FOR THE SECOND CIRCUIT
Docket No. 00-1574
UNITED STATES OF AMERICA,
BRIEF FOR THE UNITED STATES OF AMERICA
Jay Cohen appeals from a judgment entered on August 11, 2000, in the United States District Court for the Southern District of New York, following a ten day trial before the Honorable Thomas P. Griesa, United States District Judge, and a jury.
Indictment S2 98 Cr. 434 (TPG) (the "Indictment") was filed on March 18, 1999, in the United States District Court for the Southern District of New York, charging Cohen with conspiracy to violate the Wire Wager Act, 18 U.S.C. § 1084(a), and seven substantive counts of violating, and aiding and abetting violations of, the Wire Wager Act, in connection with Cohen's operation of World Sports Exchange, an off-shore book making organization that Cohen owned and ran in Antigua.
Section 1084(a) makes it unlawful to transmit in interstate and foreign commerce (1) "bets or wagers" on sporting events; (2) "information assisting in the placement" of any such bets or wagers; or (3) a communication "which entitles the recipient to receive money or credit as a result of bets or wagers." In the conspiracy count (Count One) and five of the seven substantive counts (Counts Three through Six, and Count Eight), Cohen was charged with violating all three clauses of Section 1084(a) (hereinafter, the "Betting Counts"). In two of the substantive counts (Counts Two and Seven), Cohen was charged solely with transmitting "information assisting in the placement" of bets or wagers, in violation of clause (2) of Section 1084(a) (hereinafter, the "Information-Only Counts").
Trial commenced on February 14, 2000, and concluded on February 28, 2000, when the jury returned a verdict of guilty on all counts of the Indictment. By special interrogatory, the jury indicated with respect to each Betting Count that it found Cohen guilty of violating all three clauses of Section 1084(a). On August 10, 2000, Judge Griesa sentenced Cohen to a term of 21 months’ imprisonment.
Cohen is currently on bail, pending resolution of this appeal.*
Statement Of Facts
A. The Government’s Case
The evidence at trial established that Cohen, with the assistance of three co-conspirators, Steven Schillinger, Haden Ware, and Spencer Hanson, formed the World Sports Exchange ("WSE") to engage in book-making on American sporting events -- i.e., posting odds and taking bets and wagers on the outcome of such events. The conspirators were American citizens and, although they located the business offshore, on the Carribean Island of Antigua, they directed their book-making activities primarily, if not exclusively, at residents of the United States. Cohen and his fellow bookmakers promoted their sportsbook in radio, magazine, and newspaper advertisements throughout the United States, and invited Americans to bet in either of two ways: orally, by calling WSE's toll-free telephone numbers, or electronically, by using computers connected to the Internet where, as one WSE advertisement put it, gamblers could "bet with a click of a mouse." In this way, they quickly developed a thriving business. In one fifteen month period alone, Cohen received more than $5.3 million from his American clients, who, on Cohen's instructions, wire-transferred these funds from the United States to an account controlled by Cohen in Antigua. The funds were used to establish "betting accounts" with Cohen's sportsbook from which bettors could stake their wagers.
Over the course of the conspiracy, using funds transferred to Cohen in this manner, tens of thousands of wagers were placed, all of them by means of WSE’s toll-free telephone lines or its "click and bet" website. Like 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. Because WSE was located offshore but took its bets from clients in the United States, WSE used interstate and international wire communications for virtually every aspect of its book-making business, including the transmission of (1) information about how to bet with WSE (including how to set up an account, verification that funds had arrived), (2) actual bets or wagers, and (3) communications which entitled the bettors to receive money and credit as a result of bets or wagers placed with WSE. In spite of Cohen’s arrest and prosecution, Cohen continued through much of the trial to serve as President of WSE and to oversee its book-making activities in the United States.
The Government's proof included audio tapes of conversations among undercover agents, Cohen, and his co-conspirators; printouts of "screens" of WSE's Internet website; videotapes of WSE's website as gambling transactions were actually being effectuated; advertisements placed by Cohen in American newspapers, magazine, and other media; bank records reflecting transfers of money between bettors and WSE; and telephone records reflecting betting-related activities involving the sportsbook. In addition, the Government presented testimony of many witnesses, including undercover agents, advertising and public relations personnel whom Cohen retained to promote WSE’s sportsbook in the United States, a private investigator retained by the National Football League, which had accused Cohen of violating the Wager Act and other laws in an unsuccessful effort to halt his use of certain trademarks, and representatives of the various banks and international telephone services used by Cohen to conduct business with American customers.
2. WSE’s Book-Making Operation
Cohen and Schillinger formed WSE in late 1996 in order to take bets on the outcomes of sporting events. (Tr. 378-81)*. Cohen was WSE's President, Schillinger was his partner, and Hanson and Ware were their principal assistants. (Tr. 870-71). WSE operated out of a one-room office in Antigua, where Cohen, Schillinger, Ware, and Hanson used a bank of telephones and computers to conduct WSE’s book-making activities. (Tr. 415-17). In a telephone conversation with an undercover agent during December 1997, Cohen described himself as one of the founders and owners of WSE (GX 46-T, at 2-3), and described the business of WSE as "sports betting on the Internet." (GX 46-T, at 2-3). Cohen boasted that, although his book-making business had only become operational in January 1997, it had already attracted approximately 1,600 customers. (GX 46-T, at 8).
In order to attract customers, Cohen conducted an advertising campaign directed at residents of the United States. Cohen retained an advertising firm based in San Francisco named Ingalls-Moranville, as well as a public relations firm named Echo Communications. (Tr. 377-382, 466-468). Under Cohen’s direction, Ingalls-Moranville prepared and placed advertisements in numerous American newspapers and magazines that solicited readers to call WSE and place wagers on sporting events. (Tr. 380-82, 459; GX 302, 309). One such advertisement, directed at Internet users, urged readers to "[b]et football on-line" and stated:
At World Sports Exchange, you're only a few clicks away from placing bets on your favorite sports events. From opening day to the Super Bowl and beyond, World Sports Exchange offers true on line sports wagering.
(Tr. 405; see also GX 309). Another advertisement, prepared as a flyer for distribution to WSE’s existing customers, similarly reminded readers that "[f]ootball season is fast approaching," and urged them to send money so that they could "[p]lace bets with the simple click of a mouse." (Tr. 412-414). Echo Communications prepared press packets for distribution to American journalists who might feature WSE in news articles and reports. (Tr. 475-482). Cohen was personally responsible for the U.S.-directed advertising campaign, including selecting the publications and Internet websites which would feature his advertisements (Tr. 395-96); reviewing and approving advertising copy and press packets (Tr. 400), and paying the bills for these services. (Tr. 409-410).
The methods by which Cohen and his co-conspirators conducted their book-making activities were carefully documented in an FBI investigation of offshore bookmakers.* In the course of that investigation, New York-based undercover agents opened accounts with WSE; placed bets through WSE’s toll-free operators and "click and bet" website; funded and received the proceeds of these bets; and conducted tape-recorded telephone conversations with WSE personnel, including Cohen and his co-conspirators. (Tr. 42-85, 144-173, 308-323, 582-595, 615-661; GX 1, 1-T, 1-V, 3-V, 5-V, 8-V, 11-V, 13, 13-T, 20-V, 23-V, 24-V, 39, 39-T, 46, 46-T, 51, 51-T, 83, 83-T, 101, 101-T, 103-c, 103-T, 114, 114-T, 128, 128-T, 138, 138-T, 140, 140-T, 148, 148-T, 149, 149-T, 150, 150-T, 151, 151-T).
In one example (which was the subject of Count Two of the Indictment), an undercover agent called the toll-free number listed on WSE’s website, and was informed by the person who answered the telephone of WSE’s minimum betting requirements ($300 to open a wagering account, $10 for an on-line bet, $50 for a bet placed by telephone) and instructed on how to wire-transfer funds to WSE for the purpose of establishing a wagering account. (GX 1-T, at 7-10). Based on these instructions, the agent opened an account by sending a $500 deposit to the sportsbook via Western Union. (Tr. 44-46).
In another example (which was the subject of Count Six of the Indictment), an undercover agent placed bets on a previously opened account via WSE’s toll-free telephone number. The agent began the telephone conversation by inquiring, "Do you take bets over the phone," and the WSE operator answered, "Yeah." (GX 13-T, at 1). After obtaining the name of the wagering account and the relevant password, the operator asked the agent "who do you need?" (GX 13-T, at 2). The agent replied that she wished to wager on two hockey games -- Colorado at New Jersey, and Philadelphia at Florida (GX 13-T, at 2-3, 805-A) -- and then placed two bets, $60 to win $50 on the Philadelphia/Florida hockey game and $50.00 to win $52.50 on the Colorado/New Jersey hockey game. (Tr. 169; GX 13-T, at 2-3, 805-A)*. The UC later closed the account and received the balance from WSE.**
In another example (which was the subject of Count Eight), an undercover agent placed bets in a toll-free call to co-conspirator Spencer Hanson. During the conversation, on March 18, 1998, the bet was placed as follows:
Agent: Can I place a bet right now?
Hanson: You can place a bet right now.
Agent: Alright, can you give me the line on the um Penn State/Georgia Tech game, it's the NIT third Round game tonight.
Hanson: Its Georgia tech minus 7 ½, total is 147.
Agent: Georgia Tech minus 7 ½, umm I wanna take Georgia Tech. Can I take 'em for 50?
Agent: Okay. And how 'bout the Marquette/Minnesota game?
Hanson: Minnesota minus 6 totals 128. So you got your 55 for 50 on Georgia Tech minus 7 ½.
Agent: Right, okay and I'm sorry the Minnesota was what now?
Hanson: Uh Minnesota minus 6.
Agent: Okay I'm gonna take Minnesota.
Agent: Minus 6 for 50.
Hanson: 55 wins 50 on Minnesota minus 6?
Agent: You already taught me the trick, 55 wins 50 right?
(GX 138-T at 21). Several other undercover bets were placed with WSE in substantially the same manner. (See GX 150-T, at 2-4). At no time were the agents told that their bets were conditional or subject to rejection. In every case, the bet was immediately and unequivocally accepted by WSE and the whole transaction was completed on the telephone. In addition, between October 17, 1997, and November 7, 1997, undercover agents transmitted numerous bets from New York to Antigua by means of WSE’s Internet website. (See Tr.56-78, 147-173; GX 3-V, 5-V, 8-V, 11-V). Each of these bets was placed by following the website’s instructions to select a bet amount, team, and game, and then click the "place wager" icon on the computer screen. (Id.). The bets required no further action on the part of the agent than a click of the "place wager" icon. (Id.).
WSE operated on a massive scale. Between February 1997 and November 1998, Americans placed more than 60,000 telephone calls to WSE through its toll-free numbers. (See GX 821, 822, 824). Calls were made from all fifty states, including more than 6,100 from New York. (See Tr. 253, 265, 302; GX 821, 822, 824). In addition, between June 14, 1997 and September 3, 1998, Americans sent 8,856 separate wire transfers, aggregating approximately $4,884,500, to WSE via Western Union. (Tr. 219; GX 820). More than $298,000 of this money was sent by bettors in New York (id.), with many of the wire transfers reflecting that they were "requested by Cohen" or in "care of Cohen." (Tr. 218-19, 233, 237, 240-42). Dozens of the wire transfers specifically directed to Cohen were transmitted after his arrest in March 1998. (Tr. 1180-82; see GX 1000J-P, 1001E-K).
C. The Defense Case
Before trial, in conformity with the relevant case law, the District Court ruled that Section 1084(a) is a general intent crime, not a specific intent crime. (See pp. 16-21, infra). Accordingly, the District Court held that Cohen could not attempt to defend actions violative of Section 1084(a) on the ground that he did not know they violated the statute. However, Judge Griesa declined to impose any direct restriction on Cohen’s own testimony, warning him instead that he may "testify about what he wants to testify about" (A. 184) but that any testimony would be subject to the Court’s later instructions to the jury that alleged ignorance of the meaning of the law was not a defense to the charged crimes. (A. 184).
During the defense case, Cohen took full advantage of the District Court’s failure to restrict his own testimony. Cohen testified in his own defense, and took the opportunity to advance the very defense that the District Court had ruled invalid: that he acted in the belief that his conduct was lawful. In so doing, Cohen laid the groundwork for his attorney’s attempt on summation to defy the District Court’s legal instructions and openly appeal for jury nullification of the charges. (See pp. 21-25, infra). Thus, Cohen admitted, among other things, that he remained the President of WSE, which was paying his legal fees, travel, and personal expenses (Tr. 838, 885-86), that he was in the business of bookmaking (see Tr. 910, 955); that his sportsbook took bets from gamblers throughout the United States (see Tr. 911, 951-52); that these calls involved transmission of information assisting in the placing of bets and wagers (see Tr. 927-28); and that he knew international telephone lines and the Internet were wire communication facilities. (See Tr. 876, 911).
However, Cohen testified that he personally read Section 1084, and decided that he did not violate its provisions. (Tr. 861). Cohen testified that he was aware that taking bets over the telephone was illegal (Tr. 829), and that he could not legally conduct his business from the United States (Tr. 829), but maintained that his conduct was legal because, in his mind and according to WSE's rules, everything took place in Antigua. (Tr. 829, 832, 862-63). Specifically, Cohen claimed that the placing of telephonic and Internet bets by Americans did not constitute transmission of "bets or wagers" -- which is per se unlawful under Section 1084(a) -- but rather "directions" to place such bets or wagers. (Tr. 913-15). According to Cohen, such "directions" constitute "information assisting in the placing of wagers and bets," which is subject to the "safe harbor" of Section 1084(b) if the information is only transmitted to and from jurisdictions where placing bets and wagers is legal. (See Tr. 829, 832, 862-63, 912-918, 951-53). Cohen further testified that, although he did not know whether placing bets or wagers was legal in other states (Tr. 924-25), he thought it was legal in New York because he knew of no statutes that made it criminal to place a bet or wager in New York. (Tr. 919).
In forming these views, Cohen did not claim to have received or relied on any advice of counsel. (Tr. 947). However, Cohen testified that he "relied" on certain other information. Cohen noted, for example, that he retained the accounting firm of Peat Marwick for tax advice and assistance in obtaining an Antiguan gaming license and that Peat Marwick never mentioned to him that his conducted violated Section 1984. (Tr. 816-818). This was significant, Cohen claimed, because he understood that Peat Marwick had consulted with its in-house attorneys for some purpose before accepting Cohen as a client. (Tr. 817). In addition, Cohen testified that he read an article in which a Department of Justice official was quoted as saying that little could be done about enforcing Section 1084 against offshore sportsbooks. (Tr. 860-62, 988). Cohen also claimed that he understood that New York’s government-sponsored Off-Track Betting Corporation allowed telephonic wagers to be placed on horse races run in New York from bettors outside New York (Tr. 839, 859-60, 868), and was aware of a corporation in a business similar to his own that was publicly traded and thus presumably operating lawfully. (Tr. 816). Finally, Cohen testified that he was aware that various amendments to Section 1084 had been proposed to "deal with offshore gambling," which allegedly gave him a "comfort level" that his conduct did not violate the then-existing statute. (Tr. 864-66).
On cross examination, Cohen admitted that he had been specifically informed by lawyers for the National Football League that his conduct violated Section 1084 and that, in spite of this advice, Cohen never sought counsel from any other lawyer. (Tr. 947-48). In addition, Cohen acknowledged that he knew that operating a sportsbook was legal only in one state -- Nevada -- and that, even there, it was not permissible to take bets from persons outside Nevada. (Tr. 881-82). Cohen also admitted that the quote attributed to an official of the Department of Justice said nothing about whether Internet gambling is legal under Section 1084 and that Cohen never sought the advice of the Department of Justice on this subject. (Tr. 950). Further, Cohen acknowledged that using international wires to transmit bets was illegal under current law. (Tr. 995-96). Finally, Cohen admitted that, although he claimed to conduct his bookmaking entirely in Antigua, his own articles of incorporation described WSE’s corporate purpose as "international betting and bookmaking." (Tr. 954-55; DX JJ).
In addition to Cohen, the defense called two of Cohen's former employers as witnesses. Both were principals of a firm named Group One, Inc., which was in the business of trading derivative securities. Each witness testified about Cohen's work at Group One, including the salary and bonuses that he earned in his last year of employment. (Tr. 730-764; 786-802). Although neither witness had any participation in running WSE, each confirmed that Cohen had retained Peat Marwick to perform tax and licencing work on behalf of WSE. (Tr. 742-43, 795-96).
D. Procedural History Relevant To Cohen’s "State Of Mind" Defense
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1. The Government’s In Limine Motion
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Before trial, Cohen’s counsel, Benjamin Brafman, Esq., informed the Government that he intended to argue that, even if Cohen knowingly engaged in acts proscribed by Section 1084(a), Cohen did not believe he was violating the law. (SA 4-5). In support of this argument, counsel indicated that he would call an Antiguan government official to testify that Cohen attempted to comply with Antiguan law, and to testify about conversations that she had with U.S. government officials which allegedly touched on the lawfulness of Antiguan sportsbooks such as Cohen's. (See SA 4).
In response, the Government moved in limine (1) to preclude Cohen from introducing evidence of his compliance with Antiguan law, and his beliefs about the application of United States gambling laws to his conduct; and (2) to preclude defense counsel arguing these points to the jury. (SA 11-13). The Government argued principally that, since Section 1084 created a general intent crime, the Government did not need to prove that Cohen knew his conduct violated the law, only that Cohen knowingly and intentionally engaged in acts proscribed by the statute. As a result, the Government contended, Cohen’s own subjective interpretation of Section 1084 and purported belief that his own conduct fell outside the scope of that statute were irrelevant. (SA 11).
On January 4, 2000, after hearing argument from the parties, the District Court agreed that Cohen’s knowledge of the law was irrelevant and issued guidance to the parties concerning the trial of the case. (See A. 183). Judge Griesa ruled that, although "the jury could consider whether there was a knowing use of a [wire communication] facility and so forth as I have described it and the government has described it," the Government would not be required to prove that Cohen "knew what he was doing was wrong or in violation of United States law," nor could Cohen "assert a valid defense on that basis." (A. 183). The Court emphasized, therefore, that defense counsel could not "argue about whether [Cohen] knew of the illegality" or "put on any evidence about whether he did or did not know about the illegality." (A. 183). The Court indicated, however, that, with respect to Cohen's own right to testify, it would permit him a degree of leeway to "testify about what he wants to testify about." (A. 184). That leeway, however, would be "subject to my instructions later to the jury." (A. 184).
In response to Judge Griesa's rulings, defense counsel assured the Court that "this is not a case of jury nullification" (A. 179), and that he would abide by the Court's rulings. (A. 188, 189). Specifically, counsel assured the Court that any testimony by Cohen concerning the intent requirement of the Section 1084(a) would be limited to whether Cohen knowingly used interstate and international wires in connection with his bookmaking activities. (A. 188, 189). After saying so, however, counsel appeared to blur the line between knowing conduct and knowing illegality, stating:
There is a difference between a court like yourself sir, ruling that the government doesn't have to prove that the defendant knew that he violated the law. I understand that. But there is also a huge difference between that on the one hand and me on the other hand trying to raise on the defendant's behalf a reasonable doubt as to whether or not he knowingly violated the statute. And all I seek to do is to offer a defense to the defendant that is there in the facts.
(A. 191 (emphasis supplied)).
In response to this seemingly self-contradictory comment, the District Court repeated its ruling, again stressing the relevant distinction between knowing conduct and knowing illegality:
Let me say the view I have of it right now is this, that if the defendant knew that he was using a wire communication facility . . . my view of the law is if he knew that he was using a wire communication facility for the purposes outlined in the statute, then he had the criminal mens rea, the criminal state of mind and would be guilty.
Let me repeat:
If he knew that he was using a wire communication facility for one or more of the purposes outlines in the statute, then he had the criminal mens rea. If he did it and he knew that, then he is guilty.
Now, if his defense is, well, I knew I was using the wire communication facility, but I really did not know it was illegal, then that is not a defense in my view.
(A. 192-93). The Court then asked defense counsel, "I take it that you would not propose to argue even if the jury found that he knew he was using a wire communication facility that he still could be acquitted because he didn't know that that was a violation of the law." (A. 195; see also A. 200-03). Defense counsel reassured the Court that in his opening and throughout trial he would "follow the court's instructions on that." (A. 195).
2. Cohen's Motion For Leave To Take A Foreign Deposition
Notwithstanding the Court's ruling concerning the intent element of Section 1084(a), approximately one week before trial, Cohen sought leave to take the deposition of Gyneth McAllister, an Antiguan government official involved in that country's gambling industry with whom he had dealings. (A. 206-208). In support of his motion, counsel for Cohen represented that McAllister was unable to travel to the United States due to health reasons (A. 206), but was prepared to testify about the status of the gaming industry in Antigua, Antiguan procedures concerning the licencing of sportsbooks, and the steps taken by WSE to comply with the requirements of Antiguan law. (A. 207).
Specifically, counsel proffered that McAllister would testify that she had met with U.S. Government officials concerning Antigua's efforts to establish a gambling industry; that the fact that American officials agreed to meet with her "allowed her to conclude that the United States Government was very interested in cooperating with the Government of Antigua on these matters" (A. 268); that at no time did the Government officials she met with inform her that Antigua's gambling scheme would violate American law; and that "she shared with Jay Cohen the import of these meetings," including her view that they amounted to "tacit acceptance" by the United States of Antigua's gambling industry. (A. 268). In addition, counsel proffered that the witness would testify about conversations she had had with Cohen in which Cohen expressed his views that his conduct did not fall within Section 1084. (A. 268).
The Government opposed this motion, arguing that, under the District Court’s prior ruling, the proffered testimony was irrelevant to whether Cohen violated Section 1084 or conspired to do so. (A. 207; 270-71). During a conference with the parties on February 10, 2000, the District Court reviewed each of the proffered points of testimony and found them to be irrelevant. This was so, Judge Griesa concluded, because the proffered testimony had no bearing on whether "the defendant did the physical acts, did the acts in the statute and if he knew that he was using a wire communication facility" for the purposes proscribed by Section 1084 and because, "[i]f he had conversations with other people, such as Ms. McAllister, and seemed to get some assurance that what he was doing was OK, my view is that that is not a defense." (A. 282). Accordingly, the District Court declined to authorize the taking of McAllister’s deposition pursuant to Rule 15 of the Federal Rules of Criminal Procedure.
3. The Arguments At Trial
Despite the District Court's previous rulings, the defense attempted at trial to mount the very defense that it was prohibited from advancing. Thus, defense counsel stressed in his opening statement the supposed efforts Cohen made to comply with Antiguan law, noting that Cohen hired an accounting firm "to set up [WSE] in a manner that . . . complied with Antiguan law." (Tr. 27; SA 145). Moreover, while counsel conceded that the purpose of WSE was to take bets from Americans, he argued that "Mr. Cohen was so committed to running this business correctly that he moved to Antigua [and] became a resident of Antigua." (Tr. 29; SA 147). Similarly, counsel told the jurors that they would:
Learn that Mr. Cohen, a very bright young man, retained one of the biggest accounting firms in the United States to guide [WSE] through the licencing procedure, specifically so he would not violate the law and that Kidder Peabody helped prepare the applications in Antigua, filed the documents with the government in Antigua, fully cooperated with the government of Antigua, [and] that the government of Antigua licenced World Sports Exchange.
(Tr. 31; SA 149 (emphasis added)). Counsel further emphasized that, "as far as Mr. Cohen was concerned and is concerned his business was legal." (Tr. 35; SA 153).
In light of counsel's extensive references to Antiguan law, at the end of counsel's remarks, the District Court summarized the essential elements of Section 1084(a), and reminded the jury that its role was to apply United States law to the facts developed at trial. (See Tr. 41; SA 159). In addition, numerous times during trial, the District Court specifically reminded defense counsel that whether Cohen intentionally violated the law was irrelevant. (See, e.g., Tr. 291-93, 366-67, 553, 847, 944-45). Despite these efforts, defense counsel on summation not only returned the themes of his opening statement but openly appealed for jury nullification of the District Court’s legal instructions. Counsel began his address to the jury by invoking the "The Verdict," a film whose dramatic climax involves an attorney's successful appeal to jury nullification. Counsel stated:
[T]here is a wonderful statement in a movie that took place a long time ago. It was called The Verdict, starring Paul Newman. It's not a criminal case, and the facts have nothing to do with this case, but he says something there I have been waited 20 years to really understand and appreciate. He goes up to the jury and says to them, "Today you are the law." It is very simple. Such a simple statement. It is so extraordinarily relevant to what happened here. You will be instructed by the Court on what the law is, but your verdict is your verdict. No one goes in the jury room with you to tell you what your verdict must be.
(Tr. 1114; SA 163). Counsel proceeded to argue that to convict Cohen would be a "travesty," (Tr. 1115; SA 164), because Cohen's testimony
compels a verdict of not guilty. It compels a finding by you, ladies and gentlemen, that despite the calls [to WSE], despite the [money] transfers, despite what the government claims to be a betting business, that he did not knowingly violate the law of the United States and he should not be convicted.
(Tr. 1122; SA 171). According to counsel, this was because the "heart and soul of the case" involved one simple question, "Did Mr. Cohen knowingly violate the law? Not did he pick up a phone." (Tr. 1130; SA 179). Counsel also not only repeatedly referred to the legality of Cohen's bookmaking operation under Antiguan law (see, e.g., Tr. 1136, 1137, 1145; SA 1854, 186, 194), but invited the jury to disregard the Court's ruling that an "Antiguan law defense" was unavailable under Section 1084(a):
Now, his Honor is going to tell you that it is not technically a legal defense that the matter was legal in Antigua. So simply if you conclude that the matter is legal in Antigua, that doesn't give you the right to simply say not guilty, Mr. Cohen. That's what his Honor is going to tell you. That's what the government told you before and what they are going to tell you before and that's what they are going to tell you after I sit down.
That's not the point. I have to abide by the Court's rulings even if I object to them just like [Government counsel] do, but the question of whether or not this is legal in Antigua is not, as [the Government] suggests, irrelevant. It is the case. It is the case. If Mr. Cohen is operating a legal gambling business he is not guilty of violating Section 1084.
(Tr. 1155-56; SA 204-05). In the same vein, counsel argued that the jury should acquit Cohen because he "took extraordinary efforts not to violate the law, to tell you why he believed he did not violate the law." (Tr. 1158; SA 207). Similarly, counsel stated that the jury must acquit Cohen of the conspiracy charge because "there's no proof Mr. Cohen agreed with anyone to commit a crime because he did not believe as he told you that he was committing a crime." (Tr. 1152; SA 201). Finally, returning to his nullification theme, counsel exhorted the jury that "you are going to get the last word" and that "[y]ou get to consider how to apply the instructions to the facts and nobody can tell you how to do that." (Tr. 1157; SA 206).
Before delivering its rebuttal summation, the Government requested that the District Court give a curative instruction so that the jury would not be left with the misimpression that knowledge of the law was an element the Government was required to prove. (Tr. 1161-62; SA 210-11). The Court denied the Government's request to give a curative instruction, but noted that it would dispel any misimpression of the law in its general charge to the jury. (See Tr. 1161; SA 210).
4. The Charging Conference
And Instructions To The Jury
Before and during trial, the parties submitted proposed jury instructions to the District Court. The Government’s proposed instructions with respect to the elements of a violation of Section 1084 drawn from 2 L. Sand, et al., Modern Federal Jury Instructions, ¶¶ 39-7=12. (See SA 105-110). Consistent with those model instructions, the Government proposed that the jury be instructed that, in order to convict Cohen, it must find beyond a reasonable doubt that he performed the acts alleged in the Indictment "purposely and intentionally," and specifically that he "knew that a wire communication was being used between the United States and Antigua" to transmit bets or wagers or other information prohibited by Section 1084. (SA 110). However, in accordance with Sand’s instructions (see 2 L. Sand, et al., Modern Federal Jury Instructions, ¶¶ 39-12), and the District Court’s own pretrial ruling, the Government asked for the jury to be instructed, in relevant part, that "it is not necessary for the Government to prove that the defendant knew he was violating the law" and that "[i]t is not a defense that the defendant did not know or believe he was doing something illegal." (SA 110).
At the conclusion of the defense case, the District Court held a charging conference in which it reviewed and ruled upon the parties’ proposed instructions. Over Cohen’s objection, Judge Griesa ruled that, with slight modifications, he would instruct the jury in accordance with the Government’s proposed instructions. (See Tr. 1003-06, 1011-12, 1018, 1026-27, 1030-33, 1045-48, 1051-58; A. 696-99, 704-05, 711, 719-20, 723-26, 738-741, 744-51). As it had done before trial, the District Court rejected Cohen’s argument that the Government must prove that Cohen acted with the purpose of violating the law, stating, in relevant part:
[Cohen] does not have that authority under the law or fact to reinterpret the statute to have it say something which is different and apply it in a different way. It would be like someone saying if he possesses heroin, I believe heroin is peppermint candy and I know the statute doesn't cover peppermint candy and, therefore, I am going to call it peppermint candy and I'm not selling heroin because I am selling peppermint candy. Now I have used a little bit more extreme, but not too much of an extreme [example]. The law does not permit that. If the law permitted that, it would simply permit evasions by simply a personal construction which is contrary to an obvious set of physical facts.
In addition, the District Court rejected as legally incorrect Cohen’s proposed definition of "bet," which depended on the notion that the only pertinent "transmission" of bets occurred within WSE's offices, from one spot on Cohen’s computer network to another spot on the same computer network. (See A. 357-358). Judge Griesa termed such a construction of Section 1084 "an obvious distortion and evasion of the statute," and contrary to the common-sense meaning of the word "bet." (See Tr. 846; A. 529). As Judge Griesa stated:
Its really a perfectly -- it's a dreadful argument -- frankly, and its as if the caller -- I mean, here you are saying, in the English language, that the telephone operator at WSE places the bet. You ignore the fact that someone in New York who wants to gamble, that person doesn't place the bet.
* * *
And then you say the data base server accepts and records the bet and causes a bet-accepted message to appear. And after this takes place, the WSE telephone operator orally confirms this to the individual on the other end of the line, to which you give no, no weight in terms of our statute, and you say, the transmission of the bet as taken place entirely within the WSE office in Antigua. That argument is totally, completely, 100 percent invalid as a matter of law.
(Tr. 846; A.529). On February 28, 2000, following summations, the District Court charged the jury in accordance with the rulings at the charging conference. With respect to the substantive Betting Counts (Counts Three through Six, and Count Eight), the District Court charged the jury that the Government was not required to prove that Cohen intentionally violated the law but that the Government was required to prove that Cohen (1) was in the business of betting or wagering, and that he (2) knowingly used a wire communication facility, for (3) any of the three forms of the prohibited transmissions. (See Tr. 1202-04; A. 867-69). With respect to the Information-Only Counts (Counts Two and Seven), the District Court gave the same instruction, except that it charged the jury that it may convict only if it found that Cohen transmitted "information assisting in the placing of bets or wagers." (Tr. 1197-98; A. 862-63). The District Court elaborated upon these instructions with detailed explanations of the relevant statutory language, including the three clauses of Section 1084(a). (See Tr. 1199, 1206-13; A. 871-78, 864).
In explaining what qualifies as transmission of "a bet on a sporting event or contest," the District Court stated, in relevant part:
if a person places a call form a place in the United States to a foreign country and says in words or substance, I wish to place a bet on such and such a sporting event, and if he specifies the amount of the bet and the other normal details, and if a person at the betting business in the foreign country says in words or substance we accept your bet, this is a transmission of a bet within the meaning of the statute.
(Tr. 1207; A. 872). In addition, in reference to the transmission of bets via the Internet, the District Court explained:
If you have determined here that the Internet used here was wire communication facility, if a person in the United States uses the Internet to send a message to the betting business in the foreign country, and that message is that the sender wishes to place a bet, and then if the Internet mechanism at the betting business sends a reply message confirming the bet, this again is the transmission of a bet within the meaning of the statute.
(Tr. 1207-08; A. 872-73). Responding to defense arguments, the District Court emphasized that, for purposes of determining whether the defendant’s conduct satisfies this definition, it was irrelevant whether the defendant "deemed" bets to take place only in Antigua or "construed" his conduct as outside the statutory definition. (Tr. 1208-09; A. 873-74).
In explaining what qualifies as transmission of a "communication which entitled the recipient to receive money or credit as a result of bets or wagers," the District Court stated, in relevant part:
[I]f a bet is placed or created as a result of a wire communication, and if this means that the bettor will receive money if he wins and the betting business will receive money if the betting business loses, this is in fact within the meaning of the statute, a situation where the communication entitles the bettor or the betting business to receive money or credit as a result of the bet within the meaning of the statute. The entitlement is contingent, but is still an entitlement within the meaning of the statute.
(Tr. 1212; A. 877). Finally, the District Court defined transmission of "information assisting in the placing of bets" as including "information given in the telephone call either by a person interested in placing bets or the party on the other line at the betting establishment interested in taking bets." (Tr. 1199; A. 864).
In instructing the jury with respect to the conspiracy charge (Count One), the District Court explained that the Indictment alleged an agreement to violate each of the previously defined clauses of Section 1084(a). (Tr. 1219; A. 884). The District Court instructed the jury, therefore, that, to convict Cohen of this charge, it must find that Cohen participated in a "conspiracy among some two or more people designed to carry out the acts which are made illegal under Section 1084." (Tr. 1219; A. 884). In portions of its charge that are not challenged on this appeal, the District Court also explained the "membership" and "overt act" elements of conspiracy and the distinction between the conspiracy charge and the substantive charges of the Indictment. (Tr. 1220-22, 1196-97; A. 885-87, 861-62).
In response to defense counsel’s arguments on summation, Judge Griesa included in his main charge to the jury the following curative instruction on Section 1084:
Now what the defendant must be proved to have known is that he knew that the deeds described in the statute as being prohibited were being done. I emphasize the words deeds. And what I come to now is very important in light of the evidence and summations.
It is not necessary for the Government to prove that [the defendant] knew that he was acting illegally under the statute. I repeat, it is not necessary for the government to show that he was acting illegally under the statute. I am contrasting knowledge of the deeds with knowledge of whether the deeds were illegal.
(Tr. 1214; A. 879). Judge Greisa further explained that "ignorance of the law is no excuse." (Tr. 1215; A. 880). Accordingly, "if [the defendant] did not know of its illegality, that is no excuse. If [the defendant] knew of the statute and misconstrued it, that is no excuse." (Tr. 1215; A. 880). The Court noted that this was Congress' intent in wording Section 1084 in such a manner, and that the rule was not unfair because the law was knowable and in our society "there is a legal profession which can be consulted with regarding specific questions under specific statutes." (Tr. 1216; A. 881).
Defense counsel objected to various portions of the District Court's charge, including the instructions on "ignorance of the law was no defense" and reference to the existence of a legal profession capable of providing advice on the meaning of statutes. (Tr. 1250-51; A. 915-16; see also Tr. 1284; A. 949). Defense counsel claimed that these comments imposed an "obligation" on a criminal defendant to seek counsel. (Tr. 1249; A. 914). Judge Griesa overruled these objections, emphasizing that his comments were for the purpose of "undo[ing] the damage" of a defense summation that "totally ignored what we had talked about as far as the rules of law" and "was virtually a request for jury nullification." (Tr. 1250-51; A. 915-16). Judge Greisa further explained:
[I]n view of the kind of summation given by the defense, which appealed constantly to a lot of extra legal concepts, I wanted to do something to explain that this law of ours is a fair law. And what I did was to say -- which is exactly true -- that when you are thinking about ignorance of the law being no excuse, you must put it in the context that people are able to find out what the law is if they wish to do so. I was not giving a conscious avoidance charge. That would have been unnecessary and inappropriate. But I said what I said for the purpose I said it, and it was in large part made necessary by an extreme departure in the defense summation from the rules of law.
(Tr. 1251; A. 916).
5. The Jury’s Verdict
The District Court submitted to the jury special interrogatories for each Betting Count (Counts One, Three through Six, and Eight). (See Tr. 1205-07, 1265; A. 870-72, 930). Those interrogatories called for the jury, in the event it found Cohen guilty of a count, to return special verdicts with respect to each of the three clauses of Section 1084(a) that were alleged to have been violated. (See id.). The jury found Cohen guilty on all counts of the Indictment, and reported by special interrogatory that it found Cohen guilty of violating all three clauses of Section 1084(a) in connection with each of the Betting Counts. (Tr. 1316-18; A. 980-82).
The District Court Did Not Err In Failing To Instruct The Jury That Conspiracy Requires A "Corrupt" Or "Evil" Motive
Cohen seeks to challenge his conviction of conspiracy (Count One), arguing that the District Court’s instructions improperly allowed the jury to convict him without finding that he intended to violate the law. (Br. 12-38). Cohen does not dispute that Section 1084(a) prescribes a general intent crime; and, hence, that knowledge of the law is not an element of a substantive violation of the statute. See United States v. Blair, 54 F.3d 639, 641 (10th Cir. 1995) ("Because § 1084 proscribes the knowing use of wire communications facilities to take bets, the plain language of the statute clearly evidences Congress' judgement that general intent is the mens rea needed to establish a violation of § 1084.") (citations omitted); United States v. Ross, 1999 WL 782749 (S.D.N.Y. Sep. 16, 1999) (KMW), at *8-9 (same); United States v. DiNola, slip-op., at 1-2, 98 Cr. 1051 (WHP) (S.D.N.Y. March 4, 1999) (same) (SA 80-81); see also Bryan v. United States, 118 S. Ct 1939, 1946 (1998) (noting the general presumption that ignorance of the law is not a defense and that, 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") (emphasis supplied).
Relying on People v. Powell, 63 N.Y. 88 (1875), however, Cohen argues that the law of conspiracy imposes a mens rea requirement greater than that of intent to commit the underlying substantive offenses. (Br. 12). According to Cohen, unless the objectives of a conspiracy are crimes that are "wrong in themselves" (mala in se), the Government is required to prove an extra element: that the defendant acted with a "corrupt" or "evil" motive, which would at least require the defendant’s knowledge of the law and specific intent to violate it. (Br. 12). Cohen claims to find support for this position in numerous decisions of the Courts of Appeals and in the Supreme Court’s plurality opinion in United States v. Keegan, 325 U.S. 478 (1945). (See Br. 21-38).
In fact, though, Powell’s "evil motive" doctrine was never broadly accepted in the federal courts and endorsed only in decisions outside this Circuit that have long since been overruled. Both this Court and the Supreme Court have repeatedly and unequivocally rejected the Powell doctrine, as has every federal court to consider the issue since the Supreme Court’s decision in United States v. Feola, 420 U.S. 671 (1975). As those cases recognize, there is no basis in logic or the text of the federal conspiracy statute for imposing an intent requirement for conspiracies that is greater than the intent requirement for the underlying offenses. Indeed, to do so would effectively read out of the conspiracy statute agreements to commit many offenses, since the only "evil motive" displayed by most conspirators is an intent to commit the underlying crimes. To do so, moreover, would call upon the courts to decide in every case, without any clear standard, whether the alleged objectives of a conspiracy were "wrong in themselves" or only made wrongful by judgment of Congress (malum prohibitum). At the same time, it would inject error in countless cases in which the district court failed to give an "evil motive" charge, including those involving conspiracies to commit controlled substance offenses and any other crime which was not recognized at common law as inherently wrongful or evil.
In People v. Powell, the defendant was convicted of conspiring to violate a state law which required public contracts to be advertised before they were awarded. See 63 N.Y. at 89-90. On appeal, the defendant argued that the court improperly instructed the jury that ignorance of the law was no defense. See id. at 89. The New York Court of Appeals agreed, and reversed the conviction. See id. at 91-93. The court began its analysis by affirming the settled principle that in cases "where a man is indicted for a prohibited act, he will not be allowed to say that he did not know of the existence of the law he had violated." See id. at 92. The court held, however, that ignorance of the law was a defense available to a person charged with violating New York's statutory proscriptions against conspiracy -- at least where the act was "innocent in itself," and done in "good faith." See id. at 92. The court did not advance any specific rationale for its holding; instead, it simply stated that the requirement that a defendant must act "corruptly" to be guilty of conspiracy was inherent in the concept of "conspiracy," which, the Court noted, "originally consisted in a combination to convict an innocent person by perversion of law." See id. at 92.
As Cohen points out (Br. 23-24), the Powell doctrine was mentioned favorably in several federal decisions during the early decades of the past century, see Cruz v. United States, 106 F.2d 828 (10th Cir. 1939); Landen v. United States, 299 F. 75 (6th Cir. 1924); Fall v. United States, 209 F. 547 (8th Cir. 1913). From its inception, however, the Powell doctrine was rejected by this Court and most others. This Court first did so in Hamburg-American Steam Packet Co. v. United States, 250 F. 747, 759 (2d Cir. 1918). In that case, the defendants were convicted of conspiring to defraud the United States by filing false manifests with customs officials in order to route coal and other supplies to German warships. See 250 F.2d 750. While it was not illegal for the defendant's to supply these goods to German vessels at the time, because the United States was still a neutral nation, see id. at 755-56, the defendants nevertheless concealed the destination and nature of the cargo lest French and British forces seek to intercept the cargo prior to its delivery. See id. at 760. At trial, all the defendants testified that they did not intent to break the law in connection with the filings they made. See 250 F. at 747. The district court instructed the jury that it could convict the defendants if the jury found that they agreed to cause false filings or false customs clearances to be made, see id. at 755, but declined the defendants’ request for an instruction that the Government had to prove that "in entering into this agreement [the defendants] intended to defraud the United States." See id. at 768. On appeal, citing Powell, the defendants claimed that the district court erred in refusing this charge. See id. 769, 770.
Addressing the defendants’ argument, this Court began by restating the familiar principle that "every one is presumed to know the law," and that "'[i]gnorantia juris neminem excusat' is a maxim in both civil and criminal jurisprudence which centuries of experience have approved." Id. at 758. It then turned to the defendants’ Powell claim:
But this principle, it is claimed has no application to the particular crime with which the defendants are charged. Criminal responsibility, it is said, is not entailed by a plan which involves a violation of provisions of statutory law, if those who engage therein are ignorant of the existence of the statute, or the interpretation thereof, which would render their plan unlawful.
Id. at 758 (emphasis added). Following the lead of the Sixth Circuit in Chadwick v. United States, 141 F. 225 (6th Cir. 1905), however, this Court rejected the argument, holding:
Whatever may be the law of the state of New York, we are satisfied that as to the statutory crime of conspiracy, as defined in the criminal code of the United States, it is not necessary to show that the defendants who are alleged to have conspired to do an act which is only malum prohibitum had knowledge of the unlawfulness of the act.
Id. at 759.
This Court again rejected the Powell doctrine in United States v. Mack, 112 F. 290 (2d Cir. 1940) (Hand, J.). There, the defendant, an owner of a brothel who employed Canadian prostitutes, was charged, in three separate counts, with conspiracy (1) to harbor aliens, (2) to transport prostitutes in interstate commerce, and (3) to fail to register prostitutes, in violation of a federal statute requiring such registration. Id. at 291-92.
On appeal, the defendant challenged the sufficiency of the evidence underlying his convictions of these counts. Id. at 291. This Court found that there was insufficient evidence to convict the defendant of the first two counts. Id. However, the Court upheld the defendant’s conviction for conspiring to fail to register an alien prostitute. In doing so, the Court rejected a claim, based on Powell, that the Government was required to prove the defendant’s knowledge of the registration requirements. Referring to Powell as "an anomalous doctrine," the Court held that a conspiracy charge under federal law need only rest upon an agreement to "commit all the elements of the crime [the defendants] are charged with conspiracy to commit." Id. at 292. Since the substantive failure-to-register offense did not require proof that the defendant acted with "knowledge that the proscribed conduct is unlawful," the Court concluded that the conspiracy charge likewise required no such proof. Id.
By 1974, the year before the Supreme Court decided Feola, the Powell doctrine had been so thoroughly repudiated that this Court could be "certain" that there was "no rule that the criminal intent required to satisfy a conviction of conspiracy to violate a statute must be greater than that necessary to commit the substantive crime." United States v. Mauro, 501 F.2d 45, 51 (2d Cir. 1974); see also United States v. Schwartz, 464 F.2d 499, 510 (2d Cir. 1972) ("a conspiracy conviction will be sustained upon the same showing of criminal intent necessary to make out a violation of the substantive offense"); United States v. Keegan,141 F.2d 248, 254 (2d Cir. 1944) ("We hold that to establish violation of the [conspiracy] statute nothing more has to be proven than that the parties ‘had in contemplation all the elements of the crime they are charged with conspiracy to commit.’" (quoting Mack, 112 F.2d at 292)), rev’d on other grounds, 325 U.S. 478 (1945).
If there remained any doubt on this point, however, the Supreme Court dispelled it Feola. In that case, the defendants were charged with assaulting a federal officer, in violation of 18 U.S.C. § 111, and conspiring to do so. See 420 U.S. 672-74. On direct appeal, this Court reversed the defendants’ convictions of conspiracy, reasoning that, although the substantive offense of violating Section 111 did not require the defendants to know their victim was a federal officer, a conspiracy to violate that statute did require such knowledge. See Feola, 420 U.S. at 673, 675-76. The Supreme Court, however, reversed the judgment of this Court, finding that this Court’s reasoning conflicted with the rule 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." 420 U.S. at 692. Thus, Feola not only recognized the principle that the intent requirement of a conspiracy corresponds with that of the underlying offense but enforced that principle more broadly than this Court had done.
As the Feola court itself noted, moreover, this principle was recognized in an even earlier decision of the Supreme Court. In United States v. Ingraham, 360 U.S. 672 (1959), the Supreme Court reversed a conviction for conspiracy because the evidence was insufficient to establish that the defendants acted with the intent required to commit the underlying offense: an excise tax violation. Id. at 672-73, 675. Although not necessary for its decision, the Supreme Court emphasized that the Government was not required to prove any greater level of intent than that necessary to convict the defendant of the underlying crime. As the Supreme Court stated: "There need not, of course, be proof that the conspirators were aware of the criminality of their objective." Id. at 679.
In an effort to avoid this principle and breathe life into the Powell doctrine, Cohen weaves together a number of arguments. First, Cohen attempts to distinguish Feola and this Court’s governing precedents on their facts, arguing that those cases involved conspiracies to engage in "inherently wrongful" conduct while this one involved conduct "purely innocent" on its face. (Br. 34). Second, Cohen seems to suggest that the Powell doctrine survives in the federal courts even after Feola, asserting that it has "long been the rule in several other Circuits." (Br. 36; see also Br. 23). Third, Cohen argues that, in reversing this Court’s judgment in United States v. Keegan, the Supreme Court implicitly endorsed the Powell doctrine and overruled this Court’s prior decisions rejecting that doctrine. (Br. 28-30). Finally, Cohen claims that "in cases where the subject conduct is bottomed upon otherwise innocent motivations, a more specific mens rea has been required before criminal liability may attach," and, therefore, that the Powell doctrine is in harmony with general principles of criminal liability. (Br. 35-36). These arguments are meritless.
To begin with, no case has ever suggested that the Feola’s construction of the conspiracy statute is limited to crimes that may be characterized as "inherently wrongful." To the contrary, Feola has been universally recognized as announcing a principle of general application to conspiracy charges. In United States v. Eisenberg, 596 F.2d 522 (2d Cir. 1979), for example, this Court observed that, because Feola "clearly established that [where] requisite knowledge was proved for conviction of the substantive offense, it now follows that the same knowledge is enough as well to establish the conspiracy to commit the substantive offense." 596 F.2d at 526; see also United States v. Salameh, 152 F.3d 88, 154 n. 16 (2d Cir. 1998) ("The government is not required to prove any greater knowledge of the substantive offenses that comprise the conspiracy's objectives than that required to prove the commission of the substantive offenses themselves"), cert. denied, 525 U.S. 1112 (1999); United States v. Herrera, 584 F.2d 1137, 1150 (2d Cir. 1978) (holding that the district court properly rejected defendants' proposed jury instruction that "co-conspirators must agree to violate the specific federal statutes with which they were charged;" noting that "[t]he law of conspiracy requires the same mens rea as would be required to support a conviction for a substantive violation"); United States v. Podell, 519 F.2d 144, 150 n.7 (2d Cir. 1975) (under Feola, "knowledge of illegality is not necessary for a substantive conviction . . . such knowledge is also not necessary of a conspiracy conviction").
Indeed, the Tenth Circuit applied Feola in the precise context presented here. In United States v. Blair, a sportsbook operator who took bets from Americans via toll-free calls to the Dominican Republic challenged his conviction of conspiracy to violate 1084(a), arguing that the charge required proof that he intended to break the law. The Tenth Circuit, however, swiftly rejected this claim. First, the court analyzed Section 1084(a) and concluded that a substantive violation of the statute only requires proof that the defendant knowingly engaged in the prohibited acts. 54 F.3d at 641. Applying Feola, the court then rejected the defendant’s claim that a conspiracy to violate Section 1084(a) requires a greater level of intent. The court observed that "[t]he question of whether § 371 evinces the intent of congress to require a defendant to have intentionally violated a known legal duty in order to sustain a conviction has been squarely rejected by the Supreme Court." Id. at 643. The court concluded, therefore, that "Feola is controlling and the prosecution need not prove a defendant intentionally violates a known legal duty in order to sustain a conviction under § 371 in cases where the underlying substantive offense does not impose such a requirement." Id.
In a very similar context, the First Circuit reached the same conclusion in United States v. Murray, 928 F.2d 1242 (1st Cir. 1991). Citing Feola, the First Circuit held that the charge of conspiracy to operate an illegal gambling business in violation of 18 U.S.C. § 1955 "requires the same intent as that required for a conviction for the substantive offense." Id. at 1251. Moreover, other federal cases have applied Feola in the context of conspiracies to engage in conduct far more "innocent" than running a book-making operation. In United States v. Thomas, 887 F.2d 1341 (9th Cir. 1989), for example, the Ninth Circuit upheld a defendant’s conviction of conspiracy to engage in conduct with negligent ignorance of the law. The underlying statute made it a crime to transport, receive, or acquire wildlife which the defendant should, in the exercise of due care, have known was taken in violation of state law. The Ninth Circuit, therefore, regarded the question presented on appeal as whether it is "fair to punish parties to an agreement to engage intentionally in apparently innocent conduct where the unintended result . . . is the violation of a criminal statute" in the affirmative. Id. at 1346-47. Citing Feola, the Court concluded that the intent requirement for the conspiracy charge was no different from that of the underlying offense. Id. at 1347; see also United States v. McDougal, 25 F. Supp.2d 85, 95 (N.D.N.Y. 1998) (noting that the charge of conspiracy to violate federal wildlife laws requires proof of "the requisite intent to violate the substantive offense"), aff'd mem., 216 F.3d 1074 (2d Cir. 2000) (table).
Furthermore, the Powell doctrine is not "the rule in several other Circuits." (Br. 36). As far as the Government is aware, Powell has not been applied by any Circuit Court since the 1930's and has never even been cited with approval since Feola was decided. Notably, Chief Judge Bazelon’s concurring opinion in United States v. Barker, 514 F.2d 208, 233 n. 34 (D.C. Cir. 1975) (en banc), which Cohen cites (Br. 24), was issued several days before Feola was decided. That opinion, moreover, did not refer to the Powell as the law of the D.C. Circuit or any other Circuit, and expressly noted that it had been criticized by this Court and the Supreme Court. 514 F.2d at 233 n. 34. The only other Circuit Court case decided in the last half century that Cohen cites, United States v. Previte, 648 F.2d 73, 81-82 (1st Cir. 1981), does not apply the Powell doctrine. Rather, the First Circuit noted that, while the defendant attempted to invoke the Powell doctrine, the doctrine was inapplicable by its own terms to the defendant’s conduct. Id. at 81-82. Thus, the First Circuit did not have occasion to consider whether the doctrine was viable. In discussing the defendant’s claim, moreover, the court noted Learned Hand’s strong criticism of the Powell doctrine when speaking for this Court in Mack. Id.
In addition, the Supreme Court’s various opinions in Keegan certainly did not "implicitly embrace" or "ostensibly accept" the Powell doctrine. (Br. 29). In Keegan, the defendants, members of the German-American Bund during World War II, were found guilty of conspiring to counsel evasion of the Selective Service Act by urging members of the Bund to protest the draft and challenge its legality. See 325 U.S. at 480-95. On appeal, the defendant’s argued that they counseled Bund members to engage in a lawful protest of the Selective Service Act and not to evade militate service. This Court upheld the defendant’s conviction, and the Supreme Court reversed in a 5-to-4 decision.
In the plurality opinion and the opinions of concurring justices, a majority concluded that the word "evade" contained in the Selective Service Act connoted fraudulent conduct involving "stealth," "guile," and/or "deception." Id. at 493 (statute requires avoidance of the draft "stealthily and by guile") (plurality opinion); id. at 500 (noting majority’s acceptance of defendants’ position "that ‘evade’ connotes conduct which is fraudulent or characterized by artifice or craft") (dissenting opinion). Thus, the majority ruled, "to counsel merely refusal [to serve in the military] is not made criminal by the [Selective Service] Act." Id. at 487. Since the evidence at trial established that the defendants counseled refusal to serve and nothing more, the plurality concluded that the defendants did not have the requisite intent to commit the underlying substantive offense. As the plurality stated: "[T]he evidence and oral statements of the various petitioners at committee meetings and unit meetings of the Bund did not supply the basis for a finding, beyond a reasonable doubt of counseling, or intending to counsel, or conspiring to counsel, evasion of military service within the meaning of [the relevant statute]." Id. 495. Because of this conclusion, the plurality did not have occasion to consider whether a conspiracy charge requires greater mens rea than intent to commit the underlying substantive offense. As a result, neither the plurality opinion nor any of the concurring opinions even mentions of this issue.
The four dissenting justices, on the other hand, concluded that counseling refusal to serve in the military constituted "evasion" of military service within the meaning of the Selective Service Act. Id. at 501-04. As a result, the dissenting justices were called upon to consider the defendants’ alternative argument, under Powell, "that a criminal conspiracy to do an act ‘innocent in itself’ not known by the conspirators to be prohibited must be actuated by some corrupt motive other than the intention to do the act which is prohibited." Id. at 506. Citing with approval this Court’s decisions in Mack and Hamburg-American and the Sixth Circuit’s decision in Chadwick v. United States, the four justices squarely rejected this argument, agreeing that "nothing more need be proved than that respondents had in contemplation all the elements of the offense which they conspired to commit." Id.
The cluster of opinions produced in Keegan, therefore, not only fails to support Cohen’s argument but strongly refutes it. The five justices in the majority did not address this subject, and had no occasion to do so. On the other hand, the four justices in the dissent unanimously and unequivocally rejected that argument. (Br. 29). In doing so, moreover, these four justices explicitly endorsed this Court’s rulings in Mack, Hamburg-American, and their progeny. Unsurprisingly, therefore, neither this Court nor any other has ever read Keegan as calling into question the unbroken line of decisions by this Court that reject the Powell doctrine. Indeed, long after Keegan was decided, this Court many times relied on those precedents and reaffirmed them. See, e.g., United States v. Mauro, 501 F.2d at 51; United States v. Schwartz, 464 F.2d at 510.
Moreover, Cohen’s underlying conduct -- running a book-making operation -- is not distinguishable from that at issue in many controlling decisions rejecting the Powell doctrine. As Cohen himself acknowledged at trial, book-making is illegal in every state except Nevada. (Tr. 881-82). Under common moral standards, moreover, it is doubtful that this crime is any less "evil" or "wrongful" than the crimes of, .e.g., failing to register prostitutes (Mack), filing false cargo manifests (Hamburg-American), harboring aliens (Herrera), or counseling refusal to serve in the military (Keegan). All of those crimes are mala prohibita in the sense of having been created by legislature, rather than developed through evolution of the common law.
In this respect, it should also be emphasized that, in the 125 years since Powell was decided, Congress has created a vast panoply of offenses that similarly were not recognized as crimes at common law, including, e.g., controlled-substance offenses, money laundering offenses, immigration offenses, antitrust offenses, import-export offenses, environmental offenses, labor-related offenses, food and drug offenses, and securities-law offenses. Yet, consistent with long-settled law, the standard jury instructions on conspiracy do not include an element of "corrupt motive" or "evil intent" beyond that of committing the underlying offense. See, e.g., Devitt, Fed. Jury Prac. & Instr. § 28.03 (1998) (conspiratorial agreement established by finding that "two or more persons conspired, or agreed, to commit the [underlying] crime;" noting that an instruction on "bad purpose" or "corrupt motive" is not recommended). In inviting the Court "to finally embrace the corrupt motive doctrine" (Br. 35-36), therefore, 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.
Finally, Cohen complains that it is unfair to allow convictions for conduct judged to be criminal by the legislature without proof that the defendant knew and understood the law. (Br. 34-38). He offers no rationale, however, for why knowledge of the law should be an element of a conspiracy even where Congress has chosen not to make it an element of the underlying substantive offense. That, of course, is the only question presented by the Powell doctrine, since the law has always required proof of the defendant’s knowledge of the law where the underlying substantive offense contains a parallel requirement, as is the case for, e.g., criminal violations of the Tax Code. As Judge Hand stated in rejecting the Powell doctrine, "it is hard to see any reason" why the intent requirement for a conspiracy should be different from that of its object substantive offenses. Mack, 112 F.2d at 292. In the modern era of Sentencing Guidelines, which make the penalty for conspiracy no greater than that for the substantive offense, see U.S.S.C. § 2X1.1, it is even harder to imagine a rationale for such a distinction.
None of the cases cited by Cohen (see Br. 34-35), moreover, even speaks to this issue. Indeed, each construes the elements of substantive crimes and none suggests that knowledge of the law is one of those elements. Thus, for example, the issue in United States v. X-Citement Video, Inc., 513 U.S. 64, 66-68 (1994), was whether the Government needed to prove that the defendant knew the actors in a pornographic video were minors; the issue in Staples v. United States, 511 U.S. 600, 604-05 (1994), was whether the Government needed to prove that the defendant knew the weapon he possessed had automatic firing capabilities, making it a machine gun as defined by federal law; and the issue in Morisette v. United States, 342 U.S. 246, 247-48 (1952), was whether the Government needed to prove that the defendant knew the spent shell casings he collected were property of the federal government. See 342 U.S. at 247-48. In all three cases, the court held that the statutes' knowledge requirement pertained to all the factual elements of the offense, not just some. The Government has never claimed that Section 1084(a) should be construed any differently. Rather, it has always acknowledged, as the District Court instructed the jury, that "knowledge" pertains to all elements of Section 1084(a).
The Evidence Was Sufficient To
Sustain Cohen’s Convictions Of
The Relevant Substantive Offenses
Cohen next challenges his convictions of each of the substantive counts, contending that the jury was misinstructed on the elements of Section 1084(a) and that a properly instructed jury would have concluded that his conduct within the "safe harbor" provision of Section 1084(b). (Br. 36-61). As noted above, Section 1084(a) proscribes transmission of (1) "bets or wagers" on sporting events; (2) "information assisting in the placement" of any such bets or wagers; or (3) a communication "which entitles the recipient to receive money or credit as a result of bets or wagers." The five substantive Betting Counts charged Cohen with transmitting all three prohibited communications, and the jury found that he was guilty of transmitting each of them. The two Information-Only Counts only charged Cohen with transmitting "information assisting in the placement" of such bets or wagers, in violation of the second clause of Section 1084(a). Section 1084(b) provides a "safe harbor," applicable only to the second clause of Section 1084(a), for transmission of "information assisting in the placing of bets or wagers on a sporting event or contest from a State or foreign country where betting on that sporting event or contest is legal into a State or foreign country in which such betting is legal." 18 U.S.C § 1084(b) (emphasis added).
Cohen concedes that his conduct at least entailed transmission of "information assisting in the placement" of bets or wagers. (See, e.g., Br. 56 ("[Cohen] believed that only information assisting in the placing of bets was transmitted")). Thus, all of his convictions must stand unless the relevant transmissions were made between Antigua and a State where betting on sporting events is "legal." Moreover, because the Betting Counts were independently premised on violations of the first and third clauses of Section 1084(a), which are not subject to the "safe harbor," each of those counts must stand unless the District Court wrongly instructed the jury on the meaning of both "bets or wagers" and "a communication which entitles the recipient to receive money or credit as a result of bets or wagers."
Cohen, therefore, mounts his attack on two fronts. First, Cohen claims that betting is legal in the state of New York, where the transmissions underlying the substantive counts were made and received. (Br. 41-45). On the basis of this argument, Cohen challenges his convictions of the Information-Only Counts. Second, Cohen claims that the jury was wrongly instructed on the meaning of "bets or wagers" (Br. 41-61), and adds in a footnote that the jury was wrongly instructed on the meaning of "any communication which entitles the recipient to receive money or credit as a result of bets or wagers." (Br. 45 n. 10). On the basis of these arguments, Cohen contends that the Betting Counts stand or fall on the same ground as the Information-Only Counts, since they can only be sustained upon the jury’s finding that he transmitted "information assisting in the placement" of bets or wagers.
These challenges cannot succeed. To begin with, the claim that is the foundation of all the challenges -- that betting is "legal" in New York -- borders on the frivolous. Betting is made illegal by almost every instrument of New York law, including the New York Constitution and many statutes, both civil and criminal. The illegality of betting, moreover, is universally recognized by the legislature, executive branch, and decisional law of the State of New York. In the face of this law, Cohen is reduced to pointing out that no provision of the penal law of New York criminalizes the act of placing a bet -- as distinguished from accepting bets and advancing betting activities, which are criminal -- and arguing that Congress intended the word "legal" in Section 1084(b) to mean "not criminal" and to attach only to the act of placing a bet. (See Br. 41-45). This construction, however, defies the plain meaning of the word, finds no support in any case law, and would expand the "safe harbor" to cover all or almost all states in the union, thereby thwarting the clear purpose of the statute. Moreover, the legislative history of the statute not only fails to support this construction but definitively forecloses it. Indeed, the only relevant legislative history, the Report of the House of Representatives recommending adoption of Section 1084, uses as an example of a transmission outside the scope of the "safe harbor" a communication to the State of New York, and notes specifically that betting is illegal in New York.
Cohen’s challenges to the District Court’s definition of "bets or wagers" and "a communication which entitles the recipient to receive money or credit as a result of bets or wagers" are equally meritless. Cohen claims that the transmission of a bet by telephone or Internet that is unconditionally accepted with the click of a mouse or by an operator on the other end of the line involves transmission of "an offer to place a bet," and not an actual "bet" or a communication entitling the recipient to "money or credit as a result of bets or wagers." (Br. 45-56). That construction, however, ignores the substance of the transaction, saps almost all meaning out of these two clauses of Section 1084(a), and would allow unchecked evasion of those clauses. For these reasons, this precise argument was rejected in the only other case to address the issue, United States v. Ross. Moreover, Cohen’s claim that he did not act "knowingly" in transmitting bets or wagers because he "construed" his conduct differently cannot be accepted. (Br. 56-61). Cohen, of course, was subject to the law enacted by Congress and not free to define the law himself. Cohen makes no argument that Congress intended to create a specific intent crime, with a special requirement that defendants know the law and "willfully" violate it. As the District Court correctly instructed the jury, therefore, Cohen acted "knowingly" so long as he was aware of the acts that the law forbids.
A. Betting On Sporting Events Is Not Legal In The State Of New York
As many cases have recognized, New York State has one of the most deeply rooted anti-gambling policies in the country. The policy is expressed in the New York Constitution, which provides, in relevant part, that:
no lottery or the sale of lottery tickets, pool-selling, bookmaking, or any other kind of gambling, except lotteries operated by the state and the sale of lottery tickets in connection therewith as may be authorized and prescribed by the legislature, the net proceeds of which shall be applied exclusively to or in aid or support of education in this state as the legislature may prescribe, and except pari-mutual betting on horse races as may be prescribed by the legislature and from which the state shall derive a reasonable revenue for the support of government, shall hereafter be authorized or allowed within this state; and the legislature shall pass appropriate laws to prevent offenses against any of the provisions of this section.
N.Y. Const., Art. I, § 9(1). (McKinney 1988) (emphasis added).
Consistent with this Constitutional ban on gambling activities, the New York Legislature has enacted broad criminal and civil prohibitions against such activities. For example, Section 225.05 of the New York Penal Code makes it a misdemeanor to "advance or profit from unlawful gambling activity;" Section 225.10 of the Penal Code makes it a felony to engage in various bookmaking in connection with "unlawful gambling activity." N.Y.P.L §§ 225.05, 225.10 (McKinney 1999). In both cases, "unlawful" gambling is defined as gambling which is "not specifically authorized by law." N.Y.P.L § 225.00(12).
In addition, Section 5-401 of the New York General Obligations Law provides that "[a]ll wagers, bets or stakes, made to depend on any race, or upon any gaming by lot or chance, or upon any lot, chance, casualty, or unknown or contingent event whatever, shall be unlawful." N.Y. Gen. Oblig. Law § 5-401 (McKinney 1989) (emphasis added). Acting pursuant to this Constitutional mandate to deter gambling which they have not specifically authorized, the New York Legislature has enacted a framework of laws effectively nullifying gambling when it does occur in New York. E.g., N.Y. Gen. Oblig. Law § 5-411 (McKinney 1989) ("All contracts for or on account of any money or property, or thing in action wagered, bet or staked . . . shall be void"); id., § 5-413 ("All things in action, judgments, mortgages, conveyances, and every other security whatsoever, given or executed, by any person where the whole or the part of the consideration shall be for any money or other valuable thing won by playing at any game whatsoever . . . shall be utterly void"); id. § 5-415 (transfers of property "made in pursuance of any lottery . . . [are] hereby declared void and of no effect"); id., § 5-419 (permitting actions to recover property paid, delivered, or deposited for any unlawful wager "whether any such wager be lost or not").
When asked to comment on a proposal to permit the State Lottery Division to conduct a football sports betting operation, the New York Attorney General concluded that "[t]he Constitution, both through its specific bans on bookmaking and pool-selling and through its general ban on all forms of gambling not expressly authorized, forbids the kinds of gambling involved in the proposed sports betting game." N.Y. Op. Att'y Gen. 84-F1 (1984). Thus, while certain forms of betting on horse races have been expressly authorized by the Legislature, see, e.g., N.Y. Racing, Pari-Mutuel Wagering and Breeding Law, §§ 502 et seq. (McKinney 2000) (permitting regulated off-track betting), and are therefore legal, see Finger Lakes Racing Ass'n v. New York State Racing & Wagering Board, 45 N.Y.2d 471, 475 (1978) (Court of Appeals' holding that "[a]lthough generally prohibited in the State, gambling is constitutionally permitted with respect to betting on horse races in such manner as the Legislature may prescribe"), all other sports betting contravenes New York's Constitutional and statutory ban on gambling. See 62 N.Y. Jur.2d Gambling § 8 (1987) ("[t]he permissible forms of gambling such as pari-mutual betting on horses and state lottery, are an exception to the general prohibition on gambling contained in the New York State Constitution").
Those courts that have addressed the question of whether placing a bet is "legal" in New York have uniformly recognized that it is not "legal," even though it may not be criminally sanctioned. See, e.g., United States v. James Monteleon, Order, at 7-10, 98 Cr. 812 (BDP) (S.D.N.Y., April 28, 1999) (finding that, where New York Constitution and General Obligation prohibited betting on sporting events, gambling was "illegal" under New York law and, as a consequence, offshore bookmaker could not properly rely on Section 1084(b) as a bar to prosecution) (SA 218-21); United States v. Kelley, 254 F. Supp. 9, 14-15 (S.D.N.Y. 1966) (in rejecting challenge to constitutionality of Section 1084, court observed that "while gambling per se is not violative of federal law, it is contrary to the law of the state of New York") (citing, inter alia, Article 1, Section 9 of New York Constitution); cf. New York Racing Ass'n v. Hoblock, 704 N.Y.S.2d 52, 55 (3d Dep't 2000) ("[g]iven the public policy against gambling in this State," statue authorizing gambling must be strictly construed "and any activity not expressly authorized [by it] is prohibited"); People v. World Interactive Gaming Corporation, 714 N.Y.S.2d 844, 1999 WL 591995, at * 1, 3, 5, 8 (Sup. Ct., N.Y. Co. 1999) (noting that Article I, Section 9(1) of the New York Constitution reflects New York's "deep-rooted policy against unauthorized gambling," and holding that offshore bookmaker's solicitation of bets from persons in New York via his Internet website was "illegal" under New York law and "unambiguously advanced gambling activity in direct violation of the explicit safeguards that New York . . . ha[s] placed against unauthorized gambling activity").
Despite these precedents, Cohen claims that, because the act of placing a bet is not criminal in New York, it necessarily follows that betting in general is legal in New York. (Br. 43). This claim cannot be accepted. "[T]he starting point for interpreting a statute is the language of the statute itself," United States v. Piervinanzi, 23 F.3d 670, 677 (2d Cir. 1994) (internal quotation marks omitted), and the "plain meaning" of the language "should be conclusive, except in the rare cases in which the literal application of a statute will produce a result demonstrably at odds with the intentions of its drafters." United States v. Ron Pair Enters., Inc., 489 U.S. 235, 242 (1989) (internal quotation marks and brackets omitted). Here, Congress selected the word "legal," which is not the same as "non-criminal." Indeed, an activity declared unlawful by statute, but subject only to civil and injunctive enforcement, is not "legal" under any common definition of the word. See New York State Executive Law § 63(12) (McKinney 2000) (permitting Attorney General to obtain injunctions directed against persons engaged in "illegal" acts); People v. World Interactive Gaming Corporation, 714 N.Y.S.2d 844, 1999 WL 591995, at * 1, 3, 5, 8 (Attorney General may seek injunctive and other relief to halt unauthorized gambling activities).
Moreover, even if "the act of placing a bet" were legal, it would not follow that the process of "betting" is legal, since betting requires one party to place bets and another to offer and accept them, which is criminal. New York law in fact excludes from criminal liability only the act of placing a bet by the player himself, not the act of offering or accepting bets nor the act of placing a bet by someone other than the player himself. See, e.g., New York Penal Code §§ 225.00 (4) (a person "advances gambling activity" within the meaning of the penal code "when, acting other than as a player, he engages in conduct which materially aids any form of gambling activity"), 225.00 (5) (a person "profit[s] from gambling activity" within the meaning of the penal code "when, other than as a player, he accepts or receives money or other property pursuant to an agreement or understanding with any person whereby he participates or is to participate in the proceeds of gambling activity").
Cohen also claims to find support for his definition of "legal" in the legislative history of Section 1084(a), declaring that the "primary purpose of the statute clearly was to assist the states in the enforcement of their own laws which make gambling and bookmaking punishable ‘offenses’ against the state." (Br. 44). If this were the purpose of the statute, however, it certainly would not militate in favor of a construction of "legal" which places within a federal "safe harbor" the activities of offshore book-makers like Cohen. When directed at New Yorkers, such activities are criminal under New York law, see New York Penal Code §§ 225.05 et seq.; World Interactive Gaming, 1999 WL 591995, at * 5-8, and are just the type of hard-to-enforce activities for which federal aid is needed. Moreover, the legislative history cited by Cohen makes clear that Congress sought not only to aid in enforcement of state penal laws but also to "aid in the suppression of organized gambling activities." Br. 44 (citing H.R. Rep. No. 87-967, 87th Cong., 1st Sess. (1961)); see also United States v. McDonough, 835 F.2d 1103, 1105 (5th Cir. 1988) ("The legislative history [of Section 1084] sets forth a dual purpose ‑‑ to assist the various states in enforcing their gambling laws ‘and to aid in the suppression of organized gambling activities . . . .’"); United States v. Ross, 1999 WL 782749 at *2 (same). Cohen fails to discuss this other purpose.
More importantly, portions of the House Report which Cohen fails to cite leave no doubt that Congress regarded New York as a state in which betting is not legal. Indeed, the very example used in the House Report of a bet which would not qualify for protection under Section 1084(b) is that of a bet made in New York State. Thus, the report notes that, although in Nevada it is "lawful to make and accept bets on [a] [horse] race held in New York" -- thereby making the transmission of "information" relating to betting on such races permissible under Section 1084(b) -- "[o]n the other hand, it is unlawful to make and accept bets in New York State on a [horse] race being run in Nevada." H.R. Rep. No. 967, 87th Cong., 1st. Sess. (1961), reprinted in 1961 U.S.C.C.A.N. 2631, 2633. Therefore, the House Report explains, "the transmission of information assisting in the placing of bets and wagers from Nevada to New York would be contrary to the provisions of the bill." H.R. Rep. No. 967, 87th Cong., 1st. Sess. (1961), reprinted in 1961 U.S.C.C.A.N. 2631, 2633 (emphasis added).
The cases cited by Cohen in support of his definitional arguments have no bearing at all on those arguments. (Br. 41-42). In Sterling Suffolk Racecourse Ltd. Partnership v. Burrilville Racing Ass'n, Inc., 989 F.2d 1266 (1st Cir. 1993), the First Circuit stated that "Congress, in adopting Section 1084, did not intend to criminalize acts that neither the affected states nor Congress itself deemed criminal in nature." Id. at 1273. Contrary to Cohen’s suggestion (Br. 41-42), however, the First Circuit did not construe the term "legal" in Section 1084(b), much less equate it with the term "criminal." The question presented in Sterling was whether a civil RICO claim could be premised on the transmission of information assisting in the placing of bets, in violation of the third clause of Section 1084(a), even though the plaintiff conceded that the "safe harbor" created by Section 1084(b) was facially applicable. As the First Circuit noted, the plaintiff conceded that "wagering of the sort transacted at [defendant’s] facility is permissible under the relevant laws of all interested states" -- Massachusetts and Rhode Island. Id. at 1272. The plaintiff argued, however, that the exception contained in Section 1084(b) for "circumstances in which wagering on a sporting event is legal in both the sending state and the receiving state" was made inapplicable by another federal statute, the Interstate Horseracing Act ("IHA"), 15 U.S.C. §§ 3001‑3007 (1988). 989 F.2d at 1272. The First Circuit disagreed, noting that the IHA did not create any criminal liability or purport to alter the meaning of Section 1084(b). Id. The court concluded, therefore, that there was no indictable offense -- under either state or federal law -- upon which to predicate a RICO claim. Id.
In United States v. McDonough, 835 F.2d 1103 (5th Cir. 1988), the defendant was convicted of transmitting bets in interstate commerce, in violation of the first clause of Section 1084(a), and argued on appeal that his conviction could not stand without proof that he violated state law because "a federal anti‑gambling law punishing conduct that is not unlawful under state law yields ‘an unworkable result.’" Id. at 1104. The Fifth Circuit swiftly rejected this claim, noting that, in an earlier decision, it held that Section 1084(b)’s safe harbor applies only to transmission of "information assisting in the placing of bets or wagers" and not to transmission of "bets or wagers" themselves, which is "proscribed [under Section 1084] whether or not wagering is forbidden by the law of the state where the bet is received." Id. at 1104. Applying this decision, the court stated: "[W]e affirm a conviction for receiving bets on baseball and football games by telephone from Texas to Massachusetts despite the lack of evidence or any charge that placing such bets in Massachusetts was a state criminal offense." Id. Although Cohen seizes upon this reference to "a state criminal offense" as an interpretation of the term "legal" (Br. 41-42), it had nothing to do with that word or any other term contained in Section 1084.
Lastly, Cohen attempts to imply that Martin v. United States, 389 F.2d 895 (5th Cir. 1968), equated the terms "legal" and "criminal" by "noting that the relevant state law pursuant to § 1084 was [a] Texas penal code section prohibiting agreements to wager." (Br. 42). Martin, however, did nothing of the sort. The case involved a purported constitutional challenge to Section 1084 based on an argument that the statute "defeat[ed] the policies of Nevada while not aiding the enforcement of the laws of any other State." Id. at 896. In rejecting this argument as "erroneous, misleading, and irrelevant," the Fifth Circuit noted the defendant’s allegation that Section 1084 failed to "aid the enforcement" of a provision of the Texas penal code which prohibits gambling. Id. at 897 (citing Vernon’s Ann. Tex. P.C. art. 646). Like the out-of-context quotes taken from Sterling and McDonough, this reference also had nothing to do with the meaning of the word "legal" or any other term contained in Section 1084.
B. The Evidence Sufficiently Established That Cohen Violated The Second And/Or The Third Clauses Of Section 1084(a)
Cohen 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. Nor does he contest the proof of his own orchestration of these two-way wire transmissions. Cohen argues, however, that the transmissions did not involve either "bets or wagers" or communications entitling a recipient to "money or credit as a result of bets or wagers" within the meaning of Section 1084(a). (Br. 45-56). Instead, Cohen claims, they involved "instructions" to place such bets or wagers, which only constitute "information assisting in the placing of bets or wagers" within the meaning of the second clause of Section 1084(a) and the safe harbor of Section 1084(b). (Br. 45-56).
This is so, Cohen argues, because of a single feature of WSE’s book-making operation: WSE did not accept bets on credit but rather required bettors to deposit funds in advance with which to cover their bets. (Br. 46-47). Cohen reasons that this practice, which he labels "account wagering," made his business "wholly unlike a bookmaking operation in which individuals telephone a bookie and wager a certain sum of money that will be produced by the losing party following the subject sports event" and compels a finding that no bets or wagers were transmitted to WSE. (Br. 52). Cohen adds in a footnote that the transactions effectuated on his website and toll-free telephone lines cannot qualify a communications entitling either recipient to "money or credit as a result of bets or wagers" because this clause of Section 1084(a) "plainly refers to a communication that takes place after the subject sports event has taken place and notifies a party that he is actually entitled to receive money as a result of a formerly placed bet." (Br. 45-46 n. 10 (emphasis in original)). These arguments cannot be accepted.
To begin with, as this Court has stated, "courts must presume that a legislature says in a statute what it means and means what it says there." Connecticut Nat'l Bank v. Germain, 503 U.S. 249, 253-54 (1992) (citations and internal quotations marks omitted). "'[U]nless otherwise defined, words will be interpreted as taking their ordinary, contemporary, common meaning.'" Harris v. Sullivan, 968 F.2d 263, 265 (2d Cir.1992) (quoting Perrin v. United States, 444 U.S. 37, 42 (1979)). In this case, Cohen’s conduct involved transmittal of "bets or wagers" under any possible interpretation of those words. Notably, this is not a case in which the bettors and book-maker carried on discussions that merely touched on the subject of betting or that caused a bet to be placed at some point in the future. In this case, every transaction that was the subject of a Betting Count was fully consummated in a single telephone conversation or two-way Internet communication. As discussed above (see pp. 7-12), each communication included (1) specification of the terms of the bet, (2) placing of the bet, and (3) acceptance of the bet by WSE. The relevant conversations and actions, moreover, conformed with anyone’s understanding of what is meant by "transmitting a bet." In each telephone conversation, for example, the bettor asked whether he could place a bet, the WSE operator confirmed that he could, and the bettor then specified the amount and terms of the bet, which the WSE operator accepted and confirmed on the spot. The bets placed by means of Cohen’s "click and bet" website were fully consummated upon the click of a button labeled "place wager" and receipt by the bettor of an immediate, automatic confirmation. (See Tr.56-78, 147-173; GX 3-V, 5-V, 8-V, 11-V). If such communications did not involve transmittal of a "bet or wager," it is hard to imagine what Congress had in mind.
In drafting Section 1084(a), moreover, Congress not only failed to draw a distinction between "account wagering" (i.e., wagering with funds deposited before the bet is placed) and "credit wagering" (i.e., wagering with funds deposited after the bet is placed), but used inclusive language aimed at avoiding any distinction among different forms of betting. In the third clause of Section 1084(a), for example, Congress expressly made criminal both communications entitling a recipient to "credit" and communications entitling a recipient to "money" as a result of bets or wagers. 18 U.S.C. § 1084(a). The lack of distinction between cash and credit transactions reflected in this wording also comports with Congress’ broad objectives of "assist[ing] the various states in enforcing their gambling laws" and "aid[ing] in the suppression of organized gambling activities." McDonough, 835 F.2d at 1105 (internal quotation marks omitted); accord United States v. Ross, 1999 WL 782749 at *2 (same).
Equally importantly, the factual distinction between "account wagering" and "credit wagering" does not even logically support the legal distinction he asks this Court to make. Cohen’s essential contention is that, under an "account wagering" scheme, a bet cannot be deemed to have been transmitted from New York to Antigua because no money was transferred as an incident to any bet, only a "request that WSE place a bet in Antigua on the individual’s behalf using the funds already on deposit in Antigua." (Br. 47). The same thing, however, could be said of "credit wagering." There too the bettor transfers no money to the party that accepts the bet, only a request to place a bet on credit. Any funds transferred as an incident to the betting transaction are sent afterwards, as part of a process of netting wins and losses or maintaining sufficient "margin" to satisfy the bookie. And the bookie’s acceptance of any bet is dependent on the amount of credit available to the bettor, in the same way that WSE’s acceptance of a bet was dependent on the amount of cash in the bettor’s "wagering account."
Cohen’s reading of the law, therefore, would equally exclude from the relevant definition both "account wagering" and "credit wagering, thereby placing outside the definition every traditional form of placing and receiving bets. However, "[a] statute should be interpreted in a way that avoids absurd results." United States v. Daury, 215 F.3d 257, 264 (2d Cir. 2000). Cohen’s argument would lead to just such a result, for it would entirely negate the first clause of Section 1084(a) and thereby allow what Judge Griesa aptly termed "an obvious distortion and evasion of the statute." (See Tr. 846; A. 529). Notably, although Cohen claims that Judge Griesa erred in telling the jury that a bet is "transmitted" when one party requests to place a bet and another party accepts the bet (Br. 45, 54-56), Cohen does not say what instruction should have been given or offer any other explanation of the meaning of the relevant clause.
Furthermore, every case that has directly or indirectly addressed the argument made by Cohen has rejected it. In United States v. Ross, Judge Wood rejected this precise argument. In that case, the defendant, an operator of an offshore sportsbook based in Curacao, accepted bets from undercover FBI agents in New York via an Internet website like Cohen’s. The bookmaker moved to dismiss the indictment, claiming that his conduct fell within the safe harbor protections of Section 1084(b) since the transmissions at issue allegedly involved only "information assisting in the placing of bets," and not actual bets themselves. 1999 WL 782749, at * 2-3. Like Cohen, the book-maker argued that this was so because he refused to accept credit and, for that reason, the undercover agents did not provide "any consideration" for the "betting contracts" until funds were withdrawn from a pre-paid account in Curacao. Id. at * 6. By contrast, the book-maker claimed, a bet placed on credit is fully consummated when the bettor sends an instruction to place a bet. Id.
Judge Wood rejected the defendant’s argument on several levels. The court noted that the argument "conflates the question of when a contract has been fully performed with the question of when that contract comes into existence," and stressed that only an offer and acceptance, not an exchange of money, is needed to form a contract. Id. As a matter of statutory construction, moreover, Judge Wood emphasized that,
[w]ere the Court to accept defendant’s argument that the transmission of an ‘offer to bet’ to a bookmaker does not constitute the transmission of a ‘bet,’ § 1084(a)’s prohibition on transmissions of bets would be left inapplicable to a class of transactions that courts have concluded are a central concern of the statute.
Id. at * 5. "The more reasonable interpretation of Congress' distinction between ‘bets’ under § 1084(a) and ‘information’ potentially exempt under § 1084(b)," the court stated, "is the distinction between transmissions constituting an individual gambling transaction ‑‑ those necessary to effect a particular ‘bet or wager’ ‑‑ and transmission of ‘information’ that merely ‘assists’ a potential bettor or bookmaker." Id. Such "information," Judge Wood emphasized, "would include knowledge that may influence whether, with whom, and on what terms to make a bet," including "reporting the results of sporting events, the odds placed on particular contests by odds‑makers, or the identities of persons seeking to place bets." Id. at * 5; see also 1961 U.S.C.C.A.N. 2631, 2631‑32 (citing "the immediate receipt of information as to results of a horse‑race" as an example of "rapid transmission of gambling information by wire communication facilities"). The court concluded, therefore, that "the phrase ‘transmission . . . of bets or wagers,’ as used in 18 U.S.C. § 1084(a), embraces ‘situations where the defendant was himself making or accepting bets directly,’ including accepting via telephone offers to place particular bets." 1999 WL 782749, at * 6.
The reasoning of Ross comports with that of numerous decisions which have considered similar questions arising under Section 1084. In Sagansky v. United States, 358 F.2d 195 (1st Cir. 1966), the First Circuit rejected a challenge to the sufficiency of the evidence underlying a Section 1084(a) conviction in which a telephone caller "placed a bet which [defendant] readily accepted." Id. at 198‑99. There, the defendants argued that the word "transmission" in Section 1084(a) encompasses the sending but not the receiving of bets, but the First Circuit concluded that Section 1084(a) imposes criminal penalties on bookmakers who "accept offers of bets or wagers over the telephone." Id. at 200 (emphasis added). The Tenth Circuit rejected the same argument in United States v. Tomeo, 459 F.2d 445 (10th Cir.1972), reasoning that, in enacting Section 1084(a), Congress intended to reach those transactions in which callers place bets with bookmakers via the telephone because that is what "persons engaged in the business of betting or wagering" do: "[b]ookies take bets, they receive them, they handle them." Id. at 447; see also Blair, 54 F.3d at 642 (affirming conviction for transmission of bets or wagers because "§ 1084 proscribes the knowing use of wire communication facilities to take bets"); McDonough, 835 F.2d at 1104 (affirming § 1084 conviction for transmission of wagers based on defendant's practice of "receiving bets"). As Judge Wood recognized, "[t]he thrust of these courts' reasoning is that § 1084(a)'s prohibition of ‘the transmission of bets or wagers’ applies to bookmakers who ‘hold [themselves] out as being willing to make bets or wagers over interstate telephone facilities, and [do] in fact accept offers of bets or wagers over the telephone.’" Ross, 1999 WL 782749, *4 - *5 (quoting Sagansky, 358 F.2d at 200).
The cases cited by Cohen are not to the contrary. The only federal case that he cites, United States v. Truesdale, 152 F.3d 443 (5th Cir. 1998), involved a prosecution of offshore book-makers for running an "illegal gambling business," in violation of 18 U.S.C. § 1955, which requires proof that the defendants’ operated their business in violation of state law. See 18 U.S.C. § 1955(b)(1)(i). The defendants’ convictions were reversed because the Government based its prosecution on a Texas law prohibiting "bookmaking," but failed to present evidence sufficient to prove that any bets were sent or received in Texas. Truesdale, 152 F.3d at 447-49. Specifically, the court found that the jury could not properly infer that bets were sent or received in Texas solely from evidence that two toll-free numbers used by the organization terminated in that state. As the court stated:
The fact that two of the toll‑free numbers used by the organization terminated at the Texas residences of Truesdale and Jones is not probative of illegal bookmaking without some evidence that bets were actually accepted over these phone lines. If these were the only phone lines associated with WSB and the only means through which bettors could communicate with WSB, then perhaps a jury could rationally conclude that the lines were used for illegal betting. But there were other toll‑free numbers, which were specifically designated as "betting lines," that terminated offshore and were in fact used to place bets.
Id. at 448. Contrary to Cohen’s suggestion (Br. 49-50), therefore, Truesdale in no way implies that bets placed by telephone only constitute "offers to bet" or "betting information." On the contrary, Truesdale strongly suggests that telephonic requests to bet, directed at a book-maker, involve transmission of "bets."
The various state cases and administrative materials cited by Cohen are wholly inapposite. (See Br. 48-56). Each of the cases deals with the question of when and where a betting "contract" is formed for purposes of establishing state or local jurisdiction over the transaction. In Lescallet v. Commonwealth, 17 S.E. 546, 548 (Va.1893) and McQuesten v. Steinmetz, 58 A. 876, 877 (N.H. 1904), for example, the courts held that orders for an intermediary to place bets with a bookie were not themselves completed betting contracts because the intermediaries did not accept the bets or otherwise bind themselves to pay the bettors. In Saratoga Harness Racing, Inc. v. City of Saratoga Springs, 55 A.D.2d 295, 296 (3d Dept. 1976), the court concluded that the fact that an "off-track bet is taken from a resident of, or a person using a telephone in the County of Saratoga" is insufficient to establish that "betting is conducted" in that locality for purposes of subjecting the off-track betting corporation to taxation in that particular county. None of these cases implies that a bet may not be transmitted from one location to another. To the extent that they recognize the general principle that a contract is formed by an offer and acceptance, moreover, they certainly do not help Cohen, since every Betting Count was based upon a two-way wire transmission of both an offer to bet and WSE’s acceptance of the offer.
It similarly provides no help to Cohen that various states have authorized the establishment of "wagering accounts" for the purposes of facilitating state-sponsored off-track betting. (See Br. 51-56). The fact that such "wagering 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.
Finally, even if Cohen were right that the placement of bets by means of WSE’s Internet site and toll-free telephone lines did not involve transmission of "bets or wagers," he could not escape the jury’s independent finding that it involved a communication "which entitles the recipient to receive money or credit as a result of bets or wagers," in violation of the third clause of Section 1084(a). Cohen attempts to dismiss this independent basis for conviction with a bald assertion that the clause "plainly" refers to communications that take place "after the subject sports event" and not to communications that give rise to the betting contract itself. (Br. 45-46 n. 10 (emphasis in original)).
The relevant statutory language, however, includes no such limitation. Cohen’s conduct, moreover, would be covered by this clause even if it were not covered by the first clause of Section 1084(a). Although Cohen maintains that only an "instruction to bet" was transmitted from New York to Antigua, he does not deny that, once the instruction was executed, the bet was confirmed in the very same, two-way communication. The contract formed and confirmed in this manner indisputably entitled "a recipient" of the communication to "money or credit as a result of bets or wagers." One recipient, WSE, was entitled to 10% of the bet no matter what the outcome of the sporting event; and the other recipient, the bettor, had a right to money or credit that was contingent on the outcome of the event but nonetheless valid and enforceable. Notably, if a book-makers acceptance of a bet, thereby forming a betting contract, does not "entitle" the parties to money or credit, it is difficult to see what else would. In this respect, it should be emphasized that a communication that takes place "after the subject sporting event" and "notifies" a party that he has won (Br. 45-46 n. 10) does not "entitle" the bettor to anything new; it only informs him of an "entitlement" that he already has as a result of his bet and that would exist even if he did not receive notification of the result of the sporting event.
The evidence, therefore, sufficiently established that the bets placed via WSE’s website and toll-free telephone lines involved transmission of "bets or wagers," in violation of the first clause of Section 1084, and/or communications entitling a recipient to "money or credit as a result of bets or wagers," in violation of the second clause of that statute. Since neither of those clauses is subject to Section 1084(b)’s safe harbor, the substantive Betting Counts would have to be sustained even if the betting in question was legal in New York.*
C. The Evidence Sufficiently Established That Cohen "Knowingly" Used A Wire Communication Facility To Transmit Bets Or Wagers In Foreign Commerce
" \l 2
As discussed more fully above (see pp. 25-32), the District Court instructed the jury that, in order to convict, it must find that Cohen knowingly committed all the elements of the relevant crime. (See, e.g., Tr. 1198 ("The third element you must find proven is that [the defendant] committed all these acts knowingly."); Tr. 1202 ("where a person acts through someone else, not only does the employee have to commit the acts, but the employee has to do it at the behest and under the direction or pursuant to the direction of the superior in the position of his employer, and the employer must know of all acts and intend that they be done"); Tr. 1214 (Government must prove that the defendant "knew that the deeds described in the statute as being prohibited were being done")). However, the District Court instructed the jury that it need not find that Cohen "knew that he was acting illegally under the statute," thereby "contrasting knowledge of the deeds [prohibited by the statute] with knowledge of whether the deeds were illegal." (Tr. 1214).
Cohen does not contend that ignorance of the law is a defense to a charge under Section 1084(a). Nor does he cite any of the governing precedents on this subject. However, Cohen argues that, because the term "knowingly" should be read to modify each factual element of the crime, "an individual must know that the information being transmitted is in fact a bet or wager." (Br. 58). "It follows," Cohen reasons, that a defendant cannot be convicted of violating the first or third clauses of Section 1084(a) if he "believed that such transmissions involved no more than information assisting in the placing of bets or wagers." (Br. 58-59). As a result, Cohen contends that the district court's instructions allowed him to be convicted without a showing that he had "the requisite mens rea to commit a substantive violation" of the first or third clauses of the statute. (Br. 58-59). This argument is specious.
As discussed above (see pp. 48-49), the Government has never disputed that the "knowledge" requirement of Section 1084(a) applies to all factual elements of a violation. The District Court, moreover, specifically instructed the jury that it needed to find that Cohen committed all the relevant acts knowingly. As the District Court recognized in emphasizing the distinction between "knowledge of deeds" and knowledge of "whether the deeds were illegal" (Tr. 1214), however, the jury was bound by the legal definition of those acts, not Cohen's own subjective definition. Cohen's suggestion that a person cannot knowingly engage in acts prohibited by the statute without believing those acts were unlawful is, of course, just another way of arguing that ignorance of the law is a defense to the crime. Ignorance of the law, though, is not a defense to a violation of Section 1084(a).
As the Supreme Court has stated, it is a longstanding principle that "ignorance of the law or a mistake of law is no defense to criminal prosecution." Cheek v. United States, 498 U.S. 192, 199 (1991). Congress may, of course, supplant this general rule and textually require a greater degree of criminal intent to violate a statute, such as by inserting a textual requirement of "willfulness." See, e.g., Ratzlaf v. United States, 510 U.S. 135, 141 (1994). The word "knowingly," however, does not have this effect. 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." Bryan v. United States, 118 S. Ct at 1946.
Section 1084(a) does not contain any requirement of "willful" conduct. Instead, it requires that the defendant "knowingly" use a wire communications facility for the interstate or foreign transmission of the statutorily-identified categories of gambling material. Consistent with the principles set forth above, courts have uniformly held that, in order to satisfy the intent requirement of Section 1084(a), the Government need only prove that the defendant "knowingly" used a wire communication facility in interstate or foreign commerce for a purpose proscribed by the statute. See Blair, 54 F.3d at 641; United States v. Southard, 700 F.2d 1, 23 (1st Cir. 1983); Ross, 1999 WL 782749 at *8-9; see also United States v. Mendelsohn, 896 F.2d 1183, 1188 (9th Cir. 1990) (no knowledge that the act is unlawful is required under 18 U.S.C. § 1953, which prohibits "knowing" interstate transportation of gambling paraphernalia); United States v. Marquez, 424 F.2d 236, 240 (2d Cir. 1970) (same).* Thus, Cohen's claim that the District Court improperly instructed the jury concerning the requisite mens rea of the offenses should be rejected.
The Rule Of Lenity Has No
Application In This Case
Cohen next claims that the "rule of lenity" grounded in the due process clause requires this Court to adopt his arguments (1) that "account wagering" via the Internet and telephone lines does not involve transmittal of "bets or wagers" or communications "entitling a recipient to money or credit as a result of bets or wagers" and (2) that bookmaking is "legal" in New York. (Br. 62-66). This claim is meritless.
The rule of lenity is a principle of statutory construction of last resort. The rule applies "only if, after seizing everything from which aid can be derived, [a court] can make no more than a guess as to what Congress intended." Reno v. Koray, 515 U.S. 50, 65 (1995) (internal quotation marks and citation omitted); see also United States v. Turkette, 452 U.S. 576, 587 n. 10 (1981) (rule of lenity only "comes into operation at the end of the process of construing what Congress has expressed, not at the beginning as an overriding consideration of being lenient to wrongdoers"). Thus, "[t]he simple existence of some statutory ambiguity . . . is not sufficient to warrant application of th[e] rule [of lenity], for most statutes are ambiguous to some degree." Muscarello v. United States, 118 S. Ct. 1911, 1919 (1998). In such cases, the ambiguity should be resolved by resort to "’the language and structure, legislative history, and motivating policies’ of the statute." Moskal v. United States, 498 U.S. 103, 108 (1990) (quoting Bifulco v. United States, 447 U.S. 381, 387 (1980)).
In order for the rule of lenity to apply, therefore, the statute at issue must contain not just an ambiguity but a "grievous ambiguity." Huddleston v. United States, 415 U.S. 814, 831 (1974). Moreover, the statute must be not just generally ambiguous but "ambiguous as applied to the particular defendant." United States v. Collado, 106 F.3d 1097, 1107 (2d Cir. 1997). The rule bars courts from "applying a novel construction of a criminal statute to conduct that neither the statute nor any prior judicial decision has fairly disclosed to be within its scope." United States v. Lanier, 520 U.S. 259, 266-67 (1997).
Cohen claims that this rule should be invoked because Congress did not enact special statutory definitions of the word "legal" or the words "bets or wagers." (Br. 63-66). As a result of these omissions, Cohen contends, "it is impossible for an individual to determine whether ‘bets or wagers’ are transmitted in an account wagering system" or whether running a sportsbook in New York is "legal." (Br. 64-65). As noted above, however, "'unless otherwise defined, words will be interpreted as taking their ordinary, contemporary, common meaning.'" Harris v. Sullivan, 968 F.2d at 265 (quoting Perrin v. United States, 444 U.S. at 42). Neither the word "legal" nor the words "bets or wagers" defy ordinary understanding. Judge Griesa’s interpretation of these words, moreover, was forecasted by many sources other than the words themselves. As discussed in Point II of this brief, the "illegality" of taking bets in New York has long been recognized not only by state and federal judicial decisions but by criminal statutes, civil statutes, and the Constitution of the state. In addition, long before Cohen engaged in the conduct for which he was convicted, numerous reported judicial decisions upheld the convictions of others, based on virtually the same conduct, for transmitting bets in interstate and foreign commerce. See, e.g., Blair, 54 F.3d at 642; Sagansky, 358 F.2d at 198‑99; Tomeo, 459 F.2d at 447; McDonough, 835 F.2d at 1104. There was more than enough "fair warning," therefore, that this conduct was unlawful.
Cohen points out that a committee of the National Association of Attorneys General observed in 1996 that "[t]here are . . . a number of ambiguous provisions" in Section 1084. (Br. 63). The same observation, however, could be made about many other statutes. Yet that alone does not justify invoking the rule of lenity or otherwise departing from customary rules of statutory interpretation. Reno v. Koray, 515 U.S. at 65; Huddleston v. United States, 415 U.S. at 831. Moreover, ambiguities almost always crop up when one attempts to construe the outer limits of a federal statute and definitively determine its scope. That does not mean, though, that the statute is "ambiguous as applied to [a] particular defendant." United States v. Collado, 106 F.3d at 1107. As discussed in Point II of this brief, Cohen’s conduct is nowhere near the outer limits of Section 1084(a). Indeed, despite his arguments on this appeal, Cohen’s conduct presents one of the least disputable examples of transmitting "bets or wagers" in interstate commerce, for each Internet or telephonic communication all at once involved sending, receiving, accepting, and confirming bets.
In addition, Cohen stresses that, in 1997, a bill was sponsored in Congress that would have added a statutory definition of "bets or wagers." (Br. 64). This proposed amendment, Cohen claims, demonstrates the sponsor’s recognition that "the definition currently is not clear." (Br. 64). As Cohen fails to mention, however, the proposed definition contained little more than a standard dictionary description of the words "bet" and "wager," coupled with language excluding from the scope of the definition transactions governed by the federal securities laws. (See A. 30). Moreover, the proposed definition said nothing about "account wagering," "credit wagering," or any of the other factual and legal distinctions upon which Cohen bases his arguments on appeal. In addition, the amended statute would have retained the word "legal" without adding any definition of that term. (See A. 31). The bill’s sponsors, therefore, did not recognize a single one of the "ambiguities" and gaps in "fair notice" that Cohen perceives in Section 1084(a). Cohen’s arguments for application of a rule of lenity, accordingly, should be rejected.
The District Court Properly Instructed The Jury On Aiding-And-Abetting Liability And The Evidence Sufficiently Supported Cohen’s Convictions On That Theory
Cohen next argues that his convictions on all substantive counts should be reversed because the District Court allegedly "fail[ed] to give an aiding and abetting charge" and instead "explained that the jury could convict upon principles of civil liability." (Br. 67-71). He claims that the District Court was required to instructed the jury that it could convict him of aiding and abetting only if it found that the WSE officials who participated in the relevant betting transactions were themselves criminally liable and not if it found that they were innocent parties acting at Cohen’s direction. (Br. 67-71). Similarly, Cohen argues that the evidence was insufficient to sustain his convictions on an aiding-and-abetting theory because it was insufficient to prove that these WSE officials were themselves criminally liable. (Br. 71-72). In addition, Cohen challenges his convictions on Counts Seven and Eight on the ground that the transmissions in question took place approximately a week after he was arraigned on criminal charges in this case. (Br. 72).
All of these arguments, however, are based on analysis of the wrong aiding-and-abetting statute. Cohen’s analysis focuses on the first paragraph of the aiding and abetting statute, 18 U.S.C. § 2(a), which makes a person liable for aiding and abetting a crime committed by another person. The District Court’s instructions and the Government’s theory of liability, however, were based on the second paragraph of that statute, 18 U.S.C. § 2(b), which makes it a crime to "cause" another person, including an innocent one, to perform acts that would be an offense if directly performed by the aider and abettor. That theory of liability, moreover, remained applicable after Cohen’s arraignment, since he continued to accept money and other betting-related communications that were the product of the advertising campaign and book-making operation that he planned, organized, and set in motion before his arraignment and allowed to continue afterwards.
A. The Relevant Facts
In its main charge to the jury, the District Court provided an instruction with respect to the second paragraph of Section 2. Specifically, the Court instructed the jury that "[i]f a person is acting through employees, he can be guilty of a violation of Section 1084" (Tr. 1200; A. 865); that "[t]his is really true under the statute itself, and it is also true under what is called the aiding and abetting statute (id.); and that "while it is not necessary that the employer direct or know of the specific call in question," as long as the defendant "knows and directs that calls of this precise nature are done at a time which covers the time alleged," he could be guilty of violating the statute. (Tr. 1201; A. 866).
The Court cautioned the jury, however, that "for the employee to be guilty, all of the acts defined in the elements [of Section 1084(a)] that I have described to you must be committed by the employee or employees, and the employer must know that all such acts are being done and intend they are done." (Tr. 1201; A. 866). Judge Griesa then repeated: "Where a person acts through someone else, not only does the employee have to commit the acts, but the employee has to do it at the behest and under the direction or pursuant to the direction of the superior . . . and the employer must know of all these acts and intend that they be done." (Tr. 1202; A. 867).
The defense objected to these instructions, although it proposed no alternative instructions concerning the second paragraph of Section 2. (Tr. 1239; A. 904).
B. General Legal Principles
1. Aiding-And-Abetting Liability Under 18 U.S.C. § 2(b)
Title 18, United States Code, Section 2(b) provides that:
Whoever willfully causes an act to be done which if directly performed by him or another would be an offense against the United States, is punishable as a principal.
This subsection was added to § 2 in 1948 to
"make[ ] clear the legislative intent to punish as a principal not only one who directly commits an offense and one who ‘aids, abets, counsels, commands, induces or procures’ another to commit an offense, but also anyone who causes the doing of an act which if done by him directly would render him guilty of an offense against the United States. It removes all doubt that one who puts in motion ... or causes the commission of an indispensable element of the offense by an innocent agent or instrumentality, is guilty as a principal . . . ."
United States v. Concepcion, 983 F.2d 369, 383‑84 (2d Cir. 1993) (quoting 18 U.S.C. § 2 Historical and Revision Notes) (emphasis added). Thus, § 2(b) adopts the "general principal of causation in criminal law that an individual (with the necessary intent) may be held liable if he is a cause in fact of the criminal violation, even though the result which the law condemns is achieved through the actions of innocent intermediaries." United States v. Kelner, 534 F.2d 1020, 1022 (2d Cir. 1976); see also United States v. Jordan, 927 F.2d 53, 55 (2d Cir. 1991) (defendant liable for causing other party to import heroin into United States); United States v. Heyman, 794 F.2d 788, 791 (2d Cir. 1986).
2. Sufficiency Of The Evidence
A defendant challenging the sufficiency of the evidence supporting his conviction "bears a very heavy burden." United States v. Marji, 158 F.3d 60, 63 (2d Cir.), cert. denied, 119 S. Ct. 607 (1998); accord United States v. Desimone, 119 F.3d 217, 223 (2d Cir. 1997), cert. denied, 119 S. Ct. 174 (1998); United States v. Gonzalez, 110 F.3d 936, 940 (2d Cir. 1997); United States v. Brewer, 36 F.3d 266, 268 (2d Cir. 1994); United States v. Jones, 30 F.3d 276, 281 (2d Cir. 1994). The reviewing court must consider the evidence "in the light most favorable to the government, drawing all inferences and resolving all issues of credibility in the government's favor," Glasser v. United States, 315 U.S. 60, 80 (1942); United States v. Payton, 159 F.3d 49, 56 (2d Cir. 1998); United States v. Pipola, 83 F.3d 556, 564 (2d Cir. 1996); United States v. Aulicino, 44 F.3d 1102, 1114 (2d Cir. 1995), and the jury's verdict must be sustained if "any rational trier of fact could have found the essential elements of a crime beyond a reasonable doubt." Jackson v. Virginia, 443 U.S. 307, 319 (1979) (emphasis added); see also United States v. Taylor, 18 F.3d 55, 57-58 (2d Cir. 1994); United States v. Sureff, 15 F.3d 225, 228 (2d Cir. 1994); United States v. Brown, 937 F.2d 32, 35 (2d Cir. 1991). The task of choosing among the permissible competing inferences that can be drawn from the evidence is for the jury, not the reviewing court. See, e.g., United States v. Taylor, 18 F.3d at 57-58; United States v. Sureff, 15 F.3d at 228; United States v. Matthews, 20 F.3d 538, 548 (2d Cir. 1994).
Cohen’s only complaint concerning the District Court’s jury instructions is that they "allowed the jury to conclude that Defendant could be found guilty without the jury’s finding that a crime had been committed by Defendant’s employees." (Br. 71 (emphasis in original)). However, all the cases Cohen cites (Br. 67-68), including United States Smith, 198 F.3d 377, 383 (2d Cir. 1999); United States v. Labat, 905 F.2d 18, 23 (2d Cir. 1990); United States v. Dickerson, 508 F.2d 1216, 1218 (2d Cir. 1975); United States v Piopla, 83 F.3d 556, 561 (2d Cir 1996), and United States v. Zambrano, 776 F.2d 1091, 1097 (2d Cir. 1985), involve application of the wrong aiding-and-abetting provision: 18 U.S.C. § 2(a).
As discussed above (see pp. 82-83), there is no doubt that it was proper under § 2(b) and general principles of criminal causation to instruct the jury as the District Court did. The District Court correctly emphasized that the jury could convict on this theory only if it found that the employees were acting "at the behest and under the direction" of the defendant and the defendant "kn[e]w of all these acts and intend[ed] that they be done" (Tr. 1202; A. 867; see also Tr. 1201; A. 866). Since the defendant could act through innocent agents, see, e.g., United States v. Concepcion, 983 F.2d at 383‑84; United States v. Kelner, 534 F.2d at 1022; United States v. Jordan, 927 F.2d 53, 55 (2d Cir. 1991), the District Court was not required to provide any instruction concerning the criminality of his employees. Cohen’s challenge to the jury instructions, therefore, cannot be sustained. Because Cohen’s sole claim with respect to the sufficiency of the evidence underlying Counts Two through Six is that evidence of "knowing criminality by defendant’s employees was lacking" (Br. 71-72), this claim too must fail.
Cohen argues that his conviction on Counts Seven and Eight should be reversed because the relevant communications took place several days after his arraignment on charges in this case and release on bail. (Br. 72). Counts Seven and Eight were predicated on communications between undercover agents and Cohen’s principal subordinates at WSE, Haden Ware and Spencer Hanson. (Tr. 308-23). In the communication that was the subject of Count Seven (a telephone conversation on March 17, 1998), an agent obtained information on how to bet from Ware. (Tr. 312-15). In the communication that was the subject of Count Eight (a telephone conversation on March 18, 1998), an agent placed bets on two basketball games with Hanson. (Tr. 315-23). In support of his challenge to these convictions, Cohen stresses that "[t]here was absolutely no evidence that Defendant was present at the WSE headquarters" when the relevant communications occurred. (Br. 72). In addition, Cohen claims, "the record lacked any evidence that Defendant was even aware of the telephone calls underlying Counts Seven and Eight." (Br. 72). There are several problems with these arguments.
To begin with, this Court has made clear that, under principles of criminal causation, a defendant need not personally use a wire communication facility or have knowledge of the particular communication at issue in order to violate Section 1084(a). What is important, rather, is that the defendant set in motion the process which leads to the communication and makes it foreseeable to him. In United States v. Kelley, 395 F.2d 727 (2d Cir. 1968), the defendant, a book-maker, was charged with a violation of Section 1084(a) based on interstate calls made by his betting customers. The proof at trial showed that Kelley established a telephone line at a New York hotel which customers were instructed to use if they wished to place a bet. When they would call, the customer would ask for a fictitious person and would be told by the defendant or one of his employees that this particular individual was not available. The use of the fictitious name, however, was the customer’s signal to the defendant that he was interested in betting. Afterwards the defendant would call the customer and arrange the bet. Id. at 728. The Government’s theory of the case was that the defendant was criminally responsible for calls that customers placed from outside New York to the telephone line in the New York hotel established by the defendant. Id.
On appeal, the defendant argued that his conviction could not be sustained because he did not make or plan these interstate telephone calls. This Court, however, swiftly rejected this challenge. This Court noted that "[a] person may be held responsible as a principal under 18 U.S.C. § 2(b) for causing another to do an act which would not have been criminal if directly performed by another person." Id. at 729. On this basis, the Court concluded, the defendant was properly held responsible for the interstate calls since they were foreseeable to him. As this Court explained:
The evidence showed that appellant told these bettors how to get in touch with him if they wished to make a bet and, therefore it was reasonable to expect that they would make interstate calls. This is sufficient to find that he "caused" the interstate calls.
Id. (citing United States v. Scandifia, 390 F.2d 244 (2d Cir. 1968); Bass v. United States, 324 F.2d 168 (8th Cir. 1963)).
In this case, the evidence established that Cohen organized and planned all the critical aspects of WSE’s illegal betting operation, including the website, advertising campaign, toll-free telephone lines, wagering accounts. (Tr. 260-63, 377-82, 395-96, 400, 405-07, 409-10, 459, 466-68). After he was arraigned on criminal charges, moreover, Cohen was released on bail and retained his position as President of WSE, which continued to pay him a salary, travel expenses, and the legal fees of his criminal lawyer. (Tr. 838, 885-86). In addition, although Cohen testified that he did not "deal with daily operations" of WSE after his arraignment (Tr. 957), Cohen appears to have taken no steps to dismantle or even scale back the betting operation that he established. Thus, Cohen’s "click and bet" website remained in place and continued to accept bets following his arraignment and all the way up until trial. (Tr. 660-61). The toll-free telephone lines also remained in place. (Tr. 312-23). What is more, records of Western Union revealed that WSE customers in the United States directed to Cohen himself at least 70 separate wire transfers in the months after his arraignment. (Tr. 1180-82; see GX 1000J-P, 1001E-K).
Thus, although the telephone communications that were the subjects of Counts Seven and Eight took place a few days after Cohen’s arraignment, they were the product of the business operation, facilities, and policies that Cohen had developed before his arraignment and continued afterwards. From all the evidence at trial, therefore, the jury was clearly entitled to conclude that these communications were foreseeable to Cohen and a result of his conduct.
The District Court Did Not Abuse
Its Discretion In Declining To Authorize
The Deposition Of Gyneth McAllister
Cohen’s last claim is that the District Court abused its discretion in declining to adjourn the trial and authorize the deposition of Gyneth McAllister in Antigua. According to Cohen, the District Court was required to authorize the deposition because McAllister would have testified about conversations with the defendant that would prove (1) Cohen did not intentionally violate Section 1084(a), and (2) "bets and wagers" were not "transmitted" by WSE. (Br. 74). Cohen's claims are meritless. The District Court acted well within its discretion in declining to authorize McAllister's deposition.
A. General Legal Principles
Rule 15(a) of the Federal Rules of Criminal Procedure provides, in relevant part:
Whenever due to exceptional circumstances of the case it is in the interest of justice that the testimony of a prospective witness of a party be taken and preserved for use at trial, the court may upon the motion of such party and notice to the parties order that testimony of such witness be taken by deposition. . . .
Fed. R. Crim. P. 15(a)(emphasis added). Depositions in criminal matters are disfavored, and the burden is on the party seeking a Rule 15 deposition to establish that exceptional circumstances exist to justify the procedure. United States Drogoul, 1 F.3d 1546, 1552 (11th Cir. 1993). At a minimum, the moving party must demonstrate that the prospective witness is unavailable and that his or her testimony is material. See United States v. Johnpoll, 739 F.2d 702, 709 (2d Cir. 1984); accord United States v. Rosenstein, 474 F.2d 705, 715 (2d Cir. 1973).
Rule 15's materiality test requirement is a stringent one. To meet the requirement, a party must do more than show that the testimony sought would be relevant to the case. United States v. Ismaili, 828 F.2d 153, 161 & n. 6 (3d Cir. 1987). The defendants must demonstrate that the testimony is necessary to prevent a "failure of justice." United States v. Alvarez, 837 F.2d 1024, 1029 (11th Cir. 1988). Courts of Appeals, therefore, have routinely upheld the denial of Rule 15 motions where the proffered testimony "could not negate the crux of the . . . indictment," United States v. Ismaili, 828 F.2d at 161 & n. 6, where it was "vague and indefinite," United States v. Whiting, 308 F.2d 537, 541 (2d Cir. 1962), or where it was cumulative or inadmissible. United States v. Hernandez-Escarsega, 886 F.2d 1560, 1570 (9th Cir. 1989). The decision whether to grant a Rule 15 deposition rests in the discretion of the district court, and will not be overturned absent clear abuse. United States v. Drogoul, 1 F.3d at 1551 (11th Cir. 1993); United States v. Johnpoll, 739 F.2d at 708.
Cohen claims that McAllister’s deposition was necessary to prevent a "failure of justice," United States v. Alvarez, 837 F.2d at 1029, because she would have testified about her conversations with U.S. Government officials concerning Antigua's proposed Internet gambling scheme. (Br. 74). According to counsel, McAllister had gleaned "tacit acceptance" by the United States of Antigua's scheme based on the mere fact that American officials were willing to meet with her and did not specifically inform her that, if bookmakers in Antigua took bets from Americans using telephone lines Section 1084, might be violated. (Br. 75)*. In addition, Cohen asserts, because McAllister communicated her belief "that all actual bets would be placed in Antigua" (Br. 75), and because Cohen "clearly expressed his belief [to the Antiguan official] that no bets or wagers were transmitted from the United States to Antigua" (Br. 75) (emphasis added), it followed that the deposition should have been allowed. Finally, Cohen claims, McAllister would have been able to explain Antigua's regulated gambling scheme to the jury; this, Cohen asserts, would have been helpful background against which to assess whether the Government had proven the allegations charged against him in the Indictment. (Br. 75).
As noted above (see pp. 20-21), after reviewing detailed submissions by the parties concerning whether to authorize the deposition in question, and after hearing extensive argument on those submissions, the District Court determined that Cohen had failed to demonstrate that exceptional circumstances existed which would warrant adjourning the trail for the taking of McAllister's deposition. Specifically, the District Court concluded that every item proffered by counsel as to what the witness would testify to and found that all were irrelevant: "If the defendant did the physical acts, did the acts n the statute and if he knew that he was using a wire communication facility, in my view, that is the commission of a crime." (A. 282). Moreover, the Court held, "[i]f [Cohen] had conversations with other people, such as Ms. McAllister, and seemed to get some assurance that what he was doing was OK, my view is that that is not a defense." (A. 282).
Any claim of error in this ruling falls with the same weight as all Cohen’s other arguments based on the premise that his knowledge of the law was an element of the crime. For McAllister's testimony was offered primarily on the point of whether Cohen acted with the specific intent to violate the law, an issue irrelevant to the general-intent charges in this case. (See pp. 74-76, supra). McAllister's personal views as to what constituted a "transmission" of a "bet" within the meaning of Section 1084, of course, were as irrelevant as Cohen's. Accordingly, Cohen cannot demonstrate that McAllister’s testimony would have even been admissible, much less that the loss of her potential testimony resulted in a "failure of justice." Alvarez, 837 F.2d at 1029.
The judgment of conviction should be affirmed.
Dated: New York, New York
January 19, 2001
MARY JO WHITE,
United States Attorney for the
Southern District of New York,
Attorney for the United States
Joseph V. De Marco,
George S. Canellos,
Assistant United States Attorneys,
The undersigned counsel for the United States hereby certifies that this brief does not comply with Rule 32(a)(7)(B) of the Federal Rules of Appellate Procedure but is being submitted pending the Court’s resolution of the Governmen’s motion for leave to file an oversized brief, dated January 22, 2001. As measured by the word-processing system used to prepare this brief, there are 24,721 words in the brief.
Mary Jo White,
United States Attorney for the
Southern District of New York
By: George S. Canellos
Assistant United States Attorney
TABLE OF CONTENTS
Preliminary Statement 1
Statement Of Facts 4
A. The Government’s Case 4
1. Overview 4
2. WSE’s Book-Making Operation 6
C. The Defense Case 13
D. Procedural History Relevant To Cohen’s "State Of Mind" Defense 16
1. The Government’s In Limine Motion 16
2. Cohen's Motion For Leave To Take A Foreign Deposition 20
3. The Arguments At Trial 21
4. The Charging Conference And Instructions To The Jury 25
5. The Jury’s Verdict 32
Point I -- The District Court Did Not Err In Failing To Instruct The Jury That Conspiracy Requires A "Corrupt" Or "Evil" Motive 33
Point II -- The Evidence Was Sufficient To
Sustain Cohen’s Convictions Of
The Relevant Substantive Offenses 49
A. Betting On Sporting Events Is Not Legal In The State Of New York 52
B. The Evidence Sufficiently Established That Cohen Violated The Second And/Or The Third Clauses Of Section 1084(a) 61
C. The Evidence Sufficiently Established That Cohen "Knowingly" Used A Wire Communication Facility To Transmit Bets Or Wagers In Foreign Commerce 73
Point III -- The Rule Of Lenity Has No
Application In This Case 76
Point IV -- The District Court Properly Instructed The Jury On Aiding-And-Abetting Liability And The Evidence Sufficiently Supported Cohen’s Convictions On That Theory 80
A. The Relevant Facts 81
B. General Legal Principles 82
1. Aiding-And-Abetting Liability Under 18 U.S.C. § 2(b) 82
2. Sufficiency Of The Evidence 83
C. Discussion 84
Point V -- The District Court Did Not Abuse
Its Discretion In Declining To Authorize
The Deposition Of Gyneth McAllister 89
A. General Legal Principles 89
B. Discussion 90
Table of Authorities
Bryan v. United States, 118 S. Ct. 1939
(1998) 33, 75
Chadwick v. United States, 141 F. 225 (6th
Cir. 1905) 37
Cheek v. United States, 498 U.S. 192 (1991) 75
Connecticut National Bank v. Germain, 503
U.S. 249 (1992) 62
Cruz v. United States, 106 F.2d 828 (10th
Cir. 1939) 36
Fall v. United States, 209 F. 547 (8th Cir.
Glasser v. United States, 315 U.S. 60 (1942)........... 84
Hamburg-American Steam Packet Co. v.
United States, 250 F. 747 (2d Cir.
1918) 36, 37
Harris v. Sullivan, 968 F.2d 263 (2d
Cir.1992) 62, 78
Huddleston v. United States, 415 U.S.
814 (1974).... 78, 79
Jackson v. Virginia, 443 U.S. 307 (1979) 84
Landen v. United States, 299 F. 75 (6th Cir.
Martin v. United States, 389 F.2d 895
(5th Cir. 1968) 60, 61
Morisette v. United States, 342 U.S. 246
Moskal v. United States, 498 U.S. 103 (1990) 77
Muscarello v. United States, 118 S. Ct. 1911
Ratzlaf v. United States, 510 U.S. 135 (1994) 75
Reno v. Koray, 515 U.S. 50 (1995).... 77, 79
Sagansky v. United States, 358 F.2d
195 (1st Cir. 1966) 67, 72, 79
Staples v. United States, 511 U.S. 600 (1994) 48
Sterling Suffolk Racecourse Ltd. Partnership
v. Burrilville Racing Association, Inc.,
989 F.2d 1266 (1st Cir. 1993).... 59, 60
United States Drogoul, 1 F.3d 1546 (11th
Cir. 1993).... 89, 90
United States Smith, 198 F.3d 377 (2d Cir.
United States v. Alvarez, 837 F.2d 1024
(11th Cir. 1988) 90, 92
United States v. Aulicino, 44 F.3d 1102 (2d
Cir. 1995) 84
United States v. Barker, 514 F.2d 208
(D.C. Cir. 1975) 43, 44
United States v. Blair, 54
F.3d 639 (10th Cir. 1995)... passim
United States v. Brewer, 36 F.3d 266 (2d
Cir. 1994) 84
United States v. Brown, 937 F.2d 32 (2d Cir.
United States v. Cohen, 378 F.2d 751 (9th
Cir. 1967) 76
United States v. Collado, 106 F.3d 1097
(2d Cir. 1997) 78, 79
United States v. Concepcion, 983 F.2d
369 (2d Cir. 1993) 83, 85
United States v. Daury, 215 F.3d 257 (2d
Cir. 2000) 64
United States v. Desimone, 119 F.3d 217
(2d Cir. 1997), cert. denied, 119 S. Ct. 174
United States v. Dickerson, 508 F.2d 1216
(2d Cir. 1975) 85
United States v. DiNola, slip-op.,
Cr. 1051 (WHP) (S.D.N.Y. March 4, 1999) 33
United States v. Eisenberg, 596 F.2d 522
(2d Cir. 1979) 41
United States v. Feola, 420 U.S. 671 (1975) 34, 38-43
United States v. Gonzalez, 110 F.3d 936
(2d Cir. 1997) 84
United States v. Hernandez-Escarsega, 886
F.2d 1560 (9th Cir. 1989) 90
United States v. Herrera, 584 F.2d 1137 (2d
Cir. 1978) 41
United States v. Heyman, 794 F.2d 788 (2d
Cir. 1986) 83
United States v. Ingraham, 360 U.S. 672
United States v. Ismaili, 828 F.2d 153 (3d
Cir. 1987) 90
United States v. Johnpoll, 739 F.2d 702 (2d
Cir. 1984) 90
United States v. Jones, 30 F.3d 276 (2d Cir.
United States v. Jordan, 927 F.2d 53 (2d
Cir. 1991) 83, 85
United States v. Keegan, 141 F.2d 248 (2d
Cir. 1944), rev'd on other grounds, 325
U.S. 478 (1945) 39
United States v. Keegan, 325
U.S. 478 (1945) 34, 44, 45, 46
United States v. Kelley, 254 F. Supp. 9
(S.D.N.Y. 1966) 55
United States v. Kelley, 395 F.2d 727
(2d Cir. 1968) 86, 87
United States v. Kelner, 534 F.2d 1020
(2d Cir. 1976) 83, 85
United States v. Labat, 905 F.2d 18 (2d Cir.
United States v. Lanier, 520 U.S. 259 (1997) 78
United States v. Mack, 112 F. 290 (2d Cir.
United States v. Marji, 158 F.3d 60 (2d Cir.),
cert. denied, 119 S. Ct. 607 (1998) 84
United States v. Marquez, 424 F.2d 236 (2d
Cir. 1970) 76
United States v. Matthews, 20 F.3d 538 (2d
Cir. 1994) 84
United States v. Mauro, 501 F.2d 45 (2d
Cir. 1974) 39, 46
United States v. McDonough,835 F.2d 1103 (5th Cir.
1988) 58, 60, 64, 67, 79
United States v. McDougal, 25 F. Supp. 2d
85 (N.D.N.Y. 1998), aff'd mem., 216 F.3d
1074 (2d Cir. 2000) (table) 43
United States v. Mendelsohn, 896 F.2d 1183
(9th Cir. 1990) 76
United States v. James Monteleon, Order, 98 Cr. 812 (BDP) (S.D.N.Y., April 28, 1999) 55
United States v. Murray, 928 F.2d 1242 (1st
Cir. 1991) 42
United States v. Payton, 159 F.3d 49 (2d
Cir. 1998) 84
United States v. Pezzino, 535 F.2d 483 (9th
Cir. 1976) 72
United States v. Piervinanzi, 23 F.3d 670
(2d Cir. 1994) 56
United States v. Pipola, 83 F.3d 556 (2d
Cir. 1996) 84, 85
United States v. Podell, 519 F.2d 144 (2d
Cir. 1975) 41
United States v. Previte, 648 F.2d 73 (1st
Cir. 1981) 44
United States v. Reeder, 614 F.2d 1179 (8th
Cir. 1980) 72
United States v. Ron Pair Enterprises, Inc.,
489 U.S. 235 (1989) 56
United States v. Rosenstein, 474 F.2d 705
(2d Cir. 1973) 90
United States v. Ross, 1999 WL
782749 (S.D.N.Y. Sep. 16, 1999)
(KMW) 33, 58, 64
United States v. Salameh, 152 F.3d 88 (2d
Cir. 1998), cert. denied, 525 U.S. 1112
United States v. Schwartz, 464 F.2d 499
(2d Cir. 1972); 39, 46
United States v. Sellers, 483 F.2d 37 (5th
Cir. 1973) 72
United States v. Southard, 700 F.2d 1 (1st
Cir. 1983) 75
United States v. Stonehouse, 452 F.2d
455 (7th Cir. 1971) 72, 73
United States v. Sureff, 15 F.3d 225 (2d Cir.
United States v. Taylor, 18 F.3d 55 (2d Cir.
United States v. Thomas, 887 F.2d 1341
(9th Cir. 1989) 43
United States v. Tomeo, 459 F.2d
445 (10th Cir.1972) 67, 72, 79
United States v. Truesdale, 152 F.3d
443 (5th Cir. 1998) 68, 69
United States v. Turkette, 452 U.S. 576 (1981) 77
United States v. Whiting, 308 F.2d 537 (2d
Cir. 1962) 90
United States v. X-Citement Video, Inc., 513
U.S. 64 (1994) 48
United States v. Zambrano, 776 F.2d 1091
(2d Cir. 1985) 85
Finger Lakes Racing Association v. New
York State Racing & Wagering Board, 45
N.Y.2d 471 (1978) 54
Lescallet v. Commonwealth, 17 S.E. 546
McQuesten v. Steinmetz, 58 A. 876 (N.H.
New York Racing Association v. Hoblock,
704 N.Y.S.2d 52 (3d Dep't 2000) 55
People v. Powell, 63 N.Y. 88 (1875) 34, 35, 36
People v. World Interactive Gaming
Corpo ration, 714 N.Y.S.2d 844, 1999
WL 591995 (Sup. Ct., N.Y. Co. 1999) 55, 56
Saratoga Harness Racing, Inc. v. City of
Saratoga Springs, 55 A.D.2d 295 (3d
Dept. 1976)........... 69
Federal Statutes and Rules:
18 U.S.C. § 2(a).... 81, 82, 85, 87, 97
18 U.S.C. § 111 39
18 U.S.C. § 1084(a) 1, 49, 63, 66, 72
18 U.S.C. § 1955.. 42, 68
15 U.S.C. §§ 3001-3007 (1988) 59
Fed. R. Crim. P. 15(a).......... 89
N.Y. Const., Art. I, § 9(1)... 53
N.Y. Gen. Oblig. Law § 5-401 (McKinney
N.Y. Gen. Oblig. Law § 5-411 (McKinney 1989) 54
N.Y.P.L § 225.00(12) (McKinney 1999) 53, 57
N.Y.P.L § 225.05 (McKinney 1999) 53
N.Y.P.L §§ 225.10 (McKinney 1999) 53
N.Y. Racing, Pari-Mutuel Wagering and
Breeding Law, §§ 502 et seq..... 54
New York State Executive Law § 63(12)
(McKinney 2000) 56
H.R. Rep. No. 87-967, 87th Cong., 1st Sess.
Devitt, Fed. Jury Prac. & Instr. § 28.03 (1998) 47
Sand, Modern Federal Jury Instructions, ¶¶
39-7=12. 25, 33
62 N.Y. Jur.2d Gambling § 8 (1987) 55
* Indictment 98 Cr. 434 (TPG) (the "Original Indictment"), was filed on May 11, 1998, and charged Jay Cohen with conspiring, from in or about 1996 up to and including in or about March 1998, to violate the Wire Wager Act, and with committing eight substantive Wire Act violations. Indictment S1 98 Cr. 434 (TPG) (the "First Superseding Indictment"), was filed on October 16, 1998. The First Superseding Indictment differed from the Original Indictment in that it (1) alleged that the conspiracy extended until in or about October 1998, rather than March 1998, and (2) alleged the commission of additional overt acts in furtherance of the conspiracy. The Indictment upon which Cohen was tried, Indictment S2 98 Cr. 434 (TPG), differed from the First Superseding Indictment primarily in that it omitted one substantive count for which venue was lacking in the Southern District of New York.
Three alleged co-conspirators of Cohen -- Steve Schillinger, Spencer Hanson, and Haden Ware -- were not named as defendants in the above-referenced indictments, but were charged by complaint, in March 1998, with conspiracy to violate the Wire Wager Act. Each defendant remains a fugitive on that charge.
* "Tr." refers to the trial transcript; "GX" refers to the Government exhibits; "DX" refers to defense exhibits; “Br.” refers to Cohen’s brief on appeal; “A.” refers to Cohen’s appendix on appeal; and “SA” refers to the supplemental appendix being filed with the Government’s brief.
* The investigation resulted in the prosecution and conviction of the principals and/or employees of numerous other offshore bookmakers, including those charged with conspiracy to violate Section 1084(a) in the following cases: United States v. Mike Saul, 98 Cr. 322 (S.D.N.Y.), United States v. David Budin, 98 Cr. 481 (S.D.N.Y.), United States v. Gene Elsberg, 98 Cr. 480 (S.D.N.Y.), United States v. Laurence Stofan, 98 Cr. 782 (S.D.N.Y.; United States v. Thomas DiNola, 98 Cr. 1051 (S.D.N.Y.); and United States v. Allen Ross, 98 Cr. 1179 (S.D.N.Y.).
* Bookmakers typically seek to earn money not on actual outcomes of games but on commissions on each bet. (Tr. 71-72). In a perfectly "balanced" book, all winning bets and losing bets cancel each other out, with the bookie retaining a commission on each bet placed regardless of who wins the particular game. (Tr. 72). Cohen’s sportsbook accepted bets based on the "point spread" of a particular game (i.e., the number of points by which a team is predicted to defeat its opponent), with the bettor winning or losing depending on whether the actual score of the game fell inside or outside of the spread. (See, e.g., Tr. 69-70, 314, 587; GX 309). In addition, Cohen’s sportsbook accepted so-called "over/under" bets, which involve a wager that the combined score of both teams' points at the end of the game will be either "over" or "under" a given number. (See, e.g., Tr. 71; GX 801-A, 803-A).
** On December 3, 1997, the undercover agent called WSE to ask that the account be closed and that the balance of funds in the account be sent to the agent in the United States by overnight mail. (Tr. 79-81; GX 39-T). The following day, the agent received a bank check made payable to him in the amount of $200, drawn on the Antiguan bank's account at Chase Bank in New York. (Tr. 81; GX 811-A).
* Cohen asserts that "there was no evidence that [Cohen] or any WSE employees transmitted bets or wagers, only that WSE customers did" and that this would exempt him from liability under the third clause of Section 1084(a). (Br. 46 n. 11). Section 1084(a), however, does not punish the mere transmission of bets or wagers, but rather the "'use" of interstate or international wire communication facilities for their transmission. See 18 U.S.C. § 1084(a). In this case, all of uses of such facilities -- including WSE’s website and toll-free telephone lines -- were arranged by Cohen. Moreover, five Courts of Appeals have explicitly held that the term "transmission" contained in Section 1084(a) includes both the sending and the receiving of the three prohibited categories of material. See United States v. Reeder, 614 F.2d 1179, 1184-85 (8th Cir. 1980) (the "prevailing view is that [Section 1084(a)] forbids the use of interstate facilities for sending or receiving wagering information"); accord United States v. Pezzino, 535 F.2d 483, 484 (9th Cir. 1976);United States v. Sellers, 483 F.2d 37, 44-45 (5th Cir. 1973); United States v. Tomeo, 459 F.2d at 446; Sagansky, 358 F.2d at 200.
One case, United States v. Stonehouse, 452 F.2d 455 (7th Cir. 1971), reached a different conclusion, holding that "transmission" generally includes sending, but not receipt, of information. Id. at 457. Stonehouse, however, involved the defendant's receipt of a Western Union wire ticker, which permitted only one-way communication from the sender to the recipient. In holding that the defendant was not liable for this transmission, the court stressed the distinction between the Western Union wire ticker and a telephone, "which provides a means for communication between two persons, each of whom normally transmits, as well as receives, some information during any use of the facility." Id. Here, of course, the Betting Counts were premised on two-way telephone and Internet communications. The bettors’ communications, moreover, were solicited by Cohen himself, who organized WSE’s advertising campaign, and were carried out in the manner dictated by his website and by telephone operators acting under his directions.
* In a decision that predates the Supreme Court’s recent interpretations of the statutory term "knowingly," the Ninth Circuit approved a district court’s instruction, in a prosecution under Section 1084(a), that the defendant should be presumed by the jury to know the law but may rebut this presumption with proof of his ignorance. See United States v. Cohen, 378 F.2d 751, 756 (9th Cir. 1967). In approving the instruction, the court did not engage in any analysis of the relevant statutory language; rather, it emphasized that betting is an innocent act in Nevada and stated that the "rebuttable presumption" standard afforded "those innocent of intentional wrongdoing" a defense, while not "substantially imped[ing] accomplishment of the statute's purpose to discourage professional interstate gambling." Id. Cohen’s reasoning was strongly criticized by the Tenth Circuit in Blair. See 54 F.3d at 642. Cohen, moreover, has not been followed or cited by any other court.
* In an affirmation submitted to the District Court, the Department of Justice official with whom McAllister actually dealt related his potential testimony concerning those conversations. (See A. 47-51). Cohen did not seek to call this witness.