Opinion
02 Crim. 1066 (HB).
March 25, 2003
OPINION AND ORDER
John Fitzsimmons and George Conforti (collectively "Defendants") were convicted after a trial of involvement in an illegal gambling business, in violation of 18 U.S.C. § 1955. They timely moved for acquittal, pursuant Fed.R.Crim.P. 29, claiming that the prosecution failed to prove that the gambling was part of a business, or alternatively for a new trial, pursuant to Fed.R.Crim.P. 33, claiming that 1) the Court improperly prevented Defendants' attempted establishment of an advice-of-counsel defense, and 2) the jury instruction improperly permitted to affix culpability based on Defendants' failure to prevent another from violating the law. For the foregoing reasons, Defendants' motions are denied.
I. DISCUSSION
A. Standard of review
On a motion for acquittal, pursuant to Fed.R.Crim.P. 29, the Court must view the evidence in the light most favorable to the prosecution, see United States v. Zagari, 111 F.3d 307, 327 (2d Cir. 1997), and must resolve all reasonable inference in favor of the government, see United States v. Rodriguez, 702 F.2d 38, 41 (2d Cir. 1983) (citing United States v. Artuso, 702 F.2d 38, 41 (2d Cir. 1980)). Further, "[t]he verdict will be sustained unless no `rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.'" See Zagari, 111 F.3d at 327 (quoting Jackson v. Virginia, 443 U.S. 307 (1979)).
The Court can grant a new trial "if required in the interest of justice." See Fed.R.Crim.P. 33; United States v. Locascio, 6 F.3d 924, 949 (2d Cir. 1993) (quoting Fed.R.Crim.P. 33). However, a new trial is generally disfavored and should be granted only in extraordinary circumstances. See United States v. Costello, 255 F.2d 876, 879 (2d Cir. 1958); see also, e.g., Locascio, 6 F.3d at 949.
B. Proof of Vigorish
The Defendants urge the Court to reverse their convictions on the basis that the failed to provide evidence that the Defendants charged the bettors vigorish, which according to Defendants is an essential characteristic of an illegal gambling operation and the feature that distinguishes illegal bookmaking from personal gambling, which is legal. Specifically, Defendants contend that the Government failed to meet its burden under either the state or federal gambling statutes because it failed to prove that the organization profited from the gambling business — e.g., proof of the vigorish charged. The Government's position is that it need not prove that the operation profited or that it charged vigorish, and that there was ample evidence that Defendants profited from the enterprise. I agree.
Vigorish is a surcharge on a losing bet. It is the way that bookmakers guarantee themselves a profit over the long term. Vigorish is also referred to as "vig" or "juice." See United States v. Greco, 619 F.2d 635, 637 (7th Cir. 1980).
"To be an illegal gambling enterprise, the organization must be independently proven to be a commercial, business enterprise. An essential element of proving the commercial nature of the enterprise is to prove that the enterprise was conducted to obtain a profit." See Memorandum on Behalf of Defendant, John Fitzsimmons, in Reply to Government's Opposition to Defendant's Post-Trial Motions, at 2.
Section 1955 of Title 18 of the United States Code the makes it illegal to "conduct, finance, manage, supervise, direct, or own all or part" of a gambling business which 1) violates the law of a state, 2) involves five or more people, and 3) has been in substantially continuous operation for more than 30 days or has gross revenue of more than $2,000 in any single day. The underlying state statute upon which the Defendants were prosecuted and convicted is New York Penal Law §§ 225.05 and 225.10. A person who "knowingly advances or profits from unlawful gambling activity" is guilty of promoting gambling in the second degree. See N.Y. Penal Law § 225.05 (McKinney's 2000). A person who "knowingly advances or profits from unlawful gambling activity" by engaging in bookmaking by receiving more than five bets totaling more than $5,000 in any one day is guilty of promoting gambling in the first degree. See id. § 225.10. The statute defines "advances gambling activity" as follows: "A person "advances gambling activity" when, acting other than as a player, he engages in conduct which materially aids any form of gambling activity." See id. § 225.00[4] (emphasis added).
Defendants do not contest the second and third of these elements of 18 U.S.C. § 1955.
The statute defines "bookmaking" as "advancing gambling activity by unlawfully accepting bets from members of the public as a business, rather than in a casual or personal fashion, upon the outcomes of future contingent events." N.Y. Penal Law § 225.00[9].
The statute further states that:
Such conduct includes but is not limited to conduct directed toward the creation or establishment of the particular game, contest, scheme, device or activity involved, toward the acquisition or maintenance of premises, paraphernalia, equipment or apparatus therefor, toward the solicitation or inducement of persons to participate therein, toward the actual conduct of the playing phases thereof, toward the arrangement of any of its financial or recording phases, or toward any other phase of its operation. . . .
N.Y. Penal Law § 225.OO[4].
As indicated above, Defendants contend that without evidence of vigorish, there is no basis for finding that the Defendants were "acting other than as player[s]." This contention misstates the law. Neither 18 U.S.C. § 1955 nor New York Penal Law §§ 225.05 or 225.10 requires the Government to prove the Defendants charged vigorish. Indeed, one of the cases that Defendants cite suggests the contrary. The cases that Defendants cite discuss vigorish and note that even a bookmaker engaged in illegal gambling can place a bet with another bookmaker legally, if this bettor was not placing a "lay-off" bet. See, e.g., United States v. Greco, 619 F.2d 635, 639 (7th Cir. 1980). However, none of them say that proof of vigorish is an essential element of the prosecution.
Defendants rely primarily on United States v. Greco, 619 F.2d 635 (7th Cir. 1980), which they assert stands for the proposition that a conviction under § 1955 requires proof that bets were "lay off" bets rather than personal wagers. I read this case differently. The two defendants in Greco admitted all the elements of 1955 except that there were five or more people involved in the gambling operation. See id. at 636-37. A dozen witnesses testified that they placed bets with the defendants, and thus the narrow issue before the court was whether these people were placing "lay-off bets" with the defendants, in which case they would be involved in the gambling operation, or were involved merely as bettors. See id. at 638 (noting that "§ 1955 proscribes any degree of participation in an illegal gambling business, except participation as a mere bettor" (quoting Sanabria v. United States, 437 U.S. 54, 70 n. 26 (1978)). The Seventh Circuit did not hold, as Defendants here suggest, that proof of lay-off betting is a sine qua non of all prosecutions under 1955. Rather, it held that the expert's definition of "lay-off betting" was inadequate to assist the jury in determining whether other individuals who testified that they placed bets with defendants were participating merely as bettors. See id. at 639.
With regard to the facts introduced at trial, the Government's key witness was a former runner for the gambling enterprise, Jack Lazzaro. Mr. Lazzaro testified that for several years prior to being hired by Mr. Fitzsimmons and Mr. Conforti, he placed bets with them. See Tr. 97-99, 145. As a runner, he developed new customers, usually friends or friends of friends, and served as an intermediary between his customers and Mr. Fitzsimmons and Mr. Conforti — for example, giving the customers a special telephone number to call and paying out their winnings and collecting their loses. See Tr. 99, 105-07, 115-16, 145. Significantly, he testified that his payment was determined as a percentage of certain of his bettors' losses. If Mr. Lazzaro did not take a cut of the money himself, either Mr. Conforti or Fitzsimmons would pay him. The Government also introduced audiotapes of conversations in which Mr. Fitzsimmons discussed collection of gambling debts from a delinquent bettor, as well as the plea allocution of a third participant in the enterprise. In sum, although the Government offered no evidence that Defendants charged vigorish, there was ample evidence that they were operating a profit-oriented gambling business and that they indeed profited from it.
Mr. Lazzaro explained the compensation as follows: "I would receive 25 percent of all lost bets, any won bets I did not receive compensation and a player needed to lose what he already won for me to start to earn again." See Tr. 104.
C. Advice-of-Counsel Defense
Defendants argue that a new trial is required because the Court decided to allow the aiding-and-abetting charge after the defense, having ceased to pursue an advice-of-counsel defense on the belief that the Court had decided to disallow an aiding-and-abetting charge, had rested. The Government counters that the Court invited the Defendants to establish the prerequisites for the defense — that there existed an attorney-client relationship, that the Defendants fully disclosed all pertinent facts to the attorney, and that they relied in good faith on the advice — and that the Court refused to allow the defense because Defendants had failed to demonstrate that they were entitled to assert it.
See United States v. Beech-Nut Nutrition Corp., 871 F.2d 1181, 1194 (2d Cir. 1989).
The resolution of this issue requires a close look at the events at trial, as the parties largely agree on the relevant law. This issue was raised in earnest immediately before and after the lunch recess in the second day of trial. The Court expressed skepticism that Mr. Fitzsimmons' proffer regarding the lawyer and the advice rendered was sufficient, but invited Defendants to bring in the attorney, Denis Dillon, to lay this predicate. See Tr. 202-206. At an afternoon recess, the Court discussed the Government's proposed aiding and abetting charge and Defendants' advice-of-counsel defense. See Tr. 262. When the Government rested that afternoon, Mr. Dillon was apparently not present and the Defense was not prepared to go foreword. See Tr. 266. A colloquy followed:
Both agree that an advice-of-counsel defense is relevant for specific-intent crimes such as aiding and abetting, see United States v. Cross, 113 F. Supp.2d 1253, (S.D.Ind. 2000), but inappropriate for general intent crimes such as gambling, see United States v. Richards, 302 F.3d 58, 67 (2d Cir. 2002).
Denis Dillon is the Nassau County District Attorney whose daughter apparently worked at a restaurant owned or managed by Mr. Fitzsimmons. See Tr. 202-03. According to the defense attorney's proffer, Mr. Fitzsimmons talked to Mr. Dillon at the restaurant about the legality of an off-shore gambling enterprise. See Tr. 203. Mr. Dillon apparently said he would look into and get back with answers to Mr. Fitzsimmons' questions but could not recall whether he did so. See id. According to his attorney, Mr. Fitzsimmons recalled that Mr. Dillon subsequently advised that "you can do it, but you can't use the banks in the United States for transferring the monies." See id.
THE COURT: I'll be glad to rule that you have no advice of counsel defense and, indeed, I probably won't charge the aiding and abetting charge. That will take care of your problem.
MR. HENSE: Yes sir. I realize it will. But based on your Honor's ruling and discussions with my client at this point in time, I would ask the Court to tell him that he has a right to take the stand, but it's his feeling he is not gong to do it and I will rest.
. . .
THE COURT: You still have the right to bring Dennis Dillon in, Mr. Hense.
MR. HENSE: I understand that, your Honor.
Tr. 266-67 (emphasis added). Despite the opportunity to do so, the Defendants never brought the attorney before the Court — although they apparently subpoenaed him. At the charging conference later that afternoon, the Court reiterated its disinclination to allow the advice-of-counsel defense and the aiding-and-abetting charge. See Tr. 295-96, 298. However, the Court resolved to include the aiding-and-abetting charge, and the following morning Mr. Hense, on behalf of Mr. Fitzsimmons, noted an objection to its inclusion. See Tr. 335-36.
Although the Court included the aiding-and-abetting charge despite initially indicating its disinclination to allow it, the Defendants were not prejudiced. They were charged with aiding and abetting in the Indictment, and they were given ample opportunity to lay the necessary predicate — either through Mr. Dillon's or Mr. Fitzsimmons' testimony — and declined to do so. Accordingly, the Court properly disallowed a jury instruction on this defense.
D. Improper Jury Instruction
Defendants contend that the charge to the jury concerning liability for aiding and abetting contained an error which requires a new trial. Specifically, they claim that the charge implied to the jury that specific intent is necessary to convict only for failure to prevent another from committing the crime, and is not necessary to convict for participation. The charge that Defendants attack was read to the jury as follows:
Participation in a crime is willful if action is taken voluntarily and intentionally, or in the case of a failure to act, with the specific intent to fail to do something the law requires to be done, that is to say, with a bad purpose either to disobey or to disregard the law.See Tr. 429. Defendants suggest this charge was erroneous for two reasons: First, defendants could be convicted for failure to prevent a crime, when they were under no such duty to do so. Second, the charge improperly implied that the mens rea for aiding and abetting was lower than specific intent. The Government responds that when read as a whole, the jury charge makes clear that the mens rea required for conviction based on aiding and abetting is specific intent and that any error was harmless because the jury answered affirmatively that the Defendants were guilty as principals, as well as aiders and abettors.
Admittedly, the phrase "specific intent" appears to be connected to the failure-to-act clause. However, the charge also makes clear that affirmative participation requires intent and voluntariness. Furthermore, the final clause — "that is to say, with a bad purpose either to disobey or to disregard the law" — indicates that the intent necessary for failure-to-act culpability is the same as for participation culpability. Finally and most importantly, the rest of the jury charge makes amply clear the high mens rea required for conviction based on aiding and abetting:
In order to aid and abet another to commit a crime, it is necessary that the defendant in question willfully and knowingly associate himself in some way with the crime and that he willfully and knowingly seek by some act to help make the crime succeed.
. . .
. . . [T]he mere acquiescence by a defendant in the criminal conduct of others, even with guilty knowledge, is not sufficient to establish aiding and abetting. An aider and abettor must have some interest in the criminal venture.
. . . [A]sk yourselves these questions:
Did he participate in the crime charged as something he wished to bring about? Did he associate himself with the criminal venture knowingly and willfully? Did he seek by his actions to make the criminal venture succeed?See Tr. 428-29. Defendants suggest that this later charge does not undo the damage that had already been done because the jurors were made to understand there are two "camps" for aiding and abetting: one for participation in a crime, and another for failure to prevent a crime. I disagree. The damage Defendants identify was that the purportedly erroneous charge suggested a lower mens rea for participation than for aiding and abetting, and this further explanation resolves any uncertainty by making clear the high mens rea required for participation.
Defendants also argue that the charge permitted the jury to convict based on the theory that the Defendants failed in a duty they had to prevent an unlawful gambling operation. Defendants' theory here is that the jury could have concluded that the Mr. Lazzaro was the operator of the unlawful gambling operation, which the Defendants should have but didn't stop. Defendants here engage in creative revisionism, for not a scintilla of evidence introduced in this trial suggested in any way that Mr. Lazzaro, rather than Mr. Fitzsimmons and Mr. Conforti, was the operator of the business.
II. CONCLUSION
For the foregoing reasons, the Defendants' motion for acquittal or a new trial is denied.