Cleveland v. Thorne , 2013 Ohio 1029 ( 2013 )

[Cite as Cleveland v. Thorne, 2013-Ohio-1029.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
Nos. 98365, 98474, 98503, 98695, 98696, and 98697
CITY OF CLEVELAND
PLAINTIFF-APPELLEE
vs.
RANDALL S. THORNE, ET AL.
DEFENDANTS-APPELLANTS
JUDGMENT:
AFFIRMED
Criminal Appeal from the
Cleveland Municipal Court
Case Nos. 2010-CRB-045821, 2011-CRB-005874, 2011-CRB-005875,
2011-CRB-005876, 2011-CRB-008819, 2011-CRB-008820,
2011-CRB-008821, 2011-CRB-009055, and 2011-CRB-009059
BEFORE: Celebrezze, P.J., E.A. Gallagher, J., and E.T. Gallagher, J.
RELEASED AND JOURNALIZED: March 21, 2013
ATTORNEY FOR APPELLANTS
Donald J. Malarcik
The Gothic Building
54 E. Mill Street
Suite 400
Akron, Ohio 44308
ATTORNEYS FOR APPELLEE
Barbara A. Langhenry
Law Director
City of Cleveland
Department of Law
BY: L. Stewart Hastings
Chief Assistant Director of Law
601 Lakeside Avenue
Room 106
Cleveland, Ohio 44114-1077
Victor R. Perez
Chief Prosecutor
City of Cleveland
The Justice Center
1200 Ontario Street
Cleveland, Ohio 44113
FRANK D. CELEBREZZE, JR., P.J.:
{¶1} In this consolidated appeal, several proprietors and employees of three
businesses engaged in the sale of network access time with accompanying sweepstakes
entries challenge their convictions for operating a gambling house. After a thorough
review of the pertinent law and the record, we affirm those convictions.
I. Factual and Procedural History
{¶2} Three establishments were separately raided by Cleveland police because of
suspected gambling activity. The three businesses offered substantially similar
environments and services. Each used a system called VS2 to offer for sale network
access time. Patrons could purchase network access time at a rate of 25 cents per minute.
Patrons would also receive 100 sweepstakes points for every one dollar spent on network
access time. Those sweepstakes points could then be used to play simulated casino-style
games to reveal winning entries. Customers could also have the cashier or an automated
cashier system instantly reveal any winning entries. Patrons with winning entries
accumulated “winning points,” which could be used to buy more network access time or
be exchanged for cash at a value of one cent per point. These businesses have come to
be known as “cyber cafés” or “internet cafés.”
{¶3} Internet Depot, located on West 117th Street, was owned by Randall Thorne.
Black Hawk I, located on Lakeshore Boulevard, and Black Hawk II, located on St. Clair
Avenue, were both owned by Michael Harris. Employees of Black Hawk I and II, also
charged in these cases, include Bona Suon, Sreyleak Ny, Team Ny, and Catherine Miller.
These establishments offered patrons a lounge-like environment with computer terminals
capable of connecting to the internet. The computer terminals also allowed users to play
games in a “fun games” section or to play simulated casino-style games using
sweepstakes points. The businesses offered free food and beverages, lounges with
large-screen televisions, as well as printing, faxing, and similar business services.
{¶4} In 2010 and 2011, detectives from the Intelligence Unit of the Cleveland
Police Department conducted undercover surveillance of Internet Depot and Black Hawk
I and II. Detectives went in and gave money to the cashier. They were provided with
magnetic swipe cards that contained account information. The accounts were loaded
with network access time and sweepstakes points. The detectives sat at a computer
terminal, swiped their cards, and then played casino-style games. They either won,
accumulating winning points, or lost. If they won, they would take their cards to the
cashier and be given cash.
{¶5} After conducting a number of operations at each location, Det. Jason Steckle,
lead investigator, sought and obtained search warrants for Internet Depot and Black Hawk
I and II. Officers raided each location, seizing cash, computer terminals and servers, and
associated equipment.
{¶6} The employees and owners of these establishments were charged with
gambling, in violation of Cleveland Codified Ordinances (“CCO”) 611.02(a)(2);
operating a gambling house, in violation of CCO 611.05; and possession of criminal
tools, in violation of CCO 625.08. The cases were consolidated for trial. Appellants
filed suppression motions, which were heard by the court on April 28, 2011,1 and May
19, 2011.
{¶7} At the first hearing, Det. Steckle testified for the city of Cleveland (the
“City”). He testified about his and other officers’ experiences inside these
establishments. He indicated a casino-like environment with people playing casino-style
games. He also testified that they did not observe anyone using the internet or the other
business services offered. Appellants argued that Det. Steckle made knowing omissions
or false statements in his search warrant affidavit because he indicated a patron could
purchase sweepstakes points. They argued, and computer gaming expert Nick Farley
testified, that sweepstakes points could not be purchased, but were free when one
purchased network access time.
{¶8} The trial court found the statements made in the affidavit were not knowingly
false statements, but found four omissions that should have been included. The court
went on to find sufficient evidence of criminal activity to justify the issuance of the
warrants and denied the motion to suppress. The court recognized that the second
suppression hearing encompassed the same issues and testimony involved in the first
hearing and also denied this motion on May 19, 2011.
{¶9} After several pretrial motions were disposed of, including a motion to dismiss
based on selective prosecution, trial commenced on March 9, 2012. The City called Det.
1The transcript indicates this hearing took place August 28, 2011. This
must be a clerical error because the journal entry taking judicial notice of this
testimony is dated May 19, 2011.
Steckle as well as Detectives Patricia Hasan and Pamela Zimmerman. The City was also
set to call about 20 patrons of the businesses who would testify they went there to gamble.
Appellants entered into a stipulation that these people went to the businesses in hopes of
pecuniary gain. Therefore, they did not testify. The state rested and appellants made a
Crim.R. 29 motion to dismiss based on insufficient evidence. The court overruled the
motion.
{¶10} Appellants called one witness, Nick Farley, to testify about the legality of
the system. He is an engineer employed in the gaming industry to investigate and certify
that various gaming systems comply with federal, state, and local laws. He testified that
the systems used in these three businesses, called VS2, were manufactured by a New
Jersey company and are widely used throughout the country. He further explained that
there was no element of consideration involved because customers could not purchase
sweepstakes points, and these points had no value. Customers had to purchase network
access time and then would receive sweepstakes points free. He elaborated that
sweepstakes points also had no value because they could not be exchanged for cash.
Only winning points could be exchanged for cash.
{¶11} After appellants rested and their renewed Crim.R. 29 motion was denied, the
jury was charged and set off to deliberate. The jury asked three questions during
deliberations. Two dealt with the photographic exhibits and which establishment each
photo represented. The third asked for a definition of valuable consideration. The
judge issued a definition over appellants’ objection, which was taken from Black’s Law
Dictionary and Troy Amusement Co. v. Attenweiler, 64 Ohio App. 105, 28 N.E.2d 207(2d Dist.1940).
{¶12} The jury returned guilty verdicts for all defendants as indicted. Each
appellant was sentenced and appealed. In this consolidated appeal, appellants assert six
assignments of error:
I. The trial court erred by failing to grant appellants’ motion to suppress.
II. The trial court committed reversible error by giving an incorrect and
prejudicial jury instruction on the essential element of an exchange of
valuable consideration.
III. The trial court erred by failing to dismiss the charges against
appellants for selective prosecution.
IV. The trial court erred in failing to grant motions for acquittal pursuant
to Crim.R. 29.
V. The trial court erred in entering judgment on the verdicts not supported
by sufficient evidence.
VI. Appellants’ convictions were against the manifest weight of the
evidence.
II. Law and Analysis
A. Suppression
{¶13} Appellants first claim the trial court erred when it denied their suppression
motion. They claim there was insufficient evidence of criminal activity to justify the
issuance of a warrant once material omissions and false statements made by Det. Steckle
were removed. Appellants argue that the trial court identified four statements that were
omissions or misleading statements dealing with Det. Steckle’s characterization of
appellants’ business model, which were used to obtain the warrant. Once these
statements are appropriately set aside or included, sufficient evidence of criminal
wrong-doing does not exist to justify the issuance of a search warrant.
The task of the issuing magistrate is simply to make a practical
common-sense decision whether, given all the circumstances before him,
including the “veracity” and “basis of knowledge” of persons supplying
hearsay information, there is a fair probability that contraband or evidence
of a crime will be found in a particular place. And the duty of a reviewing
court is simply to ensure that the magistrate had a substantial basis for
concluding that probable cause existed.
Illinois v. Gates, 462 U.S. 213, 238, 103 S.Ct. 2317, 76 L.Ed.2d 527 (1983). The Ohio
Supreme Court has affirmed this standard. State v. George, 45 Ohio St.3d 325, 544
N.E.2d 640 (1989).
{¶14} Appellants argue that the affidavits attached to the various warrant
applications contained material omissions and knowingly false statements by police
officers. Citing the “rules” prominently placed by the cashier windows, which also must
be accepted by the user on the computer terminals before games may be played, they
claim officers knew there was no way to buy sweepstakes entries and that sweepstakes
points had no value. This contradicts the statements in the affidavits that customers
“wager” money and “buy sweepstakes points.”
{¶15} However, from the perspective of police officers and the average customer
coming through the door, one provides money and receives sweepstakes points, which are
then used to play casino-style games in hopes of winning money. Nick Farley testified at
the suppression hearing that these patrons were actually buying network access time and
receiving free sweepstakes points, which had no value. But he is an expert in analyzing
such systems and had previously done extensive analysis on the VS2 systems used by
these appellants. The evidentiary standard to be satisfied is not beyond a reasonable
doubt, but only that sufficient probable cause existed to believe that criminal activity was
ongoing.
In reviewing the sufficiency of probable cause in an affidavit submitted in
support of a search warrant issued by a magistrate, neither a trial court nor
an appellate court should substitute its judgment for that of the magistrate
by conducting a de novo determination as to whether the affidavit contains
sufficient probable cause upon which that court would issue the search
warrant. Rather, the duty of a reviewing court is simply to ensure that the
magistrate had a substantial basis for concluding that probable cause
existed. In conducting any after-the-fact scrutiny of an affidavit submitted
in support of a search warrant, trial and appellate courts should accord great
deference to the magistrate’s determination of probable cause, and doubtful
or marginal cases in this area should be resolved in favor of upholding the
warrant.
George, at paragraph two of the syllabus. Here, the statements made regarding gambling
activity were not knowingly false statements or omissions because they were reasonable
observations of the operations of appellants’ businesses. Simply because appellants
attempted to legitimize gambling activities does not mean law enforcement must blindly
accept these artificial constructs, as explained in the sufficiency and manifest weight
assignments of error below.
{¶16} Appellants also claim the affidavits failed to mention that sweepstakes
points could be obtained for free simply by asking. They also claim that Det. Steckle
made mention of a prior investigation where Black Hawk was suspected of gambling, but
failed to mention that no charges were filed, and the computer terminals seized were
eventually returned. Appellants also point out that Det. Steckle failed to mention that
playing sweepstakes games does not diminish network access time.
{¶17} Even with these statements added or excluded, as appropriate, the affidavits
still demonstrate probable cause of criminal activity. Det. Steckle described casino-like
environments that were advertised as such with swipe cards and flyers bearing references
to games of chance and people playing casino-style games in hopes of winning money.
This is sufficient evidence to warrant further investigation and the issuance of a search
warrant.
{¶18} Appellants’ first assignment of error is overruled.
B. Jury Instruction
{¶19} Appellants next take issue with a jury instruction given by the court that
defined “valuable consideration” after it was not originally defined for the jury and the
jury inquired as to its legal meaning.
When reviewing a trial court’s jury instructions, the proper standard of
review for an appellate court is whether the trial court’s refusal to give a
requested instruction or giving an instruction constituted an abuse of
discretion under the facts and circumstances of the case. See State v.
Wolons (1989), 44 Ohio St.3d 64, 68, 541 N.E.2d 443. In addition, jury
instructions are reviewed in their entirety to determine if they contain
prejudicial error. State v. Porter (1968), 14 Ohio St.2d 10, 235 N.E.2d
520.
State v. Williams, 8th Dist. No. 90845, 2009-Ohio-2026, ¶ 50. To constitute an abuse of
discretion, the ruling must be unreasonable, arbitrary, or unconscionable. Blakemore v.
Blakemore, 5 Ohio St.3d 217, 450 N.E.2d 1140 (1983).
{¶20} Here, after the jury asked the court to define “valuable consideration,” the
trial court did so using wording taken from the 1940 edition of Black’s Law Dictionary
and Troy Amusement Co. v. Attenweiler, 64 Ohio App. 105, 28 N.E.2d 207 (2d
Dist.1940). The Troy case involves a “scheme of chance” operated by a movie theater to
develop business and interest in movies. The trial court advised the jury as follows:
Valuable consideration may consists [sic] of either in the benefit of to [sic]
the promisor or a detriment to the promisee and may consist in some right,
interest or profit or benefit to one party or some forbearance, detriment, loss
or responsibility given, suffered, [or] undertaken by the other.
Consideration does not mean that pay shall be directly given for the right to
participate. It is only necessary that the person entering the activity shall
do something or give up some right sufficient to comply with that
requirement.
{¶21} The first part of the instruction mirrors the standard definition of
consideration and helps the jury understand a term that has a specific legal definition with
which most members of the public would be unfamiliar. The second paragraph is taken
from case law involving a similar issue as the one here — consideration in a scheme of
chance. However, “[t]he obtuse legalese and confounding abstracts gleaned from
previous decisions and case books were never meant to be used by layman. Such
language is the vernacular of a sophisticated professional body and may be confusing to a
jury.” Viock v. Stowe-Woodward Co., 6th Dist. No. E-84-27, 1986 Ohio App. LEXIS
6004 (Mar. 14, 1986), *32.
{¶22} Here, the first part of the instruction is appropriate guidance in helping the
jury determine a key aspect of this case — consideration. The instruction aids the jury in
understanding this concept. Appellants argue the definition has changed over time and
that a more recent edition of Black’s Law Dictionary should have been consulted.
However, the definition provided by appellants in their brief is substantially similar,2 but
not as easy for a layperson to understand. The second part of the definition was taken
from a court analyzing a gambling statute that was significantly more restrictive than
current laws. The scheme in Troy Amusement would likely not be prohibited by current
gambling laws.
{¶23} That said, we find any error harmless. Any error will be deemed harmless
if it did not affect the accused’s “substantial rights.” Otherwise stated, the accused has a
constitutional guarantee to a trial free from prejudicial error, not necessarily one free of
all error. Before constitutional error can be considered harmless, we must be able to
“declare a belief that it was harmless beyond a reasonable doubt.” Chapman v.
California, 386 U.S. 18, 24, 87 S.Ct. 824, 17 L.Ed.2d 705 (1967).
{¶24} “[I]nstructions should be viewed in a common sense perspective and not
through the ‘remote and distorting knothole of a distant appellate fence.’” Id., citing Time,
Inc. v. Hill, 385 U.S. 374, 418, 87 S.Ct. 534, 17 L.Ed.2d 456 (1967). Appellants argue
that this definition permits nearly anything to constitute consideration. There was never
any issue with intangible benefits or detriments given as consideration in this case. This
case comes down to whether money paid to appellants was for network access time or to
“Consideration that is valid under the law; consideration that either confers
2
a pecuniary measurable benefit on one party or imposes a pecuniarily measurable
detriment on the other.” Black’s Law Dictionary, 326 (8th Ed.2004).
participate in a scheme of chance in hopes of gain. The key disagreement between the
City and appellants was that patrons paid for network access time and received free
sweepstakes points as a result. Disregarding the contrivances, it is clear that the only
consideration argued by the City was that patrons provided money to play casino-style
games in hopes of winning money. The trial court’s instruction regarding intangible
benefits or detriments was surplusage, but was harmless.
C. Selective Prosecution
{¶25} Appellants next argue that they were singled out for prosecution because
other businesses operate similar sweepstakes games, including McDonald’s, and
Coca-Cola.
{¶26} The decision whether to prosecute a criminal offense is generally within the
prosecutor’s discretion. United States v. Armstrong, 517 U.S. 456, 464, 116 S.Ct. 1480,
134 L.Ed.2d 687 (1996). “There is * * * a ‘strong presumption of regularity’ in
prosecutorial discretion.” State v. Norris, 147 Ohio App.3d 224, 229, 2002-Ohio-1033,
769 N.E.2d 896 (1st Dist.). In order to establish a case of selective prosecution, a
criminal defendant must make a prima facie showing:
(1) that, while others similarly situated have not generally been proceeded
against because of conduct of the type forming the basis of the charge
against him, he has been singled out for prosecution, and (2) that the
government’s discriminatory selection of him for prosecution has been
invidious or in bad faith, i.e., based upon such impermissible considerations
as race, religion, or the desire to prevent his exercise of constitutional
rights.
State v. Flynt, 63 Ohio St.2d 132, 134, 407 N.E.2d 15 (1980).
{¶27} The defendant’s burden of establishing discriminatory prosecution is a
heavy one. State v. Freeman, 20 Ohio St.3d 55, 58, 485 N.E.2d 1043 (1985). “The mere
failure to prosecute other violators of the statute which appellants were charged with
violating does not establish the defense of selective prosecution.” Id. Selectivity in
enforcement does not constitute a constitutional violation unless the discrimination is
“intentional or purposeful.” Flynt at 134, quoting Snowden v. Hughes, 321 U.S. 1, 8, 64
S.Ct. 397, 88 L.Ed. 497 (1944). Moreover, the mere existence of a potential
discriminatory purpose does not, by itself, show that such purpose motivated a particular
defendant’s prosecution. Freeman at 58.
{¶28} Here, appellants argue that their sweepstakes are no different from those
operated by other businesses. They cite to McDonald’s® Monopoly® game as an
example, among others. However, these schemes of chance are not similar to the one
operated by appellants. In those games, the product sold is not a clever ruse to legitimize
gambling activity. When examining similarly situated individuals, the City has brought
several prosecutions of other cyber or internet cafés that have attempted to operate within
its boundaries.
{¶29} Appellants have failed to demonstrate that other similarly situated
individuals have not been prosecuted for engaging in similar schemes of chance. In fact,
in this case, three separate establishments owned by two different individuals are
represented. Appellants’ assigned error is therefore overruled.
D. Sufficiency of the Evidence and Manifest Weight
{¶30} In their fourth, fifth, and sixth assignments of error, appellants challenge the
sufficiency of the evidence sustaining their convictions as well as allege that the jury’s
verdict is against the manifest weight of the evidence.
{¶31} Whether the evidence is legally sufficient to sustain a verdict is a question of
law. State v. Robinson, 162 Ohio St. 486, 124 N.E.2d 148 (1955). A conviction based on
legally insufficient evidence constitutes a denial of due process. Tibbs v. Florida, 457
U.S. 31, 45, 102 S.Ct. 2211, 72 L.Ed.2d 652 (1982), citing Jackson v. Virginia, 443 U.S.
307, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979).
{¶32} Where there is substantial evidence on which the trier of fact has based its
verdict, a reviewing court abuses its discretion in substituting its judgment for that of the
trier of fact as to the weight and sufficiency of the evidence. State v. Nicely, 39 Ohio
St.3d 147, 156, 529 N.E.2d 1236 (1988). On review, the appellate court must determine,
after viewing the evidence in a light most favorable to the prosecution, whether any
rational trier of fact could have found the essential elements of the crime proven beyond a
reasonable doubt. State v. Jenks, 61 Ohio St.3d 259, 273, 574 N.E.2d 492 (1991).
{¶33} Sufficiency of the evidence is subject to a different standard than is manifest
weight of the evidence. Article IV, Section 3(B)(3) of the Ohio Constitution authorizes
appellate courts to assess the weight of the evidence independently of the factfinder.
Thus, when a claim is assigned concerning the manifest weight of the evidence, an
appellate court “has the authority and duty to weigh the evidence and to determine
whether the findings of * * * the trier of facts were so against the weight of the evidence
as to require a reversal and a remanding of the case for retrial.” State ex rel. Squire v.
Cleveland, 150 Ohio St. 303, 345, 82 N.E.2d 709 (1948).
{¶34} On application of the standards enunciated in Tibbs, the court in State v.
Martin, 20 Ohio App.3d 172, 485 N.E.2d 717 (1st Dist.1983), has set forth the proper test
to be utilized when addressing the issue of manifest weight of the evidence. The Martin
court stated:
The court, reviewing the entire record, weighs the evidence and all
reasonable inferences, considers the credibility of witnesses and determines
whether in resolving conflicts in the evidence, the jury clearly lost its way
and created such a manifest miscarriage of justice that the conviction must
be reversed and a new trial ordered.
Id. at 175.
{¶35} The system used by appellants constructs a thinly veneered facade
constituting the flimsiest of walls separating the consideration paid from the opportunity
for gain through chance. As has long been recognized,
no sooner is a lottery defined, and the definition applied to a given state of
facts, than ingenuity is at work to evolve some scheme of evasion which is
within the mischief, but not quite within the letter of the definition. But, in
this way, it is not possible to escape the law’s condemnation, for it will strip
the transaction of all its thin and false apparel and consider it in its very
nakedness. It will look to the substance and not to the form of it, in order to
disclose its real elements and the pernicious tendencies which the law is
seeking to prevent.
State v. Lipkin, 169 N.C. 265, 271, 84 S.E. 340 (1915).
{¶36} CCO 611.02(a) prohibits gambling, with exceptions set forth in subsection
(b), stating:
No person shall do any of the following:
(1) Engage in bookmaking, or knowingly engage in conduct that facilitates
bookmaking;
(2) Establish, promote, or operate or knowingly engage in conduct that
facilitates any game of chance conducted for profit or any scheme of
chance;
(3) Knowingly procure, transmit, exchange, or engage in conduct that
facilitates the procurement, transmission, or exchange of information for
use in establishing odds or determining winners in connection with
bookmaking or with any game of chance conducted for profit or any scheme
of chance;
(4) Engage in betting or in playing any scheme or game of chance as a
substantial source of income or livelihood;
(5) With purpose to violate this section, acquire, possess, control, or
operate any gambling device.
{¶37} Further, CCO 611.05 prohibits the operation of a gambling establishment.
This ordinance states:
No person, being the owner or lessee, or having custody, control, or
supervision of premises, shall:
(1) Use or occupy such premises for gambling in violation of Section
611.02 or R.C. 2915.02;
(2) Recklessly permit such premises to be used or occupied for gambling
in violation of Section 611.02 or R.C. 2915.02.
{¶38} Cleveland Codified Ordinances 611.01(qq) defines “slot machine” as
[a]ny mechanical, electronic, video, or digital device that is capable of
accepting anything of value, directly or indirectly, from or on behalf of a
player who gives the thing of value in the hope of gain, the outcome of
which is determined largely or wholly by chance; [or] * * * [a]ny
mechanical, electronic, video, or digital device that is capable of accepting
anything of value, directly or indirectly, from or on behalf of a player to
conduct or dispense bingo or a scheme or game of chance.
{¶39} CCO 611.01(b) defines a “bet” as “the hazarding of anything of value upon
the result of an event, undertaking, or contingency, but does not include a bona fide
business risk.” CCO 611.01(c) defines a “scheme of chance” as “a slot machine, lottery,
numbers game, pool conducted for profit, or other scheme in which a participant gives a
valuable consideration for a chance to win a prize, but does not include bingo, a
skill-based amusement machine, or a pool not conducted for profit.” It also defines
“game of chance” under subsection (d) as “poker, craps, roulette, or other game in which
a player gives anything of value in the hope of gain, the outcome of which is determined
largely by chance, but does not include bingo.”
{¶40} Finally, CCO 625.08 prohibits the possession of criminal tools, defined in
relation to this case as “[a]n electric media device when information from the device,
obtained pursuant to law, indicates that the device was intended for criminal use[.]”
{¶41} At trial, it was essentially conceded that these businesses operated
chance-based sweepstakes that offered the chance for monetary gain. It was also
conceded that patrons participated in hopes of gain. The primary contested issue was
whether those patrons provided anything of value for a chance to participate. This is
because under all the above definitions, an exchange of valuable consideration is
necessary to find a criminal violation. Appellants argue that patrons purchased internet
access time and that this time was not diminished as a result of the sweepstakes offered.
The network access time remained and was a valuable product that patrons paid for and
received. The sweepstakes points were given free as a promotion and had no actual
value.
{¶42} Stripping away the contrivance that couches the transaction as legitimate
leads to a test that examines what is at the heart of the exchange: Whether the
sweepstakes points are there to drive the sale of network access time, or whether the sale
of network access time is there simply to legitimize gambling. Evidence and inferences
reasonably drawn from that evidence, which show that the latter is true, is sufficient for a
finding of consideration in the transaction.
{¶43} The Fifth Circuit Court of Appeals confronted a case involving a similar
computer system and was even confronted with similar testimony by Nick Farley.
United States v. Davis, 690 F.3d 330 (5th Cir.2012). That court affirmed convictions for
violations of substantially similar federal gaming laws, overruling the same
lack-of-consideration argument raised here. In doing so, it found,
a reasonable fact-finder could infer that the sale of Internet time at the
defendants’ cafés was an attempt to legitimize an illegal lottery.
Customers’ receipts indicating over 300,000 minutes of Internet time
remaining were evidence that the customers did not value the Internet time
they had purchased. Further evidence that customers did not value their
Internet time was the investigating police officers’ uniform testimony that
during each of their visits to a café, all of the people there were only
engaged in playing the sweepstakes — not accessing the Internet or using
any of the other services provided. In addition to the customers’ apparent
disregard for the value of Internet time, there was evidence which casts
doubt upon the defendants’ claim that they intended to be legitimate,
full-service Internet, faxing, copying, and word-processing vendors. For
example, the manager of the Nederland testified that Davis said that he was
“not worried about” the roughly $400 every two months in revenue from
services other than Internet time and simply told the manager to keep it.
The defendants’ focus on income from the sale of Internet time to the
exclusion of income derived from other services offered by the cafés could
reasonably raise the inference that the defendants offered the other services
merely as an attempt to make it appear that their sale of Internet time was
part of a full-service business, instead of a mechanism for legitimizing
unlawful activity. Further evidence that the defendants’ true purpose for
the cafés was to create a place where people would be comfortable staying
for a long time, purchasing Internet time and playing the sweepstakes, was
the casino-like atmosphere at the cafés, complete with tinted windows and
free food and drink. Finally, it is reasonable to infer that Davis’s and
Clark’s purpose for the cafés was to legitimize illegal gambling from the
fact that café customers were required to sign a form stating that they were
not gambling upon entering at least one of the cafés; legitimate businesses
ordinarily do not require such formalities.
Id. at 339.
{¶44} Here, appellants stipulated that customers went to these establishments in
hopes of winning money. The jury could draw the logical conclusion that they did so,
not for internet time, but for gambling. The businesses involved had similar casino-like
environments — offering relaxing lounge areas and free food and drink. The officers
uniformly testified that they witnessed no one using the other business services offered.
Here, the advertising materials submitted into evidence did not resemble those used by
Kinkos® or other would-be competitors mentioned at trial, but were more like those
used by casinos. One advertisement consisted of a black background with gold “777”
printed on it. The impression conveyed by these advertisements was for a casino, not
business services or internet access.
{¶45} Analyzing the “predominate purpose” of the transaction has been criticized
by some courts and commentators as inappropriate in the criminal context, 3 but the
3 See Toledo v. Dabish, Toledo M.C. No. CRB-08-2S138 (Nov. 18, 2009). But
justice system is not some lumbering oaf who must ignore the patently obvious gambling
scheme apparent here simply because of a contrived separation between consideration and
the scheme of chance. By advertising these businesses as casinos, appellants obviously
intended gambling to occur on their premises. They should not be surprised that law
enforcement and the jury saw these same things and found sufficient evidence of
gambling.
{¶46} From this evidence, the jury could reasonably conclude that appellants
offered network access time in an attempt to legitimize illegal gambling activity.
Therefore, appellants’ convictions for gambling, operating a gambling house, and
possession of criminal tools are supported by sufficient evidence. The VS2 network
terminals qualify as slot machines because they indirectly accept something of value to
participate in a scheme of chance. Because the operation of these terminals was done for
profit, appellants are guilty of gambling, as defined, and operating a gambling house.
{¶47} Also, the convictions are not against the manifest weight of the evidence.
The evidence shows that a system devised to skirt the law by constructing straw man after
straw man operates as an illegal gambling machine or slot machine, as defined by the
City. The law in this arena serves no purpose to elevate form to such a high degree that
for civil cases applying this standard in an administrative hearing setting, see, e.g.,
Katmandu, Inc. v. Liquor Control Commn., 10th Dist. No. 02AP-546,
2002-Ohio-6743, and Freedom Concepts, Inc. v. Ohio Liquor Control Comm., 10th
Dist. No. 02AP-913,
2003-Ohio-4686 (noting that the same criminal elements must be shown for a
violation of liquor control regulations, albeit with a lower standard of proof.)
the nature of the transaction should be ignored. The state of Ohio and municipalities
have long-standing prohibitions that sharply prohibit gambling, and there is no
justification for ignoring the nature of the transaction here simply because the system is
designed in such a way as to artificially isolate one part of the illegal transaction from
another. The justice system is not so blinded by chicanery.
III. Conclusion
{¶48} Appellants’ attempts to couch their illegal activities as legitimate business
enterprises fail. The businesses operated casino-style establishments, advertised them as
such, and profited from those operations. This is a violation of the Cleveland Codified
Ordinances. The trial court did not err in upholding the issuance of a search warrant
based on undercover investigations where officers observed this gambling activity. Also,
these businesses are not similarly situated to other legitimate businesses operating
sweepstakes as a marketing device. Therefore, appellants’ arguments about selective
prosecution fail.
{¶49} Judgment affirmed.
It is ordered that appellee recover from appellants costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the Cleveland
Municipal Court to carry this judgment into execution. The defendants’ convictions
having been affirmed, any bail pending appeal is terminated. Cases remanded to the trial
court for execution of sentences.
A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of
the Rules of Appellate Procedure.
FRANK D. CELEBREZZE, JR., PRESIDING JUDGE
EILEEN A. GALLAGHER, J., and
EILEEN T. GALLAGHER, J., CONCUR