United States v. Sacco

• Decision Date: 30 January 1974
• Docket Number: No. 72-1985 to 72-1989.,72-1985 to 72-1989.
• Citation: 491 F.2d 995
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Ronald SACCO, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Ronald J. NOTO, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Hugh C. HENDERSON, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Ronald CELLE, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. James B. MARTIN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

491 F.2d 995 (1974)

UNITED STATES of America, Plaintiff-Appellee, v. Ronald SACCO, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. Ronald J. NOTO, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. Hugh C. HENDERSON, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. Ronald CELLE, Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. James B. MARTIN, Defendant-Appellant.

Nos. 72-1985 to 72-1989.

United States Court of Appeals, Ninth Circuit.

January 30, 1974.

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Jerrold M. Ladar (argued), San Francisco, Cal., for appellants.

James L. Browning, Jr., U. S. Atty., San Francisco, Cal., Stephen H. Scott, Special Atty., Organized Crime & Racketeering Section U. S. Dept. of Justice, Marshall T. Golding (argued), Atty., Appeals Section, Crim. Div., U. S. Dept. of Justice, Washington, D. C., for appellees.

Merle H. Jenkins, Bakersfield, Cal. (argued), for appellant Hugh C. Henderson.

Before CHAMBERS, MERRILL, KOELSCH, BROWNING, DUNIWAY, ELY, HUFSTEDLER, WRIGHT, TRASK, CHOY, GOODWIN and WALLACE, Circuit Judges.^*

CHOY, Circuit Judge:

Sacco, Noto, Henderson, Celle and Martin were convicted after a non-jury trial of conducting an illegal gambling business in violation of 18 U.S.C. § 1955 and of being principals to a crime (18 U.S.C. § 2). Sacco and Noto were each fined $5,000 and sentenced to three years imprisonment. Celle and Martin were fined $500 and $200 respectively and each sentenced to three years probation. Henderson was fined $2000 and sentenced to three years probation.

Appellants raised three principal contentions on this appeal. First, they challenge the constitutionality of 18 U. S.C. § 1955 on the following grounds: (1) § 1955 is an impermissible exercise by Congress of its powers under the commerce clause of the United States Constitution; (2) § 1955 is unconstitutionally vague; and (3) § 1955 cannot be uniformly applied nationwide. Second, they contend that lower level participants in a gambling enterprise cannot be reckoned to satisfy the "five or more persons" requirement of § 1955. Third, Henderson challenges the nature and sufficiency of the evidence against him. We affirm.

FACTS

Sacco and Noto were the proprietors of a bookmaking operation which involved wagering on horse races, football games and basketball games in violation of § 337a of the California Penal Code. Celle and Martin were "splitters." A splitter collects bets, calls them in to the bookmaker's phoneman, then pays successful bettors and collects from the losers. For their services, splitters are paid a percentage of the net profits and normally bear the same percentage of any losses. Henderson was a "layoff bettor," a bookmaker who places bets with another bookmaker to protect himself against excessive losses.¹

The key government witness, testifying under a grant of immunity, was Asbury, who had acted as phoneman for the Sacco-Noto operation during the thirty-two day indictment period: December 31, 1970 to January 31, 1971. Asbury testified that $256,832 in gross wagers was received by the operation during the indictment period.² Of this amount, $114,832 was wagered on daily horse races and sports, $62,000 on the Dallas-San Francisco NFL playoff game, and $80,000 on four other NFL playoff games and the holiday bowl games. Asbury's records indicated that Henderson placed seven layoff wagers totalling $6,570 with Noto between January 20 and January 27, 1971 and received one layoff bet from Noto.

18 U.S.C. § 1955 was enacted as Part C of Title VIII of the Organized Crime Control Act of 1970, 84 Stat. 937.³ The legislation was aimed at curtailing syndicated gambling, the lifeline of organized crime, which provides billions of dollars each year to oil its diversified machinery.⁴ The statute requires that three elements be established to constitute an offense: there must be a gambling operation which (1) is a violation of the law of a State or political subdivision in which it is conducted; (2) involves five or more persons who conduct, finance, manage, supervise, direct or own all or part of such business; and (3) has been or remains in substantially continuous operation for a period in excess of thirty days or has a gross revenue of $2,000 in any single day.

The trial court found there was an illegal gambling business in violation of California law that satisfied the statutory amount requirement of § 1955. This is not contested on appeal.

CONSTITUTIONAL CHALLENGE

1. The Commerce Clause

Appellants contend that 18 U.S.C. § 1955 regulates purely local activity and that there has been no demonstration of an effect on interstate commerce to justify regulation under the commerce clause. U.S.Const. art. I, § 8. We disagree.

Chief Justice Marshall in Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 6 L.Ed. 23 (1824), held that the commerce power extended to intrastate activity which affected other states. Id. at 195. This view is reflected in recent Supreme Court decisions. Though an activity be local and not regarded as commerce, it may be reached by Congress "if it exerts a substantial economic effect on interstate commerce. . . ." Wickard v. Filburn, 317 U.S. 111, 125, 63 S.Ct. 82, 89, 87 L.Ed. 122 (1942). Accord: Perez v. United States, 402 U.S. 146, 151-152, 91 S.Ct. 1357, 28 L.Ed.2d 686 (1971); Maryland v. Wirtz, 392 U.S. 183, 189, 88 S.Ct. 2017, 20 L.Ed.2d 1020 (1968); Katzenbach v. McClung, 379 U. S. 294, 302, 85 S.Ct. 377, 13 L.Ed.2d 290 (1964); Heart of Atlanta Motel, Inc. v. United States, 379 U.S. 241, 258, 85 S. Ct. 348, 13 L.Ed.2d 258 (1964).

Congress can declare that an entire class of activities affects commerce. If that finding is challenged, "the only function of courts is to determine whether the particular activity regulated is within the reach of the federal power." United States v. Darby, 312 U.S. 100, 120, 61 S.Ct. 451, 460, 85 L.Ed. 609 (1941). Accord: Wirtz, supra at 192 of 392 U.S., 88 S.Ct. 2017. The Court utilizes a "rational basis" test, first formulated in Heart of Atlanta, to scrutinize a statute grounded on the commerce clause. Two questions are asked by a court: (1) did Congress have a rational basis for finding that the regulated activity affected commerce, and (2) if it had such a basis, were the means selected to regulate reasonable and appropriate. Heart of Atlanta, supra at 258-259 of 379 U.S., 85 S.Ct. 348.

If the class of activities is within the reach of the federal power and the regulation imposed is reasonable, a court's investigation is concluded. There is no need for inquiry on a case-by-case basis or proof that a particular activity had an effect on commerce. Perez, supra at 152 of 402 U.S., 91 S.Ct. 1357; Katzenbach, supra at 302-304 of 379 U.S., 85 S.Ct. 377. Nor can courts "excise, as trivial, individual instances" of the class. Wirtz, supra at 193 of 392 U.S., 88 S.Ct. 2017.

Legislative history reveals that Congress had a rational basis for finding that the illegal gambling proscribed by § 1955 affected interstate commerce. Congress determined that organized crime posed a major threat to American society and that illegal gambling operations provided organized crime with its greatest source of revenue. Congress made the following special findings regarding the effect of illegal gambling operations on interstate commerce:⁵

The Congress finds that (1) illegal gambling involves widespread use of, and has an effect upon, interstate commerce and the facilities thereof; (2) illegal gambling is dependent upon facilities of interstate commerce for such purposes as obtaining odds, making and accepting bets, and laying off bets; (3) money derived from or used in illegal gambling moves in interstate commerce or is handled through the facilities thereof; (4) paraphernalia for use in illegal gambling moves in interstate commerce; and (5) illegal gambling enterprises are facilitated by the corruption and bribery of State and local officials or employees responsible for the execution or enforcement of criminal laws.

It was also found that organized crime had developed complex channels through which ostensibly local gambling operations sent their revenues to central coffers.⁶ The illicit operations were seen to distort the production of goods for commerce and the flow of goods in interstate commerce.⁷

Congress had a rational basis for limiting the class of activities proscribed by § 1955. There were two principal reasons for classifying a thirty-day or $2,000 daily gambling operation as affecting interstate commerce. First, local law enforcement was to be left intact to fulfill its traditional role. § 1955 was not intended to preempt local efforts, but to free local government to do its job by removing corruption and adding the resources of the federal government.⁸ The arguments against the expansion of federal jurisdiction into traditionally local areas were strongly voiced during the hearings before both the House and Senate Committees.⁹ These arguments were rejected because of the singular importance of the problem and the inability of both federal and state authorities to deal with it.¹⁰ Second, the inherent monetary and manpower limitations on the federal government demanded selectivity, hence only major gambling enterprises could be pursued. Indeed, Congress specifically excluded sporadic gambling and those operations of insignificant monetary proportions.¹¹ The "iceberg" dimension of illegal gambling was perceived and Congress anticipated that operations which met the minimum standards of § 1955 would ordinarily involve activities of considerable greater magnitude.¹²

The absence of particularized findings on which the thirty-day or $2,000 minimum for § 1955 were based does not render the statute unconstitutional.¹³ Congress need not make particularized findings for each point of a program of legislation. Mr. Justice Douglas in Perez, supra at 156 of 402 U.S., 91 S.Ct. 1357, stated that Congr...