the Government has engineered a complete reversal of the position it
took at trial, and suggests that OTB may, in fact, be regulated by ' 1084. In a weak
attempt to gloss over the crucial reality that Defendant=s conduct was no
different than that of OTB, the Government argues:
It similarly provides no help to Cohen that various states have
authorized the establishment of Awagering account@ for the purposes
of facilitating state-sponsored off-track betting. (See Br. 51-56). The
fact that such Awagering account facilities@ exist does not
mean that bettors place bets from out-of-state, that they do so by means of
interstate wire communications, or that they may do so without infringing
federal law. Cohen, of course, does not contend that the Department of Justice
or any federal law enforcement agency has ever endorsed a view that interstate
transmittal of such bets is lawful.
Gov. Br. at 70.
The
disingenuousness of this response is staggering. Now, recognizing the vitality
of Defendant=s argument, and
bereft of any support to the contrary, the Government has no choice but to
concede that OTB indeed is regulated by ' 1084.
This
is a fact that the Department of Justice officially recognized long before
Defendant=s trial. In comments submitted to the
Senate Judiciary Committee on June 9, 1999, Acting Assistant Attorney General
Jon P. Jennings expressed the following concern about S. 692, the AInternet Gambling
Prohibition Act of 1999":
The
Department of Justice notes that S. 692 may incorrectly imply that the
Interstate Horse Racing Act of 1978, 15 U.S.C. ' 3001 et seq.,
allows for the legal transmission and receipt of interstate parimutuel bets or
wagers. The Interstate Horse Racing Act does not allow for such gambling, and
if a parimutuel wagering business currently transmits or receives interstate
bets or wagers (as opposed to intrastate bets and wagers on the outcome of a
race occurring in another state), it is violating federal gambling laws.
Letter from the
Department of Justice to Senator Leahy Regarding S. 692 (June 9, 1999).[11]
The
inescapable fact is that Defendant=s testimony that he modeled
WSE after Capital OTB was absolutely relevant to his state of mind with respect
to each and every count of the indictment. For if OTB had been operating for
decades without any threat of federal prosecution, then Defendant could
justifiably conclude that operating his business in an identical manner would
not violate federal law. Crucially, Defendant understood that the reason OTB
had operated unfettered for so many years was because their account wagering
format ensured that only information assisting in the placing of bets or
wagers was ever transmitted via interstate or foreign wire communications.
The
bottom line is that if the Government would have conceded at trial precisely
that which it concedes on appeal B i.e., that OTB and Jay Cohen were in pari
delicto, then the jury could never have been instructed that OTB was
irrelevant to this case. If the jury had never been so instructed, then it
could have been well-positioned to accept Defendant=s use of OTB as a
model. As a consequence, the jury could then have appreciated defense counsel=s resulting
argument that, if Defendant believed that OTB was not being prosecuted for
precisely the same conduct (because, like WSE, OTB was only transmitting
information in an account-based wagering system), then Defendant could not have
knowingly used a wire communication facility to transmit bets or wagers in
foreign commerce. In short, if the jury had been properly instructed,
Defendant would have been in a compelling position to have been found not
guilty of all charges.
C. The
Government=s Contention that
Transmission of Wagering Instructions Constitutes Transmission of a Bet or
Wager Per Se is Entirely Without Merit.
The
Government cannot escape the fact that the longstanding operation of interstate
off-track wagering on horse racing, without any interference or threat of
prosecution by the Federal Government, was premised upon the very same
interpretation of ' 1084(a) that Defendant urges here B namely, that
wagering instructions communicated to an account wagering facility constitute
no more than information assisting in the placing of bets or wagers.
This
same interpretation was incorporated by Congress into various legislative
proposals to prohibit Internet Gambling. The Internet Gambling Prohibition Act
of 1999, S.692, and the Internet Gambling Prohibition Act of 2000, H.3125, both
proposed enactment of a new section to prohibit Internet gambling, 18 U.S.C. ' 1085, in which
the term Ainformation
assisting in the placing of bets or wagers@ was defined as Ainformation that
is intended by the sender or recipient to be used by a person engaged in the
business of betting or wagering to place, receive, or to otherwise make a bet
or wager.@ S.692, Sec.
(a)(5)(A); H.3125, Sec. (a)(5).
The
Government suggests that the distinction urged by Defendant Aignores the
substance of the transaction@ Gov. Br. at 52, and is not meaningfully
different from traditional wagering on credit. Gov. Br. at 64. The Government
overlooks fundamental differences in the two practices. First, in the account
wagering context, a potential bettor transmits a request to have a bet placed
on his behalf with a wagering facility where the bettor has a wagering account.
In turn, the bet does not come into existence until the facility verifies that
sufficient funds are on deposit, the wager is approved, the account is debited,
and the bet is placed within the facility.
In
contrast, where an individual calls a bookie and tells the bookie that he wants
to bet a certain sum on the outcome of a particular event, on credit, this
communication does constitute the entirety of the bet. In the former context,
the transmission consists only of instructions to place a wager from a
previously funded account, whereas in the latter, the transmission constitutes
the wager itself.
Second,
by its very nature, account wagering can only take place where the wagering
facility is licensed and regulated by the jurisdiction in which it is located.
Account wagering is not possible otherwise, because no individual would turn
over funds in advance to a bookie running a prohibited gambling operation and
then send instructions to wager later. Even the New York General Obligations Law
would not protect a bettor against theft of funds transferred in anticipation
of wagering, because such funds do not constitute property staked or wagered.[12]
Indeed, traditional, unregulated credit wagering is fraught with the potential
for loansharking and other criminal activity in connection with debt
collection. These problems do not attend the practice of account wagering.
Although
the Government claims that Aevery@ case that has Adirectly or
indirectly@ addressed
Defendant=s argument has
rejected it, Gov. Br. at 65, the Government cites only one unreported case, United
States v. Ross, No. 98 CR 1174 (KMW), 1999 WL 782749 (S.D.N.Y. Sept. 16,
1999), which even addresses the distinction between Abets or wagers@ per se and Ainformation
assisting in the placing of bets or wagers.@ The Government=s reliance on
this case is inapposite for a number of reasons.
First,
Ross summarily rejects the distinction made by the defendant therein
between his casino=s method of prepaid betting and the activities of
bookmakers who extend credit, as one based on Amere method of
payment.@ Id. at
*7. The court thus wholly failed to consider the well-established practice of
account wagering, which many states permit to take place via interstate or
foreign wire communication facilities in connection with pari-mutuel betting on
horse races. See Appellant=s Brief, at 51-54.
Second,
Ross relies in significant part on Sagansky v. United States, 358
F.2d 195 (1st Cir. 1966), and United States v. Tomeo, 459 F.2d 445 (10th
Cir. 1972), neither of which is factually consistent with the case before this
Court and neither of which considered the specific question before this Court.
Unlike the case here, Sagansky and Tomeo both involved the direct
placement of bets with bookmakers via interstate telephone calls, without the
initial establishment and funding of an account with a licensed and regulated
account wagering facility. In each case the defendant argued that the word Atransmission@ in ' 1084(a)
encompassed only the sending and not the receiving of bets. Both courts held
that the word Atransmission@ encompasses both
the sending and receiving of bets. Neither decision, however, addressed the
question of whether the transmission of wagering instructions to an account
wagering facility is a transmission of a bet or wager per se.
Third,
the Government ignores the procedural posture of Ross, which was decided
upon the defendant=s motion to dismiss. Accordingly, the question
before the court in Ross was whether the indictment properly charged the
transmission of Abets or wagers,@ see id.
at *2-3, and the court=s holding is limited to the proposition that
an indictment properly charges transmission of a bet or wager by
alleging the act of accepting an offer to bet. Indeed, in Ross, the
Government even argued that the issue of whether the defendant Atransmitted bets@ was a factual
rather than a legal issue, and that Athis factual issue [could
not] be determined on a motion to dismiss.@ Id. at *3
(emphasis added). The Government cannot have it both ways.
Here,
the Government=s contention
that, as a matter of law, transmission of instructions to place a wager
constitutes transmission of the wager itself must be rejected. The simple fact
is that, on this full record, the distinction that Defendant draws between Abets or wagers@ per se and Ainformation
assisting in the placing of bets or wagers,@ is supported by
centuries-old common law, the ongoing, unfettered practice of interstate
off-track wagering in several states, including New York, recent federal
legislative action, and common sense.
D. The Government=s Newly-Conceived
Argument that a Contract to Bet Entitles Both Parties to AMoney or Credit
as a Result of Bets or Wagers@ is Procedurally
and Substantively Defective.
The
Government argues, in the alternative, that the evidence established that
Defendant=s conduct
violated the third clause of ' 1084, which prohibits the transmission of Aa wire
communication which entitles the recipient to receive money or credit as a
result of bets or wagers.@ 18
U.S.C. ' 1084(a).
The Government reasons that once an offer to bet was accepted, the
communication confirming acceptance Aentitled@ A>a recipient=@ of the
communication, either WSE or one of its customers, to A>money or credit
as a result of bets or wagers.=@ Gov. Br. at 71. In essence,
the Government contends that every bet, once formed, Aentitles@ both parties to
the contract to money or credit. Id. The Government=s argument cannot
be sustained, either procedurally or substantively.
Undoubtedly
recognizing that the specific theory upon which it proceeded to trial is not
supported by the evidence, the Government now attempts to resurrect the third
clause of ' 1084(a)
with a specious theory never advanced below. When questioned by the district
court in a pretrial hearing specifically about the application of the third
clause, counsel for the Government stated:
If money is wired, for example, from New York to Antigua to set
up an account, it would be sent to B that would be something
that would be included in the third provision.
A170. Questioned
further about who would be the Arecipient@ in this
scenario, counsel for the Government, after careful consideration of the
language in the indictment, stated: AI believe that the recipient
would be the defendant.@ A171. The Government thus charged Defendant
and proceeded to trial on the theory that the third clause of ' 1084(a) was
violated because customers of WSE wired money to the company in Antigua to
establish wagering accounts.[13]
The
Government cannot now advance a theory premised on entirely different facts and
which alleges that the Arecipient@ was either
WSE or its customers. These arguments have been waived, and should not be
considered by this Court, as they amount to a post hoc amendment of charges. See
United States v. Helmsley, 941 F.2d 71, 89 (2d Cir. 1991), cert.
denied, 502 U.S. 1091 (1992) (AAn unconstitutional
amendment of the indictment occurs when the charging terms are altered, either
literally or constructively.@).
Even
were this Court to consider the Government=s newly crafted
interpretation of the third clause of ' 1084(a), this
interpretation is at odds with the statute=s language,
structure, and legislative history, and is not supported by the facts. The
Government essentially argues that every confirmation of a bet or wager
is also a Acommunication
which entitles the recipient to receive money or credit as a result of bets or
wagers.@ Under this interpretation, the first clause
of ' 1084(a)
would be superfluous because it would be wholly encompassed by the third
clause. An interpretation that would eviscerate the first clause of ' 1084(a),
however, contravenes the fundamental principle of statutory construction that a
court should A>give effect, if
possible, to every clause and word of a statute.=@ United States
v. Menasche, 348 U.S. 528, 538-39 (1955) (quoting Montclair v. Ramsdell,
107 U.S. 147, 152 [1883]). As the Government itself has pointed out, an
interpretation of the statute that would negate the first clause of ' 1084(a) would be
just the sort of A>absurd=@ result that statutes should
be interpreted to avoid. See Gov. Br. at 64-65 (quoting United States
v. Daury, 215 F.3d 257, 264 [2d Cir. 2000]).
The
Government=s interpretation,
moreover, is directly at odds with the legislative history of ' 1084. In
emphasizing that the exemption in ' 1084(b) applies only to
information assisting in the placing of bets and wagers, the House Report
states: ANothing in the
exemption, however, will permit the transmission of bets and wagers or money
by wire as a result of a bet or wager from or to any State whether betting
is legal in that State or not.@ H.R.
Rep. No. 87-967, 87th Cong., 1st Sess. (1961), reprinted in 1961
U.S.C.C.A.N. 2631, 2633 (emphasis added). The legislative history thus
clarifies that Aa wire communication which entitles the recipient to
receive money or credit as a result of bets or wagers@ indeed
constitutes a wire transmission of proceeds of a bet or wager, or notice
that one is entitled to receive such proceeds,[14]
not mere confirmation that a bet has been placed in a remote jurisdiction on a
caller=s behalf. As the
Government established during its case in chief, this provision could not apply
to Defendant, since WSE did not return money to its customers via wire, even
upon request, but only via bank draft sent by regular mail or Federal Express.
Tr. at 83; see also Tr. at 131-33.
In
addition, the Government=s argument is premised upon a misapprehension
of the facts. The Government contends that WSE Awas entitled to
10% of the bet no matter what the outcome of the sporting event.@ Gov. Br. at 71. Although the Government
makes no citation to the record, this apparently refers to the testimony of one
agent who, conceding that she Adidn=t learn too much about the
different types of wagers,@ commented in response to a question about
the definition of a Astraight wager@ that, where an
individual bets A55 to win 50,@ there is a A10 percent fee to
place that bet.@ Tr. at 157.
In fact, however, as another agent testified, where an individual bets A55 to win
50" and wins, the bettor takes $105, and the gambling business takes
nothing. Tr. at 71-72. Accordingly, the bet itself Aentitles@ the business to
nothing. Likewise, it Aentitles@ the bettor to
nothing.
E. The
Evidence Failed to Establish that Defendant AKnowingly@ Used a Wire
Communication Facility to Transmit Bets or Wagers in Foreign Commerce.
The
Government attempts to characterize Defendant=s argument that
the evidence failed to establish that Defendant knowingly transmitted bets or
wagers in foreign commerce as Ajust another way of arguing that ignorance of
the law is a defense to the crime.@ Gov. Br. at 75. This claim is meritless.
The
Government concedes that the knowledge requirement applies to all
factual elements of a violation. Gov. Br. at 74. In this case, as the
Government recognizes, the Government must prove Athat the
defendant >knowingly= used a wire
communication facility in interstate or foreign commerce for a purpose
proscribed by the statute.@ Gov.
Br. at 75 (emphasis added). Accordingly, the Government must prove that
Defendant knew that what was being transmitted was in fact a bet or wager, and
not merely information assisting in the placing of a bet or wager. This is no
different from a requirement that the Government must prove that a defendant
charged with drug distribution knew that the substance in question was a
controlled substance and not, for instance, baking soda. This is a question of
fact, not law.
In
short, while Defendant maintains that knowledge of the wrongfulness of his
actions is required to support his conviction for conspiracy, see Point
III, infra, he makes no such argument with respect to the substantive
counts. Defendant does contend, however, as explained in Point I.B, supra,
that, in view of the exemption set forth in ' 1084(b), the
undisputed evidence failed to establish that he knowingly transmitted bets or
wagers in violation of ' 1084. This failure of proof requires
reversal of convictions on all counts. At the very least, because the district
court=s instructions
precluded the jury from making the appropriate factual determinations,[15]
this case should be remanded for a new trial.
POINT II
THE RULE OF
LENITY MANDATES THAT DEFENDANT=S CONVICTIONS BE REVERSED
AND THE CHARGES AGAINST HIM DISMISSED
The
Government=s claim that ' 1084
provided Defendant with fair notice that his conduct was proscribed is
preposterous in view of the decades-old practice of interstate off-track
wagering, recent federal legislative efforts to clarify the Wire Act, and
recent efforts in New York to protect consumers who wager with offshore
Internet enterprises. The ambiguities in ' 1084 indeed are Agrievous@ as applied to
Defendant. See Gov. Br. at 78 (citing Huddleston v. United States,
415 U.S. 814, 831 [1974], United States v. Collado, 106 F.3d 1097, 1107
[2d Cir. 1997]). Aside from noting the Government=s about-face on
the applicability of ' 1084 to OTB (see Point I.B, supra),
perhaps in this regard Defendant need go no further than referring to recently
proposed federal legislation which would have directly and specifically
prohibited Internet gambling.
The
Government suggests that Defendant=s Rule of Lenity argument is
based solely on the absence of special statutory definitions of the terms Abets or wagers@ and Alegal.@ Gov. Br. at 78. As explained previously, see
Appellant=s Br. at 63-66,
Defendant=s argument that
the Rule of Lenity requires reversal of his convictions is based on much more.
Not only does the statute fail to provide definitions for these terms, which
are susceptible to multiple interpretations, but the National Association of
Attorneys General has concluded that the statute is Aambiguous,@ and, as noted,
Congress has attempted to clarify these ambiguities in several pieces of
proposed legislation. As discussed, see Point I.C, supra, the
Internet Gambling Prohibition Act of 1999, S.692, and the Internet Gambling
Prohibition Act of 2000, H.3125, each provide for definitions of Ainformation
assisting in the placing of bets and wagers@ that accord with
Defendant=s interpretation
of that phrase. Each bill also contains a definition of Abets and wagers.@
Moreover,
the Government=s contention that
the district court=s interpretation of the terms Abets and wagers@ and Alegal@ in ' 1084 were Aforecasted by
many sources@ is entirely
without support. As shown in Point I.A, supra, the fact that many cases
have held that Ataking bets@ B in other words,
operating a gambling business B is prohibited in New York does not implicate
either the legal status of placing a bet in New York nor the meaning of
the term Alegal@ as it is used in
' 1084(b).
Likewise, for reasons discussed in Appellant=s Brief, the
cases that the Government cites as upholding the convictions of others for Avirtually@ the same conduct
at issue in this case, see Gov. Br. at 79, do no such thing. Indeed, the
very fact that we are even debating Alegal@ versus not
criminal on this appeal, alone establishes unconstitutional ambiguity.
The
Rule of Lenity, as a component of Due Process, prohibits a conviction
predicated on a statute that does not fairly warn of what it proscribes. United
States v. Lanier, 117 S.Ct. 1219, 1225 (1997). As applied in this case, ' 1084 did not
fairly warn Defendant that establishing an offshore gambling business in a jurisdiction
where such business is licensed and regulated, and modeling its operating
procedures after gambling enterprises in the United States subject to the same
legal restrictions, violated its provisions. Accordingly, Defendant=s convictions
should be reversed and this case dismissed.
POINT III
THIS COURT IS
WELL-POSITIONED TO ADOPT THE ACORRUPT MOTIVE@ DOCTRINE, WHICH
CONTINUES TO OCCUPY AN UNSETTLED AREA OF LAW IN THIS CIRCUIT AND THE SUPREME
COURT, WITHOUT INJECTING ERROR INTO COUNTLESS CONSPIRACY CONVICTIONS
In
response to Defendant=s argument that this Court should finally
embrace the principle set forth in People v. Powell, 63 N.Y. 88, 2 Cow.
Cr. Rep. 283 (1875), that a conviction for conspiracy to engage in acts that
are not inherently wrongful requires proof of a corrupt or evil motive, the
Government attempts to establish that the Powell doctrine was never
widely accepted in the federal courts, that the doctrine has been Aunequivocally@ rejected by this
Court and the Supreme Court, and that adopting it now would open the floodgates
to claims of error in countless conspiracy convictions. Not only is the
Government wrong, but it conveniently ignores many still-viable federal
precedents as well as express language limiting the reach of United States
v. Feola, 420 U.S. 671 (1975), on which it so heavily relies. The
Government=s fallback
floodgates argument, moreover, exaggerates both the reach of Powell and
the potential for viable post-conviction petitions for relief.
In
the final analysis, contrary to what it ascribes to Defendant, it is actually
the Government which asks this Court to ignore or "overrule precedents
stretching back to the beginning of the last century." Gov. Br. at 47.
A. Numerous
Federal Courts Have Endorsed the Rationale Underlying the Powell
Doctrine, Which Survives Feola.
The
Government=s efforts to
diminish the Powell doctrine are
misleading and unavailing. In its attempt to portray the Powell doctrine
as antiquated and without meaningful support in the federal courts, the Government
suggests that it has not been cited with approval beyond a handful of decisions
issued during or prior to the 1930s, and that it has never been endorsed by the
Second Circuit. See Gov. Br. at 36. In fact, the doctrine has enjoyed
considerably more support than the Government is willing to acknowledge.
As
discussed in Appellant=s Brief, The First, Sixth, Eighth, Tenth, and
D.C. Circuits have, at various times, cited the Powell doctrine with
favor. Appellant=s Br. at 22-24, citing United States v. Previte,
648 F.2d 73, 81-82 (1st Cir. 1981); Landen v. United States, 299 F. 75,
78 (6th Cir. 1924) Fall v. United States, 209 F. 547, 553 (8th Cir.
1913); Cruz v. United States, 106 F.2d 828, 830 (10th Cir. 1939); United
States v. Barker, 514 F.2d 208, 233 (D.C. Cir. 1975) (en banc) (Bazelon,
C.J., concurring).
Notably, in Previte, which was decided
after Feola, the First Circuit recognized the Powell doctrine as
a viable doctrine Alimited to cases in which an alleged objective may
be completely innocent and unobjectionable.@ 648 F.2d at 81. The Previte court did
not apply the doctrine, however, because it concluded, citing Feola, that the gratuity offenses
alleged to be the objects of the conspiracy in that case required guilty
knowledge. Id. at 82. Previte thus makes clear that, as discussed
in more detail in Part I.B, infra, the Powell doctrine indeed
survives Feola.
Likewise,
in United States v. Reminga, 493 F. Supp. 1351, 1361 (W.D. Mich. 1980),
a post-Feola case wholly ignored by the Government, the court, based on
the Acorrupt motive@ doctrine and
citing both Powell and Landen, granted the defendant=s motion for
acquittal as to the count of conspiracy to engage in the business of dealing in
firearms. Landen thus remains viable precedent in the Sixth Circuit, as
do Previte, Fall, and Cruz, in their respective circuits.
The Reminga
court, moreover, observed that the Acorrupt motive@ doctrine is
grounded in sound reasoning. 493 F. Supp. at 1361. First, the danger arising
from the act of agreeing to undertake certain acts is less when the actors are
not motivated by criminal intent. Second, the likelihood of ongoing criminal
activity is virtually nonexistent where the actors agree to undertake acts that
are not inherently wrongful and not known by them to be illegal, because they
are not likely to undertake similar acts upon learning of their illegality. Id.
(citing LaFave & Scott, Criminal Law, at 469-70). These principles remain
of undiminished validity.
B. Neither
This Court Nor the Supreme Court has Definitively Rejected the Powell
Doctrine.
In
its zeal to claim that this Court and the Supreme Court have Aunequivocally@ rejected the Powell
doctrine, see Gov. Br. at 34, the Government single-mindedly focuses on
broad-based language in Feola and conveniently ignores both the precise
issue in that case as well as the Supreme Court=s express
language declining to rule on the Powell doctrine. The Government's
result-oriented analysis, moreover, simply overlooks those authorities that do
not support its ultimate premise.
The
Government asserts, for instance, that "[t]his Court again rejected the Powell
doctrine in United States v. Mack, 112 F.2d 290 (2d Cir. 1940),"
Gov. Br. at 38, just before jumping to its analysis of the Supreme Court's 1974
ruling in Feola. The Government wholly fails to mention, however, this
Court=s post-Mack
decision in United States v. Crimmins, 123 F. 2d 271 (2d Cir. 1941), in
which Judge Learned Hand, the author of Mack, effectively did an
about-face and sanctioned application of the Powell rule under
appropriate facts.
The
Government further ignores the Supreme Court's discussion of Crimmins in
Feola. Far from overruling Crimmins, which remains a precedent of
this Court, the Supreme Court in Feola merely delimited its application
to appropriate circumstances. Specifically, the Feola court discussed at
some length the famous "traffic light" analogy articulated by Judge
Hand in Crimmins, an analogy which, the Court noted, comes close to
stating the Powell doctrine. See Feola, 420 U.S. at 691.
Rather than rejecting the analogy outright, the Supreme Court merely noted its
limited applicability:
[t]he
traffic light analogy poses the question whether it is fair to punish parties
to an agreement to engage intentionally in apparently innocent conduct where
the unintended result of engaging in that conduct is the violation of a
criminal statute.
420 U.S. at 691.
However, the Court went on to expressly state that Athis case does
not call upon us to answer this question, and we decline to do so, just as we
have once before. United States v. Freed, 401 U.S. [601], at 609 n.14
[1971]." Feola, 420 U.S. at
691.
Far
from rejecting the reasoning of Crimmins, therefore, Feola only
found Crimmins to be inapplicable to the particular facts of that case, in
which the underlying conduct, assault, was clearly wrongful and not apparently
innocent. See Feola, 420 U.S. at 692. As the Court stated, A[i]f the [traffic
light] analogy has any vitality at all, it is to conduct of the latter variety;
that, however, is a question we save for another day." Id.
It is
thus clear that the Crimmins case, which, contrary to Mack,
appears to embrace the Powell doctrine, and its progeny, see United
States v. Mauro, 501 F.2d 45, 50, n.2 (2d. Cir) (collecting cases), cert.
denied, 419 U.S. 969 (1974), have never been overruled. All the Feola
Court found was that Crimmins itself was an inappropriate vehicle in
which to explicate upon the Powell doctrine:
In Crimmins,
the substantive offense, namely, the receipt of stolen securities that had been
in interstate commerce, proscribed clearly wrongful conduct. Such conduct
could not be engaged in without an intent to accomplish the forbidden result.
So, too, it is with assault, the conduct forbidden by the substantive statute, '111, presently
before us. One may run a traffic light 'of whose existence one is ignorant,'
but assaulting another 'of whose existence one is ignorant,' probably would
require unearthly intervention. Thus, the traffic light analogy, even if it
were a correct statement of the law, is inapt, for the conduct proscribed by
the substantive offense, here assault, is not of the type outlawed without
regard to the intent of the actor to accomplish the result that is made
criminal.
420 U.S. at
691-2.
By
its own admission, the Supreme Court's precise ruling in Feola was
rather narrow:
We hold here only
that where a substantive offense embodies only a requirement of mens rea as to
each of its elements, the general federal conspiracy statute requires no more.
Id. at 692.[16]
Neither this Court, nor the Supreme Court has revisited the issue ever since.
Moreover,
even if "Feola has been universally recognized as announcing a
principle of general application to conspiracy charges," Gov. Br. at 41,
the Government fails to mention the indisputable fact that no court which has
referenced Feola has had occasion to revisit the narrowly circumscribed Powell
issue. The Government also ignores the fact that none of the cases in sister
circuits which support the doctrine have ever been overruled. Consequently,
this Court is free to consider whether the so delimited corrupt motive doctrine
should now be held to apply to the circumstances underlying the conspiracy
charged in this case.
C. The Facts of this Case Uniquely Implicate
the Powell Doctrine. This
appears to be the first post-Feola case in which the Powell
doctrine has been raised as a distinguishing factor.[17]
The undisputed facts of this case, in contrast to those in Crimmins and Feola,
uniquely implicate the Powell doctrine, for they establish that
Defendant engaged in conduct that was not clearly wrongful and which, indeed,
could be engaged in Awithout an intent to accomplish the forbidden
result." Feola, 420 U.S. at 691.[18]
As
the Government has frequently stated, unlike the statute involved in Feola,
18 U.S.C. ' 111, the statute
in this case, 18 U.S.C. ' 1084, contains no requirement of
criminal intent or inherent awareness of wrongfulness. See Gov. Br. at
75 ("Rather, unless the 'text of the statute dictates a different result,
the term "knowingly" merely requires proof of knowledge of the facts
that constitute the offense.'@ [citation omitted]); cf. Feola,
420 U.S. at 686 ("[' 111] does require a criminal intent . . . .
We hold, therefore, that in order to incur criminal liability under ' 111 an
actor must entertain the criminal intent to do the acts therein
specified.").[19]
The
Government cannot have it both ways. As noted in Appellant=s Brief, in an
instance which parallels Defendant=s situation, the Supreme
Court has ruled that a conspiracy conviction cannot lie. Specifically, in United
States v. Keegan, 325 U.S. 478 (1945), the majority found that a conspiracy
to commit a statute which was "innocent[ly]" and "honestly"
believed to be unconstitutional was not sufficiently established. As therein
stated:
One with innocent
motives, who honestly believes a law is unconstitutional and, therefore, not
obligatory, may well counsel that the law shall not be obeyed; that its
command shall be resisted until a court shall have held it valid, but this
is not knowingly counselling, stealthily and by guile, to evade its command.
325 U.S. at 493-94 (emphasis
added).[20]
Here,
the record establishes beyond dispute that Defendant took objectively
reasonable and affirmative measures to ensure that his conduct was not
prohibited by law. Indeed, Defendant took affirmative measures to ensure that
his actions were specifically sanctioned, and regulated, under the laws of the
jurisdiction in which he ultimately located his business. He also modeled his interstate
activities after New York=s Capital OTB, which had been engaging in
interstate betting activity for decades without any Government interference. See
Point I.B, infra.
Under
such circumstances, contrary to the facts in those cases cited by the Government, there simply was no mens rea,
no criminal intent, motivating Defendant's conduct. Indeed, as the
Government has urged throughout, none was even required by 18 U.S.C. ' 1084. Accordingly,
unlike the ' 111 violation
involved in Feola, unlike the receipt of stolen securities complained of
in Crimmins, and unlike the harboring of illegal aliens in Mack,
the conduct proscribed by the statute in this case is certainly "of the
type outlawed without regard to the intent of the actor to accomplish the result
that is made criminal." Feola, 420 U.S. at 692. As a result, as
expressly reserved by the Feola Court, this Court is free to consider
the applicability of the Powell doctrine to Defendant's indisputably
innocent state of mind.
In
sum, the Powell doctrine remains ripe for consideration. We respectfully
submit that (a) where, as here, Defendant firmly believed that he was acting in
compliance with law; (b) where Defendant took every reasonable measure to
legitimize such belief; (c) where local Antiguan law unequivocally sanctioned
his conduct, and (d) where such conduct, therefore, was not inherently
wrongful, the Powell rule should prevent the imposition of
conspiratorial liability.
D. Embracing the Powell Doctrine Would Not Inject Error into
Countless Conspiracy Convictions.
Seemingly
unmindful that, in the contrasting situation where an offense is mala in se
or notoriously prohibited, an intent to commit the underlying crime effectively
establishes, per se, the existence of a "corrupt motive" for purposes
of conspiratorial liability,[21]
the Government contends that endorsement of the Powell doctrine would
require courts to venture into standardless decisionmaking about the
distinction between conduct that is mala in se and that which is malum
prohibitum. The Government further claims that this would inject error into
countless conspiracy cases. Gov. Br., at 35. These dire predictions are
unavailing.
Were
this Court to apply the Powell doctrine in the unique factual context
presented by this appeal, its precedential effect would reach only that narrow
class of cases in which the underlying conduct is not inherently or notoriously
wrongful and where, based on objectively cognizable factors, it is clear that
the actor firmly believed that the law sanctioned such conduct. See, e.g.,
Previte, 648 F.2d 73 at (noting that "the Powell doctrine is
limited to cases in which an alleged objective may be completely innocent and
unobjectionable"). Moreover, far from placing the courts in the position
of having to reconsider and vacate countless conspiracy convictions, the Acorrupt motive@ doctrine could
only apply where, as here, the defendant had made a timely protest to any
contrary instructions. See United States v. Vasquez, 116 F.3d 58,
60 (2d Cir. 1997).
Practically,
as gauged by the lack of any judicial intrusion into this area over the last
several decades, the doctrine certainly
has not been asserted in recent times. Again, that is undoubtedly due to the
fact that it is the rare case, indeed, in which the evidence unequivocally
demonstrates not only that a defendant lacked any corrupt motive, but, to the
contrary, that he undertook specific and objectively appropriate measures to
reassure himself of the lawfulness of the actions taken.
Under
such circumstances, it is decidedly hyperbolic, if not grossly untenable, for
the Government to argue that "Cohen asks the Court not only to overrule
precedents stretching back to the beginning of the last century but, in the
process, to inject error in countless conspiracy prosecutions." Gov. Br.
at 47. Defendant simply asks the Court to examine the availability of
conspiratorial liability, in a unique case such as this, where an accused's
alleged conspiratorial conduct indisputably was motivated by the belief that it
fully complied with applicable law. After all, how often does such a rare case
get prosecuted, let alone result in a conviction?
The
fact remains that every one of the post-Feola cases cited by the
Government, Gov. Br. at 41-43, involved either inherently or notoriously
wrongful conduct which the actor knew, or should have known, was proscribed at
the time of its commission.[22]
See United States v. Eisenberg, 596 F.2d 522 (2d Cir. 1979)
(interstate transportation of counterfeit checks); United States v. Salameh,
152 F.3d 88 (2d Cir. 1998), cert. denied, 525 U.S. 1112 (1999)(bombing
populated buildings and structures); United States v. Herrera, 584 F.2d
1137 (2d Cir. 1978) (harboring illegal aliens and using facilities in
interstate commerce to operate an illegal enterprise); United States v.
Podell, 519 F.2d 144 (2d Cir. 1975) (bribery, perjury and defrauding the
United States); United States v. Murray, 928 F.2d 1242 (1st Cir. 1991)
(operating an illegal gambling business in violation of state law, under 18
U.S.C. '1955); United
States v. Thomas, 887 F.2d 1341 (9th Cir. 1989) (violation of Lacey
Act under 16 U.S.C. '' 3371 et seq., involving interstate
transportation or acquisition of wildlife protected by state, tribal and
federal laws); United States v. McDougal, 25 F.Supp.2d 85 (N.D.N.Y.
1998), aff'd, 216 F.3d 1074 (2d Cir. 2000) (table) (same).[23]
The
sort of inherently wrongful conduct involved in the above-cited cases simply is
not what is before the Court in this appeal. Rather, the record here shows that
Defendant undertook legitimate and objectively reasonable measures to satisfy
himself that he was acting lawfully. Defendant is not aware of any cases presenting this unique factual scenario in
this circuit or the Supreme Court since Keegan. Under these circumstances,
the still-viable Powell doctrine should be embraced by this Court, which
should thereby reverse Defendant=s conviction for conspiring to violate the
law.
POINT IV
THE GOVERNMENT=S ARGUMENT THAT
THE DISTRICT COURT PROPERLY DECLINED TO PERMIT THE DEPOSITION OF GYNETH
MCALLISTER MISAPPREHENDS BOTH THE SUBSTANCE AND RELEVANCE OF MCALLISTER=S PROPOSED
TESTIMONY
In
arguing that the district court properly refused to permit the deposition of
Gyneth McAllister, the Government ignores significant portions of McAllister=s proffered
testimony and mischaracterizes the propositions for which such testimony would
have been probative.
The
Government contends that McAllister concluded that the United States tacitly
accepted offshore Internet gambling targeted at U.S. customers based on the Amere fact@ that U.S.
officials Awere willing to
meet with her and did not specifically inform her@ that such
activity would violate ' 1084. Gov. Br. at 91. The Government ignores
the fact that McAllister would have testified that the U.S. officials with whom
she met expressed interest in helping to strengthen Antiguan gaming regulations
and in protecting U.S. customers who gambled with Antiguan companies. More
importantly, the Government ignores the fact that McAllister would have testified
that she communicated these facts to Defendant.
These
facts, along with the other facts to which McAllister would have testified, see
Appellant=s Br. at 73-76,
were probative of two key issues: (1) with respect to the conspiracy count,
whether Defendant had a corrupt motive to violate the law; and (2) with respect
to the substantive counts, whether Defendant knew that bets or wagers per se,
and not merely information assisting in the placing of bets or wagers, were
transmitted in foreign commerce. Defendant did not, as the Government suggests,
proffer this testimony based on the premise that Defendant had to know that he
was violating the law in order to be convicted of the substantive counts.
The
proffered testimony indeed tended to show that Defendant believed that only
information assisting in the placing of bets or wagers was transmitted in
foreign commerce. The exclusion of this crucial proof was an abuse of
discretion, let alone a constitutional deprivation, see Washington v.
Schriver, ___ F.3d ___, 2001 WL 125332 *8 (2d Cir. 2001), which mandates a
new trial.
POINT V
THE GOVERNMENT'S
RESPONSE TO DEFENDANT'S CHALLENGE TO THE DISTRICT COURT'S DEFICIENT
INSTRUCTIONS ON AIDING AND ABETTING EFFECTIVELY ADVOCATES AN UNCONSTITUTIONAL
CONSTRUCTIVE AMENDMENT TO THE INDICTMENT
Throughout
this prosecution, as dramatically reflected in its requests to charge, the
Government=s express theory
of aiding and abetting liability on Defendant's part was based solely upon 18
U.S.C. ' 2(a). Yet, now,
in response to Defendant's meritorious complaint that the District Court's duly
protested instructions under that specific theory of criminal liability were
egregiously deficient, the Government B implicitly conceding the
viability of Defendant's challenge B now asks this Court to
uphold these convictions under ' 2(b). The Government's position simply
cannot be sustained, for it effectively advocates that this Court now lend its
imprimatur to what would surely amount to an unconstitutional constructive
amendment to the indictment.
A. The
Government=s Theory of Aiding and
Abetting Liability Was Predicated Solely Upon 18 U.S.C. ' 2(a).
Curiously
ignored in the Government's brief is the daunting B and rather inconsistent B reality that,
during trial, the Government submitted its proposed jury instruction regarding
aiding and abetting liability under 18 U.S.C. ' 2(a).
Specifically, despite the Government=s now revised claim that its
theory of liability was based on the second paragraph of the aiding and
abetting statute, namely 18 U.S.C. ' 2(b), the Government=s own proposed
instruction solely contemplated the actual participation in the commission of a
criminal act (18 U.S.C. ' 2[a]), as opposed to the causation of an
act, which, if committed, would only then amount to an offense, as
provided in 18 U.S.C. ' 2(b).
The
Government's proposal, in its entirety, provided:
Counts Two
through Eight of the Indictment also charge the defendant with aiding and
abetting the crime of being engaged in an illegal gambling operation.
The aiding and
abetting statute is set forth in Title 18, United States Code, Section 2. That
statute provides, in pertinent part:
Whoever commits
an offense against the United States or aids, abets, counsels, commands,
induces or procures its commission, is punishable as a principal.
Under the aiding
and abetting statute, it is not necessary for the Government to show that a
defendant himself physically committed the crime with which he is charged B here, the
gambling transmissions charged in Counts Two through Eight B in order for
your to find that the defendant guilty of that offense. Thus, if you do not
find beyond a reasonable doubt that the defendant himself committed the
crime charged, you may, under certain circumstances, still find the
defendant guilty as someone who aided and abetted another person in the
commission of the offense.
A person who aids
or abets another to commit an offense is just as guilty of that offense
as if he committed it himself. Accordingly, you may find that defendant guilty if
you find beyond a reasonable doubt that the Government has proved that someone
else committed the crime, and that the defendant aided and abetted that
person in the commission of the offense.
As you can see,
the first requirement is that another person has agreed with the defendant to
commit the crime charged. Obviously no one can be convicted of aiding
and abetting the criminal acts of another if no crime was committed by the
other person in the first place. But if you do find that a crime was committed,
then you must consider whether the defendant you are considering aided or
abetted the commission of the crime.
In order to aid
or abet another to commit a crime, it is necessary that the person knowingly
agreed to associate himself in some way with the crime, and that he agreed o
knowingly seek by some act to help make the crime succeed.
A820-21(emphasis added).
Thereafter,
the District Court held a charging conference in which it reviewed and ruled
upon the parties= proposed instructions. During the conference, the
Government referred to its submitted charge, noting Ait=s the standard
aiding and abetting charge.@ Tr. 1064. The Government then cited to
specific language in ' 2(a), contained within its charge request,
stating A[t]he >counsels, commands,
produces or procures its commission= language I think is
sufficient.@ Tr. 1064.
The
District Court agreed and ruled that it would instruct the jury in accordance
with the Government=s proposed instruction regarding aiding and abetting
liability. Tr. 1064-1065. Despite the foregoing, as argued in Defendant's
principal brief, at pp. 67-71, the District Court failed to charge the jury
with respect to 18 U.S.C. ' 2(a).
B. Discussion.
The
Government's current position, which tacitly acknowledges the correctness of
Defendant's challenge by not even attempting to salvage the District Court's
instructions under 18 U.S.C. ' 2(a), effectively asks this Court to amend
the indictment. That is because, in so arguing, the Government seeks to have
this Court sustain this conviction upon an amended theory of criminal
liability, wholly distinct from that upon which Defendant stood trial, and upon
which he fashioned his defense. Respectfully, the Court must decline this
invitation.
A
constructive amendment of an indictment is per se violative of the grand
jury clause of the Fifth Amendment. United States v. Danielson, 199 F.3d
666, 669 (2d Cir. 1999); United States v. Zingaro, 858 F.2d 9498 (2d
Cir. 1988); see also, United States v. Rochko, 969 F.2d 1, 5 (2d
Cir. 1992); United States v. Mollica, 849 F.2d 723 (2d Cir. 1988); United
States v. Weiss, 752 F.2d 777, 786-787 (2d Cir. ), cert denied, 474
U.S. 944 (1985); United States v. Floresca, 38 F.3d 706 (4th
Cir. 1994) (en banc) (upon reversing conviction, court held that a constructive
amendment claim is reviewable, absent preservation, as plain error).
Generally,
A[a]n
unconstitutional amendment of the indictment occurs when the charging terms are
altered, either literally or constructively[,]@ United States
v. Helmsley, 941 F.2d 71, 89 (2d Cir. 1991), cert. denied, 502 U.S.
1091 (1992). Thus, a constructive amendment arises when the terms of the
indictment are in effect altered by the presentation of evidence and jury
instructions which so modify essential elements of the offense charged that
there is a substantial likelihood that the defendant may have been convicted of
an offense other than that charged in the indictment. United States v.
Wallace, 59 F.3d 333, 337 (2d Cir. 1995) (quoting United States v.
Mollica, 849 F.2d 723, 729 (2d Cir. 1988).
If
upheld, the Government's revised view of this case would accomplish, on appeal,
just such a result in altering, post hoc, the charging terms upon which
Defendant stood trial. As demonstrated by the Government=s own proposed request
to charge and remarks at trial, it was always professed to be the Government=s theory of
aiding and abetting upon the provisions of 18 U.S.C. ' 2(a) alone.
Therefore, that was the theory upon which the defense was constructed, in
specifically seeking to convince the jury that no crime was actually
committed by virtue of the operation having been solely conducted in
Antigua. Accordingly, it is respectfully submitted that the case must rise or
fall on the legitimacy of the District Court=s charge under 18
U.S.C. ' 2(a), at
pains of a broadening of the prosecutorial theory in violation of these
constructive amendment principles.
As
contended in Defendant's principal brief (Appellant=s Br. at 67-71),
and as attested to by the failure of the Government even to attempt to justify
the Court's charge, it is clear that the District Court's instructions with
respect to ' 2(a) were
egregiously deficient. They simply did not advise the jury that,
"To convict
a defendant on a theory of aiding and abetting, the government must prove that
the underlying crime was committed by a person other than the defendant and
that the defendant acted . . . with the specific purpose of bringing about the
underlying crime." United States v. Best, 219 F.3d 192, 199 (2d
Cir.2000).
United States v.
Samaria,
239 F.3d 228, 2001 WL 55383, *4 (2d Cir. 2001). Consequently, this record
presents clear and well-preserved error which mandates a reversal of
Defendant's convictions.
CONCLUSION
FOR THE REASONS
STATED HEREIN AND IN APPELLANT=S BRIEF, THE JUDGMENT OF
CONVICTION SHOULD BE REVERSED AND ALL COUNTS SHOULD BE DISMISSED;
ALTERNATIVELY, FOR SUCH REASONS, A NEW TRIAL SHOULD BE ORDERED.
Dated: New York, New York
March 2, 2001
Respectfully
submitted,
BRAFMAN &
ROSS, P.C.
Attorneys for
Defendant- Appellant Jay Cohen
767 Third Avenue,
26th Floor
New York, New
York 10017
212 750-7800
By:
MARK M. BAKER
BENJAMIN BRAFMAN
MARK M. BAKER
JENNIFER LIANG
MELINDA SARAFA
Of counsel
Certificate of Compliance
(FRAP 32[a][7][C])
I,
Mark M. Baker, an attorney at law duly admitted to practice in the United
States Court of Appeals for the Second Circuit, hereby certifies that, although
the within Reply Brief on behalf of Defendant-Appellant does not comply with the
word limitation contained in Fed. R.
App. P. 32 (a)(7)(B)(ii), in that, according to the word count in the
word-processing system used to prepare such brief, there are 12,848 words,
Defendant-Appellant was previously granted leave to file a principal brief
containing 19,964 words, Appellee has been granted leave to file a principal
brief containing 24,721 words, and Defendant-Appellant has moved, in
conjunction with this filing, pursuant to Local Rule 27(g), for permission to
file such oversized Reply Brief.
Dated: New York, New York
March 2, 2001
MARK M. BAKER
[1] As discussed in Appellant=s Brief at 51-54
and in Point I.B, infra, off-track betting facilities in several states
have engaged for many years in interstate account wagering in the same manner
as Defendant, with no special exemption from the provisions of ' 1084.
Counsel is aware of no prosecution for such activity. In addition, hundreds of
offshore Internet and telephone gambling businesses are currently in operation,
yet counsel is aware of no prosecutions for such activity since Defendant and
several others were charged in the Southern District of New York in March 1998.
[2] First, the Government claims that, A[l]ike most
bookies, Cohen and his conspirators derived profits not from winning on a
particular bet or group of bets, but from commissions, commonly known as >vig= or >juice,= on each bet. At
Cohen=s book , the >vig= typically was
10% of the amount of the bet.@ Gov. Br. at 5. There is no support in the
record for this proposition. As discussed in Point I.D, infra, WSE did
not charge commissions on bets. Rather, as indicated by the testimony of the
Government=s own agent, WSE=s revenues
depended upon the balance of bets placed and whether each individual bet was
won or lost by the bettor, not on any commission or fee. See Tr. at
71-72.
Second, the Government
states, without any citation to the record, that ACohen continued
through much of the trial to serve as president of WSE and to oversee its
book-making activities in the United States.@ Gov. Br. at 5.
In fact, as Cohen testified, after he voluntarily surrendered, he became the inactive
President of WSE and did not deal with its daily operations. A654-55.
Furthermore, there was no evidence that any Abook-making
activities@ took place in
the United States.
Third, the Government states
that the National Football League Ahad accused Cohen of
violating the Wager Act and other laws in an unsuccessful effort to halt his
use of certain trademarks.@ Gov. Br. at 5-6. As Cohen=s uncontradicted
testimony established, WSE settled the matter without litigation by agreeing to
cease their use of team names and to take down links to official websites of
the major sports leagues. A515-16.
Fourth, the
Government states that its undercover agents were never Atold that their
bets were conditional or subject to rejection.@ Gov. Br. at 12.
This is misleading. The evidence established that, prior to wagering, a
potential bettor had to send money to WSE in Antigua to fund a wagering
account. See Tr. at 53-54.
Further, the WSE Rules and Regulations state that WSE reserves the right to
refuse any wager prior to its acceptance. A348. (cont=d)
Finally, the
Government claims that Cohen never sought counsel from any lawyer after
receiving the letter from the law firm representing several major sports
leagues. Gov. Br. at 15. The cited testimony, however, entirely fails to
support this proposition. See A947-49. Moreover, as the Government is
well aware, Defendant did consult counsel after receiving such correspondence,
as included in the Government=s response to Defendant=s pretrial
motions is correspondence from the law firm in question to Defendant=s legal counsel. See
Gov.=s Mem. of Law in
Response to Def.=s Pretrial Motions, Ex. D.
[3] Sections 5-401, 5-411, 5-413, 5-415, and
5-419 of the New York General Obligations Law were formerly Sections 991, 992,
993, 1385, and 994 of the New York Penal Law, respectively. Each of these Penal
Law sections was repealed by ' 500.05 of the Penal Law of 1965,
effective September 1, 1967. The current sections of the General Obligations
Law became effective on the same date. The removal of these sections from the
Penal Law and insertion into the purely civil General Obligations Law
underscores their remedial, not penal, role.
[4] See also Watts v. Malatesta,
261 N.Y.S. 51, 54, 237 A.D. 558, 561 (Sup. Ct. N.Y. Co. 1932) (Watts I)
(APlaintiff, on the
other hand, has committed no crime in making the wager and in delivering to
defendant, in payment of his losses, the checks in evidence. The statute
clearly intended that he should recover the amounts paid by him.@).
[5] The bill text, status, and sponsor=s memorandum are
available at http://leginfo.state.ny.us:82/NYSLEG/bstfrmef.cgi.
[6] In fact, the WSE Rules and Regulations
provided that WSE Areserves the right to refuse any wager prior to its
acceptance.@ A348.
[7] See Appellant=s Br. at 52-53
& n.17. Although the definition of Ainterstate
off-track wager@ in the Interstate Horseracing Act of 1978 was
expanded on December 21, 2000, to include wagers placed by an individual in one
state via telephone or other electronic media and accepted by an off-track
betting system in the same or another state, Pub. L. No. 106-553, ' 629, 114
Stat. 2762 (amending 15 U.S.C. ' 3002[3]), ' 1084 has not
been amended since Defendant=s trial.
The amendment to the Interstate Horseracing Act arguably would preclude
prosecution of OTB at this juncture.
[8] The trial judge, conceding that he had not
thoroughly reviewed the matter, had previously opined that Athere=s, at least, an
indication that an analogy to off-track betting is not on point@ because of the
existence of the Interstate Horseracing Act of 1978.@ A525.
[9] Not surprisingly, the Government cites not
one such authority in its brief.
[10] The district court instructed the jury that Aanything that you
have heard about New York state law, or off track betting, is really not
relevant to our case because the case doesn=t arise under the
off track betting regulations of New York State or any state law at all. It is under the federal statute.@ A857. This was reversible error. See Appellant=s Br. at 61.
[11] This letter is available at the Department
of Justice=s website at
http://www.usdog.gov/criminal/cybercrime/s692ltr.htm.
[12] See N.Y. Gen. Obl. Law ' 5-419; Cf.
United States v. Truesdale, 152 F.3d 443, 449 n.5 (5th Cir. 1998)
(concluding that, under Texas law, receiving money to facilitate the placing of
a wager at a later time does not constitute a bet).
[13] As the Government apparently has come to
realize, this theory fails because such wire transfers did not Aentitle@ WSE to
anything. The evidence established that
a potential bettor would wire money to Antigua solely to establish a wagering
account. The establishment and funding
of wagering account did not constitute the placement of a wager or instructions
to wager. Rather, it facilitated subsequent wagering from the offshore
wagering account upon instruction by a WSE customer. An individual could wire
money, never place a bet, and then request that the money be returned, which
WSE would do by sending a bank draft via regular mail or Federal Express.
Accordingly, wire transfers to establish wagering accounts Aentitled@ WSE to nothing. Cf.
Truesdale, 152 F.3d at 449 n.5 (concluding that, under Texas law,
receiving money to facilitate the placing of a wager at a later time does not
constitute a bet).
[14] In fact, consistent with its apparently
inability to sustain a single theory of prosecution, the Government indicated
in its response to Defendant=s pretrial motions that the third clause
refers to Agambling winnings
information.@ Gov.=s Mem. of Law in
Opposition to Def.=s Pretrial Motions, at 15, n. 13.
[15] See Appellant=s Br. at 59-61; see
also Defendant=s Requests to Charge, Nos. 5 & 7, at A775, A777.
[16] AMens rea,@ as an element of
criminal responsibility, is defined as
"a guilty mind; a guilty or wrongful purpose; a criminal intent."
Black's Law Dictionary 985 (6th ed.1990).
[17] As noted previously, the defendant in United
States v. Blair, 54 F.3d 639 (10th Cir. 1995), a case heavily relied upon
by the Government, made no effort, via Powell or otherwise, to
distinguish Feola from the facts of his case, which also involved 18
U.S.C ' 1084. See
Appellant=s Br., at 36,
n.9.
[18] The Government does not challenge this
factual premise in its responsive brief.
[19] It was,
therefore, only where such a mens rea was required that the Supreme
Court quickly, and understandably, noted that "[o]ur decisions establish
that in order to sustain a judgment of conviction on a charge of conspiracy to
violate a federal statute, the Government must prove at least the degree of
criminal intent necessary for the substantive offense itself." 420 U.S. at
686.
[20] The Government's
effort to undermine the force of the Keegan majority decision, Gov. Br.
at 44-46, is unavailing. Whatever else was discussed therein, the indisputable
fact remains that the Keegan majority, implicitly disagreeing with the
dissent (which rejected the Powell doctrine), based its decision on what
it viewed to be decidedly innocent conduct.
[21] As Defendant has
previously conceded, "it is not necessary to establish knowledge on the
part of the defendants of the existence of the law defining the offense, even
if it is merely mala prohibita[]," since "[w]here a corrupt motive is
established such knowledge is imputed." Cruz, 106 F.2d at 830; see
also Appellant=s Br., at 24, n.4.
[22] With regard to
the Government's reliance on United States v. Blair, 54 F.3d 639 (10th
Cir. 1995), Gov. Br. at 33, 42, see note 17, supra, and Appellant=s Br. at 36 n.9.
[23] Interestingly,
the McDougal Court, citing, inter alia, United States v. Todd,
735 F.2d 146, 151 (5th Cir. 1984), observed that "it is sufficient to
allege that the defendant knew that his conduct was unlawful." 25
F.Supp.2d at 96. In Todd, the Fifth Circuit stated that for purposes of
a Lacey Act violation, "[t]he Government need not prove that the
appellants knew of the existence of the Lacey Act itself, only that they
knew of the illegal nature of the game." 735 F.2d at 151 (emphasis
added).