U.S. v. Gallo

• Decision Date: 04 November 1981
• Docket Number: No. 80-1775,80-1775
• Citation: 659 F.2d 110
• Parties: 81-2 USTC P 9712 UNITED STATES of America, Plaintiff-Appellee, v. Augustine A. GALLO, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 110

659 F.2d 110

81-2 USTC P 9712

UNITED STATES of America, Plaintiff-Appellee, v. Augustine A. GALLO, Defendant-Appellant.

No. 80-1775.

United States Court of Appeals Ninth Circuit.

Argued and Submitted July 6, 1981.

Decided Oct. 13, 1981.

As Corrected Nov.4, 1981.

William B. Terry, Goodman, Oshins, Brown & Singer, Las Vegas, Nev., for defendant-appellant.

Rimantas A. Rukstele, Las Vegas, Nev., argued, for plaintiff-appellee; Leland E. Lutfy, Asst. U. S. Atty., Las Vegas, Nev., on brief.

On Appeal from the United States District Court for the District of Nevada.

Before GOODWIN and NELSON, Circuit Judges, and PRICE ^*, District Judge.

PRICE, District Judge.

The Defendant/Appellant Gallo was convicted of four counts of attempting to evade or defeat wagering excise taxes (26 U.S.C. § 7201), and one count of failure to file return and pay wagering occupational tax (26 U.S.C. § 7203).

Defendant became the object of an intensive investigation by the Criminal Investigation Division of the Internal Revenue Service (IRS) in October, 1978. Although he was not duly licensed as such in the State of Nevada, Gallo was suspected of bookmaking and failing to comply with the Federal registration requirements and to pay the taxes imposed upon such activity by the United States government. ¹

Investigation of Gallo commenced on approximately October 1, 1978, and continued through the early part of December, 1978. Investigation not only consisted of personal surveillance of Gallo by various agents of the IRS, but also undercover agents were utilized to make direct contact with Gallo and to actually place bets with Gallo. Further, a search of IRS records failed to indicate that Gallo had ever filed a formal Form 11-C (Special Tax Return and Application for Registry Wager) for the period July 1, 1977 to December 8, 1978.

At the conclusion of the investigation, a search warrant was sought based upon a master affidavit recounting the investigatory activities in great detail. The master affidavit consists of forty-one (41) legal size pages. The search warrant was issued pursuant to this master affidavit and was executed on December 18, 1978.

As a result of the search pursuant to the search warrant, substantial quantities of evidence indicating defendant's bookmaking activities were seized. In addition, the searching agents answered the telephone situated in the bookmaking office being searched approximately twelve (12) times during the course of their activities. On a substantial number of these occasions, the caller was a bettor desiring to place a bet with Gallo.

Prior to his indictment, Gallo filed a motion in district court for the return of his property seized during the raid. His motion was denied by minute order.

After his indictment and arrest, the motion was renewed in the form of a motion to suppress evidence. On this occasion, Gallo also attacked the evidence produced by the agents answering the telephone during the raid. Again the matter was decided adversely to Gallo. The district court filed a memorandum decision and order.

At his trial, where all of the evidence to which he had previously objected was introduced, Gallo admitted his bookmaking activities but claimed ignorance of the law. He was convicted of four counts of attempting to evade or defeat wagering excise tax, and one count of failure to file return and pay wagering occupational tax. He appeals that conviction.

Gallo raises three issues on appeal:

I. Whether the master affidavit established probable cause to believe the defendant was involved in criminal activity;

II. Whether the agents' interception of telephone calls during the search pursuant to the search warrant violated Gallo's constitutional rights; and

III. Whether the government sustained its burden of proof as to the issue of willfulness.

I

Whether the Master Affidavit Established Probable Cause to

Believe Defendant was Involved in Criminal Activity.

Gallo's main argument in his attack upon the sufficiency of the affidavit is that nowhere is it alleged that he charged or received "vigorish" or "juice" on the bets he accepted.

Vigorish: 1. A charge taken (as by a bookie or gambling house) on bets; also: the degree of such a charge.

Webster's New Collegiate Dictionary (1973).

Gallo expands this argument to assert quite properly that the activity proscribed by the statute does not encompass taking bets "among friends," and is only aimed at the commercial bookmaker. See George v. United States, 346 F.2d 137 (9th Cir. 1965).

Gallo's contentions are correct as to what constitute the elements of the crime of bookmaking, but overlooks the issue with which we concern ourselves, i. e., did the affidavit show probable cause to believe that criminal activity by Gallo was being carried on by him in the premises described in the search warrant.

One only need compare the affidavit found in Spinelli v. United States, 393 U.S. 410, 89 S.Ct. 584, 21 L.Ed.2d 637 (1969) ² with the instant master affidavit to recognize immediately that the affidavit in the instant case more than adequately establishes probable cause to believe that federal criminal activity is being engaged in by the person or persons against whom the sought after search warrant is directed.

The search warrant in the instant case was issued by the magistrate after being presented with a "master" affidavit consisting of forty-one (41) legal size pages which set forth in great detail the following facts:

1. The extensive prior experience of the case agent directing the investigation;

2. The mode of operations normally engaged in by bookmakers;

3. The "language" of the professional bookmaker;

4. The prior experience and reliability of the undercover agent used in the investigation;

5. The observations of the undercover agent which consisted of:

(a) The defendant paying several individuals in cash;

(b) The defendant personally clearing a customer who had telephoned the betting parlor;

(c) The defendant instructing callers as to where the caller might pick up his money;

(d) The defendant accepting payoff after consulting his records;

(e) The defendant delivering the betting "line" to several persons who requested it;

(f) The bartenders at Sal Gusso's Bar (a place which the defendant habitually used for his contacts with customers) attempting to place bets and accepting money for delivery to the defendant;

(g) The defendant's acceptance of bets from the undercover agent and the defendant's instructions as to how to place future bets by telephone, including the number to use;

(h) The undercover agent's placing of bets with persons who answered the telephone when the undercover agent placed calls to the numbers furnished to him by the defendant;

(i) The defendant obtaining sports line information from the board at legal betting parlors.

Clearly, the Magistrate had probable cause to issue the search warrant in question. See United States v. Besase, 521 F.2d 1306 (6th Cir. 1975); United States v. McNally, 473 F.2d 934 (3rd Cir. 1973); United States v. Berry, 463 F.2d 1278 (D.C.Cir.1972).

II

Whether the Agents' Interception of Telephone Calls During

the Search Pursuant to the Search Warrant Violated

Gallo's Constitutional Rights.

As previously indicated, the searching agents answered the telephone on numerous occasions during the search. In many instances the caller was a prospective bettor who desired to place a bet with the defendant's "book."

Gallo argues that the search warrant did not authorize this particular seizure, and that in order to answer the phone that matter should have been included within the description of the items to be "seized" pursuant to the search warrant.

The government argues that this argument is mooted because Gallo's counsel in his opening statement admitted that he was a bookmaker.

Gallo counters with the claim that this decision re trial tactics was dictated by the failure of the court to suppress the evidence seized pursuant to the search warrant, including the telephonic conversation.

Gallo's contention that the search warrant did not authorize "seizure" of incoming telephone calls was answered in United States v. Fuller, 441 F.2d 755 (4th Cir. 1971) cert. denied, 404 U.S. 830, 92 S.Ct. 73, 30 L.Ed.2d 59 (1971). At page 760, the Fuller court stated In this case, the warrant authorized searching for and seizing "bookmaking records and wagering paraphernalia consisting of, but not limited to, accounting sheets, rundown sheets, betting slips, recap sheets, sports information papers, miscellaneous line notations, line sheets, books of account, checks, money orders, and United States Currency * * *." The description is necessarily general and clearly contemplates that material relating to gambling activity but not precisely described might be seized. The intent of the generalized description is clearly to permit the seizure of any items directly related to the appellants' booking operation. The telephone calls answered by the agents were clearly a part of appellants' booking operation and, therefore, we think within the scope of the general language of the warrant.

In United States v. Beusch, 596 F.2d 871, 877 (9th Cir. 1979), it appeared that during the execution of the search warrant the agents seized certain ledgers which contained records properly described in the warrant as being the object of the search. The ledgers also contained other incriminating evidence not described in the search warrant. Defendants objected to the seizure of the material that was not specifically described. The Ninth Circuit panel dismissed the defendant's objections, stating:

As long as an item appears, at the time of the search, to contain evidence reasonably related to the purposes of the search, there is no reason absent some other Fourth Amendment violation to suppress it. Warden v. Hayden, 387 U.S. 294, 307, 87 S.Ct. 1642 (1650), 18 L.Ed.2d 782 (1967). The fact that an item seized happens to...