United States v. Lyons

• Decision Date: 17 January 2014
• Docket Number: Nos. 12–1835,12–1858.,s. 12–1835
• Citation: 740 F.3d 702
• Parties: UNITED STATES of America, Appellee, v. Todd LYONS and Daniel Eremian, Defendants, Appellants.
• Court: U.S. Court of Appeals — First Circuit

740 F.3d 702

UNITED STATES of America, Appellee,

v.Todd LYONS and Daniel Eremian, Defendants, Appellants.

Nos. 12–1835, 12–1858.

United States Court of Appeals,

First Circuit.

Jan. 17, 2014.

Peter Charles Horstmann, with whom Partridge, Ankner & Horstmann, LLP was on brief, for appellant Todd Lyons.

Juan Chardiet, with whom Chardiet Law P.C. was on brief, for appellant Daniel Eremian.

John M. Pellettieri, Attorney, Appellate Section, Criminal Division, U.S. Department of Justice, with whom Mythili Raman, Acting Assistant Attorney General, Denis J. McInerney, Acting Deputy Assistant Attorney General, Carmen M. Ortiz, United States Attorney, and Robert A. Fisher, Mary Beth Murrane, and Fred W. Wyshak, Assistant U.S. Attorneys, were on brief, for appellee.

Before LYNCH, Chief Judge, THOMPSON and KAYATTA, Circuit Judges.

KAYATTA, Circuit Judge.

Todd Lyons and Daniel Eremian worked for Sports Off Shore (SOS), a gambling business based in Antigua. After a wide-ranging investigation by federal and state law enforcement of SOS and its employees and agents, and a lengthy trial, a jury convicted both Lyons and Eremian on two counts under the Wire Act, 18 U.S.C. § 1084, two counts under RICO, 18 U.S.C. §§ 1962(c) and 1962(d), and one count under 18 U.S.C. § 1955 for conducting an illegal gambling business. Lyons was separately convicted on another eighteen counts. In this direct appeal from their convictions and sentences, Lyons and Eremian argue that: (1) the district court improperly denied them a safe harbor instruction on the government's charges that they violated the Wire Act; (2) the Wire Act does not apply to the internet; (3) the government did not prove they had the necessary mens rea to violate the Wire Act; (4) their convictions involved an inappropriate extraterritorial application of the Wire Act; (5) their Wire Act convictions should be overturned because the government was required but failed to prove that all relevant bets were on sporting events; and (6) the district court improperly admitted into evidence a directory of SOS agents.

Lyons separately argues that: (7) the district court should have suppressed evidence derived from wiretaps of his phone conversations; (8) the district court should have suppressed evidence obtained pursuant to search warrants for his home, car, and person; (9) there was insufficient evidence to convict him of money laundering because the government's evidence did not distinguish between “proceeds” and “profits” of illegal gambling; (10) there was insufficient evidence to convict him of violating the Travel Act, 18 U.S.C. § 1952, for the same reason; (11) the absence of final implementing regulations precluded his convictions for violating the Unlawful Internet Gambling Enforcement Act of 2006 (“UIGEA”), 31 U.S.C. §§ 5361–67; and (12) the prosecution referred at trial to his decision not to testify, violating his Fifth Amendment right against self-incrimination.

Eremian separately argues that: (13) venue did not lie in Massachusetts; (14) there was insufficient evidence to convict him of racketeering; and (15) instructing the jury on Florida law constituted a constructive amendment of the indictment. Finally, Lyons and Eremian each challenges his punishment, arguing that (16) his prison sentence and the forfeiture judgment were unreasonable and violated the Eighth Amendment.

In the remainder of this opinion, we address these sixteen arguments in the order listed, above. For the reasons stated, we affirm the convictions and sentences, though we affirm Lyons's Wire Act convictions in one limited respect on a basis different from that employed by the district court.

I. Background

SOS was a bookmaking business founded in 1996 by Robert Eremian, Daniel Eremian's brother.¹ SOS centered its operations in Antigua at least in part because some forms of bookmaking are legal there. Many of SOS's customers, however, were in the U.S. and SOS took bets by phone or over the internet from the U.S. Most SOS customers bet on team sports, but others bet on horse racing or on casino games played on the SOS website. SOS allowed bettors to place bets against funds placed on deposit with SOS, or on credit. Antiguan regulatory law allowed the former but, at least between 2001 and 2007, prohibited betting on credit.

A bettor who wished to place bets on credit with SOS received a password and a customer code for placing bets through the internet or by phone. SOS employed agents in the United States, including Eremian and Todd Lyons, to “settle up” with credit bettors, collecting losses from losers and making payments to winners. These agents met with bettors in person in public places and primarily conducted transactions in cash or by receiving checks. Each agent managed a group of regular customers and received as a commission a percentage of those customers' losses. Some agents also employed sub-agents who managed their own customers and shared commissions with the agents under whom they worked.

After deducting their commissions from the money leftover once customers settled up, the agents sent the balance to SOS in Antigua. Agents often sent this balance in cash, sometimes using a “six pack,” a package containing three bundles of $2,000. SOS agents also carried cash to Antigua in person. Agents also transferred or caused their customers to transfer funds to Antigua by check or wire transfer.

Daniel Eremian played an important role in the SOS operation from its inception.He helped his brother establish the SOS office in Antigua, training Antiguan employees about how to answer the phone and take bets. After SOS was established, Eremian returned to the United States where he worked as an SOS agent. He recruited customers in Florida. He also employed at least three sub-agents. Like other SOS agents, Eremian provided bettors with the information needed to place bets with SOS on credit and settled up with customers, either in-person or through his sub-agents. On at least one occasion, Eremian also collected funds from another agent on behalf of SOS.

Todd Lyons came to SOS later than Eremian, but ended up playing a larger role in SOS's Massachusetts operation than Eremian played in Florida. Like many agents, Lyons was a bettor with SOS before he became an agent. But at some point between 1997 and 2000 Lyons became an SOS agent. Like other SOS agents, Lyons provided customers with the information they needed to make bets. He also collected losses and distributed winnings. Lyons had at least one sub-agent. In addition to working as an agent, Lyons also served as “the bank” for SOS in Massachusetts, collecting money from, and disbursing it to, other agents. Starting in 2000, SOS paid Lyons a salary for this managerial role.

Lyons first drew the attention of Massachusetts state police investigating an illegal bookmaker in Boston. Police and prosecutors sought and received a wiretap of Lyons's cell phone. This wiretap led to warrants for searches of Lyons's home, car, and person conducted in January, 2006. The search of Lyons's home uncovered records of bets and cash disbursements, and a substantial quantity of cash, including $34,318 in a briefcase and $50,000 in the leg of a pair of pants in a drawer. The Massachusetts State Police continued to investigate Lyons until 2009, when they executed a second search warrant for his house, finding $93,800 hidden above two ceiling tiles and more gambling records. A federal grand jury indicted Lyons in May, 2010. A superseding indictment was filed in August, 2010, charging Daniel Eremian, Robert Eremian, Lyons, and Richard Sullivan, another important figure in SOS. As of March 1, 2012, Robert Eremian and Sullivan were fugitives.

II. Analysis

We first address Lyons's and Eremian's common challenges to their convictions, then their individual challenges to their convictions, and finally their challenges to their sentences.

1. The Safe Harbor Provision of the Wire Act

Both Lyons and Eremian were convicted on two counts of violating the Wire Act by transmitting bets or betting information or assisting the transmission of bets over a wire communication facility. One count charged them with violating the Wire Act using telephones, the other with violating the Wire Act using the internet. In a challenge directed at both counts, they argue that the district court erred by failing to instruct the jury on the safe harbor provision of the Wire Act, 18 U.S.C. § 1084(b), which exempts from liability certain communications assisting in the transmission of bets between places where betting on sports is legal.

We review preserved claims of instructional error de novo. United States v. Baird, 712 F.3d 623, 627–28 (1st Cir.2013). If this de novo review concludes that “the evidence at trial, taken in the defendant's favor, was sufficient to support his requested instruction, then we move to a three-part test to decide whether the district court's refusal to give the instruction constitutes reversible error.” Id at 628. Reversal is only appropriate if the requested instruction was “(1) substantively correct as a matter of law, (2) not substantially covered by the charge as rendered, and (3) integral to an important point in the case so that the omission of the instruction seriously impaired the defendant's ability to present his defense.” Id.

For the following reasons, we find that Eremian was not entitled to an instruction on the safe harbor provision, and that it makes no difference whether Lyons was entitled to such an instruction.

a. Statutory Background

The Wire Act has two provisions relevant to Lyons and Eremian. Section 1084(a) creates criminal liability:

Whoever being engaged in the business of betting or wagering knowingly uses a wire communication facility for the transmission in interstate or foreign commerce of bets or wagers or information assisting in the placing of bets or wagers on any sporting event or contest, or for the transmission of a wire...