United States v. Daniel Davis

690 F.3d 330, 2012 WL 3104677, 2012 U.S. App. LEXIS 15875
CourtCourt of Appeals for the Fifth Circuit
DecidedAugust 1, 2012
Docket11-40265
StatusPublished
Cited by36 cases

This text of 690 F.3d 330 (United States v. Daniel Davis) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Daniel Davis, 690 F.3d 330, 2012 WL 3104677, 2012 U.S. App. LEXIS 15875 (5th Cir. 2012).

Opinion

PRADO, Circuit Judge:

Defendants-Appellants Daniel Patrick Davis and Phillip Dell Clark were convicted of illegal gambling, conspiring to commit illegal gambling, and money laundering for their roles in a “sweepstakes” promotion at three Internet cafés in Tex *332 as. They challenge their convictions on a variety of grounds, but contend principally that there is insufficient evidence to support their convictions and that the district court erred in refusing to allow them to present a “mistake-of-láw” defense. The Government concedes that there is insufficient evidence to support their convictions for money laundering, which we now reverse; we affirm their other convictions.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. The Statutory Framework

Davis and Clark were charged with violating and conspiring to violate 18 U.S.C. § 1955. Section 1955 makes it a federal crime to conduct, finance, manage, supervise, direct, or own all or part of an “illegal gambling business,” defined as a gambling business which (1) violates the law of the state in which it is conducted, (2) involves five or more persons who conduct, manage, supervise, direct, or own all or part of such business, and (3) continuously operates for a period of more than thirty days or has a gross revenue of $2,000 or more on any single day. The defendants concede the second two elements; the crux of their appeal is that the first, element is not satisfied because their conduct did not violate Texas state law.

The superseding indictment alleges that Davis and Clark operated “electronic gambling devices” in violation of three 1 Texas state laws: gambling promotion, keeping a gambling place, and possessing a gambling device, equipment dr paraphernalia. Tex. Penal Code Ann. §§ 47.03, 47.04, 47.06. As relevant to the conduct involved here, a person is guilty of “gambling promotion” if the Government proves that he “intentionally or knowingly” “operates or participates in the earnings of a gambling place” or “for gain, sets up or promotes any lottery or sells or offers to sell or knowingly possesses for transfer, or transfers any card, stub, ticket, check, or other device designed to serve as evidence of participation in any lottery.” Id. § 47.03(a)(1), (5). A person is guilty of “keeping a gambling place” if the Government proves that he “uses or permits another to use as a gambling place any real estate, building, room, tent, vehicle, boat, or other property whatsoever owned by him or under his control, or rents or lets any such property with a view or expectation that it be so used.” Id. § 47.04(a). A “gambling place” is “any real estate, building, room, tent, vehicle, boat, or other property whatsoever, one of the uses of which is ... the conducting of a lottery or the playing of gambling devices.” Id. § 47.01(3). A person is guilty of “possession of gambling device, equipment, or paraphernalia” if, “with the intent to further gambling, he knowingly owns, manufactures, transfers, or possesses any gambling device that he knows is designed for gambling purposes or any equipment that he knows is designed as a subassembly or essential part of a gambling device” or “if, with the intent to further gambling, the person knowingly owns, manufactures, transfers commercially, or possesses gambling paraphernalia.” Id. § 47.06(a), (c).

To obtain a conviction under any one of those Texas statutes, the Government would have to prove either that a gambling device or a lottery was involved. A “gambling device” is “any electronic, electromechanical, or mechanical contrivance ... that for a consideration affords *333 the player an opportunity to obtain anything of value, the award of which is determined solely or partially by chance, even though accompanied by some skill, whether or not the prize is automatically paid by the contrivance.” Id. § 47.01(4) (emphasis added). A lottery requires: “(a) A prize or prizes[;] (b) the award or distribution of the prize or prizes by chance; [and] (c) the payment either directly or indirectly by the participants of a consideration for the right or privilege of participating.” Brice v. State, 156 Tex.Crim. 372, 242 S.W.2d 433, 434 (1951) (internal quotation marks omitted) (emphasis added). Therefore, in order to convict Davis or Clark the Government had to prove the existence of some consideration exchanged for the privilege of playing the sweepstakes. The sole issue in each of the defendants’ insufficiency challenges is whether such consideration was proved.

B. The Sweepstakes’ Mechanics

In addition to providing Internet access and word processing, faxing, and copying services, each of the three Internet cafés involved in this case — the Dolphin in Port Arthur, Texas; the Double Click in Henderson, Texas; and the Nederland in Nederland, Texas — offered a sweepstakes promotion that allowed customers to win cash prizes. The sweepstakes ran on computer software that, at the outset, created a finite number of “entries.” Within that universe of entries, the software designated particular entries as winning entries, and assigned a cash value to each winning entry. The software then shuffled the universe of entries so that the winning entries were randomly distributed.

There were three ways for sweepstakes participants to acquire entries. First, by purchasing Internet time at one of the cafés; each dollar of Internet time purchased came with 100 entries. Second, by requesting entries in person at the café, up to 100 entries a day. Or third, by requesting entries by mail, also up to 100 entries a day. 2 After obtaining entries, participants could choose among three ways to find out if their entries were winners; the method chosen did not affect whether a particular entry was a winner or a loser because, as noted earlier, whether it was a winner or a loser was predetermined by the computer software. First, participants could ask the clerk who sold them Internet time to instantly reveal whether any of their entries were winners and if so, what their total "winnings were. Second, participants could swipe at a computer terminal the card issued by the cafés that electronically stored Internet time and entries, and then choose “reveal” or “quick win” on the screen. That option would, like the instant reveal, immediately tell- the participant whether or not the entries were winners, and if so, for how much.

Third, participants could reveal whether their entries were winners by playing a variety of casino-like games available on each computer terminal. For example, one game available looked like a video slot machine. Clicking “reveal” caused the reels to rotate and stop, revealing whether or not the played entries were winners, and for how much. Each time “reveal” was clicked, twenty-five entries were played. Winnings were displayed on the screen, and the participant could cash out those winnings in two ways.

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Bluebook (online)
690 F.3d 330, 2012 WL 3104677, 2012 U.S. App. LEXIS 15875, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-daniel-davis-ca5-2012.