U.S. v. Grey, s. 94-3217

• Decision Date: 22 May 1995
• Docket Number: Nos. 94-3217,94-3218,s. 94-3217
• Citation: 56 F.3d 1219
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Huey P. GREY and Ann P. Grey, Defendants-Appellants.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1219

56 F.3d 1219

UNITED STATES of America, Plaintiff-Appellee, v. Huey P. GREY and Ann P. Grey, Defendants-Appellants.

Nos. 94-3217, 94-3218.

United States Court of Appeals, Tenth Circuit.

May 22, 1995.

Daniel E. Monnat of Monnat & Spurrier, Chartered, Wichita, KS, for defendant-appellant Huey P. Grey.

Laura B. Shaneyfelt of Focht, Hughey & Calvert, Wichita, KS, for defendant-appellant Ann P. Grey.

Randall K. Rathbun, U.S. Atty. (Stephen K. Lester, Asst. U.S. Atty., with him on the brief), Wichita, KS, for plaintiff-appellee.

Before ANDERSON, ALDISERT ^*, and HOLLOWAY, Circuit Judges.

ALDISERT, Circuit Judge.

In these consolidated appeals of Huey P. Grey, No. 94-3217, and his wife Ann P. Grey, No. 94-3218, we must first consider their combined contentions stemming from their convictions and sentences following a jury trial, in which the Greys were charged with conducting an illegal gambling business involving the operation of video poker machines in violation of 18 U.S.C. Sec. 1955 (Count I), and with making false oaths and accounts by understating their income in a Chapter 13 bankruptcy filing in violation of 18 U.S.C. Sec. 152 (Count V). Mr. Grey appeals also his conviction and sentence in connection with a fraudulent Chapter 12 filing in violation of 18 U.S.C. Sec. 152 (Count III), and money laundering in violation of 18 U.S.C. Sec. 1956(a)(1)(A)(i) (Count II).

Jurisdiction was proper in the trial court based on 18 U.S.C. Sec. 3231. This court has jurisdiction under 28 U.S.C. Sec. 1291. The appeals were timely filed under Rule 4(b), Federal Rules of Appellate Procedure.

The Greys argue that there was insufficient evidence to convict them of conducting an illegal gambling operation because the "five-person" statutory requirement was not satisfied, that the district court erred in providing and omitting various jury instructions, and that the information and indictment as to the bankruptcy fraud counts was fatally defective in that they failed to state the materiality element of the cause of action. Mrs. Grey further contends that the district court erred in refusing to grant a two point reduction in offense level under the Sentencing Guidelines for her minor role in the offenses. Mr. Grey also challenges the computation of his offense level under the Guidelines with respect to the gambling and bankruptcy counts and challenges his conviction under the money laundering statute.

We affirm the conviction and sentence of Ann Grey and affirm the conviction of Huey Grey with respect to the illegal gambling operation and bankruptcy fraud counts. We vacate Mr. Grey's sentence for money laundering and reverse the conviction, and we remand for resentencing on the gambling and bankruptcy counts.

I.

From 1990 until November 1992, Mr. and Mrs. Grey ran a gambling business involving the operation of at least 20 video poker machines located at seven establishments in six different towns in Kansas. During this period, the Greys entered into business arrangements with the establishments under which they would place and service the poker machines. Unlike video poker devices found in legal casinos, these machines did not make immediate payoffs; they merely recorded credits. When a player wished to cash in accumulated credits, he or she would notify a bartender or other designated club officer. That individual would either make a cash payout at that time or record the credits earned for future payment. This practice constituted illegal gambling under state law. The Greys and the establishments divided the net proceeds on a 50-50 basis. During this period, the Greys' share was approximately $376,718.08. The enterprise came to end on November 5, 1992, when the establishments were raided and the machines seized.

In considering the Greys' post-trial motions, the district court concluded that they conducted a single illegal gambling business in several different locations involving "five or more persons." United States v. Grey, 856 F.Supp. 1515, 1518 (D.Kan.1994). "The clubs were not interdependent among each other, but were each interdependent with the defendants' business." Id. at 1518 n. 2. Ann Grey was sentenced to one year and a day imprisonment and fined $2,000. Huey Grey was fined $12,500 and sentenced to 70 months imprisonment on the money laundering count and 60 months on the gambling and bankruptcy counts of conviction, with all sentences to run concurrently.

II.

Both Huey and Ann Grey were convicted of operating an illegal gambling business in violation of 18 U.S.C. Sec. 1955 (Count I), which defines an "illegal gambling business" as a gambling business which--

(i) is a violation of the law of a State or political subdivision in which it is conducted;

(ii) involves five or more persons who conduct, finance, manage, supervise, direct, or own all or part of such business; and

(iii) has been or remains in substantially continuous operation for a period in excess of thirty days....

18 U.S.C. Sec. 1955(b)(1). The Greys challenge their convictions under subparts (ii) and (iii) of the statute, arguing that there was insufficient evidence to support their convictions.

"We must affirm the judgment of conviction if there is record evidence which would allow a rational trier-of-fact to find the appellants guilty of the crimes charged in the indictment." U.S. v. Pinelli, 890 F.2d 1461, 1465 (10th Cir.1989) (citing omitted), cert. denied, 494 U.S. 1038, 110 S.Ct. 1498, 108 L.Ed.2d 632 and 495 U.S. 960, 110 S.Ct. 2568, 109 L.Ed.2d 750 (1990). We must view the evidence "in the light most favorable to the government." Id.

The district court concluded that the Greys were conducting a single gambling business in several different locations and that, although each club may have been independent of the other clubs, each was interdependent with the Greys' business. Moreover, the court determined that the bartenders and managers who recorded winnings, made payouts and reset the machines were properly counted towards the "five or more persons" statutory requirement. We agree.

Although the Greys argue that there were seven distinct gambling operations, each comprised of less than five persons, we are persuaded that the Greys were the "hub" in one grand illegal gambling operation involving seven different "spokes" or, alternatively, that most of the seven independent operations involved five or more persons.

The Greys' video poker machine enterprise consisted of more than 20 machines located at seven clubs. Huey Grey financed, managed, supervised, directed and owned all or part of the business, and cleaned and maintained the machines at the establishments. Mrs. Grey visited the clubs regularly, recorded payouts, calculated profits and divided the earnings with each club. The Greys shared in the illegal profits from all seven establishments. This clearly was one business with respect to Huey and Ann Grey. In addition to the Greys, each of the seven establishments had at least one person in charge of resetting the machines, keeping track of money and making payouts. At a minimum, then, there were nine persons involved in the operation, well in excess of the statutory minimum.

Even if we were to view this gambling business as seven distinct operations, we are satisfied that the participation by other employees in the various clubs who recorded credits, made payouts and reset the machines in the absence of the designated managers was "necessary" to the operation, allowing these employees to count toward the "five person" requirement. Pinelli, 890 F.2d at 1478; United States v. Boss, 671 F.2d 396, 400 (10th Cir.1982).

We conclude also that this illegal gambling operation continued for a period in excess of thirty days. See United States v. Smaldone, 485 F.2d 1333, 1351 (10th Cir.1973).

III.

The Grey's next contend that the court erred in not giving their requested instructions. We review the record as a whole to determine whether the actual instructions adequately stated the governing law and provided the jury with an accurate understanding of the issues and standards applicable. United States v. Sasser, 971 F.2d 470 (10th Cir.1992). "While a defendant is entitled to an instruction regarding his theory of the case, the district judge has substantial discretion in formulating the instructions, so long as they are correct statements of the law and adequately cover the issue presented." United States v. Vasquez, 985 F.2d 491, 496 (10th Cir.1993).

The Greys argue that the court erred in not giving their proposed jury instruction regarding the definition of "substantially continuous operation," which they argue was a concise and accurate statement in conformity with the laws of this court. They suggest their proposed instruction "would have provided the jury with a much clearer understanding of the interplay of the elements of Section 1955." However, the Greys are unable to identify how the instruction given was erroneous or inadequate. Consequently, they have failed to demonstrate an abuse of discretion.

The Greys contend also that the district court erred in refusing to provide an instruction concerning interdependency of the establishments. As discussed above, the court rejected the Greys' argument that because each establishment was not dependent on the other, there were seven distinct gambling businesses rather than one for the purposes of calculating participants. The refusal of the district court to accept the Greys' arguments and accordingly instruct the jury was not error.

The Greys next argument is that the court erred in refusing to instruct the jury that the government must prove that at all times during some thirty-day period at least five persons conducted an illegal gambling business. The "five or more persons" requirement is separate from the thirty day requirement and, consequently, the government did not have to show that five or more persons at all times continued the operation for a period in excess...