432 F.2d 879 (9th Cir. 1970), 24220, United States v. Roselli

Docket Nº:24220, 24289, 24290, 24300.
Citation:432 F.2d 879
Party Name:UNITED STATES of America, Plaintiff-Appellee, v. John ROSELLI, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Maurice FRIEDMAN, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Benjamin TEITELBAUM, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Manuel JACOBS, Defendant-Appellant.
Case Date:September 28, 1970
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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432 F.2d 879 (9th Cir. 1970)

UNITED STATES of America, Plaintiff-Appellee,

v.

John ROSELLI, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee,

v.

Maurice FRIEDMAN, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee,

v.

Benjamin TEITELBAUM, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee,

v.

Manuel JACOBS, Defendant-Appellant.

Nos. 24220, 24289, 24290, 24300.

United States Court of Appeals, Ninth Circuit.

Sept. 28, 1970

Rehearings Denied Oct. 30, 1970.

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Thomas A. Wadden, Jr. (argued), Washington, D.C., James P. Cantillon, Cantillon & Cantillon, Beverly Hills, Cal., for John Roselli.

Herman F. Selvin, Beverly Hills, Cal. (argued), Grant B. Cooper, Los Angeles, Cal., and Norman Oberstein, Kaplan, Livingston, Goodwin, Berkowitz & Selvin, Beverly Hills, Cal., for Maurice Friedman.

Clarence S. Hunt (argued), Joseph A. Ball, Douglas Dalton, Michael F. Richman, Ball, Hunt, Hart & Brown, Long Beach, Cal., for Benjamin Teitelbaum.

William Marshall Morgan (argued), Morgan, Wenzel, Lynberg, Stearns & Morris, Los Angeles, Cal., for Manuel Jacobs.

Gerald F. Uelmen (argued), and James E. Shekoyan, Asst. U.S. Attys., Robert L. Meyer, U.S. Atty., David R. Nissen, Chief, Special Prosecution Division, Los Angeles, Cal., for appellee.

Before BROWNING, DUNIWAY and HUFSTEDLER, Circuit Judges.

BROWNING, Circuit Judge:

Appellants participated in an organized scheme to cheat for profit in card games played at the Friars Club, a private social club in Beverly Hills, California. Victims were induced to join high stake gin rummy games. Observers stationed at ceiling peekholes transmitted

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playing instructions to confederates in the game via electronic signaling devices.

The activity continued from the summer of 1962 to the summer of 1966. Games were 'peeked' almost daily during a portion of this period. Appellants and other participants in the scheme made large profits. George Seach, an unindicted coconspirator who acted as 'peekman' from late June 1962 to early April 1963, estimated the 'take' during this period at $400,000.

After a long and complex trial appellants were convicted of conspiracy to violate 18 U.S.C. § 1952 (interstate travel and use of interstate facilities in aid of racketeering enterprises) and § 2314 (interstate transportation of fraudulently taken securities), and substantive violations of these sections 1 and of 26 U.S.C. § 7206 (false statements in income tax returns).

I

Appellants' threshold contention that their conduct did not come within the terms of 18 U.S.C. § 1952, raises two issues regarding the meaning of the statute.

Section 1952 condemns interstate travel or the use of interstate facilities in furtherance of 'any unlawful activity,' defined as including 'any business enterprise involving gambling, liquor on which the federal excise tax has not been paid, narcotics, or prostitution offenses in violation of the laws of the State in which they are committed or of the United States.' The Government's theory is that appellants' conduct was a 'business enterprise' within the meaning of the statute because it was a continuous course of conduct pursued for profit; and that it involved 'gambling * * * offenses' in violation of California Penal Code section 332. 2

Appellants' first argument is that section 1952 was intended to reach only forms of gambling that were within the province of organized crime at the time the statute was enacted, numbers, bookmaking, and dice, for example; and that gin rummy does not fall in this category.

It is true that section 1952 was aimed at orgainzed crime. 3 It is also

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true that Congress intended to strike at those illicit activities that provide organized crime with its profits, particularly gambling. 4 To accomplish this purpose, however, Congress did not choose to direct the prohibitions of section 1952 against only those persons who could be shown to be members of an organized criminal group (this much appellants concede), 5 nor against only those kinds of gambling, liquor, narcotics, and prostitution offenses that racketeers were engaged in at the time Congress acted. The words of section 1952 are general; they contain no restriction to particular persons or to particular kinds of gambling, liquor, narcotics, and prostitution offenses. 6

The reasons seem self-evident. It would usually be difficult, if not impossible, to prove that an individual or business was associated with or controlled by a clandestine criminal organization. It might also be difficult to prove that a particular offense was of the kind commonly engaged in by organized criminals in 1961; and, in any event, such a restriction upon the statute's coverage would provide an easy avenue for evasion through adoption of new forms and techniques of illicit trafficking. Nothing in the legislative history suggests that Congress intended prosecutors and courts to read into the Act such highly restrictive and administratively impractical exclusionary provisions. On the contrary, as we read the legislative record, Congress meant exactly what the language of section 1952 states-- it deliberately chose to make the statute applicable generally, and without crippling restrictions, to any person engaged in any kind of illicit business enterprise in one of the four fields of activity specified in the statute, which experience showed to be those in which organized racketeers commonly engaged. 7

Appellants contend that the 'business enterprise' requirement was included in section 1952 for the very purpose of limiting the statute as they suggest. Concededly the purpose of the

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'business enterprise' restriction, like that limiting the statute to illicit activity in one of the four fields in which racketeers were commonly engaged, was to focus the statute upon organized crime. Again, however, the technique Congress employed was that of stating the limitation in general terms applicable to organized crime but not confined to it. Thus Congress limited section 1952 to any 'business enterprise' because the requirement of a continuous course of conduct for profit would ordinarily include the gambling operations of organized crime; 8 but, as we have said, there is nothing to suggest that Congress intended to go beyond the conditions expressed in the statute and require either that the 'business enterprise' be operated by racketeers or that it be of a specific kind in which racketeers very commonly engaged at the time the statute was enacted.

Appellants rely heavily upon 'interpretive technique' applied to the Anti-Racketeering Act of 1934 (18 U.S.C. § 420(a)) in United States v. Local 807, 315 U.S. 521, 535, 62 S.Ct. 642, 86 L.Ed. 1004 (1942). Precedent, however, is of limited value in determining the meaning of another statute, differently phrased, and having its own unique legislative history. Moreover, the Court's efforts in Local 807 to discern Congress' intent were not notably successful. See United States v. Green, 350 U.S. 415, 419, 76 S.Ct. 522, 100 L.Ed. 494 (1956).

Appellants' second argument against coverage is that section 1952 applies only to gambling that is illegal under state (or federal) law; and that California Penal Code section 332 does not make it illegal to play gin rummy for money, but only makes it illegal to commit fraud while playing gin rummy for money. 9

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Again, the statutory language does not support appellants' argument. Section 1952 speaks not of illegal gambling, but of a more inclusive category: 'gambling * * * offenses.' 10

Although Congress did not record the reason for this choice of language, it seems apparent. It is not illegal per se to engage in any of the four fields of activity listed in section 1952 under the laws either of the United States or of all fifty states. The statutory approach in these areas has often been regulatory rather than flatly prohibitory-- particular conduct is forbidden, or conduct in particular circumstances or by particular persons. 11 If section 1952 applied only when all business activity was absolutely prohibited in the particular field, the reach of the section would be materially diminished without apparent reason in terms of the statute's purpose. There is no evidence that Congress intended this result. 12

Appellants point out that Congress declined to adopt a suggestion that section 1952 be broadened to include interstate travel and use of interstate facilities in furtherance of criminal fraud. 13 They argue that California Penal Code section 332 simply punishes fraud, and therefore the term 'gambling * * * offenses' should not be construed to include violations of section 332.

As originally enacted, the California statute dealt exclusively with cheating while gambling. By a series of amendments its scope was broadened to include fraud in certain other specified contexts. 14 It is not, however, a general fraud statute. It prohibits cheating only in the stipulated contexts, including gambling. It is expressly directed (among other things) at the regulation of gambling conduct. It expressly prohibits (among other things) fraud while gambling. We see no reason for excluding violations of this particular prohibition of section 332 from the category of 'gambling * * * offenses.'

Appellants call attention to exchanges at committee hearings and in floor debates that indicate that section 1952 is to apply only to illegal business enterprises, and not to illegal conduct incidental to lawful business enterprises. 15

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If we understand correctly, the conclusion we are asked to draw is that illegal cheating incidental to lawful gambling is not within section 1952.

Accepting the premise, the conclusion does not follow. This case...

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