UNITED STATES v. MARDER
| Decision Date | 02 February 1995 |
| Docket Number | No. 93-1882,93-1882 |
| Citation | 48 F.3d 564 |
| Parties | UNITED STATES, APPELLEE v. Arthur M. MARDER, DEFENDANT, APPELLANT |
| Court | U.S. Court of Appeals — First Circuit |
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS. Hon. Mark L. Wolf, U.S. District Judge.
Richard J. Shea for appellant. Cynthia A. Young, Attorney, Department of Justice, with whom Donald K. Stern, United States Attorney, District of Massachusetts, and Ernest S. Dinisco, Assistant United States Attorney, were on brief for appellee. Before Selya, Circuit Judge, Bownes, Senior Circuit Judge, and Cyr, Circuit Judge.
BOWNES, Senior Circuit Judge. Defendant-appellant, Arthur Marder, was convicted by a jury on all seventeen counts of the indictment against him. Twelve counts of the indictment were predicated specifically on illegal gambling allegedly in violation of Massachusetts General Laws ch. 271, §§ 7 and 17. The counts involving the Massachusetts statutes were: two RICO counts; two counts of using interstate facilities in aid of racketeering; one count of operating an illegal gambling business; and seven counts of money laundering. There can be no doubt of the right of the federal government to base a federal crime upon the violation of a state statute. Sanabria v. United States, 437 U.S. 54, 70, 57 L. Ed. 2d 43, 98 S. Ct. 2170 (1978).
The five other counts charged income tax evasion (three counts), a count of conspiracy to defraud the United States by impeding the lawful functions of the IRS, and a count of illegally structuring monetary transactions.
Defendant mounts three challenges to his conviction: that there were no illegal gambling offenses under the Massachusetts statutes, and that, if there were, the court’s instruction on them was erroneous; that the currency transaction conviction lacked sufficient evidentiary foundation, and the court erred in its instruction on it; and that there were sentencing errors.
Most of the essential facts are not in dispute, only the inferences and Conclusions to be drawn from them. We must, of course, review the facts and all inferences to be drawn from them in the light most favorable to the government. United States v. Cotto-Aponte, 30 F.3d 4, 5 (1st Cir. 1994); United States v. Hernandez, 995 F.2d 307, 311 (1st Cir.), cert. denied, 114 S. Ct. 407 (1993).
Defendant owned and operated the Revere Amusement Company (“Revere”) from 1981 to 1989. Revere’s income came from the operation of video poker machines that were placed in an assortment of bars, taverns, and social clubs in Revere, Massachusetts. The poker machines operated somewhat like slot machines. The machine was activated by inserting money into it, at least a quarter. The player would then manipulate a button to obtain a poker hand. The machine’s video screen would display five cards representing a poker hand. Before the “play” began, the screen displayed the payoffs for winning hands; i.e., a hand consisting of three of a kind might pay twelve to one. Credits were given for winning hands. For example, a full house might pay ten credits. After a winning player finished playing the machine, he exchanged his credits for cash. The cash payment was made by the person in charge of the establishment in which the machine(s) was located. Defendant and/or his employees visited the approximately seventeen places where the poker machines were located on a regular basis, usually daily. The proprietors of the establishments were reimbursed for the payoffs and then the machine’s proceeds were split with them. Normally, no records were kept of the transactions. And, of course, only defendant and his employees had access to the monies paid into the poker machine.
In 1985 defendant decided to enjoy the fruits of his profitable business and moved to Palm Springs, California. Defendant’s son, Steven, then took over the daily operation of Revere.*fn1 Defendant, however, kept a tight reign on Revere’s operations from Palm Springs. He received between $4,000 to $10,000 in cash by express mail several times a week. At irregular intervals, he asked his employees to keep records of the transactions so he would know what was going on.
Revere’s income from the poker machines amounted to about $500,000 per year. There was convincing evidence that defendant made regular payoffs to local police officers, politicians, and organized crime. Neither defendant nor his company paid state or federal income tax on the income generated by the video poker game machines.
With this factual background, we turn to the question of whether defendant’s poker game business violated the implicated Massachusetts statutes. This is, of course, primarily a question of Massachusetts law. And there is no Massachusetts case directly on point. We first consider Mass. Gen. L. ch. 271, § 17, which provides:
§ 17. Place for registering bets or dealing in pools; owner or occupant; custodian or depository
Whoever keeps a building or room, or any part thereof, or occupies, or is found in, any place, way, public or private, park or parkway, or any open space, public or private, or any portion thereof, with apparatus, books or any device, for registering bets, or buying or selling pools, upon the result of a trial or contest of skill, speed or endurance of man, beast, bird or machine, or upon the result of a game, competition, political nomination, appointment or election, or whoever is present in such place, way, park or parkway, or any such open space, or any portion thereof, engaged in such business or employment; or, being such keeper, occupant, person found or person present, as aforesaid, registers such bets, or buys or sells such pools, or is concerned in buying or selling the same; or, being the owner, lessee or occupant of a building or room, or part thereof, or private grounds, knowingly permits the same to be used or occupied for any such purpose, or therein keeps, exhibits, uses or employs, or knowingly permits to be therein kept, exhibited, used or employed, any device or apparatus for registering such bets, or for buying or selling such pools, or whoever becomes the custodian or depository for hire, reward, commission or compensation in any manner, of any pools, money, property or thing of value, in any manner staked or bet upon such result, shall be punished by fine of not more than three thousand dollars or by imprisonment in the state prison for not more than three years, or in jail or the house of correction for not more than two and one half years. (Emphasis added.)
We note first that the statute is not limited to bookmaking in the traditional sense. It includes “any device for registering bets, or buying or selling pools, upon the result of a trial or contest of skill, speed or endurance of man, beast, bird or machine, or upon the result of a game . . . .” This is broad and encompassing language. We do not think that it excludes the placing of bets on video poker games as a matter of statutory construction.
Although there are no Massachusetts cases directly on point, there are three that indicate that betting on video poker games violates § 17. In Commonwealth v. Club Caravan, Inc. (and eighteen companion cases), 30 Mass. App. Ct. 561, 571 N.E.2d 405 (Mass. App. Ct. 1991), the court made several significant rulings. It upheld the ruling of the trial Judge that “play on the video poker machines in question involved as a matter of law an element of skill, thus qualifying the machines for licensure under Mass. Gen. L. c. 140, § 177 A(1) and (2) as automatic amusement devices.” Id. at 406. The court explained:
Since the video poker machines involved an element of skill and ostensibly paid off winners only with free games, the Judge correctly dismissed the indictments based solely on having such machines on hand for the use of patrons. The Judge correctly ruled, we think, that licensed machines so used were exempt not only from G.L. c. 271, § 7, this exemption being explicit in G.L. c. 140, § 177A(7), but also from G.L. c. 271, §§ 5 and 17, seemingly overlapping statutes which in relevant part prohibit keeping a place for gaming or keeping gaming apparatus. The purpose of § 177A, to legalize and license machines that utilize some element of skill and pay off winners only with free games, would otherwise be thwarted.
Id. at 407. The court noted that the trial Judge differentiated between video poker games and “actual use of the machines for gambling: i.e., paying off in money rather than free games,” id. and drew the following line:
Where a machine was used for gambling, i.e., where there was evidence of a payoff to a customer, the Judge ruled that the machine, by the express terms of G.L. c. 140, § 177A(6), was in violation of that statute and thus lacked protection from the prohibitions of the gaming laws such as G.L. c. 271, §§ 5, 7, 8, and 17.
Id. at 407-08. The court explicitly refrained from ruling as to the applicability of § 17 to video poker machines. It explained:
An argument was made by the defendants below that § 17 was aimed at bookie operations, i.e., registering of bets on contests such as horseracing, dog racing, football point spreads, or numbers, rather than at slot machines or other gambling devices. The argument, rejected by the Judge, is not advanced in this appeal, which concerns only indictments dismissed by the Judge. We intend no ruling as to the applicability of § 17 to video poker machines.
Id. at 408 n.6. (Emphasis added.)
It was held in Commonwealth v. Boyle, 346 Mass. 1, 189 N.E.2d 844, 846 (Mass. 1963) that, “possession of gaming apparatus anywhere is punishable” and “the possession of any recorded memorandum intended to be a minute of a bet is sufficient to demonstrate a violation of either Mass. Gen. L. c. 271 § 7 or 17 or both of these sections, depending upon the contents of the memorandum.”
In Commonwealth v. Sousa, 33 Mass. App. Ct. 433, 600 N.E.2d 1012 (Mass....
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