DocketNumber： 93-1882
Filed Date： 2/2/1995
Status： Precedential
Modified Date： 3/3/2016
UNITED STATES COURT OF APPEALS UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT FOR THE FIRST CIRCUIT
____________________
No. 93-1882
UNITED STATES,
Appellee,
v.
ARTHUR M. MARDER,
Defendant, Appellant.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Mark L. Wolf, U.S. District Judge] ___________________
____________________
Before
Selya, Circuit Judge, _____________
Bownes, Senior Circuit Judge, ____________________
and Cyr, Circuit Judge. _____________
____________________
Richard J. Shea for appellant. _______________
Cynthia A. Young, Attorney, Department of Justice, with whom _________________
Donald K. Stern, United States Attorney, District of Massachusetts, ________________
and Ernest S. Dinisco, Assistant United States Attorney, were on brief _________________
for appellee.
____________________
February 2, 1995
____________________
BOWNES, Senior Circuit Judge. Defendant-appellant, BOWNES, Senior Circuit Judge. ____________________
Arthur Marder, was convicted by a jury on all seventeen
counts of the indictment against him. Twelve counts of the
indictment were predicated specifically on illegal gambling
allegedly in violation of Massachusetts General Laws ch. 271,
7 and 17. The counts involving the Massachusetts statutes
were: two RICO counts; two counts of using interstate
facilities in aid of racketeering; one count of operating an
illegal gambling business; and seven counts of money
laundering. There can be no doubt of the right of the
federal government to base a federal crime upon the violation
of a state statute. Sanabria v. United States, 437 U.S. 54, ________ _____________
70 (1978).
The five other counts charged income tax evasion
(three counts), a count of conspiracy to defraud the United
States by impeding the lawful functions of the IRS, and a
count of illegally structuring monetary transactions.
Defendant mounts three challenges to his
conviction: that there were no illegal gambling offenses
under the Massachusetts statutes, and that, if there were,
the court's instruction on them was erroneous; that the
currency transaction conviction lacked sufficient evidentiary
foundation, and the court erred in its instruction on it; and
that there were sentencing errors.
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Most of the essential facts are not in dispute,
only the inferences and conclusions to be drawn from them.
We must, of course, review the facts and all inferences to be
drawn from them in the light most favorable to the
government. United States v. Cotto-Aponte, 30 F.3d 4, 5 (1st _____________ ____________
Cir. 1994); United States v. Hernandez, 995 F.2d 307, 311 _____________ _________
(1st Cir.), cert. denied, 114 S. Ct. 407 (1993). _____ ______
I. ILLEGAL GAMBLING UNDER THE MASSACHUSETTS STATUTES I. ILLEGAL GAMBLING UNDER THE MASSACHUSETTS STATUTES
Defendant owned and operated the Revere Amusement
Company ("Revere") from 1981 to 1989. Revere's income came
from the operation of video poker machines that were placed
in an assortment of bars, taverns, and social clubs in
Revere, Massachusetts. The poker machines operated somewhat
like slot machines. The machine was activated by inserting
money into it, at least a quarter. The player would then
manipulate a button to obtain a poker hand. The machine's
video screen would display five cards representing a poker
hand. Before the "play" began, the screen displayed the
payoffs for winning hands; i.e., a hand consisting of three
of a kind might pay twelve to one. Credits were given for
winning hands. For example, a full house might pay ten
credits. After a winning player finished playing the
machine, he exchanged his credits for cash. The cash payment
was made by the person in charge of the establishment in
which the machine(s) was located. Defendant and/or his
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employees visited the approximately seventeen places where
the poker machines were located on a regular basis, usually
daily. The proprietors of the establishments were reimbursed
for the payoffs and then the machine's proceeds were split
with them. Normally, no records were kept of the
transactions. And, of course, only defendant and his
employees had access to the monies paid into the poker
machine.
In 1985 defendant decided to enjoy the fruits of
his profitable business and moved to Palm Springs,
California. Defendant's son, Steven, then took over the
daily operation of Revere.1 Defendant, however, kept a
tight reign on Revere's operations from Palm Springs. He
received between $4,000 to $10,000 in cash by express mail
several times a week. At irregular intervals, he asked his
employees to keep records of the transactions so he would
know what was going on.
Revere's income from the poker machines amounted to
about $500,000 per year. There was convincing evidence that
defendant made regular payoffs to local police officers,
politicians, and organized crime. Neither defendant nor his
company paid state or federal income tax on the income
generated by the video poker game machines.
____________________
1. Steven Marder was indicted along with his father; he pled
guilty prior to trial.
-4- 4
With this factual background, we turn to the
question of whether defendant's poker game business violated
the implicated Massachusetts statutes. This is, of course,
primarily a question of Massachusetts law. And there is no
Massachusetts case directly on point. We first consider
Mass. Gen. L. ch. 271, 17, which provides:
17. Place for registering bets or 17. Place for registering bets or
dealing in pools; owner or occupant; dealing in pools; owner or occupant;
custodian or depository custodian or depository
Whoever keeps a building or room, or
any part thereof, or occupies, or is
found in, any place, way, public or
private, park or parkway, or any open
space, public or private, or any portion
thereof, with apparatus, books or any _______
device, for registering bets, or buying _________________________________________
or selling pools, upon the result of a _________________________________________
trial or contest of skill, speed or _________________________________________
endurance of man, beast, bird or machine, _________________________________________
or upon the result of a game, _________________________________________
competition, political nomination,
appointment or election, or whoever is
present in such place, way, park or
parkway, or any such open space, or any
portion thereof, engaged in such business
or employment; or, being such keeper,
occupant, person found or person present,
as aforesaid, registers such bets, or
buys or sells such pools, or is concerned
in buying or selling the same; or, being
the owner, lessee or occupant of a
building or room, or part thereof, or
private grounds, knowingly permits the
same to be used or occupied for any such
purpose, or therein keeps, exhibits, uses
or employs, or knowingly permits to be
therein kept, exhibited, used or
employed, any device or apparatus for
registering such bets, or for buying or
selling such pools, or whoever becomes
the custodian or depository for hire,
reward, commission or compensation in any
manner, of any pools, money, property or
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thing of value, in any manner staked or
bet upon such result, shall be punished
by fine of not more than three thousand
dollars or by imprisonment in the state
prison for not more than three years, or
in jail or the house of correction for
not more than two and one half years.
(Emphasis added.)
We note first that the statute is not limited to
bookmaking in the traditional sense. It includes "any device
for registering bets, or buying or selling pools, upon the
result of a trial or contest of skill, speed or endurance of
man, beast, bird or machine, or upon the result of a game . .
. ." This is broad and encompassing language. We do not
think that it excludes the placing of bets on video poker
games as a matter of statutory construction.
Although there are no Massachusetts cases directly
on point, there are three that indicate that betting on video
poker games violates 17. In Commonwealth v. Club Caravan, ____________ _____________
Inc. (and eighteen companion cases), 571 N.E.2d 405 (Mass. ____ ________________________________
App. Ct. 1991), the court made several significant rulings.
It upheld the ruling of the trial judge that "play on the
video poker machines in question involved as a matter of law
an element of skill, thus qualifying the machines for
licensure under Mass. Gen. L. c. 140, 177 A(1) and (2) as
automatic amusement devices." Id. at 406. The court ___
explained:
Since the video poker machines
involved an element of skill and
ostensibly paid off winners only with
-6- 6
free games, the judge correctly dismissed
the indictments based solely on having
such machines on hand for the use of
patrons. The judge correctly ruled, we
think, that licensed machines so used
were exempt not only from G.L. c. 271,
7, this exemption being explicit in G.L.
c. 140, 177A(7), but also from G.L. c.
271, 5 and 17, seemingly overlapping
statutes which in relevant part prohibit
keeping a place for gaming or keeping
gaming apparatus. The purpose of 177A,
to legalize and license machines that
utilize some element of skill and pay off
winners only with free games, would
otherwise be thwarted.
Id. at 407. The court noted that the trial judge ___
differentiated between video poker games and "actual use of
the machines for gambling: i.e., paying off in money rather
than free games," id. and drew the following line: ___
Where a machine was used for gambling,
i.e., where there was evidence of a
payoff to a customer, the judge ruled
that the machine, by the express terms of
G.L. c. 140, 177A(6), was in violation
of that statute and thus lacked
protection from the prohibitions of the
gaming laws such as G.L. c. 271, 5, 7,
8, and 17.
Id. at 407-08. The court explicitly refrained from ruling as ___
to the applicability of 17 to video poker machines. It
explained:
An argument was made by the defendants
below that 17 was aimed at bookie
operations, i.e., registering of bets on
contests such as horseracing, dog racing,
football point spreads, or numbers,
rather than at slot machines or other
gambling devices. The argument, rejected
by the judge, is not advanced in this
appeal, which concerns only indictments
-7- 7
dismissed by the judge. We intend no _____________
ruling as to the applicability of 17 to _________________________________________
video poker machines. ____________________
Id. at 408 n.6. (Emphasis added.) ___
It was held in Commonwealth v. Boyle, 189 N.E.2d ____________ _____
844, 846 (Mass. 1963) that, "possession of gaming apparatus
anywhere is punishable" and "[t]he possession of any recorded
memorandum intended to be a minute of a bet is sufficient to
demonstrate a violation of either Mass. Gen. L. c. 271 7 or
17 or both of these sections, depending upon the contents of
the memorandum."
In Commonwealth v. Sousa, 600 N.E.2d 1012 (Mass. ____________ _____
App. Ct. 1991), the appeals court noted that, registering a
bet "usually connotes a recording or notation." It also
stated: "One may 'register' a bet, however, by committing it
to memory." Id. at 1016. ___
We think there was sufficient evidence from which a
reasonable jury could find that a video poker machine was "a
device for registering bets" within the meaning of 17.
After inserting the required amount of money into the
machine, the player selected the number of credits - the
amount he wanted to bet. The machine "registered" the bet by
displaying the number of credits he had selected and set the
odds on winning the poker hand dealt the player. The bets
had to be registered by the machine so that the odds could be
set. Moreover, the bets had to be registered on the machine
-8- 8
because defendant and/or his employees determined, after
opening the machine, the amount of reimbursement for payouts
due the proprietors of the establishments where the machines
were located. And we think it could be reasonably found that
the statute included the defendant as one who sold pools
"upon the result of a trial or contest of skill" . . . or
"upon the result of a game."
We rule, based on the evidence, the words of the
statute and Massachusetts case law, that the jury could
lawfully find defendant violated Mass. Gen. L. ch. 271, 17.
Mass. General Laws ch. 271, 7 provides:
7. Lotteries; disposal of property by 7. Lotteries; disposal of property by
chance chance
Whoever sets up or promotes a lottery
for money or other property of value, or
by way of lottery disposes of any
property of value, or under the pretext
of a sale, gift or delivery of other
property or of any right, privilege or
thing whatever disposes of or offers or
attempts to dispose of any property, with
intent to make the disposal thereof
dependent upon or connected with chance
by lot, dice, numbers, game, hazard or
other gambling device, whereby such
chance or device is made an additional
inducement to the disposal or sale of
said property, and whoever aids either by
printing or writing, or is in any way
concerned, in the setting up, managing or
drawing of such lottery, or in such
disposal or offer or attempt to dispose
of property by such chance or device,
shall be punished by a fine of not more
than three thousand dollars or by
imprisonment in the state prison for not
more than three years, or in jail or the
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house of correction for not more than two
and one half years.
Defendant's attack on 7 takes a different
approach than his doesn't-apply challenge to 17. He
acknowledges that "[a] video poker machine which pays off
'hits in cash can amount to a 'lottery' under 7." Brief at
31. His argument is that it was not proven by the government
that chance predominated over skill in playing video poker
and therefore there was no lottery within the meaning of 7.
The Massachusetts law is reasonably clear that for
there to be a lottery, chance must predominate over skill in
the results of the game, or the element of chance must be
present in such a manner as to thwart the exercise of skill
or judgment in a game. Commonwealth v. Plissner, 4 N.E.2d ____________ ________
241, 245 (Mass. 1936). In Commonwealth v. Club Caravan, ____________ _____________
Inc., 571 N.E.2d at 406, the appeals court held that play on ____
video poker machines "involved as [sic] matter of law an
element of skill."
The government contends that there was sufficient
evidence for the jury to find that chance predominated over
skill in playing video poker. Viewing the evidence in the
light most favorable to the government, we agree. There was
testimony that the machine dealt the cards electronically,
although a player could choose what cards to discard. There
was testimony that winning depended on the cards dealt by the
machine. A hand of video poker was played before the jury in
-10- 10
the courtroom. The jury could judge for themselves whether a
substantial element of chance was involved. There was
testimony that one hand of video poker took from two to ten
seconds to play. Unless a player has a mind like a computer,
this is hardly sufficient time to use poker skills. Another
factor that the jury could take into consideration in
determining whether video poker was a game dominated by
chance or skill was the profit that defendant made.
Obviously, there were a great many more losers than winners.
Skill might have played a role in the video poker games
operated by defendant, but it did not dominate.
We rule, therefore, that the jury lawfully could
find defendant to have operated a lottery that was prohibited
by chapter 271, 7 of the Massachusetts General Laws.
The Jury Instruction -- Waiver or Forfeiture The Jury Instruction -- Waiver or Forfeiture ____________________________________________
Defendant claims that the court erred in
instructing the jury on the Massachusetts statutes relative
to gambling by refusing to read the statutes in their
entirety to the jury. There was no objection by defense
counsel. Failure to object to a jury instruction usually
means that our review is conducted under the "plain error"
doctrine. In this case, however, the government argues
strenuously that defendant waived any objection to the
instruction and is, therefore, foreclosed from arguing the
-11- 11
issue on appeal. We start our analysis by rehearsing what
happened in the trial court.
At the pre-charge conference the district court
started to discuss the government's instruction request,
number 38. This request asked that the texts of Mass. Gen.
Laws ch. 271, 7 and 17 be read in full to the jury. Then
followed this colloquy between the court and counsel. The
prosecutor is Tuteur; defense counsel is Duggan.
THE COURT: And, we will go into
Government's 38.
And, I don't think I am going to give
this law in the description of Section 17
and 19. What I would be inclined to tell
them is the following -- and, I think it
may be the end of the Government's 38.
MR. TUTEUR: 38-A as well.
THE COURT: Well, I am inclined to
tell them just what is the last paragraph
of Government *38. You are instructed
that the video poker machines are used
for amusement purposes only by offering
nothing more than the opportunity to win
games. However, when the evidence
indicates beyond a reasonable doubt, or
proves beyond a reasonable doubt that
video poker machines are used for
gambling, that is, where cash payoffs are
given, then Massachusetts law has been
violated. Okay?
MR. TUTEUR: Can I back the Court up
for just a minute. On the illegal
gambling business, is the Court inclined
to give an instruction regarding gross
revenue?
THE COURT: Right. I am going to
cover that. I am going to cover 38(a) on
licensing and basically tell them what
they want to hear. And, I think on these
stipulations tomorrow that they should
not focus on the license but on whether
the evidence proves they were used for
gambling.
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MR. DUGGAN: Back on 38 where the
General Laws, Massachusetts General Laws
271 and 17 is cited, and the notion that
the statute is violated where one with
the intent to --
THE COURT: I just told you, I am not.
I mean*, if it is true, if the last
paragraph of their 38 is true,2 I am not
going to tell them what 271 and 17 say.
I think it is just tremendously confusing
in the context of this case. Okay?
MR. DUGGAN: Yes.
THE COURT: I mean the key is: Have
they proved beyond a reasonable doubt
that they are used for gambling, that you
get money for games? That is a crime,
there is no dispute under state law on
that. The rest of this stuff is just --
It is the government's contention that defense
counsel's (Duggan) answer "Yes" to the court's question,
"Okay?" was an acceptance and approval of the instruction
and, therefore, he cannot raise the issue on appeal.
The most authoritative case on waiver and
forfeiture under Fed. R. Crim. P. 52(b) is United States v. ______________
Olano, 113 S. Ct. 1770 (1993). The Court pointed out: _____
Waiver is different from forfeiture.
Whereas forfeiture is the failure to make
the timely assertion of a right, waiver
is the "intentional relinquishment or
abandonment of a known right." . . .
Whether a particular right is waivable;
whether the defendant must participate
personally in the waiver; whether certain
procedures are required for waiver; and
whether the defendant's choice must be
particularly informed or voluntary, all
depend on the right at stake. . . . Mere
____________________
2. The last paragraph of government's request number 38 is
not in the record. We do not think it is necessary for
understanding the issue.
-13- 13
forfeiture, as opposed to waiver, does
not extinguish an "error" under Rule
52(b). . . . If a legal rule was
violated during the District Court
proceedings, and if the defendant did not
waive the rule, then there has been an
"error" within the meaning of Rule 52(b)
despite the absence of a timely
objection.
Id. at 1777 (citations and quotations omitted). ___
Our survey of the cases in this esoteric procedural
corner of the federal law convinces us that defendant did not
waive the issue. In United States v. Lakich, 23 F.3d 1203 _____________ ______
(7th Cir. 1994), counsel had overnight to think how the jury
should be instructed in response to its question about
entrapment. The next morning the court, after eliciting
comments from counsel, read its proposed instruction to them.
Both counsel explicitly agreed to the court's instruction.
The court of appeals held that under these circumstances
defendant had waived any objections to the instruction. Id. ___
at 207-08.
Lakich is a far cry from the case before us. In ______
the instant case the court cut off defense counsel's question
before it was finished. It is difficult to determine just
what defense counsel was going to ask, particularly in light
of the fact that it was the government that requested the
Massachusetts statutes be read in their entirety to the jury.
For aught we know, defense counsel was simply agreeing that
the statutes were confusing. Or perhaps he thought it
-14- 14
prudent to simply say, "Yes" and move on. In any event, we
think the attempted colloquy between defense counsel and the
court is too thin a peg on which to hang a finding of waiver.
This case clearly does not fall within the ambit of
waiver resulting from a tactical decision not to object. See ___
United States v. Mihm, 13 F.3d 1200, 1204 (8th Cir. 1994); ______________ ____
United States v. Coonan, 938 F.2d 1553, 1561 (2d Cir. 1991). _____________ ______
We are also reluctant to find a waiver in these
circumstances because the cases in our own circuit send out
conflicting signals. In United States v. Rojo-Alvarez, 944 _____________ ____________
F.2d 959, 971 (1st Cir. 1991), we held that there was a
waiver when, after the court reworded an instruction in
response to defendant's objection, defense counsel stated he
was satisfied with the reworded instruction. Even assuming
that this is the law of the circuit,3 there was no direct
inquiry from the court in the instant case nor an unequivocal
assent to the instruction by defense counsel. There are two
prior cases in this circuit that cut the other way. In
United States v. Espinal, 757 F.2d 423, 426 (1st Cir. 1985), ______________ _______
we held: "When a charge is given as requested by counsel,
the defects, if any, must rise to the level of plain error
affecting substantial rights in order to justify reversal."
There was no mention of waiver. In United States v. Drougas, _____________ _______
748 F.2d 8, 30 (1st Cir. 1984), we held that defense
____________________
3. Rojo-Alvarez was not an en banc opinion. ____________ _______
-15- 15
counsel's explicit approval of an instruction bars any
objection except upon the grounds of plain error. These two
cases appear to be somewhat at odds with United States v. _____________
Kakley, 741 F.2d 1, 3 (1st Cir. 1984), which held that ______
requesting an instruction that is given amounts to "invited
error," and whatever error occurred may not be raised on
appeal. All of the cases cited in this paragraph were
decided prior to Olano. This panel regards the question as _____
open.
Because of the uncertainty as to whether defense
counsel had explicitly approved the instruction and in light
of the conflicting decisions of this circuit, we decline to
finda waiverhere. We, therefore,turn toa plainerror analysis.
United States v. Olano, 113 S. Ct. 1770, considers _____________ _____
in detail the doctrine of plain error under Fed. R. Crim. P.
52(b). Its teaching may be capsulized as follows: "'Plain'
is synonymous with 'clear' or, equivalently, 'obvious.'" Id. ___
at 1777. The requirement of Rule 52(b) that the error affect
substantial rights "means that the error must have been
prejudicial: It must have affected the outcome of the
District Court proceedings." Id. at 1778. And "[i]t is the ___
defendant rather than the Government who bears the burden of
persuasion with respect to prejudice." Id. Correcting plain ___
error should be made where "a miscarriage of justice would
otherwise result." This "means that the defendant is
-16- 16
actually innocent . . . but we have never held that a Rule
52(b) remedy is only warranted in cases of actual innocence." ____
Id. at 1779. The standard that guides the correction of a ___
plain error is whether the error "'seriously affect[s] the
fairness, integrity or public reputation of judicial
proceedings.'" Id. (quoting United States v. Atkinson, 297 ___ _____________ ________
U.S. 157, 160 (1936)).
In United States v. Whiting, 28 F.3d 1296, 1309 _____________ _______
(1st Cir. 1994), we assumed that the error affected
substantial rights, but found that the error neither caused a
miscarriage of justice nor seriously affected the fairness,
integrity or public reputation of the judicial proceeding.
We need not go that far at this juncture. We have
carefully reviewed the trial record and find that the
district court's refusal to read the full text of each
statute did not rise to the level of plain error because it
did not affect the outcome of the trial. It was not
prejudicial and did not affect substantial rights as those
terms are defined in Olano. This ruling is not intended to _____
suggest that the instruction as given was error, plain or
otherwise.
II. THE ILLEGAL STRUCTURING II. THE ILLEGAL STRUCTURING
Defendant asserts error in his conviction under 31
U.S.C. 5322(b) and 5324(c), which proscribe the
structuring of currency transactions to evade the regulatory
-17- 17
and statutory requirement that banks report to the IRS all
currency transactions in amounts greater than or equal to
$10,000. Citing Ratzlaf v. United States, 114 S. Ct. 655 _______ _____________
(1994), which held that conviction under these statutes
requires proof "that the defendant acted with knowledge that
his conduct was unlawful," id. at 657 (interpreting meaning ___
of statutory term "willful"), defendant argues that the
instructions given at his trial did not require the jury to
make the elemental determination that he knew the structuring
in which he was engaged was unlawful in order to convict
him.4 Conceding that he did not interpose a contemporaneous
objection at trial, defendant contends that the erroneous
instructions constitute plain error, see Fed. R. Crim. P. ___
____________________
4. Ratzlaf was decided after the trial of this case but _______
prior to appellate argument.
-18- 18
52(b), and require reversal of his structuring conviction.5
In light of the teaching of Ratzlaf, we think it _______
clear that error was committed here. The willfulness
____________________
5. In his reply brief, defendant raises a belated argument
that we should apply an unspecified "more favorable"
reviewing standard in assessing his challenge to the
structuring conviction. In defendant's view, his failure to
object to the structuring instructions given at his trial was
excusable because Ratzlaf had not yet been handed down and _______
because all of the circuits which had then issued opinions on
the meaning of the term "willful" in the context of the anti-
structuring statute had defined it in a manner consistent
with the district court's instructions. Thus, defendant
contends, the law "did not support a request for the
instruction later mandated in Ratzlaf." _______
Even if we were to view this argument as properly
before us, cf. Sandstrom v. Chemlawn Corp., 904 F.2d 83, 86 ___ _________ ______________
(1st Cir. 1990) (deeming waived, in a civil case, an argument
not made in appellant's opening brief), we would not find
excusable defendant's failure to object to the now-challenged
instructions. At the time of defendant's trial, settled law
in this circuit foreshadowed the Supreme Court's conclusion
in Ratzlaf that a conviction for structuring requires proof _______
that defendant acted with knowledge that his conduct was
unlawful. See United States v. Bank of New England, N.A., ___ _____________ __________________________
821 F.2d 844, 854 (1st Cir.) ("A finding of willfulness under
the Reporting Act must be supported by proof of the
defendant's knowledge of the reporting requirements and his
specific intent to commit the crime.") (citations omitted)
(interpreting the meaning of 5322's willfulness provision
in a context other than 5324's anti-structuring
provisions), cert. denied, 484 U.S. 943 (1987). Moreover, at _____ ______
this same time, we had withdrawn an opinion and reheard en __
banc a case which raised the precise question eventually ____
decided in Ratzlaf: the meaning of 5322's willfulness _______
provision in the anti-structuring context. See United States ___ _____________
v. Donovan, No. 91-1574 (1st Cir. Feb. 6, 1992), reh'g en _______ _____ __
banc granted, opinion withdrawn, (1st Cir. Mar. 18, 1992), ____ _______ _______ _________
opinion reissued as redacted, 984 F.2d 493 (1st Cir. 1993), _______ ________ __ ________
cert. granted and judgment vacated, 114 S. Ct. 873 (1994). _____ _______ ___ ________ _______
In light of this authority and these events, of which
defendant should have been aware, defendant's argument that
his failure to object was excusable rings hollow.
-19- 19
requirement of 5322 and 5324 demands a jury finding that
the defendant knew that the structuring in which he was
engaged was unlawful. See Ratzlaf, 114 S. Ct. at 663. ___ _______
Defendant's jury was not, however, instructed to make this
elemental determination in order to convict. In relevant
part, the trial court instructed the jury:
[T]o prove this offense the Government
has to prove beyond a reasonable doubt
that the defendant knew each [of the
banks] are required to file a currency
transaction report.
A person structures a transaction if he .
. . intended to evade the requirement.
[T]he Government has to prove . . . this
was done willfully, that is, that the
defendant knew of the reporting
requirement and that the structuring had
the purpose of evading that requirement.
Finally, the Government has to prove that
the defendant in the process of
structuring this transaction . . . was
also violating another law of the United
States in connection with that.
Thus, the jury was told that conviction was proper
if it found that defendant knew of the reporting requirement,
acted to evade it, and violated some other law of the United
States in so acting. The instructions were not tantamount to
charging that in order to convict, the jury must find that
defendant knew that acting to evade the reporting requirement
-20- 20
was unlawful.6 The absence of such an instruction
constitutes a clear violation of the defendant's due process
right to have the prosecution persuade the fact-finder beyond
a reasonable doubt of the facts necessary to establish each ____
element of the offense charged, and defendant's Sixth _______
Amendment right to a jury trial. Sullivan v. Louisiana, 113 ________ _________
S. Ct. 2078, 2080-81 (1993) (collecting cases) (the Sixth
Amendment jury-trial right carries within it a right to have
the jury find, beyond a reasonable doubt, all of the facts ____
necessary to establish each element of the offense charged).
While the question whether error occurred here is
rather easily answered in hindsight, the questions whether
____________________
6. Noting that jury instructions are not to be reviewed in
isolation, but rather "in the context of the overall charge,"
Cupp v. Naughten, 414 U.S. 141, 147 (1973), the government ____ ________
contends that a general instruction on willfulness given
elsewhere in the charge was sufficient to have conveyed to
the jury the appropriate structuring mens rea requirement. ____ ___
The instruction on which the government relies provided:
"And, for all of the counts except the tax evasion count
which has a different definition of willfulness, the concept
of willfulness means that somebody has acted willfully, that
he acted knowingly and not by accident or mistake, and
deliberately in violation of a known legal duty."
In our view, this instruction cannot be viewed as
having cured any error in the specific structuring
instruction. While the general willfulness instruction
stated that the defendant had to have acted in violation of
some known legal duty, it does not explicitly inform the jury
that the defendant had to know that structuring itself was
illegal. Furthermore, by indicating that willfulness means
something different in the structuring and tax evasion
contexts (the latter of which differs from most other
criminal law areas by requiring specific knowledge that the
conduct at issue was criminal), the jury could have inferred
that the actual knowledge of illegality required in the tax
evasion context was not required in the structuring context. ___
-21- 21
the second and third prerequisites to reversal under Rule
52(b) -- i.e., whether the error was plain and affected
defendant's substantial rights -- are considerably more
complicated. Although the challenged instructions are
clearly incorrect in light of Ratzlaf, Ratzlaf was not _______ _______
decided at the time of defendant's trial. Moreover, the
great weight of then-existing authority indicated that actual
knowledge of the illegality of structuring by the defendant
was not a precondition to conviction. See Ratzlaf, 114 S. ___ ___ _______
Ct. at 665 (collecting cases). Thus, this case raises an
issue that the Olano court explicitly reserved: "We need not _____
consider the special case where the error was unclear at the
time of trial but becomes clear on appeal because the
applicable law has been clarified." Olano, 113 S. Ct. at _____
1777; but see United States v. Frady, 456 U.S. 152, 163 ___ ___ ______________ _____
(1982) ("By its terms, recourse may be had to [Rule 52(b)]
only on appeal from a trial infected with error so 'plain' ____
the trial judge and prosecutor were derelict in countenancing
it, even absent defendant's timely assistance in detecting
it.") (dictum) (emphasis supplied). ______
This issue has engendered a split in the circuits
since the Olano decision. Compare, e.g., United States v. _____ _______ ____ _____________
Calverley, 37 F.3d 160, 162-63 (5th Cir. 1994) (en banc) _________ __ ____
(error must be clear or obvious at time of trial); United ______
States v. Washington, 12 F.3d 1128, 1138 (D.C. Cir.) (same), ______ __________
-22- 22
cert. denied, 115 S. Ct. 98 (1994); with United States v. _____ ______ ____ _____________
Viola, 35 F.3d 37, 42 (2d Cir. 1994) (Rule 52(b) can be _____
invoked even where the error was not clear or obvious at the
time it was committed); United States v. Retos, 25 F.3d 1220, _____________ _____
1230 (3d Cir. 1994) (same); United States v. Jones, 21 F.3d _____________ _____
165, 172 (7th Cir. 1994) (same).
In addition, the question whether the error
affected the defendant's substantial rights is not without
controversy. Olano made clear that substantial rights have _____
been affected only where there has been prejudice to
defendant, and then confirmed that the Rule 52(b) prejudice
inquiry is indistinguishable from ordinary, harmless-error
review except for the fact that the burden of proof is upon
the defendant. 113 S. Ct. at 1777-78. In the present
context, this gives rise to a problem we recently noted:
contemporary Supreme Court cases suggest two separate modes
of harmless-error analysis where the challenged error is a
jury instruction that misdefines (or omits) an element of the
offense charged. Whiting, 28 F.3d at 1309 and n.12 _______
(collecting cases). One mode would look to whether there was
sufficient record evidence to establish the unfound element;
the other would look only to whether the jury made findings
functionally equivalent to the missing finding. Id.; see ___ ___
also Ortiz v. Dubois, 19 F.3d 708, 717-18 (1st Cir. 1994) ____ _____ ______
(Stahl, J., dissenting) (explicating latter inquiry in the
-23- 23
habeas context), cert. denied, ___ S. Ct. ___ (U.S., Jan. 9, _____ ______
1995) (No. 94-5650). As one might imagine, the determination
of harmlessness vel non is often different under these two ___ ___
modes of analysis.
Neither of these two issues need be resolved in
this case. Even if we find that the error here was plain and
affected defendant's substantial rights, we may not respond
to it unless it "seriously affects the fairness, integrity or
public reputation of judicial proceedings." Olano, 113 S. _____
Ct. 1778-79. In this case, we think that the error cannot be
viewed as having seriously compromised any of these three
values.
First, there is relatively little risk that the
error resulted in the miscarriage of justice engendered by
the conviction of an innocent man. Olano, 113 S. Ct. at _____
1779. Although there is no direct evidence in the record
that defendant knew of the illegality of structuring, we
previously have recognized that willfulness, as a state of
mind, can rarely be proved by such evidence; instead, "it is
usually established by drawing reasonable inferences from the
available facts." Bank of New England, 821 F.2d at 854; see ___________________ ___
also Ratzlaf, 114 S. Ct. at 663 n.19. Here, any claim of ____ _______
lack of knowledge of the illegality of structuring tends to
be belied by defendant's conduct. The evidence shows that,
on February 18, 1987, defendant's then-wife, Lynne Marder,
-24- 24
acting at defendant's behest, used cash to purchase $11,460
worth of cashier's checks in amounts of $5,000, $3,960, and
$2,500 from three separate banks in Derry, New Hampshire.
While it certainly would make sense for a person cognizant of
the reporting requirement but unaware of the illegality of
structuring to make two separate purchases at two separate ___
banks -- e.g., a purchase of $5,000 and a purchase of $6,460
-- in order to obtain $11,460 without triggering a report to
the IRS, the fact that defendant instructed his wife to make
three separate purchases at three separate banks suggests _____
that defendant had a purpose beyond evasion of the reporting
requirement: concealment of his structuring. And proof of
concealment tends to prove knowledge of illegality. See ___
United States v. Sorrentino, 726 F.2d 876, 880 (1st Cir. ______________ __________
1984) (citing Holland v. United States, 348 U.S.121, 125 _______ _____________
(1954)).
Moreover, our circuit has recently ruled that jury
instructions misdescribing or failing to describe an element
of the offense do not per se seriously affect the fairness, ___ __
integrity or public reputation of judicial proceedings.
Whiting, 28 F.3d at 1309-10 (declining to find plain error in _______
a jury instruction which allowed the jury to convict a
defendant for receipt or possession of an unregistered
firearm without making the elemental determination that the
weapon in question was a "firearm" within the meaning of the
-25- 25
statute). While we in no way disparage the importance of the
due process and Sixth Amendment rights that may be undermined
when jury instructions misdescribe or fail to describe an
element of the offense charged, we simply do not think that a
deprivation of these rights in all circumstances is so __ ___ _____________
"shocking," as to require automatic reversal even where the
defendant has failed to bring the error to the attention of
the trial judge. See United States v. Griffin, 818 F.2d 97, ___ _____________ _______
100 (1st Cir.) (describing errors suitable for reversal under
plain error doctrine), cert. denied, 484 U.S. 844 (1987). _____ ______
On the civil side we recently held, following
circuit precedent, that:
The "plain error" rule "'should be
applied sparingly and only in exceptional
cases or under peculiar circumstances to
prevent a clear miscarriage of justice.''
Wells Real Estate, 850 F.2d at 809 ___________________
(quoting Nimrod v. Sylvester, 369 F.2d ____________________
870, 873 (1st Cir. 1966)); see Elgabri, ___ _______
964 F.2d at 1259. Under the "plain
error" exception, an erroneous
instruction warrants a new trial only
where the error "seriously affected the
fairness, integrity or public reputation
of the judicial proceedings." See Lash ___ ____
v. Cutts, 943 F.2d 147, 152 (1st Cir. ________
1991); Smith, 877 F.2d at 1110. _____
Poulin v. Greer, 18 F.3d 979, 982 (1st Cir. 1994). ______ _____
Finally, we do not think that the challenged
instructions, in light of the particulars of this case,
warrant an exercise of our discretion to determine whether
the error "seriously affect[s] the fairness, integrity or
-26- 26
public reputation of judicial proceedings." Olano, 113 S. _____
Ct. at 1779. Our recent decision in Whiting, which is _______
binding on us, undergirds this conclusion. While the
evidence of the omitted element is certainly less strong here
than it was in Whiting, see Whiting, 28 F.3d at 1309 _______ ___ _______
(documenting the overwhelming record evidence that the weapon
in question was indeed a "firearm" within the meaning of the
statute), it is, as we have noted, not insubstantial.
Furthermore, the error here was far more excusable than in
Whiting. At the time the defective instructions were given, _______
they were in accord with the law of every circuit that had
issued an opinion on the meaning of the anti-structuring
statute's willfulness provision. Thus, we simply do not
believe that they can reasonably be viewed as having caused
the type of error which calls into serious question the
fairness, integrity or public reputation of judicial
proceedings. See United States v. Figueroa, 976 F.2d 1446, ___ _____________ ________
1456 (1st Cir. 1992) (ruling that any error in the trial
court's failure to admit evidence of a cooperating witness's
criminal record for impeachment purposes did not seriously
affect the fairness, integrity or public reputation of
judicial proceedings in view of the conflict regarding the
admissibility of such evidence among the circuits and the
absence of on-point First Circuit precedent), cert. denied, _____ ______
113 S. Ct. 1346 (1993). To be sure there are cases from
-27- 27
other circuits to the contrary. See Retos, 25 F.3d at 1232 ___ _____
(concluding without analysis that a defective willfulness
instruction given prior to Ratzlaf in a structuring case _______
seriously affects the fairness, integrity or public
reputation of judicial proceedings); Jones, 21 F.3d at 173 _____
(same); United States v. Rogers, 18 F.3d 265, 268 (4th Cir. _____________ ______
1994) (same). We recognize that these other circuits may
well have a valid rationale for their view, but we are bound
by our own precedent. Furthermore, we think that it is the
better solution to this problem.
In sum, we decline to vacate defendant's
structuring conviction under the plain error doctrine.
III. THE SENTENCING III. THE SENTENCING
No transcript of the sentencing hearing has been
furnished us. We do not know whether it has been lost in
transit or one was not requested. Although a transcript
would have been helpful, the issues raised by defendant can
be competently decided without one.
In its judgment and conviction order, the court
followed the procedure set forth in U.S.S.G. 5G1.2, which
provides in pertinent part:
5G1.2. Sentencing on Multiple Counts 5G1.2. Sentencing on Multiple Counts _______________________________
of Conviction of Conviction _____________
(c) If the sentence imposed on the
count carrying the highest
statutory maximum is adequate
-28- 28
to achieve the total
punishment, then the sentences
on all counts shall run
concurrently, except to the
extent otherwise re-quired by
law. 7
____________________
7. See United States v. Quinones, 26 F.2d 213, 215-17 (1st ___ _____________ ________
Cir. 1994), for a discussion of the district court's
discretion to order that sentences be served consecutively
notwithstanding the dictates of U.S.S.G. 5G1.2. This is not
an issue in this case.
-29- 29
The commentary to 5G1.2 explains:
This section specifies the procedure
for determining the specific sentence to
be formally imposed on each count in a
multiple-count case. The combined length
of the sentences ("total punishment") is
determined by the adjusted combined
offense level. To the extent possible,
the total punishment is to be imposed on
each count. Sentences on all counts run
concurrently, except as required to
achieve the total sentence, or as
required by law.
This section applies to multiple
counts of conviction (1) contained in the
same indictment or information, or (2)
contained in different indictments or
informations for which sentences are to
be imposed at the same time or in a
consolidated proceeding.
Usually, at least one of the counts
will have a statutory maximum adequate to
permit imposition of the total punishment
as the sentence on that count. The
sentence on each of the other counts will
then be set at a lesser of the total
punishment and the applicable statutory
maximum, and be made to run concurrently
with all or part of the longest sentence.
If no count carries an adequate statutory
maximum, consecutive sentences are to be
imposed to the extent necessary to
achieve the total punishment.
The district court sentenced the defendant to 140
months incarceration, which was in accord with the Guidelines
Sentencing Range, on his RICO and Money Laundering counts (1,
2, 4-10), "to be served concurrently on each other." The
balance of the sentence was as follows:
-30- 30
120 months on each of counts 19 & 20 to
be served concurrently on each other as
well as on counts 1, 2, 4-10;
60 months on each of counts 3,11,12, 16-
18, to be served concurrently on each
other as well as on counts 1,2,4-10 and
counts 19 & 20.
Defendant does not object to the overall sentence.
He does argue that the court erred in imposing a sentence of
120 months on Counts 19 & 20 (conspiracy to defraud the IRS
and structuring) and 60 months on Counts 16-18 (tax evasion).
In his reply brief defendant acknowledges that the sentences
on Counts 16-18 "lawfully reached the statutory maximum"
because of the provisions of U.S.S.G. 5G1.2 and its
commentary. He therefore concedes that his attack on the
sentences on counts 16-18 is contingent on reversal of the
judgment on those counts carrying the 140-month sentence.
Because this contingency has not occurred, the attack on the
sentences for counts 16-18 fails.
As the government points out, however, the court
erred in sentencing defendant to a concurrent sentence of 120
months on Count 19 for conspiring to defraud the United
States. The applicable statute, 18 U.S.C. 371, provides
for a fine of not more than $10,000 or imprisonment of not
more than five years, or both. Defendant's sentence on this
count should have been a concurrent sentence of sixty months.
We must remand to the district court for a correction of the
-31- 31
sentence on Count 19. In all other respects, the sentence of
defendant is upheld.
Remanded for correction in sentencing; the judgment Remanded for correction in sentencing; the judgment ___________________________________________________
of the district court is in all other respects of the district court is in all other respects ______________________________________________
Affirmed. Affirmed. _________
-32- 32
Ratzlaf v. United States ( 1994 )
united-states-v-angel-luis-figueroa-united-states-of-america-v-tomas ( 1992 )
united-states-v-anthony-viola-louis-gazzoli-michael-formisano-gaetano ( 1994 )
United States v. Daniel F. Aversa, United States of America ... ( 1993 )
united-states-v-james-coonan-kevin-kelly-james-mcelroy-kenneth-shannon ( 1991 )
united-states-v-darryl-whiting-aka-g-god-rah-united-states-of ( 1994 )
United States v. Jose Hernandez, United States of America v.... ( 1993 )
United States v. Michael A. Kakley ( 1984 )
United States v. Hector Espinal ( 1985 )
United States v. Cotto Aponte ( 1994 )
United States v. George Henry Mihm ( 1994 )
United States v. Staniford A. Sorrentino ( 1984 )
Caleb Lash v. Richard Cutts ( 1991 )
United States v. Rodney Rogers, A/K/A Koseem C. Sanders ( 1994 )
United States v. Dusan Lakich ( 1994 )
Commonwealth v. Club Caravan, Inc. ( 1991 )