United States v. Sacco

491 F.2d 995

• Court: Court of Appeals for the Ninth Circuit
• Decided: January 30, 1974
• Docket: Nos. 72-1985 to 72-1989
• Status: Published

Opinions

CHOY, Circuit Judge:

Sacco, Noto, Henderson, Celle and Martin were convicted after a non-jury trial of conducting an illegal gambling business in violation of 18 U.S.C. § 1955 and of being principals to a crime (18 U.S.C. § 2). Sacco and Noto were each fined $5,000 and sentenced to three years imprisonment. Celle and Martin were fined $500 and $200 respectively and each sentenced to three years probation. Henderson was fined $2000 and sentenced to three years probation.

Appellants raised three principal contentions on this appeal. First, they challenge the constitutionality of 18 U. S.C. § 1955 on the following grounds: (1) § 1955 is an impermissible exercise by Congress of its powers under the commerce clause of the United States Constitution; (2) § 1955 is unconstitutionally vague; and (3) § 1955 cannot be uniformly applied nationwide. Second, they contend that lower level participants in a gambling enterprise cannot be reckoned to satisfy the “five or more persons” requirement of § 1955. Third, Henderson challenges the nature and sufficiency of the evidence against him. We affirm.

FACTS

Sacco and Noto were the proprietors of a bookmaking operation which involved wagering on horse races, football games and basketball games in violation of § 337a of the California Penal Code. Celle and Martin were “splitters.” A splitter collects bets, calls them in to the bookmaker’s phoneman, then pays successful bettors and collects from the losers. For their services, splitters are paid a percentage of the net profits and normally bear the same percentage of any losses. Henderson was a “layoff bettor,” a bookmaker who places bets with another bookmaker to protect himself against-excessive losses.¹

The key government witness, testifying under a grant of immunity, was As-bury, who had acted as phoneman for the Sacco-Noto operation during the thirty-two day indictment period: December 31, 1970 to January 31, 1971. Asbury testified that $256,832 in gross wagers was received by the operation during the indictment period.² Of this amount, $114,832 was wagered on daily horse races and sports, $62,000 on the Dallas-San Francisco NFL playoff game, and $80,000 on four other NFL playoff games and the holiday bowl games. As-bury’s records indicated that Henderson placed seven layoff wagers totalling $6,570 with Noto between January 20 and January 27, 1971 and received one layoff bet from Noto.

In Out Viet

January 8, 1971 $3,956 $1,414 $2,532

January 26, 1971 $7,102 $3,836 $3,266

January 27, 1971 $7,145 $4,373 $2,772

18 U.S.C. § 1955 was enacted as Part C of Title VIII of the Organized Crime Control Act of 1970, 84 Stat. 937.³ The legislation was aimed at curtailing syndicated gambling, the lifeline of organized crime, which provides billions of dollars each year to oil its diversified machinery.⁴ The statute requires that three elements be established to constitute an offense: there must be a gambling operation which (1) is a violation of the law of a State or political subdivision in which it is conducted; (2) involves five or more persons who conduct, finance, manage, supervise, direct or own all or part of such business; and (3) has been or remains in substantially continuous operation for a period in excess of thirty days or has a gross revenue of $2,000 in any single day.

The trial court found there was an illegal gambling business in violation of California law that satisfied the statutory amount requirement, of § 1955. This is not contested on appeal.

CONSTITUTIONAL CHALLENGE

1. The Commerce Clause

Appellants contend that 18 U.S.C. § 1955 regulates purely local activity and that there has been no demonstration of an effect on interstate commerce to justify regulation under the commerce clause. U.S.Const, art. I, § 8. We disagree.

Chief Justice Marshall in Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 6 L.Ed. 23 (1824), held that the commerce power extended to intrastate activity which affected other states. Id. at 195. This view is reflected in recent Supreme Court decisions. Though an activity be local and not regarded as commerce, it may be reached by Congress “if it exerts a substantial economic effect on interstate commerce. . . .” Wickard v. Filburn, 317 U.S. 111, 125, 63 S.Ct. 82, 89, 87 L.Ed. 122 (1942). Accord: Perez v. United States, 402 U.S. 146, 151-152, 91 S.Ct. 1357, 28 L.Ed.2d 686 (1971); Maryland v. Wirtz, 392 U.S. 183, 189, 88 S.Ct. 2017, 20 L.Ed.2d 1020 (1968); Katzenbach v. McClung, 379 U.S. 294, 302, 85 S.Ct. 377, 13 L.Ed.2d 290 (1964); Heart of Atlanta Motel, Inc. v. United States, 379 U.S. 241, 258, 85 S.Ct. 348, 13 L.Ed.2d 258 (1964).

Congress can declare that an entire class of activities affects commerce. If that finding is challenged, “the only function of courts is to determine whether the particular activity regulated is within the reach of the federal power.” United States v. Darby, 312 U.S. 100, 120, 61 S.Ct. 451, 460, 85 L.Ed. 609 (1941). Accord: Wirtz, supra at 192 of 392 U.S., 88 S.Ct. 2017. The Court utilizes a “rational basis” test, first formulated in Heart of Atlanta, to scrutinize a statute grounded on the commerce clause. Two questions are asked by a court: (1) did Congress have a rational basis for finding that the regulated activity affected commerce, and (2) if it had such a basis, were the means selected to regulate reasonable and appropriate. Heart of Atlanta, supra at 258-259 of 379 U.S., 85 S.Ct. 348.

If the class of activities is within the reach of the federal power and the regulation imposed is reasonable, a court’s investigation is concluded. There is no need for inquiry on a case-by-case basis or proof that a particular activity had an effect on commerce. Perez, supra at 152 of 402 U.S., 91 S.Ct. 1357; Katzenbach, supra at 302-304 of 379 U.S., 85 S.Ct. 377. Nor can courts “excise, as trivial, individual instances” of the class. Wirtz, supra at 193 of 392 U.S., 88 S.Ct. 2017.

Legislative history reveals that Congress had a rational basis for finding that the illegal gambling proscribed by § 1955 affected interstate commerce. Congress determined that organized crime posed a major threat to American society and that illegal gambling operations provided organized crime with its greatest source of revenue. Congress made the following special findings regarding the effect of illegal gambling operations on interstate commerce :⁵

The Congress finds that (1) illegal gambling involves widespread use of,- and has an effect upon, interstate commerce and the facilities thereof; (2) illegal gambling is dependent upon facilities of interstate commerce for such purposes as obtaining odds, making and accepting bets, and laying off bets; (3) money derived from or used in illegal gambling moves in interstate commerce or is handled through the facilities thereof; (4) paraphernalia for use in illegal gambling moves in interstate commerce; and (5) illegal gambling enterprises are facilitated by the corruption and bribery of State and local officials or employees responsible for the execution or enforcement of criminal laws.

It was also found that organized crime had developed complex channels through which ostensibly local gambling operations sent their revenues to central coffers.⁶ The illicit operations were seen to distort the production of goods for commerce and the flow of goods in interstate commerce.⁷

Congress had a rational basis for limiting the class of activities proscribed by § 1955. There were two principal reasons for classifying a thirty-day or $2,000 daily gambling operation as affecting interstate commerce. First, local law enforcement was to be left intact to fulfill its traditional role. § 1955 was not intended to preempt local efforts, but to free local government to do its job by removing corruption and adding the resources of the federal government.⁸ The arguments against the expansion of federal jurisdiction into traditionally local areas were strongly voiced during the hearings before both the House and Senate Committees.⁹ These arguments were rejected because of the singular importance of the problem and the inability of both federal and state authorities to deal with it.¹⁰ Second, the inherent monetary and manpower limitations on the federal government demanded selectivity, hence only major gambling enterprises could be pursued. Indeed, Congress specifically excluded sporadic gambling and those operations of insignificant monetary proportions.¹¹ The “iceberg” dimension of illegal gambling was perceived and Congress anticipated that operations which met the minimum standards of § 1955 would ordinarily involve activities of considerable greater magnitude.¹²

The absence of particularized findings on which the thirty-day or $2,000 minimum for § 1955 were based does not render the statute unconstitutional.¹³ Congress need not make particularized findings for each point of a program of legislation. Mr. Justice Douglas in Perez, supra at 156 of 402 U.S., 91 S.Ct. 1357, stated that Congress need not make any particularized findings in order to legislate. There may be rare instances where a gambling operation meeting the requirements of § 1955 will be a purely local operation, in no way connected with organized crime. That possibility does not undermine the statute’s constitutionality, for such rarity is precisely what Mr. Justice Holmes had in mind when he said: “when it is necessary in order to prevent an evil to make a law embrace more than the precise thing to be prevented, it [Congress] may do so.” Westfall v. United States, 274 U.S. 256, 259, 47 S.Ct. 629, 71 L.Ed. 1036 (1927). We hold that Congress had a rational basis for finding that the illegal gambling proscribed by § 1955 affected interstate commerce. We note that a number of other circuits have reached the same conclusion.¹⁴

The means chosen by Congress were reasonable and appropriate. The goal was to reach large-scale operations that were “so continuous and so substantial as to be of national concern.” ¹⁵ As noted above, local efforts were not to be preempted. A federal-state joint venture, with federal prosecution of large scale gambling operations affecting interstate commerce, was intended to preserve the delicate federal-state balance in prosecuting criminal activity ostensibly confined to one state.

2. Vagueness

Appellants argue that § 1955 is unconstitutionally vague because it lacks standards and is uncertain. They contend that the terms “gross revenue,” “involves” and “conducts” are ambiguous. We find that the terminology used, a discernible legislative intent and the construction given § 1955 by other circuits refute appellants’ argument.

The Supreme Court specified what it demanded of a new statute and how assertions of vagueness would be resolved in Connally v. General Construction Co., 269 U.S. 385, 391, 46 S.Ct. 126, 127, 70 L.Ed. 322. (1926):

That the terms of a penal statute creating a new offense must be sufficiently explicit to inform those who are subject to it what conduct on their part will render them liable to its penalties, is a well-recognized requirement, consonant alike with ordinary notions of fair play and the settled rules of law. And a statute which either forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application, violates the first essential of due process of law.

When a statute is challenged, the court first looks to the well-settled meaning of the words or phrases utilized. The rules of statutory construction are then employed to enable a court to “. look through awkward or clumsy expression, or language wanting in precision, to the intent of the legislature.” Id. at 394, 46 S.Ct. at 128. Finally, decisions in the same jurisdiction are examined.

Appellants argue that' “gross revenue” refers to the net profits of a syndicated gambling operation while the government maintains the term means gross receipts. The distinction between “gross” and “net” is well established in the business world. When Congress referred to “gross revenue,” it meant the total amount wagered in one day. Legislative history is in accord.¹⁶ Congress’ aim was to eliminate major gambling enterprises, regardless of the luck of the odds. United States v. Ceraso, 467 F.2d 653 (3rd Cir. 1972). The facts of this case reveal that the statutory amount requirement was satisfied under either the government’s or appellants’ definition of “gross revenue.”

The word “involves” is defined by appellants as “to draw in as a participant.” This is an acceptable definition and any allegations as to its vagueness are frivolous.

The term “conducts” does not have such a precise meaning that we can summarily dismiss appellants’ contentions. The intent of Congress is difficult to divine since the word is nowhere defined in the history of § 1955. However, 18 U.S.C. § 1511¹⁷ and § 1955 were enacted together as sections 802 and 803 of the Organized Crime Control Act of 1970. The same language is utilized in both statutes to define an “illegal gambling business.” The statutes should be construed together. United States v. Becker, 461 F.2d 230, 232 (2nd Cir. 1972). With reference to the “illegal gambling business” in § 1511, the Congress stated:¹⁸

The section applies generally to persons who participate in the ownership, management, or conduct of an illegal gambling business. The term “conducts” refers both to high level bosses and street level employees. It does not include the player in an illegal game of chance, nor the person who participates in an illegal gambling activity by placing a bet. (emphasis added.)

The word “participate” is the key to resolving the controversy. The original bill introduced by Senator Hruska contained the word “participate” instead of the six words which presently mark the violation. Other circuits which have construed “conduct” have revived this initial meaning.¹⁹

The outstanding testimonial is the facts of the case before us. Sacco and Noto relied on the splitters, Celle and Martin, to perform the essential tasks of their gambling operation: seek out bettors, pay winners, and collect from losers. The splitters depended upon the financial backing of Sacco and Noto for their existence. The layoff bettor, Henderson, also played a vital role in the economics of the Saceo-Noto operation. Through layoff bettors, a crucial task is accomplished: allocation of the risk of loss.²⁰ Managers, split-ters and layoff bettors are indispensable to the maintenance of an illegal gambling business. This is precisely the type of illegal interrelationship Congress intended to eliminate by the enactment of § 1955. Each person, whatever his function, who plays an integral part in the maintenance of illegal gambling, conducts an “illegal gambling business” and is included within the scope of § 1955. The sole exception is the player or bettor.

We hold § 1955 not unconstitutionally vague.

3. Uniformity.

Appellants contend that because § 1955 relies on a violation of state law for one of its elements, the effect of the statute will not be uniform throughout the United States. This aspect of § 1955 does not render it unconstitutional. Congress can enact statutes which incorporate by reference the present and future laws of the various states. United States v. Sharpnack, 355 U.S. 286, 293, 78 S.Ct. 291, 2 L.Ed.2d 282 (1958). In Sharpnack, the Court held the Assimilative Crimes Act of 1948, which made subsequently enacted state law applicable to federal enclaves within the respective, states, constitutional as a reasonable exercise of congressional power. Accord, Schneider v. United States, 459 F.2d 540 (8th Cir. 1972).

When Congress exercises its power under the commerce clause, there is no requirement of national uniformity “such as there is with respect to the power to lay duties, imposts and excises.” Currin v. Wallace, 306 U.S. 1, 14, 59 S.Ct. 379, 386, 83 L.Ed. 441 (1939). Accord: Secretary of Agriculture v. Central Roig Refining Co., 338 U.S. 604, 616, 70 S.Ct. 403, 94 L.Ed.2d 381 (1950); Clark Distilling Co. v. Western Md. Ry. Co., 242 U.S. 311, 327, 37 S.Ct. 180, 61 L.Ed. 326 (1917). The fact that § 1955 applies only in states where gambling is illegal does not result in a denial of equality under the law guaranteed by the due process clause of the fifth amendment. Turf Center, Inc. v. United States, 325 F.2d 793, 796 (9th Cir. 1963). The absence of national uniformity does not render § 1955 unconstitutional.

FIVE OR MORE PERSONS REQUIREMENT

Appellants’ second contention is grounded on the theory that Celle, Martin and Henderson were independent operators and cannot be reckoned to satisfy the “five or more persons” requirement of § 1955. They argue that the government evidence revealed one three-man business comprised of Sacco, Noto and Asbury, and a number of one-man businesses. In our disposal of appellants’ vagueness argument, the indispensable nature of the relationships among management, splitter and layoff bettor, coupled with legislative history, led us to hold that each appellant conducts the subject illegal gambling business. Congress intended to include lower level participants within the scope of § 1955. We reject appellants’ contention.

SUFFICIENCY OF EVIDENCE

Much of the evidence establishing Henderson as a layoff bettor and revealing that he wagered $6,570 between January 20 and 27, 1971, was provided by Asbury, a participant in the Sacco-Noto operation. For the most part, Asbury’s testimony was uncorroborated. Under California law, the uncorroborated testimony of an accomplice is insufficient to convict. California Penal Code § 1111. Henderson claims that California rules of evidence are applicable in a federal prosecution under § 1955. This is incorrect. While Congress did adopt a particular substantive statute (anti-gambling) of the state, Congress did not incorporate into § 1955 the procedural rules of the state where the illegal activity occurred. Evidence questions in a federal court are federal questions. Smayda v. United States, 352 F.2d 251, 253 (9th Cir. 1965), cert. denied, 382 U.S. 981, 86 S.Ct. 555, 15 L.Ed.2d 471 (1966). The testimony of an accomplice need not be corroborated, but merely examined with care. United States v. Sidman, 470 F.2d 1158 (9th Cir. 1972).

Viewing the evidence in the light most favorable to the government, Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 86 L.Ed. 680 (1942), we hold that Henderson’s wagers of $6,570 in one week coupled with Asbury’s testimony, is sufficient evidence to sustain his conviction as a layoff bettor.

Affirmed.

1 . In sports events, a layoff bet is to keep a bookmaker’s books balanced when more wagers are received on one side of a contest than another. In horse races, where the odds are long, and a bookmaker does not want to bear the total risk of loss, part of the bets are “laid off” with another bookmaker. (Reporter’s Trancript at 322-23).

2 . Representative days of the indictment period reveal that a net profit in excess of $2,000 was obtained on three occasions. Gross wagers in excess of $2,000 were received on nineteen occasions.

3 . 18 U.S.C. § 1955 reads in pertinent part:

Prohibition of illegal gambling businesses

(a) Whoever conducts, finances, manages, supervises, directs, or owns all or part of an illegal gambling business shall be fined not more than $20,000 or imprisoned not more than five years, or both.

(b) As used in this section—

(1) “illegal gambling business” means a gambling business which-—

(i) is a violation of the law of a State or political subdivision in which it is conducted ;

(ii) involves five or more persons who conduct, finance, manage, supervise, direct, or own all or part of such businesses; and

(iii) has been or remains in substantially continuing operation for a period in excess of thirty days or has a gross revenue of $2,000 in any single day.

(2) “gambling” includes but is not limited to pool-selling, book making, maintaining slot machines, roulette wheels or dice tables, and conducting lotteries, policy, bolita or numbers games, or selling chances therein.

(3) “State” means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, and any territory or possession of the United States.

4 . See 115 Cong.Rec. 10735 (1969) (Remarks of Senator Hruska) ; 116 Cong.Rec. 590-1 (1970) (Remarks of Senator McClellan) ; 116 Cong.Rec. 603 (1970) (Remarks of Senator Allott).

5 . S.Rep.No.91-617, 91st Cong., 1st Sess. 16 (1969), [hereinafter cited as Senate Report],

6 . President’s Comm’n on Law Enforcement and Administration of Justice, Report: The Challenge of Crime in a Free Society 189 (1967). See also Task Force Report: Crime and its Impact—an Assessment 52-53 (1967).

7 . 116 Cong.Rec. 604 (1970) (Remarks of Senator Allott). Senator Allott cites numerous examples to demonstrate' the dependency of substantial gambling operations on interstate commerce. See also 116 Cong. Ree. 35199 (1970) (Remarks of Congressman St. Germain).

8 . Senate Report at 71, 74; Hearings on S. 30 Before the Subcom. on Criminal Laws and Procedures of the Senate Comm. on the Judiciary, 91st Cong., 1st Sess., at 381, 383, 394 (1969) [hereinafter cited as Senate Hearings].

9 . Senate Hearings at 425; Hearings on S. 30 Before the Subcomm. # 5 of the House Comm. on the Judiciary, 91st Cong., 2nd Sess., at 498--499 (1970) [hereinafter cited as House Hearings],

10 . Federal authorities found it difficult to satisfy the interstate commerce element. Senate Report at 72; Senate Hearings at 383. Many local authorities were infected with corruption. House Hearings at 105, 168.

11 . 1970 U. S. Code Cong. & Ad. News p. 4029.

12 . Senate Report at 73; Senate Hearings at 381; 116 Cong.Rec. 603 (1970) (Remarks of Senator Allott).

13 . One passage in the Senate Hearings, though not a specific finding of Congress, is evidence of the basis for the thirty-day or $2,000 minimum. Deputy Assistant Attorney General Petersen explained that in previous federally-conducted gambling raids, federal agents had been able “to come up with better than $2,000 a day in most all of [the] cases.” Senate Hearings at 399-400.

14 . United States v. Ceraso, 467 F.2d 653 (3rd Cir. 1972) ; United States v. Becker, 461 F.2d 230 (2nd Cir. 1972) ; United States v. Harris, 460 F.2d 1041 (5th Cir. 1972) ; Schneider v. United States, 459 F.2d 540 (8th Cir. 1972).

15 . 1970 United States Code Congressional and Administrative News at 4029.

16 . 115 Cong.Rec. 10736 (1969) (Remarks of Senator Hruska).

17 . 18 U.S.C. § 1511 reads in pertinent part:

§ 1511. Obstruction of State or local law enforcement

(a) It shall be unlawful for two or more persons to conspire to obstruct the enforcement of the criminal laws of a State or political subdivision thereof, with the intent to facilitate an illegal gambling business if—

(1) one or more of such persons does any act to effect the object of such a conspiracy ;

(2) one or more of such persons is an official or employee, elected, appointed, or otherwise, of such State or political subdivision ; and

(3) one or more of such persons conducts, finances, manages, supervises, directs, or owns all or part of an illegal gambling business.

(b) As used in this section—

(1) “illegal gambling business” means a gambling business which

(1) is a violation of the law of a State or political subdivision in which it is conducted ;

(ii) involves five or more persons who conduct, finance, manage, supervise, direct, or own all or part of such business; and

(iii) has been or remains in substantially continuous operation for a period in excess of thirty days or has a gross revenue of $2,000 in any single day.

(2) “gambling” includes but is not limited to pool-selling, bookmaking, maintaining slot machines, roulette wheels, or dice tables, and conducting lotteries, policy, bolita or numbers games, or selling chances therein.

(3) “State” means any State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, and any territory or possession of the United States.

See also 1970 United States Code Congressional and Administrative News at p. 4030. There the provisions of § 1955 are said to parallel those of § 1511.

18 . 1970 United States Code Congressional and Administrative News at 4029.

19 . United States v. Ceraso, supra; United States v. Palmer, 465 F.2d 697, 699 (6th Cir. 1972) ; United States v. Becker, supra; United States v. Riehl, 460 F.2d 454 (3rd Cir. 1972).

20 . President’s Comm’n on Law Enforcement and Administration of Justice, Report: The Challenge of Crime in a Free Society 189 (1967), reads as follows :

Organization is also necessary to prevent severe losses. More money may be bet on one horse or one number with a small operator than he could pay off if that horse or that number should win. The operator will have to hedge by betting some money himself on that horse or that number. This so-called “layoff” betting is accomplished through a network of local, regional, and national layoff men, who take bets from gambling operations.