Opposition Brief — Cohen v. United States

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No. 01-1234

In the Supreme Court of the Cnited States

JAY COHEN, PETITIONER

UNITEDSTATES OF AMERI

ON PETITION FOR A WRIT OF CERTIORARI

LOTHE UNITEDSTATES COURT OF APPEAL?

FOR THE SECOND CIRCU

BRIEF FOR THE UNITED STATES IN OPPOSITION

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QUESTIONS PRESENTED

1. Whether the district court erred in declining to

instruct the jury that, in order to find petitioner guilty

of conspiring to violate the Wire Wager Act, 18 U.S.C.

1084(a), it must find that he acted with a “corrupt

motive.”

2. Whether the bookmaking activities for which peti-

tioner was convicted were lawful under the “safe har-

bor” provision of 18 U.S.C. 1084(b).

3. Whether the district court erred in declining to

instruct the jury that, in order to find petitioner guilty

of a substantive offense under Section 1084(a), it must

find that he knew his activities were in violation of

federal law.

TABLE OF CONTENTS

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TABLE OF AUTHORITIES

Cases:

Bryan v. United States, 524 U.S. 184 (1998) 0.0.00...

Cheek v. United States, 498 U.S. 192 (1991) .........

Cohen v. United States, 378 F.2d 751 (9th Cir.),

cert. denied, 389 U.S. 897 (1967) ...............ccccccccsccccsccccscseees

Cruz v. United States, 106 F.2d 828 (10th Cir. 1939) ......

Fall v. United States, 209 F. 547 (8th Cir. 1913) ...............

Hamburg-American Steam Packet Co. v. United

States, 250 F. 747 (2d Cir.), cert. denied, 246 U.S.

STII ts MII iptaicteinitinsihiesnisatinniiaseniiliehindcniemesiinninntaddaninddaionadienassenist

Keegan v. United States, 325 U.S. 478 (1945) 0...

Landen v. United States, 299 F. 75 (6th Cir. 1924) .........

Lescallett v. Commonwealth, 17 S.E. 546 (Va. 1893) ......

[iparota v. United States, 471 U.S. 419 (1985) «0.0.0.0...

McQuesten v. Steinmetz, 58 A. 876 (N.H. 1904) .......0......

Morrissette v. United States, 342 U.S. 246 (1952) ............

People v. Powell, 63 N.Y. 88 (1875) ...........scscscsssssssssessess

People ex rel. Vacco v. World Interactive Gaming

Corp., 714 N.Y.S.2d 844 (Sup. Ct. 1999) ccc ccceseseseeeees

Sagansky v. United States, 358 F.2d 195 (1st Cir.),

cert. denied, 385 U.S. 816 (1966) .............ccccceecesscssssceseeseeees

Saratoga Harness Racing, Inc. v. City of Saratoga

Springs, 55 A.D.2d 295 (N.Y. 1976) ..........ccccscsssscsssecsceesees

Sterling Suffolk Racecourse Ltd. P’ship v. Burrill-

ville Racing Ass’n, 989 F.2d 1266 (1st Cir.), cert.

denied, 510 U.S. 1024 (1993) .............ccccccsscsosscesceccecesenceees

(111)

Page

oN =

19

10-11

IV

Cases—Continued: Page

United States v. Barker, 514 F.2d 208 (D.C. Cir.),

cert. denied, 421 U.S. 1013 (1975) ...c.cccccccccccscsesseecsceeeseseeees 8

United States v. Blair, 54 F.3d 639 (10th Cir.),

cert. denied, 516 U.S. 883 (1995) .........ccesssssssssseseseeseees 7,9,17

United States v. Feola, 420 U.S. 671 (1975) ............004 4,6,7

United States v. Leon, 534 F.2d 667 (6th Cir. 1976) ........ 7,9

United States v. Mack, 112 F.2d 290 (2d Cir. 1940) ......... 6

United States v. Mendelsohn, 896 F.2d 1183 (9th

Sa, SUID <cdsbsceeceahacsessashiaiesansuinhalsageencshidialidadesietiebiceaabiadaamniaiandian 18

United States v. Murray, 928 F.2d 1242 (1st Cir.

EEL SERS e Mee EPEC EIEN 7,8

United States v. Previte, 648 F.2d 73 (1st Cir. 1981) ....... 8

United States v. Ross, No. 98-CR.1174-1 (KMV),

1999 WL 782749 (S.D.N.Y. Sept. 16, 1999) ....... eee 13

United States v. Tomeo, 459 F.2d 445 (10th Cir.),

cert. denied, 409 U.S. 914 (1972) ............cceccessescsresescseeseees 13

United States v. Thomas, 887 F.2d 1341 (9th Cir.

SUS UITTED sissisthciepinseiiteasceahdbeeteptcnigelbanaiiidateceinebaadiaatanlantpbaahaeliadia 7

United States v. Truesdale, 152 F.3d 443 (5th Cir.

STII siotcoktaaietsebhacebacideltie cise dbbasdabdbeaDaatneahetchebtamaateleineadaaiaibens ~ 414

Constitution and statutes:

Os a MUMIA Satsseesesapiciciaiiiieaeiiehasciaiatinasilesebctascabeiabaliaiidcelidainiaiean 4

Interstate Horseracing Act of 1978, 15 U.S.C. 3001-

IIIETT sd ceaiicicahdscnieneaheiseeacehpiecbeadambeaiamrundedieadioanaaabiaibenniammbiadsiensbaainiie 1l

RR SPINE siissiilisasdatstectncishsescammmsiahiaedsanensitenbsaendldniciate 15

Racketeer Influenced and Corrupt Organizations

Ba, Te reas UI OUI, srcnhcinisnniceeinrcrnnescrentatiaimisiinncsinint 11

Wire Wager Act:

BT FE. BOG eccneisnnscnnnsnnsesccnanerenearacconnanssnsnnnanionincsannne 4,10, 15

BB DEBRA, BOD RG aD anccseenrcsccnensssennccsccncnes 2, 3,5, 11, 15, 16,17, 18

es ED suititidesismieninnniitninnin 3, 4, 5, 9, 11, 12, 13, 14, 16

, gt os —————__:_, EARATE REEDED NEDO NNN ONTE nem ene NVR Ee 18

Spe MEENat ahs TATU sicsieitinshtniiiseslieeilihaaseceesbeetinbadeiniiimauiiuiipieiiie 7

BB ETRE, EE sense ssectaseccnsnnzeensntasanenusvomnnnennsnannisesnnnahiniseannennieten 2,6

SF es TIPE ciusiariiniseticchaiiaiaiiilieedincnmiiatiipattateriiacasiiasiadiastiuiisiniiniaanete 18

Statutes—Continued:

BB C5 FEC. TIBI eenenenssnetentinsicisnnsteninininsscenninnansnaianenncnenniin

N.Y. Penal Law (McKinney 2000):

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ID accicsineseseihiscesiiscceripnsiiniesinntilanieseniatananantagpeinae

IIB) asesssinssasseisnsanatsnrnninnnunenintinutionnninisnsnssiisn

OI aicisisceisnisanssnricissansevinn stint nenedaiaininctaminnee

DD sncisnsaccccesnsnteneniesstesniiiinaicintichibniinianesedaanamnann

Miscellaneous:

Black’s Law Dictionary (7th ed. 1999) .........:ccc

Edward J. Devitt, Federal Jury Practice and

Trstructions (4th ed. 1990) ....ccccsccsccccsscccsecsccsseseceres

H.R. Rep. No. 967, 87th Cong., Ist Sess. (1961) ....

2 Model Penal Code and Commentaries (1985) .....

Statement by President William J. Clinton Upon

Signing H.R. 4942, 36 Weekly Comp. Pres. Doc.

BIG Cee. BE OD vaninseseriiesininnnssincanentnniininianaianantos

Webster’s Third International Dictionary (1993)

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15

10

In the Supreme Court of the Gnited States

No. 01-1234

JAY COHEN, PETITIONER

U.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINION BELOW

The opinion of the court of appeals (Pet. App. la-18a)

is reported at 260 F.3d 68.

JURISDICTION

The judgment of the court of appeals was entered on

July 31, 2001. The petition for rehearing was denied on

October 25, 2001 (Pet. App. 19a). On January 11, 2002,

Justice Ginsburg extended the time within which to file

a petition for a writ of certiorari to and including

February 22, 2002, and the petition was filed on that

date. The jurisdiction of this Court is invoked under 28

U.S.C. 1254(1).

2

STATEMENT

After a jury trial in the United States District Court

for the Southern District of New York, petitioner was

convicted on one count of conspiring to violate the Wire

Wager Act, 18 U.S.C. 1084(a), in violation of 18 U.S.C.

371, and on seven counts charging substantive viola-

tions of the Act. He was sentenced to 21 months’ im-

prisonment. The court of appeals affirmed. Pet. App.

la-18a.

1. The evidence at trial showed that petitioner was

president of World Sports Exchange (WSE), a sports

wagering business located on the island of Antigua in

the Caribbean. WSE targeted customers in the United

States and promoted its business throughout the coun-

try by radio, newspaper, and television. Its advertise-

ments invited customers to bet on American sporting

events by toll-free telephone calls or over the Internet.

Pet. App. la-2a.

WSE required new customers to open an account

with the company and to wire $300 to that account in

Antigua. A customer wishing to place a bet would do so

by contacting WSE by telephone or the Internet. WSE

would issue an immediate, automatic acceptance and

confirmation of the bet, using funds from the customer’s

account to cover the bet. WSE would customarily re-

tain a commission of 10% on each bet. Pet. App. 2a.

By November 1998, WSE had received 60,000 phone

calls from customers in the United States, including

6100 from New York. In one 15-month period, the

business collected approximately $5.3 million in funds

wired by its customers in the United States. Pet. App.

2a.

2. Section 1084(a) makes it unlawful “knowingly” to

transmit in interstate and foreign commerce (1) “bets or

eT

3

wagers” on sporting events; (2) “information assisting

in the placing” of any such bets or wagers; or (3) a

communication “which entitles the recipient to receive

money or credit as a result of bets or wagers.” The

statute contains a “safe harbor” provision, 18 U.S.C.

1084(b), which exempts from its coverage transmissions

of “information” (but not of bets or of “communications”

of the type prohibited by the third clause of subsection

(a)) between States or countries where betting on the

particular sporting event at issue is “legal.” The con-

spiracy count in this case charged a conspiracy to

violate all three clauses of Section 1084(a). Five of the

substantive counts charged petitioner with substantive

violations of all three clauses of Section 1084(a), and the

jury, by special interrogatory, found petitioner guilty of

violating all three clauses charged in those counts. The

other two substantive counts charged only the trans-

mission of “information.”

At trial, petitioner’s defense was that he acted in the

belief that his conduct was lawful because it took place

entirely in Antigua. He claimed that the placing of

telephonic and Internet bets from the United States did

not constitute the transmission of bets but rather direc-

tions to place bets. Petitioner argued that the trans-

mission of such directions between jurisdictions in

which sports betting is legal falls within the statute’s

“safe harbor” provision. Petitioner testified that, al-

though he did not know whether placing bets on

sporting events was legal in other States, he believed it

was legal in New York. Gov't C.A. Br. 14.

With respect to the mens rea element of a Section

1084(a) offense, the district court instructed the jury

that the government must prove only that petitioner

“knew that the deeds described in the statute as being

prohibited were being done,” and that it did not have to

4

show that petitioner “knew that he was acting illegally

under the statute.” Pet. App. 13a; Gov’t C.A. Br. 31.

The court further explained that “ignorance of the law

is no excuse.” Jbid. The court instructed the jury to

disregard the “safe harbor” provision of Section

1084(b), having found that it is inapplicable in this case.

Pet. App. 7a.

3. On appeal, petitioner contended that the district.

court erred in instructing the jury that his good-faith

belief in the legality of his conduct was not a valid

defense to the conspiracy charge. He relied on People

v. Powell, 63 N.Y. 88 (1875), which held that corrupt

motive is an element of any conspiracy to commit an

offense that is malum prohibitum rather than malum

in se. The court of appeals observed that the so-called

Powell doctrine was “echoed” in federal cases during

the first half of the last century, but that the courts

have since ‘moved away” from it. Pet. App. 5a. The

court further noted that the American Law Institute’s

Model Penal Code had rejected the doctrine, and that,

in United States v. Feola, 420 U.S. 671 (1975), this

Court had held in another context that the federal

conspiracy statute did not require proof of scienter.

Pet. App. 6a-7a. The court concluded that “the Powell

doctrine does not apply to a conspiracy to violate 18

U.S.C. § 1084.” Jd. at Ta.

Petitioner also challenged the district court’s conclu-

sion that the “safe harbor” provision is inapplicable in

this case. He argued that betting on sports events is

legal in both Antigua and New York, and that WSE’s

transmissions involved information assisting in the

placing of bets rather than bets themselves. The court

of appeals rejected both arguments. Pet. App. 8a-12a.

First, the court, citing to provisions prohibiting bet-

ting in the Constitution of New York State and in the

5

State’s General Obligations Law, stated that “[t]here

can be no dispute that betting is illegal in New York.”

Pet. App. 8a. The court was not persuaded by the argu-

ment that betting is “legal” in New York for purposes

of Section 1084(b) because the State does not make it a

crime. The court explained that, “[b]y its plain terms,”

the word “legal” means “permitted by law,” and that

betting is barred by law in New York regardless of

whether it is punished criminally. /bid. With respect to

petitioner’s argument that the transmissions did not

involve bets but directions to place bets, the court of

appeals explained that “[b]y making * * * requests

and having them accepted, WSE’s customers were

placing bets.” Jd. at 12a. The court noted, however,

that in light of its holding that betting is illegal in New

York, the issue of whether the transmissions were of

the type that are covered by the “safe harbor” provi-

sion was “immaterial.” bid.

Finally, petitioner contended that the word “know-

ingly” in Section 1084(a) requires knowledge that one’s

conduct violates the statute, and therefore that the

district court erred in instructing the jury that such

knowledge is not an element of the offense. The court

of appeals held that “(t]he district court was correct; it

mattered only that [petitioner] knowingly committed

the deeds forbidden by § 1084, not that he intended to

violate the statute.” Pet. App. 18a.

ARGUMENT

1. Petitioner renews his contention (Pet. 11-18) that

the district court should have instructed the jury that,

in order to convict him of conspiring to violate 18 U.S.C.

1084(a), it had to find that he had a “corrupt motive” in

the sense that he had knowledge of the illegality of the

underlying conduct. Relying on People v. Powell, 63

6

N.Y. 88, 92 (1875), and its progeny, he argues that when

the object of the conspiracy is not clearly wrongful in

itself but rather is wrongful solely by reason of a statu-

tory prohibition, the government must prove not only

an agreement to achieve that object but also a “corrupt

motive.” Even accepting arguendo petitioner’s as-

sumption that bookmaking is not wrongful in itself, the

court of appeals correctly rejected petitioner’s claim.

Petitioner’s contention that the government must

prove that the defendant had a “corrupt motive” in

order to convict him for conspiracy is at odds with the

language of the federal conspiracy statute, 18 U.S.C.

371. That statute makes it a crime to “conspire * * *

to commit any offense against the United States.” The

statute says nothing about a “corrupt motive,” nor does

it otherwise contain any mens rea element separate

from that required to commit the underlying offense

itself. There is no sound reason why a “corrupt motive”

should be an element of conspiracy where Congress has

chosen not to make it an element of the underlying

offense. See United States v. Mack, 112 F.2d 290, 292

(2d Cir. 1940) (L. Hand, J.) (“{I]t is hard to see any rea-

son for [the Powell doctrine]"’).’

In United States v. Feola, 420 U.S. 671 (1975), the

defendant was convicted of a Section 371 conspiracy to

| Petitioner argues (Pet. 14-15) that a “corrupt motive” require-

ment should be read into the conspiracy statute because at the

time Congress reenacted it in 1948 the Powell doctrine was settled

law. That is not so. This Court has never endorsed the doctrine,

and in Keegan v. United States, 325 U.S. 478 (1945), four Justices

went on record as disapproving it. Jd. at 506 (Stone, J., dissenting).

Nor had every court of appeals endorsed the doctrine. See, e.g.,

Hamburg-American Steam Packet Co. v. United States, 250 F.

747, 759 (2d Cir.), cert. denied, 246 U.S. 662 (1918); United States v.

Mack, 112 F.2d at 292.

7

assault a federal officer while the officer was engaged in

the performance of his official duties. The underlying

substantive offense, 18 U.S.C. 111, did not require

knowledge that the intended victim was a federal

officer. The issue before the Court was whether the

government was nonetheless required to prove such

knowledge under the conspiracy statute. The Court

held that it was not, concluding that “where a substan-

tive offense embodies only a requirement of mens rea

as to each of its elements, the general federal conspir-

acy statute requires no more.” 420 U.S. at 692. The

Court relied for that conclusion chiefly on the language

of the conspiracy statute itself, observing that “nothing

on the face” of that statute would require greater

knowledge on the part of those conspiring to commit an

offense than is required to actually commit the offense.

Id. at 687. The Court in Feola did not have occasion

specifically to consider the question of whether the

government must prove a “corrupt motive” where the

underlying conduct is not wrongful in itself. See 420

U.S. at 691. Nevertheless, such a requirement is incon-

sistent with the statutory analysis in Feola and with its

holding that a conspiracy offense requires the same

mens rea as required to commit the underlying offense.

Since Feola, the courts of appeals, in reliance on that

decision, have repeatedly rejected claims that a “cor-

rupt motive” or knowledge of the law is an element of a

gambling conspiracy. See United States v. Blair, 54

F.3d 639, 642-643 (10th Cir.) (conspiracy to violate Sec-

tion 1084(a)), cert. denied, 516 U.S. 883 (1995); United

States v. Murray, 928 F.2d 1242, 1251 (1st Cir. 1991);

United States v. Leon, 534 F.2d 667, 674-675 (6th Cir.

1976); see also United States v. Thomas, 887 F.2d 1341,

1346-1347 (9th Cir. 1989) (holding that knowledge of the

law is not an element of a conspiracy to engage in

8

“apparently innocent conduct”). No federal court of

appeals has cited the Powell doctrine with approval

since Feola. Nor do the standard jury instructions on

conspiracy include an element of “corrupt motive.” See,

e.g., Edward J. Devitt, Federal Jury Practice and

Instructions § 28.03 (4th ed. 1990). And, as the court of

appeals noted (Pet. App. 6a-7a), the American Law

Institute rejected the Powell doctrine in its Model

Penal Code. See 2 Model Penal Code and Commentar-

ies, pt. 1, § 5.03 note on subsec. 1 & cmt. 2(c)(iii) (1985).

The only post-Feola circuit court decision petitioner

cites (Pet. 12) is United States v. Previte, 648 F.2d 73

(1st Cir. 1981)” In that case the court stated that the

defendant had invoked the Powell doctrine but that the

doctrine was inapplicable on its own terms because the

underlying substantive statute required “guilty knowl-

edge.” Jd. at 81-82. Accordingly, the court, which took

note of Judge Hand’s criticism of the doctrine, did not

have occasion to decide whether the doctrine was viable

as a general rule of conspiracy law. Previously, in

United States v. Murray, supra, the same court held

that knowledge of the law is not an element of conspir-

acy to conduct a gambling business in violation of 18

U.S.C. 1955.°

” Chief Judge Bazelon’s concurring opinion in United States v.

Barker, 514 F.2d 208 (D.C. Cir.) (en bane), cert. denied, 421 U.S.

1013 (1975), the only other modern circuit court authority cited by

petitioner (Pet. 12), was issued several days before the decision in

Feola. In any event, that opinion did not refer to Powell as the law

of the D.C. Circuit or any other court, and it noted that the doc-

trine had been criticized. 514 F.2d at 234 n.34.

3 In his support, petitioner cites (Pet. 11-12) three court of ap-

peals decisions from the early part of last century: Cruz v. United

States, 106 F.2d 828 (10th Cir. 1939); Landen v. United States, 299

F. 75 (6th Cir. 1924); and Fall v. United States, 209 F. 547, 553 (8th

9

Nor is petitioner’s cause aided by Keegan v. United

States, 325 U.S. 478 (1945), which he also cites (Pet. 16-

17). In Keegan, the defendants were convicted of

conspiring to counsel evasion of the Secret Service Act

by urging individuals to protest the draft and challenge

its legality. A fragmented Court reversed the convic-

tions not on the basis of the Powell doctrine, which the

plurality and concurring opinions did not address, but

because the defendants’ agreement did not violate the

underlying substantive statute. 325 U.S. at 495 (plural-

ity opinion); id. at 495-498 (Black, J., concurring); id. at

498 (Rutledge, J., concurring). The only Justices to

address the Powell doctrine were the four dissenters,

who rejected it. Jd. at 506 (Stone, C.J., dissenting)

(“The doctrine of People v. Powell * * * has never

been accepted by this Court.”).

2. Petitioner contends (Pet. 18-22, 26-29) that the

courts below erred in concluding that Section 1084(b)’s

“safe harbor” provision is inapplicable in this case. That

provision exempts from the statute’s coverage trans-

missions limited to mere information that assists in the

placing of bets (as opposed to transmissions of bets

themselves), where “such betting” is “legal” both in the

place of origin and the destination of the transmission.

Petitioner argues that his activities satisfied both

Cir. 1913). Significantly, in post-Feola cases, the Sixth and Tenth

Circuits have held that knowledge of the law is not an element of

a gambling conspiracy. See United States v. Leon, supra, and

United States v. Blair, supra. And, contrary to petitioner, Fall

does not stand for the proposition that knowledge of the law is an

element of conspiracy when the underlying conduct is not wrongful

in itself; it stands for the proposition that, under the circumstances

of that case, evidence of official misinformation as to the require-

ments of the law was admissible to negate fraudulent intent. 209

F. at 553.

10

elements of Section 1084(b)—that is, that betting is

“legal” in New York State, the origin of the transmis-

sions at issue here,’ and that the transmissions did not

involve bets but rather were limited to information

assisting in the placing of bets.

a. Petitioner does not dispute that both the New

York State Constitution and the State’s General Obli-

gation Law expressly prohibit betting. Rather, he

argues (Pet. 18-22) that the word “legal” in the statute

means “not criminal,” and that no penal statute in New

York State criminalizes the placing of a bet. That

argument, however, is contrary to the ordinary under-

standing of the word “legal,” which is “permitted by

law.” See Webster’s Third International Dictionary

1290 (1993); Black’s Law Dictionary 902 (7th ed. 1999).

Moreover, the legislative history of Section 1084 con-

firms that Congress regarded New York as a State

where betting is not “legal” within the meaning of the

“safe harbor” provision. The House Report states that,

although in Nevada it is “lawful to make and accept

bets on [a horse] race held in * * * New York,” it is

“unlawful to make and accept bets in New York State

on a [horse] race being run in Nevada.” Accordingly,

the Report continued, “the transmission of information

assisting in the placing of bets and wagers from Nevada

to New York would be contrary to the provisions of the

bill.” H.R. Rep. No. 967, 87th Cong., Ist Sess. 3 (1961).

Petitioner’s reliance (Pet. 19-20) on Sterling Suffolk

Racecourse Ltd. Partnership v. Burrillville Racing

Ass’n, 989 F.2d 1266 (1st Cir.), cert. denied, 510 U.S.

+ It is undisputed that betting is legal in Antigua, the place of

origin of the transmissions.

1]

1024 (1993), is misplaced.’ In that case, the defendant

was an off-track betting facility in Rhode Island that

accepted bets on horse races from distant tracks and

broadcasted the races. The defendant would often ne-

glect to secure the consent of the plaintiff, a Mas-

sachusetts track, as required by the Interstate Horse-

racing Act of 1978 (IHA), 15 U.S.C. 3001-3007. The

plaintiff sought an injunction against the off-track bet-

ting facility under the Racketeer Influenced and Cor-

rupt Organizations Act (RICO), 18 U.S.C. 1961 et seq.,

alleging that the facility was engaged in a pattern of

racketeering activity by violating Section 1084(a)

through its noncompliance with the IHA. The court of

appeals denied the RICO injunction. In so doing, it

noted that because the off-track betting facility’s busi-

ness was legal under the laws of all interested States, it

fell under the “safe harbor” provision of Section

1084(b). 989 F.2d at 1273. The court further noted that,

in enacting the IHA, Congress had only created a pri-

vate cause of action for damages on the part of certain

parties and did not intend that there be government

enforcement. Consequently, the court concluded that

the plaintiff could not use the IHA to avoid the appli-

cability of the “safe harbor” provision—that is, “to

transform an otherwise legal OTB business into a crimi-

nal racketeering enterprise.” Pet. App. 9a. The court

was not confronted with and did not consider the ques-

tion whether, for purposes of Section 1084(b), placing a

bet is “legal” in a State that specifically prohibits it by

statute but does not attach criminal penalties to the

prohibition. As the court below observed, “Sterling

[does not} * * * demonstrate[] that Congress intended

* None of the other cases relied on by petitioner (Pet. 20-21)

involves Section 1084(b) nor the meaning of the word “legal.”

12

for § 1084(b) to mean anything other than what it says.”

Id. at 10a.°

b. Nor can petitioner satisfy the second element of

the Section 1084(b) exemption—that, under WSE’s

account-wagering system, the transmissions from

WSE’s customers in New York involved only instruc-

tions to place bets rather than bets themselves. In each

telephone conversation at issue the bettor asked if he

could place a bet, a WSE operator confirmed that he

could, and the bettor then specified the amount and

6 In any event, the safe harbor would not apply in this case

because, while it is true that the placing of a bet is not a crime in

New York State, the process of “betting” through a bookmaker is a

crime. It is a misdemeanor to “knowingly advance[] or profit{]

from unlawful gambling activity,” such as betting on sports that is

not specifically authorized by law, N.Y. Penal Law § 225.05

(McKinney 2000), and it is a felony to do so and “receive[] or

accept[] in any one day more than five bets totaling more than five

thousand dollars,” id. § 225.10. An individual “‘advances gambling

activity’ when, acting other than as a player, he engages in conduct

which materially aids any form of gambling activity,” id. §

225.00(4), and an individual “‘profits from gambling activity’ when,

other than as a player, he accepts or receives money * * * pursu-

ant to an agreement or understanding * * * whereby he partici-

pates or is to participate in the proceeds of gambling activity,” id. §

225.00(5). The cited criminal prohibitions apply only to someone

who is not a “player,” defined as a “contestant or bettor” who

receives no profit other than “personal gambling winnings” and

does not “render[{] any material assistance to the establishment,

conduct, or operation of the particular gambling activity.” Jd. §

225.00(3). See generally People ex rel. Vacco v. World Interactive

Gaming Corp., 714 N.Y.S.2d 844, 851 (Sup. Ct. 1999) (relying on

above statutes). In other words, according to New York law, the

placing of a bet with a party who is to earn a profit—a

bookmaker—necessarily gives rise to a crime, in which the

bookmaker, but perhaps not the bettor, is the criminally liable

party.

13

terms of the bet, which the operator accepted and con-

firmed on the spot. The bets placed over the Internet

were fully consummated upon the bettor’s click of a

button labeled “place wager” and the bettor’s receipt of

an automatic, immediate confirmation. As the court

of appeals correctiy concluded, under that procedure,

“WSE’s customers were placing bets.” Pet. App. 12a;

see United States v. Tomeo, 459 F.2d 445, 446 (10th

Cir.) (“When a person holds himself out as being willing

to make bets or wagers over interstate telephone facili-

ties, and does in fact accept offers of bets or wagers

over the telephone as part of his business, we think it is

consistent with both the language and the purpose of

[Section 1084(a)] to hold that he has ‘used’ the facility

for the transmission of bets or wagers.”) (quoting

Sagansky v. United States, 358 F.2d 195 (1st Cir.), cert.

denied, 385 U.S. 816 (1966)), cert. denied, 409 U.S. 914

(1972).

The distinction between bets and “information” po-

tentially exempt under Section 1084(b) was correctly

described by the district court in United States v. Ross,

No. 98 CR 1174-1 (KMV), 1999 WL 782749, *5

(S.D.N.Y. Sept. 16, 1999):

[The distinction is] between transmissions constitut-

ing an individual gambling transaction—those nec-

essary to effect a particular “bet or wager”—and

transmission of “information” that merely “assists”

a potential bettor or bookmaker. Such “informa-

tion” would include knowledge that may influence

whether, with whom, and on what terms to make a

bet. Thus transmissions reporting the results of

sporting events, the odds placed on particular con-

tests by odds-makers, or the identities of persons

14

seeking to place bets would be examples of “infor-

mation.”

Petitioner draws a distinction (Pet. 27-28 & n.14)

between the “account wagering” system employed by

WSE and what could be called “credit wagering,” claim-

ing that the former is protected by Section 1084(b). But

under both systems the bettor transfers no money, only

a request to place a bet. And under the “credit wager-

ing” system, the bookmaker’s acceptance of a bet is

dependent on the amount of credit available to the

bettor, in the same way that WSE’s acceptance of a bet

was dependent on the amount of cash in the bettor’s

account. Petitioner’s reading of the law, therefore,

would equally exclude both forms of betting, thereby

placing outside the definition of “betting or wagering”

every traditional form of placing and receiving bets.

The cases relied on by petitioner are not to the con-

trary. In United States v. Truesdale, 152 F.3d 443, 448

(5th Cir. 1998), the court found that the jury could not

properly infer that bets were sent or received in Texas

solely from evidence that two toll-free numbers used by

the organization terminated in that State, because

there were other toll-free “betting lines” that termi-

nated elsewhere. In the older cases of Lescallett

v. Commonwealth, 17 S.E. 546, 548 (Va. 1893), and

McQuesten v. Steinmetz, 58 A. 876, 877 (N.H. 1904), the

courts held that orders for an intermediary to place

bets with a bookie were not themselves completed bet-

ting contracts because the intermediaries did not accept

the bets or otherwise bind themselves to pay the

bettors. And in Saratoga Harness Racing, Inc. v. City

of Saratoga Springs, 55 A.D.2d 295, 296 (N.Y. 1976), the

court concluded that the fact that an off-track bet is

taken by telephone from a person in the City of

ee ee eg

15

Saratoga does not establish that betting is conducted in

Saratoga for purposes of subjecting the off-track bet-

ting corporation to taxation in that county. None of

these cases implies that a bet may not be transmitted

from one location to another. To the extent that they

recognize the general principle that a contract is

reached by an offer and an acceptance, they do not help

petitioner, since the proof against him showed a two-

way wire transmission of both an offer to bet and

WSE’s acceptance of the offer.’

ce. Even if the placing of bets by means of WSE’s

toll-free telephone lines and Internet site did not consti-

? Petitioner argues (Pet. 27-29) that if the transmissions at

issue consisted of “bets or wagers” in violation of Section 1084(a),

then so do out-of-state telephone or electronic contacts with state-

authorized OTB facilities for the purpose of placing a bet. He

points out (Pet. 28 & n.15) that during 2000, Congress amended the

IHA to regulate interstate “wagers” with state OTB facilities

when lawful in each State involved (see 15 U.S.C. 3002(3)), sug-

gesting that Congress viewed such wagers as legal. Petitioner

concedes, however, that the interstate transmission of “wagers” is

not exempted by the “safe harbor” provision; his argument is that

WSE did not receive “bets or wagers,” only instructions on their

placement. The presidential signing statement accompanying the

amendment made clear that, in the view of the Department of

Justice, the amendment was not intended to alter or repeal Section

1084 or to legalize “interstate account wagering” even where

lawful in the States involved. Statement by President William J.

Clinton Upon Signing H.R. 4942, 36 Weekly Comp. Pres. Doc.

3153 (Dec. 21, 2000). In addition, to the extent that the amendment

suggests that certain interstate wagers with state OTB facilities

might be lawful, it applies strictly to wagers on horse races; WSE

took bets on other types of sporting events, not on horse races.

Finally, any conflict between the 2000 amendment and Section

1084, which was enacted by a different Congress almost 40 years

earlier, could not help petitioner, since the conduct for which he

was convicted occurred before the enactment of the amendment.

16

tute the transmission of “bets or wagers,” petitioner

cannot escape the jury’s independent determination

with respect to five of the counts on which he was con-

victed that the bet-placement transmissions involved a

communication “which entitles the recipient to receive

money or credit as a result of bets or wagers” in

violation of the third clause of Section 1084(a). See p. 3,

supra.” Like violations of the first clause of the statute,

violations of the third clause are not subject to the “safe

harbor” provision of Section 1084(b). Whether or not

the transmissions consisted only of “instructions to

bet,” once a bet was accepted and confirmed in the very

same two-way communication, a contract was formed

entitling WSE, “a recipient” of the communication, to

“money or credit as a result of bets or wagers”—that is,

to its percentage of the bet no matter the outcome of

the sporting event.

3. Petitioner contends (Pet. 22-26) that a defendant’s

good-faith belief that he ws not transmitting “bets or

wagers” is a defense to a Section 1084(a) charge, and

that the district court should have instructed the jury

accordingly. He relies on the language in the statute

requiring the offense to be committed “knowingly.”

Petitioner does not purport to argue that ignorance

of the law is a defense to a substantive Section 1084(a)

charge. See Pet. 23-26. Rather, he argues that a per-

son cannot “knowingly” violate Section 1084(a) without

believing that the conduct in which he engaged was

8 Petitioner’s convictions on the remaining two counts, which

did not charge a violation of the third clause of Section 1084(a), are

of no practical consequence, since the sentences on each count on

which petitioner was convicted are concurrent and petitioner’s

sentencing range under the Sentencing Guidelines was effectively

determined by the other five counts.

17

prohibited by the statute. But that is just another way

of framing an “ignorance of the law” defense.

As this Court has held, “ignorance of the law or a

mistake of law is no defense to criminal prosecution.”

Cheek v. United States, 498 U.S. 192, 199 (1991). Of

course, Congress may supplant that general rule by

making knowledge that the charged conduct is an

unlawful element of the offense, and Congress’s use of

the term “willfully” has that effect in certain contexts.

See Bryan v. United States, 524 U.S. 184, 193 (1998).

The word “knowingly,” however, “merely requires

* * * knowledge of the facts that constitute the

offense,” not knowledge that the prohibited conduct is

unlawful. /bid. Consistent with those principles, the

Tenth Circuit has held that knowledge of the statutory

prohibition is not an element of a Section 1084(a)

offense. United States v. Blair, 54 F.3d at 642.

Petitioner’s reliance (Pet. 23) on Cohen v. United

States, 378 F.2d 751, 756 (9th Cir.), cert. denied, 389

U.S. 897 (1967), is unavailing. In that case, the court of

appeals held that, in a prosecution under Section

1084(a), the defendant should be presumed to know the

law but that he may rebut the presumption with proof

of his ignorance. Jd. at 756-757. In reaching that con-

clusion, the court did not engage in any analysis of the

relevant statutory language. Rather, it reasoned that

betting is legal in Nevada, and that the rebuttable pre-

sumption of knowledge afforded those “innocent of in-

tentional wrongdoing” a defense without impeding the

statute’s purpose of discouraging professional inter-

state gambling. /d. at 756. Cohen, however, predated

this Court’s recent interpretations of the word “know-

ingly” in Bryan and other cases. Significantly, in a

much more recent case, the Ninth Circuit rejected the

rationale of its prior decision in Cohen (without citing

18

that case) in holding that knowledge of the law is not an

element of the offense of transporting wagering para-

phernalia in interstate commerce, in violation of 18

U.S.C. 1953. United States v. Mendelsohn, 896 F.2d

1183, 1188 (9th Cir. 1990). In light of subsequent deci-

sions, there is serious doubt about the continuing force

of Cohen in the Ninth Circuit.

Petitioner cites (Pet. 24-25) Liparota v. United

States, 471 U.S. 419 (1985), and Morissette v. United

States, 342 U.S. 246 (1952), for the proposition that the

word “knowingly” may require knowledge of the law.

In Liparota, the Court held that in a prosecution under

7 U.S.C. 2024(b)(1), which makes it a crime “knowingly”

to possess or acquire food stamps “in any manner not

authorized by [the statute] or the regulations,” the gov-

ernment must show that the defendant knew that his

acquisition or possession of food stamps was in a man-

ner unauthorized by law. 471 U.S. at 423-484. Subse-

quently, in Bryan v. United States, 524 U.S. at 193 n.15,

the Court explained that it had reached that result

based on the fact that the term “knowingly” in Section

2024(b)(1) “literally referred to knowledge of the law,”

524 U.S. at 193 n.15, by virtue of the “in any manner”

clause quoted above. Section 1084(a) does not contain

equivalent language.

Nor is petitioner helped by Morissette. In that case

the defendant was convicted of stealing spent bomb

casings from federal property in violation of a statute

making it unlawful to “knowingly convert[]” property of

the United States. The trial court instructed the jury

that criminal intent could be predicated on the isolated

act of taking the property without more. This Court

held that the instruction was error because the defen- -

dant might have thought that the property was aban-

doned. 342 U.S. at 276. The Court explained that a

19

“knowing conversion” requires “knowledge of the facts,

though not necessarily the law, that made the taking a

conversion.” Jd. at 270-271. Accordingly, Morissette

does not support petitioner’s construction of the word

“knowingly” to require knowledge of the law.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

THEODORE B. OLSON

Solicitor General

MICHAEL CHERTOFF

Assistant Attorney General

JOEL M. GERSHOWITZ

Attorney

MAY 2002