# Petition for Writ of Certiorari — Emprise Corp. v. United States > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385608_0055%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1975 - **Citation:** 419 U.S. 1120 ## Text ae i Soo, a fal Pee BLE ot LG AS toe INDEX TABLE OF CONTENTS Page i... pkckst babar eneesnebadeasednsenees 1 TTT PETE ELT ee EET ELT TET REET Ce 2 CONSTITUTIONAL AND Statutory Provistons INvoLveD.. = 2 SEC EOOME POMORNTR sis c ncn csesacncavanesnces 2 EISELE CET ee eee EE Te eT eee eee 3 1. The Prosecution’s Evidence ........ hexane D i RO THUS TPOOROIINEE coasts enc sccsnceress 7 ye ER ge | eer rer ree errr Tere es i) Reasons ror GRANTING THE Writ ...... ceeeaeswankee 9 1. The Court of Appeals Expansively Construed the Travel Act To Embrace Activities Not a ee” rer rrr ere i) II. The Court of Appeals, in Direct Conflict with Other Circuits, Erronecously Held That Con- spiracy To Violate the Travel Act Does Not Require Speeifie Intent To Violate State Law 15 Ill. The Court of Appeals, ia Direct Conflict With the Sixth Cireuit, Erroneously Held One Cor- poration Criminally Liabie for the Acts of PL CRiGRKAs KEN 46Cb Os VEG RGhESMDNS Oh OSES S 17 IV. The Court of Appeals Erroneously Refused to Recognize the Unconstitutionality of Acts Which, Both Singly and in Sum Total, Denied Petitioner’s Fifth and = Sixth Amendment PE Chere acke SAGE NERS SED a ARRERRKOKAR RES 21 a re ee ea a a a ad ee ee il Table of Contents Continued TABLE OF AUTHORITIES CASES: Page Bachellar v. Marvland, 397 U.S. 564 (1976). ...0...... 28 Berger v. United States, 205 U.S. 78 (1935). ......... 24 —— v. United States, ao 1S. 123 (HOGS). . ie oes 24 Campbell v. United States, 575 U.S. 487 (1965) ...... 25 Chapman v. California, 386 U.S. 18 (1967)........... 23 Clay v. United States, 408 U.S. 698 (1971).......... 27 estes V, TORRE, BOL Uk Gee CREE so ccckadchbeveawas 23 Giglio v. United States, 405 U.S. 150 (1972) .......... 25 Golden State Bottling Co. v. NLRB, 414 U.S. 168 SEED. bn bah ee ce Nob aaeehes eee Cav eKbeaeeR es 18 Lewis v. United States, 146 U.S. 370 (1892).......... 24 Mares v. United States, 385 F.zd 805 (10th Cir. 1967)... 28 Melrose Distillers, Inc. v. U aed States, 359 U.S. 271 ERD cas ck beh ub euseeeerencckavindseuccnied 18, 19 Mooney v. Holohan, 294 U.S. 108 (1955) ............. 25 Rewis v. United States, 401 U.S. S08 (1971)........ passim Sheppard v. Maxwell, 584 U.S. 335 (1966) 2.0.2.2... 23 State v. Capital City Dairy Co., 62 Ohio 550, 56 NE. 651 (1900), aff’d, 183 U.S. 238 (1902)........... 5) State v. Delmar Jockey Ciub, 200 Mo. 34, 92 S.W. 185 GREE, cd cec oes bakeul cu cece cence ake che taeecen 5 Stromberg v. California, 285 U.S. 359 (193 __| Serer 28 Turf Center, Inc. v. United States, 325 F.2d 793 (9th OE Serer errs Try ery Pero err cee 16 United States v. Alsondo, 486 F.2d 1339 (2d Cir. 1973), cert. granted, sub. nom., United States v. Feola, No. Tadd, G2 UE Wi Ble ve ccs neva ces sws vanesus 16 United States v. Archer, 486 F. 2d 600 (2d Cir. 1973). .12, 13 United States v. Bass, 404 U.S. 336 (1971).......... 10, 14 United States v. Bergland, 318 F.2d 159 (7th Cir.), cert. denied, 375 US. Pee CUED 65 bhi0nee nates 9 United States v. Carter, 311 F.2d 954, cert. denied, 373 ee a Se Rates eae 17 United States v. Cigarette Merchandisers Ass’n, 136 Pe: BEG CER SR rey Bees ok kas cee cuekvankus 19 United States v. Enmons, 410 U.S. 396 (1973) 2.2.2... 10 United States v. Gordon, 464 F.2d 357 (9th Cir. SE: 3c boda aa sk SSG AE SS Cee Ae ae nena 14 United States v. Hanon, 428 F.2d 101 (Sth Cir. 1970) 16 United States v. Hawthorne, 356 F.2d 740 (4th Cir. DE care eeKN cod oka genec sks Che kas eeee ea aanKe 16 mE Table of Cont: nts Continued ill Page United States v. McCoy, 4298 F.2d 739 (D.C. Cir. DN Woe ee ie ert Cerra ee one ae 24 United States v. Miller, 379 Fizd 489 (7th Cir. 1967)... 16 United States v. Nardello, 293 U.S. 286 (1969) ....... 11 United States v. Palladino, 475 F.2d 65 (1st Cir. 1973) 24 United States v. Roselli, 452 F.2d S79 (9th Cir. 1970), cert. denied, 401 U.S. 924 (1971)..........ccc00e 10 United States v. Ryan, 455 F.2d 728 (9th Cir. 1972)... 25 United States v. Stagmen, 446 F.2d 489 (6th Cir. PERE SU ses ivkauaucercsees ks ceeds CoN akkab eae se 15, 16 United States v. Stone, 452 F.2d 42 (Sth Cir, 1971).... °° 19 United States v. Thomas, 463 F.2d 1061 (7th Cir. 1972) 23 United States v. Union Supply Co., 215 U.S. 50 (1909) 4 United States v. Weehsler, 592 F.2d 344 (4th Cir. oe) NE EE CET eee eee OE re ee 16 Yates v. United States, 354 U.S. 298 (1957).......... 28 CONSTITUTIONAL PROVISIONS AND STATUTES: Fifth Amendment, United States Constitution. ..... passim Sixth Amendment, United States Constitution. ..... passim eS BRE ee cdc KEV ER SGR AEN CORREA SG EERE OeEE 16 et Sia Oe SPEED os ein esas bel ke ca taweekariee 14 Be Res 0 UE ohh nen cee a ceKvel sek caeuceasen en passim Pe Ae BE CU Rab ake k knees caw coh knee 13, 14 Se ee EN GW choked heehee chee Cee eb 14 De A A pekkeae ew cec Uk eee kas bcaw cre axes 7 Be ee os oie es ile ce eae hen Me eke acs 25 D.C. Code Ann. §§ 25-118, 47-2345 (1973) ............ ) Del. Code Ann. Tit. 4, § 561(b) (1953) ............... Dd POOUM TEOU, Teh, Oe oa sn nd dn cnaeecdubeewens 11 PCVOte Teev, URt, BORG ee os ccc akacacccccnrcuccas 11 Dewan Bev. tat. § SER BIO coc os sas w vweeecaesaneae 6 N.Y. Aleo. Bev. ¢ ‘ontrol Law $126 (McKinney 1970)... 5 N.Y. Bus. Corp. Act § MO1(a)( 2) (McKinney 1970).. § N.Y. Bus. Corp. Law *§906(b) (2 RRA, Pee ae mee 9 Tex. Bus. Corp. Act, Arts. 7.01, 8.16 (1956).......... 5 MISCELLANEOUS: American Bar Association Standards Relating to the Prosecution Funciion, Approved Draft, See. 3.5, Re DEES os iss kus v ecu bok weOkeeeescae 24 iv Table of Contents Continued Page Miller, The **Traved Act’’: A New Statutory Approach ty Organized Crime in the United States, 1 Du- mipedion Gi. Ba TeV. TEL CIDGS): on cece seaccassacs> 12 Legislation Relating to Organized Crime, Hearings on H. R. 468 ete. before Subeommittee No. 5 of the House Committee on the Judiciary, 87th Cong., Ist ED sc Peand Gledkce haben Vas bea abaanehae ie 12 Sayre, Criminal Responsibility for the Acts of Anotier, So Hhatv. Us. Bev. GBD (1990) once cscccccnscess 20, 21 “Tie Collateral Consequences of a Criminal Con- viction,’’ 23 Vand. L. Rev. 929 (1970) ........... 4 ee Bitte BON CROUEE oscv sve vacdsdrnehetsueeiess Fs) ee EE vay wae bua ee ard eke Okeke 4 elt IN THE Supreme Court of the United States OcTrover TERM 1974 EMPRISE CorPoRATION, Petitioner v. Untrep Srates or AMenrica, Jes pondent PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT Petitioner Emprise Corporation prays that a writ of certiorari issue to review the opinion and judgment of the United States Court of Appeals for the Ninth Cir- cuit entered in this proceeding on April 30, 1974. OPINIONS BELOW The opinion of the Court of Appeals is not yet re- ported, It is printed as Appendix A in the separately- filed Appendix to this petition. In denying a petition for rehearing, the Court of Appeals made a number of subsiantive changes in its original opinion; those changes are printed as Appendix B (pp. 94a ct seq.) in the separately-filed Appendix. » JURISDICTION The judgment of the Court of Appeals was entered on April 30, 1974. App. Av p. la. On May 14. 1974, Petitioner Emprise Corporation filed a timely Petition for Rehearing and Suggestion of Appropriateness of Rehearing in Bane. The Court of Appeals denied said Petition on July 18, 1974 (App. By p. 94a). but notice of the denial was not sent to the parties until July 25. Therefore, pursuant to proper motions, the court revised the date of the denial nune pro tune to July 25, 1974. App. C, p. 98a. In the meantime, on August 8 Mr. Justice Douglas, pursuant to motion, extended petitioner's time in which it could file this petition from August 17 to September 16, 1974. App. EK, p. 102a. The jurisdiction of this Court is invoked pursuant to 28 U.S.C. § 1254(1). CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED The Fifth and Sixth Amendments to the United States Constitution; the Travel Act, 18 U.S.C. § 1952, and the relevant portions of the applicable Nevada statutes are set forth in Appendix F, pp. 108a ¢é seq. QUESTIONS PRESENTED The federal Travel Act, 18 U.S.C. § 1952, makes it a federal crime to travel in interstate commerce with intent to facilitate the *‘ promotion, management, estab- lishment or carrying on”’ of a ‘‘business enterprise in- volving gambling offenses’? in violation of local law. The questions presented are: 1. Whether it is an unjustifiably ‘‘expansive inter- pretation’ (Rewis v. United States, 401 U.S. 808, 809 (1971)) of the Travel Act to read the words ‘‘gam- h 6 3 bling offemses’’ as covering corporate operation of a licensed gambling casino in Nevada when the sole alleged violation related not te any aspeet of the sub- stantive crime of gambling but entirely to the omission of certain information in the corporation's application fora license. 2. Whether conspiracy to violate the federal Travel Act. 18 ULS.C. § 1952. requires proof of specific intent to violate state law, as held by the Sixth Circuit and other Courts of Appeals, or whether no such proof is necessary, as held by the court below. 3. Whether the petition er corporation was prop- erly held criminally responsible for acts connaitted by and on behalf of another corporate entity whieh had been merged into the petitioner one vear before indict- ment for business reasons having nothing whatever to do with the alleged vielation. 4. Whether petitioner was denied due process under the Fifth Amendment and its right to a jury trial under the Sixth Amendment by the conduct of the prosecution prior and subsequent to triai and by the conduct of the prosecutor and the court at trial—con- duct which included illegal wiretapping, the ciigender- ing of prejudicial publicity, interrogations of the jury out of the presence of defendants and their counsel, and improper remarks by the prosecutor. STATEMENT Petitioner is a New York corporation that was known, until March 1970, as High Park Corporation. Its business consists primarily of the operation of con- cessions for food and liquor at football stadiums, base- ball parks, race tracks, airports and the like through- 4 out the United States, Canada and England, After an eleven-week trial by Jury, the petitioner cerporation and six indiviauai co-defendants were found guilty of conspiring to violate the federal Travel Act, 18 U.S.C. § 1952,’ and the corporation was sentenced to pay a ¥10,000 fine. The essence of the proof against peti- tioner was that a former subsidiary whose assets peti- tioner had acquired by merger in March 1970 had, four years previously, loaned money to three of the thirty shareholders of a Nevada corporation called Vegas Frontier, Ince. (*VEI"’), to enable them to purchase stock and debentures in VFI, with knowledge that VEIL would be licensed to operate a gambling casino in Las Vegas, Nevada, and with the further alleged knowl- edge that two other persons (co-defendants Zeri!li and Polizzi) wouid have a ‘thidden interest”? in VEIT. * This conviction, under an improper extension of a federal criminal statute based upon the acts of a sub- sidiary which the petitioner corporation neither rati- fied nor approved in advance, could possibly jeopar- dize petitioner’s ability to operate in the future.* 1The individual defendants were also convicted on substantive counts, 2 There was no proof of any financial interest of Zerilli or Polizzi. The finding of their ‘hidden interest’’ arises from evidence that they participated in (or ‘‘controlled’’) the management of VFI. There was no evidence, direct or circumstantial, that either peti- tioner or its former subsidiary had knowledge that Zerilli or Polizzi participated in the management of VEE. 3 Petitioner presently holds 107 alcoholic beverage licenses (as well as other licenses) in 26 states and the District of Columbia. As a result of the conviction, 14 of these jurisdictions have com- menced revocation hearings or indicated their intention to do so. See United States v. Union Supply Co., 215 U.S. 50 (1909); “The Collateral Consequences of a Criminal Conviction,’ 23) Vand. L. Rev. 929, 1010-11) CiyT@); 45 Am. Jur. 2d 1. The Prosecution’s Evidcuce—Two residents of Las Vegas named Friedman and Richardson became interested in 1965 in finaneing, constructing and aper- ating a licensed gambling casing in Las Vegas to be muned the Frontier Hotel. They formed the eorpora- tion known as VEIT to own aiid operate the casino and to secure froni the Nevada State Gaming Commission the license needed for such activity. Two of the many people to whom they attempted to sell stock and denen- tures in VFI were the defendants Zerilli and Polizzi, who had previously shown an interest in purchasing part ownership of a gambling casing in Nevada. Zerilli and Polizzi eame to Las Vegas in Mareh 1966 and, together with Friedman aud Riehardson, consulted an attorney in Reno whe, after obtaining background information from Zerilli and Polizzi, disenssed their proposed investment informally with members of the Nevada Gaming Contre) Board. (This is a regular procedure permitted under Nevada practice.) The $150. Examples of juriscieticns where mumerdis statutory provisions allow for the revocation of such licenses, are the Distriet of Columbia and the states of New York and Delaware. E.g., D.C. Code Ann, $$ 25-118. 17-2345 C1974): Bel. Code Ann, tit. 4, $561 (b) (1953); NY. Aleo. Bey. Control Law $ 126 (Me- Kinney 1970), A As a matter of fact. the laws of most states allow for the involuntary dissolution of a domestic corporation or the revocation of the certificate of authority of a foreign corporation if it engages in criminal conduct. E.g., Tex. Bus. Corp. Act, arts. 7.01, 8.16 (1956) and N.Y. Bus. Corp Act £1101 (a) (2) (MeNKinney 1970), See State v. Capital City Dairy Co. 62 Ohio 350, 56 NE. 651 (1900), aff’d, 183 US. 238 (1802). Some states have also initiated quo Warranto proceedings, enjouiing corporations from exercising corporate funetions or from engaging tt some particular corporate activity. See 37 Yale L. J. 237, 244 (1927): State ve Delmar Jockey Club, 200 Mo. 34. 92 SW. 185 (1905). While we believe that both law and equity should preclude each of these sanctions, and that none of them would be warranted in this case, the dangers remain. te 6 attorney reported that there were ‘problems’? with Zerilli’s and Polizzi’s ownership of interests in VET. it is an admitted fact that Zerilli and Polizzi did not purchase VEIT stock or debentures or otherwise make any financial investment. The prosecution's theory was that the actions of the defendants thereafter were directed toward securing for Zerilli and Polizzi substantial participation in the control of the manage- ment of VET from whieh it could be inferred that they had some kind of an interest in VET, and that Nevada law was violated by the failure of Zerilli and Polizzi to obtain separate gambling Heenses in addition te the VET corporate license. The Court of Appeals rejected this theory (which was the only basis for conviction on the instructions submitted to the jury), but found that Zerilli and Polizzi did have ‘hidden interests”’, and held that Nevada law was violated by failing to make disclosure of such interests in the corporate license application. Under either theory, the opera- tion of the casino in these circumstances assertedly constitutes the “gambling offense’? upon which jur- isdietion ander the federal Pravel Act rests. On July 5, 1867, the license for VET was signed and issued to be effective July 27, 1967. Tr. 8090-3094, As of July 1, 1967, Nevada law no longer required investi- gation by the Gaming Control Board of a corporation's stockholders or of any other person who might have a “direct or indirect interest ina corporation holding a license Nev. Rev. Stat. §463.530. No gambling took place at the Frontier Casino before the license was issued, and the jury was instructed (without objection from the prosecution) that ‘sinee in this ease a license Was issued to the corporation VET, any gambling con- ducted by or through VFI would not be illegal and 7 would not be in violation of the statute.’ Tr. 8798.4 The Proutier Casino opened under VIL management on July 27, 1967. The entire operation was sold to the Hughes Tool Company ou November 27, 1967, 2. The Trial Proceedings—Onu February 26, 1971, an indictment was returned in the Central District of California charging **Emprise Corporation’? in one count with conspiracy to violate the federal Travel Act. The individual defendants were also charged With the conspiracy, and some of them were in addition variously charged with substantive Travel Act offenses in nine additional counts, After the prosecution advised that the reference in the indictment was to the mprise Corporation which had been the subsidiary of High Park Corporation and which no longer existed? motions to distniss were filed. The indictment was then dismissed for lack of personal jurisdiction over the former subsidiary corporation. The prosecution ap- pealed and then abandoned its appeal, choosing instead to file an information on October 14, 1971, charging the former High Park Corporation (now called Emprise) with the same conspiracy alleged in the indietment. The opening paragraph of the information squarely relied ona theory of viearions liability : The defendant is a corperation originally in- corporated pursuant to the laws of the State of ' The theory of Nevada law violation asserted in the instrnetions and in the evidence and argument was that) Zerilli and Polizzi should have obtained separate gambling licenses. Tr, 2998-23001, S695-94, ST6S-69, ST74. SS10. * The court below repeatedly referred to High Park's subsidiary as * old Emprise™’ and to petitioner as ‘new Emprise.”” We have deliberately avoided these designations because we believe they an. fiirly imply a ereater identity between the two companies than aetually existed. The District Court had subject matter jurisdiction under 18 U.S.C. $3231. 8 New York, under the name High Park Corpora- tion, It is the surviving corporation of a merger effectuated March 1, 1970 (pursuant to the laws of the State of New York) whereby a corporation then existing under the laws of the State of New York known as Emprmse Corrorarion (hereinafter re- ferred to throughout this paragraph as ‘original’ IEMPRISE ConroRATION ), a Wholly owned subsidiary of High Park Corporation, merged into said Tigh Park Corporation. Thereafter, on or about Mareh 17, 1970, High Park Corporation duly changed its name to Emprise Corporation. It was the original Earriisk Convokation whieh committed the conspiratorial acts charged below. Pursuant to the laws of the State of New York, the now existing EMpnrisk CorporatioX, as the survivor of the previousls described merger between original EMpitsk Convorarion and tligh Park Corpora- tion, 's named as the defendant herein. Petitioner then moved to dismiss on the ground that it had, under the information, committed no offense and that it could not be held vieariously liable merely because of its merger with the alleged) wrongdeer, The court denied the motion and required petitioner to stand trial along with the six individual defendants, Consistently with the opening paragraph of the in- formation, the proof at trial showed no acts by High Park Corporation (uow called Emiuprise), but only by the subsidiary. The judge charged the jury that the subsidiary’s guilt was attributable to the petitioner (Tr. 8757-38) : You have heard evidence in this case about a merger whereby the Emprise Corporation which existed at the time of the alleged offense, merged into its parent corporation in F970, You need not concern vourselves with the legal effect of that merger, Tf, in accordance with the evidence and 9 these instructions, you find beyond a reasonable doubt that the Emprise Corporation which existed at the time of the criminal acts alleged here did commit the criminal aets as charged then you should return a verdict of guilty as against the corporate defendant. 8. The Court of Appeals—On eppeal, the Ninth Cireuit affirmed the convictions in a tripartite 78-page opinion, finding at least a dozen errors but holdiug them all harmless. On the merger issue, the court relied on New York law, interpreting that State’s statutes to vermit ‘the maintenance of 2 prosecution against the surviving corporation for crimes allegedly conuitted by a constituent corporation.” App. A, p. 88a." The court also held on the Travel Act question that defend- aunts had engaged in the statutorily prohibited *un- lawful activity,” here a ‘business enterprise involving gambling offenses,’ even though the gambling con- ducted by VFI was legal. The court refused to consider the extensive legislative history indicating a contrary reading of the statute, stating, “The statutory language is clear.’ App, A, pp. 18a-1d4a.’ REASONS FOR GRANTING THE WRIT I. The Court of Appeals Expansively Construed the Travel Act To Emkrace Activities Not Intended by Congress. The decision below has applied the federal Travel Act in a manner that confliets with the principles and policies established by this Court when it construed the 6“ Consiituent corporation’ is a term taken directly from the New York statute, Business Corporation Law $ 906(b) (3), which implies no necessary prior relationship between the *‘constituent”’ and the survivor. 7 But sce Rewis vy. United States, supra, 401 U.S. at 811-812; United States v. Bergland, 318 F.2d 159, 161 (7th Cir), cart. de- nied, 375 U.S. 861 (1963). 19 same law in Rewis v. United States, supra, and when it subsequently construed other federal criminal stat- utes (in reliance on Rewis) in United States vy. Bass, 404 U.S. 336 (1971), and (in reliance on Bass) in United States v. Enmons, 410 U.S. 390 (1973). In all of these very recent cases, this Court emphasized that federal criminal statutes should not, in the absence of the clearest indication, be read **to effect a significant change in the sensitive relation between federal and state criminal jurisdiction”’ or to ‘‘overextend limited federal police resources.’? 404 U.S. at 349; see 401 U.S. at 812; 410 U.S. at 411-412. Such an expansive reading of federal criminal law would, of course, cast upon the overworked federal courts the burden of deciding many criminal cases that should properly be left to local prosecutors and courts. Yet the decision in this case does exactly what was warned against in Rewis—it **would transform relatively minor state offenses into federal felonies’? (401 U.S. at 812) with- out an explicit Congressional expression of intention to do so and in the face of Congressional language in other statutes waich indicates that this was not Congress’ desire. We note at the outset that there ean be no doubt that this case does not involve a ‘gambling offense” in any ordinary sense of the term. The defendants were not operating a gambling enterprise in a jurisdiction where gambling is forbidden. Nor—as was true in United States v. Roselli, 432 F.2d 679 (9th Cir. 1970), cert. denied, 401 U.S. 924 (1971)—were they engaged in a fraudulent enterprise of the kind specifically pro- hibited by a local law directed at deceptive gambling such as card playing or betting. In every respect relat- ing to the gambling aspect of their business, the defend- ants acted in full compliance with loeal regulations. 11 The local violation they are charged with having committed, that assertedly converted the operation of VEIL into a’tgambling offense,’ was that they failed “to disclose the identities of Zerilli and Polizzi as per- sons having an interest in VFL’? when the VFT Lvense applications were filed. App. A, p. 9a. This, we submit, was simply not a ‘tgembling offense’? within Congress’ intended meaning in the Travel Act, even if it fell short of the requirement of Ney. Rev. Stat. § 463.200 that ‘‘all persons directly or indirectly interested” in a cor- porate licensee be disclosed, and even if the very debat- able assumption made by the court below—i., that there was a failure to make the disclosure directed by the statute—amounted to a ‘violation’? punishable by Nev. Rey. Stat. § 463.360 (*‘the catchall section’) as a ‘*oross misdemeanor.” Nondisclosure or false statements in a licensing regu- lation are separate and distinct acts from the nature of the business for which a license is sought. Such non- disclosure or falsity does not become a ‘gambling offense”? simply because the license is sought for a gambling business. If, by way of analogy, a Nevada statute required gambling casinos to have three fire exits, would it be a ‘‘gambling offcuse’’ to operate a ‘asino with one? Or if Nevada law required that employees of gambling casinos work not more than nine hours a day, would it be a ‘‘gambling offense’’— reachable by the federal Travel Act—to operate a casino where the employees worked on twelve-hour shifts ? Congress’ intention when the law was enacted is clear from the legislative history examined by this Court in Rewis and in its earlier decision in United States v. Nardello, 393 U.S. 286 (1969). Congress 12 authorized federal prosecution of those who operated ‘unlawful businesses’’; the law was not designed, as the Assistant Attorney General who testified in support of it observed, to bring within federal jurisdiction ‘ineidental illegal acts done in the course of lawful businesses."’ Legislation Relating to Organized Crime, Hearings on H.R. 468 ete. before Subcommittee No. 5 of the House Committee on the Judiciary, 87th Cong., Ist Sess., 336 (1961). At best, the failure to disclose the interest of Zerilli and Polizzi amounted to *tincidental ilegal acts’ which did not convert the operation of a lawful casino in Nevada into ‘tan unlawful business enterprise." See the testimony of Attorney General Kennedy, id. at 35. Besides conflicting with principles established by decisions of this Court, the ruling of the Court of Appeals conflicts with the view of the Travel Act re- cently taken by the Court of Appeals for the Second Cireuit in United States v. Archer, 486 F.2d G70 (2d Cir. 1973), where the Solicitor General did not seek review of a reversal of a major conviction. Judge S Assistant Attorney General Miller said in the course of the House hearings (op. ci7. at 342): ‘When we defined business enter- prise as one involving gambling, liquor violation, and the like, we were thinking of the business itself as being an illegal business. Any business enterprise can have an employee or the president or someone down the line commit some act which is a violation of a statute and therefore, a crime. * * * Now, that does not make the business enterprise, itself. an unlawful one. It merely means that one individual has committed a crime, and it has no relation to the business enterprise itself.’’ Mr. Miller also expressed the same view in a law review article he wrote shortly after the enactment of the law. Miller, The **Travel Act’’: A New Statutory Approach to Organized Crime in the United States, 1 Duquesne U.L. Rev. 181, © 194 (1963) (‘A program to establish a gambling casino in Las Vegas, Nevada, would not amount to ‘unlawful activity’ ’’). 15 Friendly, speaking for the Second Circuit, observed in Archer that “[tloday there is widespread concern whether the federal criminal law og not outrun rea- sonable bounds,’ 486 F.2d at 677. Tle quoted an authoritative statement that **[t ti is practically no offense within the purview of loeal laws that does not become a Federal crime if some distinctive Federal invelvement happens to be present.’ Jd. at 678. On the basis of these considerations, among others, the Travel Act was read narrowly in Archer so as not to apply to the facts of that case. This ease graphically demonstrates how the limita- tions inherent in the Travel Act’s objectives—even if not in its language—may be abused. An alleged non- disclosure, which is not even a clear ground for civil revocation of a license under Nevada law and which amounts, at most, to a ‘‘gross misdemeanor’? under the most prosecutorial reading of the Nevada statute, is made the basis of an assertion that the entire licensed operation of a gambling casino is ‘in violation of the laws’? of Nevada, so that any assistance to that opera- tion js punishable as a federal felony with heavy fines, jail terms of three and four years, and the collateral consequences of a felony conviction. There is, moreover, more than the legislative history of the Travel Act itself that proves Congress’ narrow focus. Other federal criminal statutes reach “illegal gambling businesses,’? and in each instance the law would be extended well beyond Congress’ probable intention if it were read to cover incidental or per- ipheral illegality of the kind sought to be proved here. eet 18 U.S.C. § 1955 covers any gambling business “which is a violation of the law of a State’’; this would have a sweeping effect, for example, on any gambling 14 enterprise in Nevada that could be shown to be in violation of some local regulation. Yet in United States vy. Gordon, 464 F.2d 357 (9th Cir. 1972), the Court of Appeals, relying on United States v. Bass, supra, held that a violation of the Nevada Gambling Commission regulations which leads only to civil sane- tions does not qualify under § 1955. ° The decision below is, therefore, a signai devarture from established federal-state relations under which local crimes, with the exception of thoroughly illegal businesses that are owned and operated from out of state, are subject to local police control. If the Nevada authorities were misled enough by the alleged failure to disclose the names of Zerilli and Polizzi as interest- holders in VFI, they could have initiated license- revocation proceedings or sought to prosecute those responsible for a *‘gross misdemeanor.’? This Court should not, at a time when the dockets of federal courts are swollen, approve of a precedent winch will drag into the federal courts a host of other similar felony charges based upon minor incidental infractions of local law. * Similarly, 18 U.S.C. $$ 1961-63 subjects to certain federal crimi- nal sanctions *‘any act or threat involving * * * gambling * * * which is chargeable under State law and punishable by imprison- ment fer more than one year.”’ If ‘*gambling’’ were read in that law as sweepingly as it has been read by the court below, incidental iliegal acts associated with legal gambling enterprises would be the subject of federal court action. See also 18 U.S.C. § 1511 (6) (1). ~- 15 II. The Court of Appeals, in Direct Conflict with Other Cir- cuits, Erroneously Held that Conspiracy To Violate the Travel Act Does Not Require Specific Intent To Violate State Law. The broad reading of the Travel Act adopted below is particularly unfair when it is applied in a way that does not require the prosecution to establish specitie knowledge that local law has been violated. That is precisely what occurred here, The Covrt of Appeals itself recognized (App. A at 19a) that its decision in regard to the nature and extent of specific intent required to prove a violation of the Travel Act was in conflict with that set forth in United States v. Stayman, 446 F.2d 489, 492-493 (6th Cir. 1971). As pointed out by the court below (App. A at 19a n. 29), the jury in this case was instructed that ‘it is not necessary that the Government prove that the defendants knew that they were violating Nevada law. The specific intent which the Government must show is the intent to facilitate the carrying on of a business enterprise involving gambling in violation of Nevada law.”? The court thought these instructions ‘could have been more precise’’ (id. at 192) but nevertheless upheld them because it disagreed with Stagman that specifie intent to violate state law was a necessary pre- requisite to conviction (see App. A at 19a modified by the denial of the Petition for Rehearing, App. B at 95a), Stagman, on the other hand, cited cases by four different Courts of Appeals holding or stating that “knowing and willful intent to violate state laws is an clement of the crime proscribed by the Travel Act.” 16 446 F.2d at 491-492.°° The court noted the Govern- ment’s argument (adopted by the court below in the instant case) that **the word ‘intent’ is meant to apply only to the verb ‘to carry on’ and not to its object, ‘unlawful activity’—ic., that the crime does not require knowledge that the activity is unlawful.’” /d. at 492. But the Sixth Circuit in Stagman rejected that argu- meut, saying, ‘* We prefer the more natural reading, in which ‘intent’ refers to the entire phrase ‘to * * * carry ou * * * any unlawful activity,’ ”’ citing **the purposes and structure of the Act” to support its interpretation. Id. This conflict must be resolved. It will not go away. Courts continue to convict under the Travel Act and to instruct juries, either on the necessity of a specific intent to viclate state law or on the non-necessity of such an intent. Unless this Court acts, the coufusion and conflict will abound. ” 10 United States v. Miller, 379 F.2d 483, 486 (7th Cir. 1967); Turf Center, Ine. vy. United States, 325 F.2d 793, 797 (9th Cir. 1963) ; United States vy. Hanon, 428 F.2d 101, 108 (8th Cir. 1970) (en bane) citing Willer with approval). The court also cited two cases holding to the contrary. United States v. Hawthorne, 356 F.2d 740, 742 (4th Cir. 1966), and United States vy. Weehsler, 392 F.2d 344, 347 (4th Cir. 1968). The Court has granted a petition for writ of certiorari on a similar issue of specific intent for a federal conspiracy conviction. In United States v. Alsondo, 486 F.2d 1339 (24 Cir. 1973), cert. granted, sub nom, United States y. Feola, No. 73-1123, 42 U.S, L.W. 3584, the Second Circuit held that although proof of a juris- dictional element was not requisite for conviction of a substantive offense under 18 U.S.C. § 111, conspiracy to commit that same of- fense required proof that the defendants knew the official identity of the federal officer they were charged with assaulting. Simi- larly, in the present case it is submitted that in order to be con- victed of conspiracy to violate the Travel Act, the Government must infer alia prove intent to violate state law whether or not that intent is requisite to a substantive offense under the Act. 17 III. The Court of Appeals, In Direct Conflict With the Siaih Circuit, Erroneously Held One Corporation Criminally Liable for the Acts of Another. In Section AVI of its opinion (App. A, pp. T9a et seq.), the court below applied a startling new principle of vicarious criminal liability which is not supported by any decision of this Court and whieh conflicts squarely with the decision of the Court of Appeals for the Sixth Circuit in United State. v. Carter, 311 F.2d 934, 941, cert. denied, 373 US. GIF (1963). The court below has held in this case that a parent corporation, which was not shown to have had any involvement whatever with alleged criminal acts when they were committed, could be held criminally liable for the a-ts of a subsidiary corporation solely because the sub- sidiary was, for reasons totatly unrelated to the alleged crime, merged into the parent four years after the commission of the offeise. In Carter, as in this case. the parent (City Produet Corporation) acquired by merger the assets of its subsidiary (Pilsener Brewing Company) after the alleged criminal conduct and prior to the bringing of federal charges. Both entities were convicted, but the Sixth Circuit held on appeal that the merger ** would not make [City Produets] chargeable, as a principal, for a crime previously committed by Pilsener. * * *” 311 F.2d at 941. Carter is directly contrary to the Ninth Cireuit’s lelding in this case. In the instant appeal, both sides extensively briefed the Sixth Circuit decision, but the court below simply ignored it. The conflict requires resolution here. This Court recently considered the civil liabilities of a purchasing corporation which had bought a busi- ness with knowledge that the preceding owner had id engaged in an unfair labor practice. It concluded, in Golden State Bottling Co. vy. NLRB, 414 U.S. 168 (1973), that in order to effectuate the remedial pur- poses of the National Labor Relations Act, a bona tide suceessor may be liable for reinstatement and back pay to improperly discharged employees. The Court rea- soned that ‘‘[s]ince the suecessor must have notice before liability can be imposed, ‘his potential liability for remedying the unfair labor practices is a matter which can be reflected in the price he pays for the busi- ness, or he may secure an indemnity clause in the sales contract which will indemnify him for liability arising from the seller’s unfair labor practice.’ fd. at 185, In the instant ease, on the other hand, adjustments in price and indemnification agreements are obviously inadequate and unavailable to provide for possible criminal prosecutions. And, on the record of this case, it is clear that even the issue of knowledge was taken from the jury by the judge’s instruction (pp. 8-9, supra), which simply told the jurors that if the original offender committed a violation, the merged parent was to be found guilty. The starting point with regard to the survival of corporate criminal liability is, as this Court observed in Meirose Distillers, Inc. v. United States, 359 U.S. 271, 272 (1959), that ‘tin the federal domain prosecu- tions abate both on the death of an individual defendant * * * and on the dissolution of a corporate defendant * * * unless the action is saved by statute.’? Tn the Melrose Distillers ease this Court concluded that cor- porations which were dissolved when their businesses beeame divisions of a parent corporation could still be prosecuted criminally under the Sherman Act even after dissolution. Application of the Welrose Distillers 19 principle would have required that the present action be taken only against the original Emprise Corpora- tion. Indeed, it was clear throughout the proceedings below that, notwithstanding the transfer of assets and dissolution by merger, the original corporation was available for criminal prosecution. The dismissal of the initial charge—the appeal from which was abandoned by the government—was based entirely on the conclusion that the case was in the wrong federal district. Moreover, in District Judge Weinfeld’s decision in United States v. Cigarette Merchandisers Ass’n, 136 F.Supp. 214 (S.D.N.Y. 1955), on which the court below relied for its understanding of New York law (App. A, pp. 82a, 83a), the court ruled that the acquired corporation, which had been dissolved by merger, could be prosecuted ‘for crimes it may have connuitted prior to dissolution.’ 136 F.Supp. at 217. Accord: United States v. Stone » $02 Fi2d 42, 47 (8th Cir. 1971) (construing the present New York statute). Here, instead of prosecuting the dissolved corporation —as required by the federal policy of Welrose Distillers and the law of New York—the government has attached criminal liability to the purchaser of its assets solely because that purchaser is, for civil purposes, responsible under New York law for the dissolved corporation's liabilities. The court below also erred, we submit, in placing such heavy reliance on local Jaw in the application of a federal criminal statute. Corporations which operate in several states should not have their federal criminal liability turn on the vagaries of Jaws of par- ticular local jurisdictions. Such a rule is not only 20 burdensome to federal prosecutors aud courts, which must administer the law, but unfair to putative defend- ants, particularly those whoxe business takes them: into rarious states. The decision below, if allowed to stand, has serious implications for American business. It subjects the surviving corporation in a merger to vicarious criminal liability for acts performed on behalf of au acquired corporation on some earlier date. '* Banks and in- surance companies could be fatally disabled by criminal convictions for acts they neither committed nor knew of, but which had been undertaken on behalf of busi- nesses they purchased. Mergers and consolidations are commonly used methods of achieving permissible business objectives, and businessmen anticipate that when they engage in such transactions the survivor or new corporation will bear the risk of unknown civil liabilities. The price and terms of the exchange will reflect that risk, and familiar techniques of contract law are available to shift the economic burden where it equitably belongs. But we conceive of mo way by which the possibility of viearious criminal liability and 12 The court below placed no reliance whatever on the fact that the petitioner and the dissolved corporation had a parent-subsidiary relationship, so that the court’s reasoning applies to corporations which are total strangers prior to merger. In any event. in the absence of proof (and a jury finding) that the parent corporation was itself involved and knew of the illegal activity, the parent can- not be held criminally liable. With corporations, as with indi- viduals, a master is not liable for the criminal acts of his servants unless he authorizes or knows and acqniesces in what the servant has done. Sayre. Criminal Responsibility for the Aets of Another, 43 Harv. L. Rev. 689. 723 (1930). No proof of authorization, knowledge, or aequiescenee by Tigh Park was offered in this case and, under the instruction given the jury (pp. 8-9, supra), no such issue was relevant. 21 its collateral consequences can be covered by contract. The parties can, of course, provide for the costs of defense of a criminal prosecution against the dissolved corporation and the payment by the survivor of any fine that is due. If, however, the survivor may be held Vieariously liable and be treated itself as a felon, the potential harm—particularly in licensed industries— ix so staggering that corporations would be encouraged to forego both external arid intevnal mergers and ae- quisitions, If such a result is to be reached, it surely requires more careful legal and economic cousideration than was given by the court below. Viearious criminal liability is *‘repugnant to every instinet of the criminal jurist,’ Sayre, supra, 45 Harv. L. Rev. at 702. It is no less so when it attaches to a corporation rather than an individual. In the con- text of this case, the question of viearious liability presents portant issues affecting corporate business in general and the economy of the nation. The funda- mental problems of criminal jurisprudence raised by the decision below should not be obscured by the other issues discussed in the court’s lengthy opinion or by the size of the reeord. They deserve isolated and thorough examination from this Court. IV. The Court of Appeals Erroneously Refused To Recognize the Unconstitutionality of Acts Which, Both Singly and in Sum Total, Denied Petitioner’s Fifth and Sixth Amendment Rights. We respectfully submit that petitioner was denied due process in violation of the Fifth Amendment and a jury trial in violation of the Sixth Amendment by the conduct of the prosecution prior and subsequent to trial and by the conduet of the prosecutor and the court at trial. Petitioner was so repeated!y prejudiced by 22 this conduct that it was denied even the semblance of a fair hearing and a fair decision by the jury. We recognize, of course. that a long and complex trial cannot be a perfect trial, that some mistakes are bound to be made, and that appellate courts have lati- tude in overlooking minor errors. But there is another side to that coin: the length and complexity of atrial should not be used as an excuse for, or as a shield against, the denial of basic constitutional rights. This is particularly true here, where there are not one or two isolated violations of limited magnitude, but rather an entire range of serious and pervasive violations going to the very core of constitutional due process, Tn presenting these, we do not rely upou our own interpretation of the record, which is far more serious than that put forth by the Court of Appeals. Rather, for purposes of this Petition, and in order that the Court will have no question about what oecurred, we adopt the Court of Appeals’? own version of events, with appropriate references to that Court’s opinion in Appendix *'Tf it were error to allow the prosecttion to ask appellant Rooks about the first Reisman deposition * * #7’ (50a) ;** While it may generally be preferable for the trial court to allow such an examination of jurors * * *°? (35a-36a); ‘** * * a question of inconsistency perhaps cid arise * * *7? (53a); ‘The balance may not have been so clear when Giordano moved for severance during trial’’ (69a); °*The court thus should not have admitted any testimony referring to the Lands transcript’? (55a) ; ‘At most the witness may have misunderstood the court * * *”’ (55a) ; ‘* Errors were committed * * **’ (51a). 27 tional violations, but that in sum they clearly and with- out question denied petitioner the fair trial to which it was entitled under the Fifth and Sixth Amendments. In addition, there was one serious constitutional violation that is not sufficiently reflected in the Court of Appeals opinion. The record of the proceedings below establishes beyond doubt that there was prominently presented to the jury a theory for petitioner’s violation of the Travel Act which the Court of Appeals held invalid. The government charged in the indictment and in the information and urged in closing argument (39 R.T. 7902-94, 43 R.T. 8693-95) that the defendants violated the law beeause holders of alleged hidden interests in the gambling franchise were not them- selves licensed. And the trial court struck from pe- titioner’s requested instructions a statement that in wnbling conducted by a corporation, only the cor- poration need be licensed. It allowed to stand a state- ment that patrons going to the casino to gamble need not be liceused, strongly suggesting the negative preg- nant that other interested parties would have been required to hold a license. The Court of Appeals clearly and emphatically rejected precisely this re- quired-licensing theory. As the court’s opinion put it, speaking of the government’s contention that all persons with a direct or indirect interest in a gambling casino must be licensed: ‘We find no such require- ment in Nevada law.”” App. A, p. 1a. The decision of the Court of Appeals, invalidating the theory of Travel Act violation relied upon by the government and yet affirming convictions undoubtedly returned on precisely the same theory. has ignored the clear teaching of a long line of cases in this Court. E.g., Clay v. United States, 403 U.S. 698, 705 (1971); oe 28 Rewis vy. United States, supra; Bachellar v. Maryland, 397 U.S. 564, 570-571 (1970); Yates v. United States, 304 U.S. 298, 312 (1957); Stromberg v. California, 283 U.S. 359, 307-368 (1931). CONCLUSION For each and all of these reasons, we respectfully submit that the Petition for a Writ of Certiorari should be granted and the judginent below reversed. Respectfully submitted, E. Barrett PrRETTYMAN, JR. 815 Connecticut Avenue, N.W. Washington, D.C. 20006 Hervert J. MInier, JR. NATHAN LEWIN 1320-19th Street, N.W. Washington, D.C. 20036 he ee 4) INDEX Page Appendix A, Opinion of Court of Appeals, April 30, Sere rrr ort Teer Tree TT TIT ee era Ty la Appendix B. Denial of Petition for Rehearing, July DA MEE GuN MKS ees bedebeencnsessakconshanevine® 94a Appendix C. Order Correcting Date of Filing of Order Denying Petitions for Rehearing, August 5, 1974.. 98a Appendix D. Stay of Mandate, August 12, 1974 ..... 100a Appendix KE. Order Extending Time To File Petition for Writ of Certiorari, August 8, 1974 ......... 102a Appendix F. Constitutional and Statutory Provi- NE a Uae Re TARA sera Neches ¥eeewauearene es 103a la APPENDIX A UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT No. 72-2983 Unitep Srates or Amenica, Plaintiff-Appellee, v. Miciaen, Santo Pouizzi, Defendant-Appellant. No. 72-2984 Unitep States or Amenica, Plaintiff- Appellee, v. Jack 8. Suapinoe, Defendant-Appellant. No. 72-2985 Unitep States or America, Plaintiff-Appellee, v. Peter James Betwanca, Defendant-Appellant. No. 72-2986 Unitep States or America, Plaintiff-A ppellee, V. Antuony GriArvano, Defendant-A ppellant. No. 72-2987 Uniten States ov America, Plaintiff-Appellee, v. Artuur J. Rooxs, Defendant-Appellant. No. 72-2988 Unitep States or America, Plaintiff-Appe ‘ce, v. Antuony Josern Zens, Defendant-Appellant. No. 72-2989 Unitep States or America, Plaintiff-Appellee, v. Empnise Corporation, a New York Corporation, Defendant-A ppelant. ?. a Opinion April 50, 1974 Appeal from the United States District Court for the Central District of California Before: Browsixc and Duxiway, Circuit Judges, and Renxerrew,* District Judge. Rexrrew, District Judge: In 1966 and 1967, appellants Zerilli and Polizzi acquired hidden interests in Vegas Frontier, Ine. (VFI); a Nevada corporation, which leased and operated the Frontier Hotel in Las Vegas, Nevada. VEI was also licensed to conduct gambling at the hotel, which opened in July of 1967. Neither Zerilli nor Polizzi wos Leensed by the Nevada gaming authorities, nor was either man’s interest in VFI disclosed to those authorites. After extensive negotia- tions, VFI was sold in November, 1967, to Howard Hughes. Following a very lengthy and complex trial,’ Zerilli, Polizzi, and the other appellants were convicted of con- spiracy (18 U.S.C. $371) to violate 18 U.S.C. § 19527 * The Honorable Charles B. Renfrew, United States District Judge, Northern District of California, sitting by designation. ? There were 48 days of trial reported in 11.022 pages of report- er’s transeript (ineluding post-trial motions), and $21 exhibits were received in evidence. 218 U.S.C. $1952 provides in part: ‘*(a) Whoever travels in interstate or foreign commerce or uses any facility in interstate or foreign commerce, including the mail, with intent to— (1) distribute the proceeds of any unlawful activity; or (2) commit any crime of violence to further any unlawful activity; or (3) otherw's. promote, manage, establish, carry on, or facill- tate the promotion, management, establishment, or carrying on. of any unlawful activity, and thereafter performs or attempts to perform any of the acts specified in subparagraphs (1), (2), and (3), shall be fined not 3a (Interstate and Foreign Travel or Transportation in Aid of Racketeering Mnterprises) and of substantive violations of that section, Appellants challenge their convictions on a number of bases. They contend: 1, That the prosecution failed to show a violation of § 1952. 2. That, if a violation were shown, the laws in question would be unconstitutionally vague. 3. That the court erred in instructing the jury. 4. That the publicity surrounding their trial deprived them of a fair trial and that there was jury miseonduet which the court refused to investigate. ». That the label ‘Mafia’? was applied to them in a public list of Mafia figures made by the Department of Justice and that the list was submitted in the grand jury proceedings and in the trial in this case and that these actions constitute a deprivation of their rights of due process, 6. That the trial court committed error in the permission it gave to the proscention to cross-examine certain of the appellants about their reputations as members of the Mafia when the appellants had not presented evidence of character or reputation. 7. That they were deprived of a fair trial by miseonduet of the prosecutor which the trial court sanctioned. 8. That the testimony of a key proseention witness should have been stricken in that the prosecution’s untimely —s more than $10,000 or imprisoned for not more than five years, or both. (b) As used in this section, ‘unlawful activity’ means (1) any business enterprise involving gambling * * * offenses in violation of the laws of the State in which they are committed or of the United Wites ** F,”” 4a production of his pretrial statements violated the Jencks Act. 9. That error was committed in the admission of the testimony of that witness on the grounds that part of the testimony was conclusively demonstrated to be false, and admitted to be false by the witness. 10. That promises of leniency made to the witness by the prosecution were not disclosed. 11. That the acts complained of were a unitary crime and that it was not proper for them to be con¥ieted of a—— conspiracy and substantive violations based upon the same conduct. 12. the venue of the trial court was improper. 12. That the v f the trial t proy 13. That the court below erred in refusing to grant appel- lant Giordano’s motion for severance. 14. That the court below erred in failing to instruct the jury that evidence admitted after appellant Giordano had rested at the close of the prosccution’s case could not be considered against him. 15. That appellant Giordano’s motion for acquittal at the close of the prosecution’s case should have been granted. 16. That appellant Emprise is not liable for any criminal acts that its predecessor in interest allegedly committed. 17. That the evidence was insufficient to support their convictions. 18. That the trial was materially tainted by leads from unlawful electronic surveillance. Having carefully considered each of these contentions, we affirm the convictions below. Although this opinion is longer than we would have preferred, appellants have raised and argued so many points in 534 pages of briefs, exclusive of appendices and exhibits, that we find a lengthy opinion unavoidable. 5a I. Violation of § 1952 Appellants’ threshold contention is that their conduct did not come within the coverage of the federal Travel Act (18 U.S.C. § 1952), raising two issues as to the meaning of the statute. Section 1952 condemns interstate travel or the use of interstate facilities in the furtherance of ‘‘any un- lawful activity,’’ defined as including ‘‘any business enter- prise involving gambling * * * offenses in violation of the laws of the State in which they are committed or of the United States * * * .”’ A violation of ¢ 1952 thus must —he- premised upon—another—distinet violation of state or federal law. Although state law becomes the focus of this inquiry, “the gravamen of a charge under $1952 is the violation of federal law * * * 2? United States v. Karigiannis, 430 F.2d 148, 150 (7 Cir. 1970) (Clark J.), cert. denied 400 U.S. 904 (1970). ‘‘Reference to state law is necessary only to identify the type of unlawful activity in which the defend- ants intended to engage.’? United States of A merica Vv. Rizzo, 418 F.2d 71, 74 (7 Cir. 1969), cert. denied 397 U.S. 967 (1970). While the Government’s theory was not succinctly stated, either in its briefs or at oral argument, it does emerge from a careful reading of the indictment and information * to- gether with the court’s instructions to the jury‘ that ap- 3The indictment names the six individual appellants and the information names appellant Emprise Corperation, the successor in interest to a merged corporation of the same name which had been dismissed from the indjctment for lack of personal jurisdiction prior to trial. Both the information and indictment contain the following language charging appellants with traveling ‘‘in interstate com- merce and [using] facilities in interstate commerce with intent to: ‘1. Distribute the proceeds of unlawful activity, namely: the ownership, operation of, and receipt of profits from a Las Vegas, Nevada gaming casino by persons who were not licensed and whose 6a pellants violated the federal Travel Act by conduct which was a ‘‘business enterprise’’ that involved *‘ gambling * * * offenses”’ in violation of Nevada Revised Statutes (N.R.S. $ 463.160° in that Zerilli and Polizzi’s interests in the gambling conducted by VFI at the Frontier Hotel were hidden from the Nevada gaming authorities. interest in the gaming casino had been concealed from agencies of the State ov Nevada in violation of Nevada law; and ‘92 Promote, manage, establish, carry on, and facilitate the promotion, management, establishment and carrying on of unlaw- ful activity, namely: the ownership, operation of, and receipt of profits from a Las Vegas, Nevada gaming casino by persons who were not licensed by and whose interest in the gaming casino had been concealed from agencies of the State of Nevada in violation of Nevada law * * *.’’ The court’s instructions to the jury were also couched in terms of the failure to disclose the interest of Zerilli and Polizzi in VFI. 5 Nevada Revised Statutes (N.RUS.) $ 463.160 lays down the basic law requiring a license for gambling operations: “*1. It is unlawful for any person, either as owner, lessee or employee, whether for hire or not, either solely or in conjunction with others: . ‘*(a) To deal, operate, carry on, conduct, maintain or expose for play in the State of Nevada any game or slot machine as defined in this chapter, or to operate, carry on, conduct or main- tain any horserace book or sports pooi; or &* - * % * ‘*(¢) To receive, directly or indirectly, any compensation or reward or any percentage or share of the money or property played, for keeping, running, carrying on or permitting the same to be carried on, without having first procured, and thereafter maintaining in full force and effect, all federal, state, county and municipal gaming licenses as required by statute or ordinance *“* uals N.R.S. $ 463.170 then indicates what information must be dis- closed if a license is to be obtained by a corporation: **2. No corporation * * * shall be eligible to receiveor hold any license ua? r¢ this chapter unless all persons having any direct or indirect interest therein of any nature whatsoever, whether finan- ‘ ern ET Ee * ie areas | 7a Appellants’ first argument is that since VFI had a gambling license as required by Nevada law, their activity could not be unlawful within the meaning of the federal Travel Act. They rely considerably on one instruction, to which the government did not object, that VFI was licensed and that the gambling it conducted could not be found iHegal.® Appellants counsel stated at oral argument that, even if appellants procured the VFT license fraudulently, there would be no criminal violation of Nevada law. We disagree. This instruction meant only that the trial court did not believe that the prosecution could rely upon N.RS. £¢ 463.160(1)(a). The license would not be viewed as void ab initio, and the appellants could not be prosecuted for conducting a gambling enterprise without a license. Nor could the proscentor ‘pierce the corporate veil’’ to reach appellants.7 The instruction does not, however, legitimize cial, administrative, policymaking or s ipervisory, are individually qualified to be licensed under the provisions of this chapter.”’ {Appellants contend that the revised N.RLS. § 463.170(2), effee- tive July 1, 1967, should have been applied. In footnote 11, iafra, we point out the error in that contention.} The statute governing the disclosure to be made in an application for a lieense provides: “9 The application shall include: * * * % *% ““(d) The names of all persons directly or indire tty inter- ested in the business and the nature of such interest.’? N.ILS. § 463.200. The forms supplied for an application by a corporation indicate that corporate officers and stockholders are to be listed as those persons interested in the business. 6“ Sinee in this case a license was issued to the corporation VFI, any gambling conducted by or through VFI would not be illegal and would not be in violation of this statute [N.RS. $ 463.160].”’ Reporter’s Transcript, Vol. 43, p. 8798. 7 See footnote 13, infra. 8a all the acts of appellants in obtaining the license. N.R.S. § 463.160(1)(c) covers precisely the charges here against appellants: receiving compensation from gambling con- dueted without having procured and maintained licenses as required by law.’ Appellants argue, however, that N.R.S. $463.160(1) (e) only requires that the gambling be licensed and does not reach fraud or other violations in obtaining the license. Acceptance of this construction of Nevada law would ef- fectively emaseulate the statutory scheme of requiring the disclosure of the identities of the persons who would be involved in the gambling enterprise. This disclosure re- quirement has as its purpose the prevention of the in- filtration of criminal elements into gambling in Nevada. ® Section 463.160(1)(e) requires not only that a license be * See footnote 5, supra, for the language of the statute. ***It is hereby declared to be the policy of this state that all establishments where cambling games are conducted or onerated or where gambling devices are operated in the State of Nevada shall be licensed and controlled so as to better protect the public health, safety, morals, good order and general welfare of the inhabitants of the State of Nevada.’’ N.R.S. § 463.130(1). The Nevada Supreme Court, in a decision handed down two years prior to the enactment of the statutes here in question, gave a strong policy basis for the licensing requirement: **Nevada gambling, if it is to succeed as a lawful enterprise, must be free from the criminal and corruptive taint acquired by gambling beyond our borders. If this is to be accomplished not only must the operation of gambiing be carefully controlled, but the character and background of those who would engage in gambling in this state must be carefully scrutinized. ‘ the hallway outside the courtroom. We said ‘hello’ to each other, ana I then talked to Agnar Wahlberg, one of the court reporters. “A few minutes later [I went into the courtroom, Mr. Palmer was then sitting in the courtroom, I said ‘hello’ to him again, and I remarked that the five days of deliberation of the jury indicated the dedicated work of the jury. “*T was about to walk to the counsel table, but before I could do so Mr. Palmer made substantially the following statement: ***We tried to be conscientious. But the newspaper pub- licity of the trial was devastating to the defendants. You can't keep those jurors from reading the newspapers.’ **I then stopped vend inquired about this, and I asked Mr, Palmer if he was referring to the Hoffa story. **His reply was suostantially as follows: ***More than that. The jury was reading about the case every day.’ ‘Mr. Palmer further stated that he himself had not read the newspaper articles concerning the case during the trial, but that he had read them after the trial, and that he could now understand how many of the other jurors felt during the trial. He said he felt that the Los Angeles Herald-Examiner was more damaging than the Los Angeles Times. “Mr. Palmer also stated that the people in his office work hard and then go to Las Vegas and lose their money, and that he thought this was wrong. I then asked him how he felt about horse racing, and he said he thought that horse racing was the same.’’ 37a have been skeptical of such a belated attack on the jury’s yerdicts. The record is not barren on this point,’ and the 50 In his first interrogation of the jurors, the trial judge asked Palmer about his own exposure to the media, Palmer answered that he had not read, seen, or heard anything about the case, Reporier’s Transeript, Vol. 7, pp. 1330-1332, During the second voir dire, Palmer again failed to mention any problem with the publicity. Reporter's Transcript, Vol. 31, pp. 6011-6012. The post-trial interrogation of juror Palmer is set out in full below: “The Court: Come in, Mr. Palmer. *‘Juror Palmer: Thank you, sir. ‘“‘T owe you an apology for being the black sheep, the only one that said yes when | should have said no. “The Court: No apology needed at all. ‘juror Palmer: The count was seven to five and 1 still feel that if we had had another session we could have come out on it. [This reference is to the jury's failure to reach a verdict as to defendant Polizzi on Count 3 of the indict- ment. See p. 8987.] ‘The Court: My purpose here now is to ask you some questions about the case. Do you think that anything hap- pened outside of this courtroom during the trial of this case that in any way influenced the verdict in the case? ‘‘Juror Palmer: Well, I will put it this way, not that I know of. As far as myself is concerned, no, but as to others I am not too sure. “The Court: Yes. Now is there anything about that, that leads you to suspect that anything happened? “Juror P.lmer: Well, 1 would rather hesitatingly say no. ‘The Court: Read that answer to me. ** (Record read.) ‘Juror Palmer: I think you well know in your experience that when folks get together outside, going to lunch or some- thing like that, you can’t very well stop them from talking about it among themselves, you know what I mean, just among ourselves, and I think some of that was done but I don’t want to accuse anybody of it. “The Court: Yes. All right. Now do you think that any- body reached any decisions about the ease before the case was turned over to the jury? ‘Juror Palmer: I don’t think so. None were expressed to me, no, sir, “The Court: Mr. Palmer, there is a picture called The Godfather, Have you seen that picture? eed 38a court could reasonably have found juror Palmer’s disclo- sure as reported by defense counsel unworthy of belief. ‘Juror Palmer: No, sir, T have not. “The Court: Have you read the book by he samme wane’ ‘Juror Palmer: No, sir. In facet, I never heard of it until you mentioned it. “The Court: Was there any discussion of either the picture or the book in that jury room? ‘Juror Palmer: No, sir, not that [ know of; not that I heard, “The Court: Do you think that the mention during this trial of any of the terms such as ‘Mafia’ or related terms had any unfavorable influence on the verdicts that were reached? ‘Juror Palmer; Well, to be frank and honest with you, | hope I won't get into trouble by doing so, | think some of that was mentioned during the lunch hour between some of the members of the jury. ‘The Court: In what respect? ‘Juror Palmer: Well, it was just the faet that ii eame up during the trial, the Chief of Police of Detroit accused some of our defendants of being members of it, they threatened him with suit and the suit was never filed because they thought they couldn’t win it, the defendants I mean. Do [ make myself clear? “The Court: Yes, I think so. What you are saying is that during a lunch hour that there was some discussion of the evidence, is that correct? ‘‘Juror Palmer: I was told somewhere that that come out in the local papers during the trial, and I think that was dis- cussed during the lunch hour between some of the members. I don’t want to hold up my right hand and swear to that, your Honor. “The Court: Did you hear it yourself? ‘Juror Palmer: Indirectly, yes. “The Court: What do you mean by ‘indirectly’? ‘Juror Palmer: Well, they were some distance away from me, that is what I think they were talking about, but T couldn't convict them of it, I heard the word * Mafia’ mentioned and that kind of thing, and that was all, but 1 den't think there was any prejudice to it as far as that is concerned because it was admitted it was not to be considered in the trial. It was, shall I say, outlawed. “The Court: Do you think that anybody did consider that in the deliberations in this case! ‘Juror Palmer: I don't believe so, no, sir. “The Court: Any comment or any discussion about it in the deliberations? 39a Palmer’s unwillingness iv submit an affidavit strongly sup- ports that judgment.” In this ease the probiem of publicity was not insignificant, nt Tt was a prodhens ‘had wwres Raedled, bas proper isdicial supervision, ‘The right to publish a prejudicial article docs not carry with it the right of an aecused to an uuto- nuatie mistrial. Such an outcome would give to the press a power over judicial proceedings which may not he coun- tenaneed.””) Mares v. United States, 283 F.2d 805, 808 (10 Cir. 1967), cert. denied, 394 U.S, 968 (1969), After our detailed review, we cannot say that there is a Serious poxsi- Wility that the jury was influenecd by considerations apart from evidence properly admitted at trial. The trial judge admonished the jury on at least four oecasions to avoid publicity about the case, He interrogated the jurors in- dividually three times. The fact that the jurors discussed the term ‘Mafia’? and related issues does not in itself re- ouire reversal, Cf, United States v. Lasarus, 425 F.2d 638, 640-641 (9 Cir. 1970), cort. denicd, 400 US, 869 (1970), rehearing denied, 400 U.S. 94 (1970). For sppellants’ “Juror Palmer: No, sir, nothing. 1 never heard the word mentioned during the deliberation time, no, sir. “The Court: All right. I think those are the questions that I wanted to ask you. And thank you again. “Juror Palmer: Let me say it has been a pleasure to work with you. I hops I get a chanee to do it again. “The Court: It has been a pleasure working with you. “Juror Palmer: Thank you."’ Reporter's Transcript, Vol. 46, pp. 1005-9008. “A vase cited by appellants in support of their contention that juror Palmer's revelations indicate jury bias is easily distinguished from this case, United States v. Thomas, 4635 F.2d 1061, 1062 (7 Cir. 172), involved the dis dosure by ” juror the morning after the jury lie! deliberated. and reached a verdict that jurors ** who vhoxe to vote for conviction argued from [a newspaper] article which they displayed and to whieh they repeatedly referred.” Here Palmer's disclosure as reported by appellants” counsel came approximately six weeks after the verdict hed been reached, and there were good reasons for disbelieving that disclosure, 40a arguments of prejudice and juror Palmer’s disclosure to be true, the other jurors would in effect have committed per- jury on several occasions and have entered into a conspir- acy of silence. The trial judge found that incredible. We agree. ‘‘Appellate courts should be slow to impute to juries a disregard of their duties, and to trial courts a want of diligence or perspicacity in appraising the jury’s con- duct.’? Fairmount Glass Works v. Cub Fork Coal Co., 287 U.S. 474, 485 (1933) (Brandeis, J.). ‘‘If the mere oppor- tunity for prejudice or corruption is to raise a presumption that they exist, it will be hard to maintain jury trial under the conditions of the present day.’’ Jolt v. United States, 218 U.S. 245, 251 (1910) (Holmes, J.). No reversible error was committed in the trial court’s handling of the question of prejudicial publicity; we do not find ‘‘that the prob- ability of prejudice arose and was not eliminated.”’ Silver- thorne v. United States, 400 F.2d 627, 644 (9 Cir. 1968). V. Department of Justice ‘‘Mafia’’ List The United States Department of Justice in 1969 included appellants Zerilli and Polizzi on a list of known Mafia figures. See 115 Cong. Ree., Part 17, pp. 23440-23441 (An- gust 12, 1969). Appellants contend that the presence of those names on that list was the motivating factor in the prosecution of this case and also that the prosecution made several prejudicial comments, based upon appellants’ alleged Mafia connections, to the grand and petit juries. Their first point, that their inclusion on the ‘‘ Mafia list’’ was the prime motivation for the prosecution, is not sup- ported by anything in the record and is strongly contra- dicted by the testimony of three government officials prom- inent in this prosecution. *2 The Honorable W. Matthew Byrne, Jr., United States District Judge, and who was United States Attorney in Los Angeles during the initial stages of ihis case, testified that interviews with Maurice Friedman were ‘‘the basis for the commencement of the investiga- 4la The next contention, that the prosecution ‘¢noisoned’’ the grand jury proceedings by comments referring to the Mafia, is unsupported by the record or by the authorities appellants cite. The portions of the transcript of the pro- ceedings before the grand jury which appellants quote in their opening brief are not evidence of grand jury bias. ‘‘Mafia’’ is mentioned by the prosecutor in one question. The possible use of foree is the basis of four questions re- ferring to appellant Shapiro. One witness is asked whether he is fearful or apprehensive as a result of his testimony. Appellants allege that the grand jury was ‘‘re- peatedly told’? of a prior arrest of appellant Zerilli; and the prosecutor commented on the alleged association of Zerilli and Polizzi with ‘‘tough guys, Italians, from New York.’’ Appellants have a difficult burden to satisfy in their challenge to the indictment. ‘*An indictment returned by a legally constituted and unbiased grand jury, like an in- formation drawn by the prosecutor, if valid on its face, is enough to eall for trial of the charge on the merits. The Fifth Amendment requires nothing more.” Costello v. United States, 350 U.S. 359, 363 (1956). A valid indict- ment does not require support by ‘‘adequate or competent tion and the commencement of grand jury investigation regarding the Frontier ease.”’ Reporter’s Transcript, Vol. 48, p. 9224. He did not recall having ever seen the ‘*Mafia list.’’ Reporter’s Transcript, Vol. 51, pp. 9824-9825. David Nissen, chief of special prosecutions in the organized crime and racketeering section of ‘he United States Attorney’s office in Los Angeles at the time, also testified that Friedman's information was the basis for the decision to convene a grand jury. Reporter’s Transcript, Vol. 51, p. 10,031. He denied that the ‘‘Mafia list’’played any role in developing his interest in beginning the prosecution. Reporter’s Transcript, Vol. 52, p. 10,220. Wayne W. Hill, a special agent with the F.B.I., also testified that the Friedman interviews provided the basis for initiating the prosecution. Reporter's Transcript, Vol. 49, pp. 9412-9418. He too denied ever having seen the ‘‘ Mafia list.”’ Re- porter’s Transcript, Vol. 50, p. 9714. 42a evidence.”? 350 U.S. at 364%’ See also United States v. Calandra, -— U.S. — (i974). Appellants have not demon- strated a reasonable inference of bias on the part of the grand jury resulting from the comments of the prosecutor. Sce Beck v. Washington, 369 U.S, 541, 545-549 (1962). **The quantum of evidence necessary to indict is not as great as that necessary to convict. If a grand jury is prejudiced by outside sources when in fact there is insufficient evidence to indict, the greatest safeguard to the liberty of the accused is the petit jury and the rules governing its deter- mination of a defendant’s guilt or innocence. And, if im- partiality among the petit jurors is wanting, the cure is reversal by the appellate courts.’’ Silverthorne vy. United States, 490 F.2d 627, 634 (9 Cir. 1968).% Appellants also argue that the ‘‘ Mafia list’? played an impermissible role in the trial. They refer, however, only to the comments of the prosecutor in closing argument that appellants ‘substituted the corporate resolution for the %3The recent decision cited by appellants, United States v. Estcpa, 471 F.2d 1132, 1137 (2 Cir. 1972), condemns the needless use of hearsay testimony before the grand jury and is irrelevant to appellants’ claims. “4 References to ‘‘Mafia’’ end ‘‘Italians’’ are certainly not per se prejudicial. Cf. United States vy. Lazarus, 425 F.2d 638, 640-641 (9 Cir. 1970), cert. denied, 400 US. 869 (1970), rehearing denied, 400 U.S. 954 (1970). * Those cases upon which appellants rely concerned prosecutor misconduct in arguments to the petit jury. Berger v. United States, 295 U.S. 78 (1935) United States v. Cumminas, 468 F 2d 274, 277-278 (9 Cir. 1972); Hall v. United States, 419 F.2d 582 (5 Cir, 1969). This distinction does not justify, of course, prose- cutor misconduct before the grand jury. See A.B.A. Standards Relating to the Prosecution Function, Approved Draft, 1971, §$3.5(b). It does mean that it takes very substantial evidence of grand jury bias for an appellate court to reverse a conviction beeause of an indictment returned by an allegedly biased grand jury. ~ 43a pistol.” Although it is unclear that these comments were related to the ‘‘Mafia list’? in any event appellants have failed to demonstrate that the comments contributed to an unfair trial. The trial judge specifically inquired of each juror in camera in a post-verdict voir dire as to the influence on the jurors of terms such as ‘* Mafia,”’ with no indication that they had influenced the verdicts.” _VL. Cross-Examination on Reputation Appellants argue that the trial court committed reversible error in allowing the prosecution to cross-examine Polizzi and Zerilli on their reputations. The government contends that the cross-examination was permissible as to Polizzi because he had opened the subject of his reputation on direct examination and as to Zerilli in order to impeach his testimony about why he could not be licensed. ‘The price a defendant must pay for attempting to prove his good name is to throw open the entire subject which the law has kept closed for his benefit and to make himself vulnerable where the law otherwise shields him.’’ Michel- son v. United States, 235 U.S. 469, 479 (1948). Throughout the presentation of its ease, the prosecution avoided raising the issue of the Mafia links of Zerilli and Polizzi in dem- onstrating that they could not themselves obtain licenses from the Nevada authorities. On direct examination Polizzi testified that the reason why he could not be licensed was that he had a ‘‘problem.’? He never described the 1 think I told you at the outset that this is nothing more “than sophisticated robbery, sophisticated theft. And these busi- nessinen have learned it is better to use a corporate resolution than » pistol.’” Reporter’s Transcript, Vol. 43, p. 8683. ‘In short * * * the principals have learned that a corporate resolution is more deadly and more effective than a pistol, and the changes of apprehension and proof are considerably more difficult.”’ Reporter's Transcript, Vol. 39, p. 7995. "7 See pages 29-32, supra. od re 2 44a specifics of this problem. These statements did not open the question of Polizzi’s reputation for cross-examination. Appellants could reasonably have understood that refer- ences to Mafia links and reputation were to be avoided. The important point fer the prosecution was that Polizzi had serious problems preventing him from obtaining a license and thus motivating ium to acquire a hidden interest; what the specifie problems were was not directly relevant. The danger of prejudice certainly outweighed whatever slight probative value a more specific line of questioning may have had. The government attempts to justify its cross-examination of Zerilli in terms of impeaching his testimony on the reasons why he could not be licensed. His testimony. how- ever, really concerned what his attorney had told him were the reasons. applicant shall complete and file with the application .such supplemental forms shall require, but shall not be limited to, complete informa- tion and details with respect to the applicant’s ante- cedents, habits, character, criminal record, business ac- tivities, financial affairs and business associates, cov- ering at least a 10-year period immediately preceding the date of filing of the application. [20 :429 :1955] New York Business Corporation Law, Article 9: § 901(a)(3) ‘‘Constituent corporation’’ means an ex- isting corporation that is participating in the merger or consolidation with one or more other corporations. 107a (4) ‘‘Surviving corporation’? means the constituent corporation into which one or more other constituent corporations are merged. (5) ‘*Consolidated corporation’’ means the new cor- poration into which two or more constituent corpora- tions are consolidated. L.190T, ¢.555, cif! Sept. 7, THE. ” - * § 906(b) (3) The surviving or consolidated corpora- tion shall assume and be liable for all the linbilities, obligations and penalties of each of the constituent cor- porations. No liability or obligation due or to become due, claim or demand for any cause existing against any such corporation, or any shareholder, officer or di- rector thereof, shall be released or impaired by such merger or consolidation. No action or proceeding, whether civil or criminal, then pending by or against any such constituent corporation, or any shareholder, officer or director thereof, shall abate or be discon- tinued by such merger or consolidation, but may be enforced, prosecuted, settled or compromised as if such merger or consolidation had not occurred, or such sur- viving or consolidated corporation may be substituted in such action or special proceeding in place of any constituent corporation. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385608_0055%3A1. Public record. Not legal advice.