United States v. Larry L. Masino ( 2017 )

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
Nos. 16-15451; 16-15609
________________________
D.C. Docket No. 3:16-cr-00017-MCR-1
UNITED STATES OF AMERICA,
Plaintiff - Appellant - Cross Appellee,
versus
LARRY L. MASINO,
Defendant - Appellee - Cross Appellant,
DIXIE L. MASINO,
Defendant - Appellee.
________________________
Appeals from the United States District Court
for the Northern District of Florida
________________________
(September 7, 2017)
Before ED CARNES, Chief Judge, WILLIAM PRYOR, Circuit Judge, and
MOORE, * District Judge.
WILLIAM PRYOR, Circuit Judge:
*
Honorable K. Michael Moore, United States District Chief Judge for the Southern District of
Florida, sitting by designation.
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We must decide whether an indictment that alleges that a business was in
violation of the Florida bingo and gambling house statutes, Fla. Stat. §§ 849.01,
849.02, 849.03, 849.0931, sufficiently alleges one of the essential elements needed
to obtain a conviction under the federal gambling statute: that the business “is a
violation of” state law, 18 U.S.C. § 1955(b)(1)(i). Larry Masino and his ex-wife
Dixie Masino own a Florida business called Racetrack Bingo Inc. Although
Florida law generally prohibits gambling, it allows bingo to be conducted under
stringent regulations. See Fla. Stat. § 849.0931. The government alleges a scheme
in which the Masinos, through Racetrack Bingo, operated illegal bingo games on
behalf of several charities, defrauded those charities as to the legality of their
operation, charged the charities unlawfully excessive fees, and then laundered the
profits. Count Two of the indictment charges the Masinos with violating the
federal gambling statute, 18 U.S.C. § 1955. To establish a violation of that statute,
the government must prove, among other things, that the business is an “illegal
gambling business,” which in turn requires proof that the business “is a violation”
of state law, id. § 1955(b)(1)(i). The district court dismissed part of Count Two on
the ground that a violation of the Florida bingo statute could never convert a bingo
business into an illegal gambling business. The government appealed, and Larry
Masino filed a cross-appeal. Because we decline to exercise pendent appellate
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jurisdiction over Larry Masino’s interlocutory cross-appeal, we dismiss the cross-
appeal. And because a gambling business that violates the Florida bingo statute,
Fla. Stat. § 849.0931, could be “a gambling business which is a violation of the law
of a State,” 18 U.S.C. § 1955(b)(1)(i), we reverse the dismissal of the indictment
and remand.
I. BACKGROUND
Former spouses Larry and Dixie Masino and their children own Racetrack
Bingo Inc., a Florida corporation that conducted bingo games on behalf of several
charities in Fort Walton Beach, Florida. Each charity sponsored two bingo sessions
a week. The charities collectively formed Ft. Walton Beach Charities LLC to
manage and distribute proceeds of the bingo games. At the direction of the
Masinos, each charity entered into annual lease agreements with Racetrack Bingo.
The leases provided that Beach Charities would pay Racetrack Bingo a fee that
ranged from $1,050 to $1,770 a bingo session. The lease fee did not cover
electronic bingo equipment rental, paper bingo supplies, bank fees, and set up and
cleanup costs.
In February 2016, a federal grand jury returned a 41-count indictment
against Larry and Dixie Masino for conspiracy to commit wire fraud, operating an
illegal gambling business, conspiracy to commit money laundering, and money
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laundering. 18 U.S.C. §§ 1343, 1349, 1955, 1956(h), 1957. In June 2016, a federal
grand jury returned a superseding indictment that added predicate offenses to
Count Two, operating an illegal gambling business. Count Two states as follows:
Between on or about January 1, 2006, and on or about July 31, 2015,
in the Northern District of Florida, the defendants,
Larry L. Masino and Dixie L. Masino,
did conduct, manage, supervise, direct, and own all or part of an
illegal gambling business, to wit, a gambling business involving bingo
games called Racetrack Bingo Inc., which business was in violation of
the laws of the State of Florida, to wit, Florida Statutes, Sections
849.01, 849.02, 849.03, and 849.0931, and which involved five or
more persons who conducted, managed, supervised, directed, and
owned all or part of said illegal gambling business, and which
remained in substantially continuous operation for a period in excess
of 30 days, and which had a gross revenue of $2,000 in any single
day.
In violation of Title 18, United States Code, Sections 1955 and 2.
The prosecution proceeded under the theory that the Masinos “defrauded the
charities by falsely representing that they were operating [Racetrack Bingo] in
compliance with Florida law. Instead, [they] falsely inflated the amount charged
for rent and expenses so [they] could unlawfully retain bingo proceeds that were
otherwise supposed to go to the charities.” The Masinos then “conspired to launder
and did launder the proceeds of their fraud and illegal gambling operation.” The
government suggested that “the amount ordered in restitution, forfeiture, and any
money judgment [could] exceed approximately $5.8 million.”
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Larry and Dixie Masino moved to dismiss Count Two of the indictment,
Fed. R. Crim. P. 12(b)(3)(B). The district court initially granted the motion to
dismiss Count Two in its entirety because it determined that “bingo offenses are
not a form of illegal gambling under Florida law, and therefore, a violation of the
Florida Bingo statute may not serve as a predicate offense for purposes of the
Federal Gambling statute.” But the district court later vacated that order and
instead granted in part and denied in part the Masinos’ motion to dismiss Count
Two. The district court explained, “Given that the Florida Legislature plainly
expressed its intent by including offenses chargeable under the Bingo Statute as
forms of ‘racketeering activity’ under the 2013 amendment to Florida’s
[Racketeering Act], it necessarily follows that a violation of the Bingo Statute now
constitutes an ‘illegal gambling business’ in violation of Florida law for purposes
of the [federal gambling statute].” The district court dismissed Count Two to the
extent it charged a violation based on bingo activities that occurred before the
amendment to Florida’s Racketeering Act, which occurred on April 10, 2013. The
district court concluded that the indictment failed to charge the essential element
that Racetrack Bingo was an “illegal gambling business” because no violation of
the Florida bingo statute could convert a bingo company into an illegal gambling
business.
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The government appealed the partial dismissal of Count Two, 18 U.S.C.
§ 3731. Larry Masino cross-appealed on the ground that the district court should
have dismissed Count Two in its entirety. Dixie Masino did not file a cross-appeal.
After we asked the parties to address the basis for our jurisdiction over the cross-
appeal, the government argued that we lack jurisdiction over a cross-appeal of a
denial of a motion to dismiss an indictment. We construed this response as a
motion to dismiss the cross-appeal and carried that motion with the case.
II. STANDARD OF REVIEW
We review the legal sufficiency of the allegations in an indictment de novo.
United States v. York, 428 F.3d 1325, 1331 n.8 (11th Cir. 2005).
III. DISCUSSION
We divide our discussion in two parts. First, we explain that even if we have
the authority to exercise pendent appellate jurisdiction when the government
appeals from the dismissal of an indictment, 18 U.S.C. § 3731, we decline to
exercise that jurisdiction over the cross-appeal. Second, we explain that Count Two
of the indictment is legally sufficient because there are at least some violations of
the Florida bingo statute, Fla. Stat. § 849.0931, that could make Racetrack Bingo
an “illegal gambling business” under federal law, 18 U.S.C. § 1955.
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A. We Decline to Exercise Pendant Jurisdiction over Larry Masino’s Cross-
Appeal.
Ordinarily, we cannot review a criminal case “until conviction and
imposition of sentence.” Flanagan v. United States, 465 U.S. 259, 263 (1984); see
28 U.S.C. § 1291. But there is a statutory exception for “an appeal by the United
States . . . from a[n] . . . order of a district court dismissing an indictment.” 18
U.S.C. § 3731. And the doctrine of pendent appellate jurisdiction allows a federal
court to “address nonappealable orders if they are ‘inextricably intertwined’ with
an appealable decision or if ‘review of the former decision [is] necessary to ensure
meaningful review of the latter.’” Summit Med. Assocs., P.C. v. Pryor, 180 F.3d
1326, 1335 (11th Cir. 1999) (alteration in original) (quoting Swint v. Chambers
Cty. Comm’n, 514 U.S. 35, 51 (1995)).
Larry Masino argues that his cross-appeal is inextricably intertwined with
the order the government appeals, but even if we have jurisdiction over that cross-
appeal, we decline to exercise it. See, e.g., Hartley v. Parnell, 193 F.3d 1263, 1272
(11th Cir. 1999) (“To the extent we have discretionary pendent appellate
jurisdiction . . . , we decline to exercise that jurisdiction.” (citation omitted)). We
will instead address only the appeal filed by the government.
B. Count Two of the Indictment Is Legally Sufficient To State an Offense.
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Congress passed the Organized Crime Control Act of 1970, Pub. L. No. 91-
452, 84 Stat. 922, to address a major source of money and power for organized
crime—gambling. See United States v. Harris, 460 F.2d 1041, 1045 (5th Cir.
1972). The Act prohibits substantial and continuous illegal gambling businesses:
(a) Whoever conducts, finances, manages, supervises, directs, or owns
all or part of an illegal gambling business shall be fined under this title
or imprisoned not more than five years, or both.
(b) As used in this section–
(1) “illegal gambling business” means 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 or has a gross revenue of $2,000 in any
single day.
...
(4) “gambling” includes but is not limited to pool-selling,
bookmaking, maintaining slot machines, roulette wheels
or dice tables, and conducting lotteries, policy, bolita or
numbers games, or selling chances therein.
18 U.S.C. § 1955.
The government argues that Count Two of the indictment sufficiently
alleges that Racetrack Bingo is an “illegal gambling business.” “An indictment is
sufficient if it: ‘(1) presents the essential elements of the charged offense, (2)
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notifies the accused of the charges to be defended against, and (3) enables the
accused to rely upon a judgment under the indictment as a bar against double
jeopardy for any subsequent prosecution for the same offense.’” United States v.
Lang, 732 F.3d 1246, 1247 (11th Cir. 2013) (quoting United States v. Dabbs, 134
F.3d 1071, 1079 (11th Cir. 1998)). The district court ruled that a violation of
Florida law could not convert a gambling business into an illegal gambling
business, so the indictment failed to state the essential element about state law
required to prove Count Two. No party argues about either of the two other
elements of sufficiency, so our inquiry is limited to deciding whether the
indictment presents the essential element about state law. We agree with the
government that the indictment is sufficient because at least some violations of the
Florida bingo statute, Fla. Stat. § 849.0931, which the indictment cites, could make
Racetrack Bingo an “illegal gambling business,” 18 U.S.C. § 1955.
Bingo is a form of gambling. Federal law defines the term “gambling,” id.
§ 1955(b)(4), and then defers to state law to determine which gambling businesses
are illegal, id. § 1955(b)(1)(i). States may decide what conduct is illegal, but states
may not redefine “gambling.” Cf. United States v. One Single Family Residence
Located at 18755 N. Bay Rd., Miami, 13 F.3d 1493, 1497 (11th Cir. 1994)
(“Section 1955 ‘borrows’ state law only for the limited purpose of defining the
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conduct that is prohibited as illegal gambling. Incorporation of state law for other
purposes has been rejected . . . .” (emphasis omitted)). Gambling “includes but is
not limited to pool-selling, bookmaking, maintaining slot machines, roulette
wheels or dice tables, and conducting lotteries, policy, bolita or numbers games, or
selling chances therein.” 18 U.S.C. § 1955(b)(4). And bingo is an activity where
“participants pay a sum of money for the use of . . . cards[,] . . . numbers are drawn
by chance, . . . [and a] player calls out ‘bingo’ and is declared the winner of a
predetermined prize.” Fla. Stat. § 849.0931(1)(a). Selling chances in a numbers
game is classically gambling, and the list of examples defining gambling is not
exhaustive. The federal gambling statute also excludes bingo games conducted by
a nonprofit organization, 18 U.S.C. § 1955(e), an unnecessary exception if bingo is
not gambling. Because bingo is gambling, and because Racetrack Bingo is a bingo
business, Racetrack Bingo is a gambling business.
The question remains whether the indictment alleges that Racetrack Bingo is
an illegal gambling business: “a gambling business which is a violation of the law
of [Florida].” Id. § 1955(b)(1)(i). Answering this question depends on what the
meaning of the word “is” is. The federal gambling statute applies only to a
gambling business that “is a violation of the law,” 18 U.S.C. § 1955(b)(1)(i)
(emphasis added), not to a gambling business that “is in violation of” or “has
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violated the law.” We have stated that “Section 1955 defines an illegal gambling
business as one that . . . operates in violation of state law,” United States v. Miller,
22 F.3d 1075, 1077 (11th Cir. 1994), but this dictum paraphrases the elements of
the statute and is imprecise. That a business violates state law is necessary, but not
sufficient, for that business to be illegal. As the Eighth Circuit explained, “The
word ‘is’ strongly suggests that the government must prove more than a violation
of some state law by a gambling business. The gambling business itself must be
illegal.” United States v. Bala, 489 F.3d 334, 340–41 (8th Cir. 2007).
The Supreme Court has held that “[t]he allowable unit of prosecution under
§ 1955 is defined as participation in a single ‘illegal gambling business.’ Congress
did not . . . define discrete acts of gambling as independent federal offenses.”
Sanabria v. United States, 437 U.S. 54, 70 (1978). “[T]he essence of the crime
created by Congress is participation in a ‘business.’” Id. That the unit of
prosecution is a single gambling business also suggests that the violation of state
law must be about the existence and nature of the business itself, not a single
illegal action.
The unit of prosecution defined by section 1955 may sometimes require
difficult line-drawing. When gambling is squarely banned under state law, it is not
difficult to conclude that a gambling business is illegal. In contrast, when “the core
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gambling activity was specifically authorized by state law but the manner in which
[the] defendant conducted that activity violated some aspect of state law,” we must
“identify those . . . violations of state law that turn a legal gambling business into
an ‘illegal gambling business’ that is itself a violation of state law.” Bala, 489 F.3d
at 340. Because all of the statutes charged in the indictment are criminal and
related to gambling, we do not have to resolve whether a gambling business might
be “illegal” because it operates without official grant of authority (e.g., an
“underground” Las Vegas casino that lacks a business license and never pays
taxes). Nevertheless, “it may be difficult in some cases to determine when a
[criminal,] gambling-related violation is sufficient to make a legal gambling
business illegal for purposes of § 1955.” Id. at 341. But “the text of the statute
. . . require[s] that the line be drawn.” Id.
This appeal does not require that we resolve every hypothetical difficulty in
deciding what makes a gambling business illegal because there are at least some
violations of the Florida bingo statute, Fla. Stat. § 849.0931, that may make
Racetrack Bingo “illegal.” The indictment alleges that Racetrack Bingo was an
“illegal gambling business”; it does not allege an incidental illegal act by an
otherwise legal business. The Florida bingo statute states that charitable
organizations may conduct bingo games “provided the entire proceeds derived
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from the conduct of such games, less actual business expenses . . . , are donated by
such organizations.” Id. § 849.0931(2)(a). The charitable organizations may “only
be directly involved” and may not “serve as a sponsor of a bingo game . . .
conducted by another.” Id. § 849.09319(2)(b). For a non-charitable organization,
“its right to conduct bingo games . . . is conditioned upon the return of all the
proceeds from such games to the players in the form of prizes.” Id. § 849.0931(3)
(emphasis added). If, for example, the government can prove that Racetrack Bingo
illegally allows charities to sponsor bingo games without their direct involvement
or that Racetrack Bingo forfeits its right to conduct bingo by not returning all of
the proceeds from those games to the players, then a jury could find that Racetrack
Bingo is an illegal gambling business.
It is a harder question whether Racetrack Bingo is an illegal gambling
business if it violates only the more detailed rules on topics such as the number of
days a week an organization may conduct bingo, the location of the games, or the
rental rates charged to lease property where bingo is conducted. See id.
§ 849.0931(5)–(13). But at the indictment stage, we need not decide whether every
possible violation of the Florida bingo statute can support federal prosecution
under the Act. The district court ruled only that a violation of the Florida bingo
statute before 2013 could never convert a business into an illegal gambling
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business, and we decide only that there are at least some violations of the bingo
statute that could make Racetrack Bingo an illegal gambling business. The
Masinos have not filed a motion for a bill of particulars on the ground that the
indictment provided them insufficient notice. See United States v. Davis, 854 F.3d
1276, 1293 (explaining that “[t]he purpose of a bill of particulars is ‘to inform the
defendant of the charge against him with sufficient precision to allow him to
prepare his defense, to minimize surprise at trial, and to enable him to plead double
jeopardy in the event of a later prosecution for the same offense’” (quoting United
States v. Warren, 772 F.2d 827, 837 (11th Cir. 1985))). And the government will
bear the burden to prove at trial that Racetrack Bingo is an illegal gambling
business under Florida law.
As the parties acknowledge, whether a violation of the bingo statute may
serve as a predicate offense for the Florida Racketeering Act is irrelevant to this
appeal. In 1998, the Florida Supreme Court held that violations of the bingo statute
were not punishable under the state lottery or racketeering statutes because the
bingo statute had its own separate system of criminal penalties. Dep’t of Legal
Affairs v. Bradenton Grp., Inc., 727 So. 2d 199, 202 (Fla. 1998). On remand,
Florida attempted to evade this holding by using the federal gambling statute to
transform a violation of the bingo statute into a racketeering violation. The Florida
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District Court of Appeal held that this argument was barred by collateral estoppel
and that, in any event, the government could not use the federal statute to
circumvent the state statutes. Brandenton Grp., Inc. v. State, 970 So. 2d 403, 408–
11 (Fla. Dist. Ct. App. 2007). In 2013, the Florida legislature amended its
Racketeering Act to allow violations of the bingo statute to count as
“[r]acketeering activity.” See Fla. Stat. § 895.02(8)(a)(45). The district court
reasoned that this change in the law meant that only violations of the Florida bingo
statute that occurred after the amendment could constitute an illegal gambling
business for purposes of the federal gambling statute. But whether a violation of
the bingo statute is a predicate offense for the Florida Racketeering Act and
whether a violation of the bingo statute makes an otherwise legal gambling
business into an illegal gambling business for purposes of the federal gambling
statute are separate questions. Violations of the bingo statute could make a
business illegal regardless of whether those violations also support a state
racketeering prosecution. The district court erred when it drew a distinction
between bingo offenses committed before and after the amendment to the Florida
Racketeering Act.
Because a violation of the Florida bingo statute could satisfy the essential
element about state law required to prove Count Two, we need not address Florida
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gambling house statutes as a basis for upholding the indictment. See Fla. Stat.
§§ 849.01, 849.02, 849.03 (prohibiting individuals, their agents, and their lessors,
from “keep[ing], exercis[ing] or maintain[ing] a gaming table or room” or
“suffer[ing] or permit[ting] any person to play for money or other valuable thing at
any game whatever.”); see also Brandenton, 727 So. 2d at 201–02 (explaining that
violations of the bingo statute are punishable by the bingo statute, not other
gambling statutes). The bingo statute provides at least some violations that would
make a gambling business illegal. As a result, the indictment stated the essential
element about state law.
IV. CONCLUSION
We DISMISS the cross-appeal for lack of jurisdiction. We REVERSE the
order dismissing part of Count Two of the indictment and REMAND for further
proceedings.
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