IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 90-3886 _____________________
UNITED STATES OF AMERICA, Plaintiff-Appellee,
versus
WALTON AUCOIN, WILLIAM CONDON and STEVEN BERTOLINO,
Defendants-Appellants,
______________________
Appeal from the United States District Court for the Eastern District of Louisiana _______________________ (June 22, 1992)
Before HIGGINBOTHAM, DUHE, Circuit Judges, and HUNTER1, District Judge
EDWIN F. HUNTER, JR., District Judge:
Appellants are admitted illegal bookmakers under state law2
but who challenge their convictions under 18 U.S.C. §1955
(operating an illegal gambling business) and 18 U.S.C. §1962(c)
(RICO collection of unlawful debt).3 At trial, hours of
conversations intercepted through court authorized electronic
surveillance, supported by expert and fact witness testimony, were
1 District Judge of the Western District of Louisiana, sitting by designation. 2 LSA-R.S. 14:90. 3 There were other defendants in the case. Connick, Fanning, Abraham and Burke were found not guilty on all Counts. Iris Ethridge and Darlene Aucoin Toca accepted plea agreements. presented which demonstrated that during the 1988-89 college and
professional football season, appellants were operating a multi-
million dollar interstate sports betting handbook in violation of
state and federal law. Defendants advance a myriad of arguments on
appeal. They challenged their convictions by arguing that §1962(c)
and to a limited extent §1955(c) are unconstitutionally vague on
their face as applied to their activities. They also insist that
their sentencing under both §1955 and §1962 violated the double
jeopardy clause. Additionally, they argue that the district court
committed reversible error in failing to suppress betting sheets
and certain conversations between Aucoin and his attorney which the
district court held to be within the crime fraud exception to the
attorney-client privilege.
We reject each of appellants' claims on appeal and affirm
their convictions.
In September 1988, the Federal Bureau of Investigation ("FBI")
and the New Orleans Police Department ("NOPD") initiated an
investigation of a large sports bookmaking operation owned and
operated by Walton Aucoin. The business was being conducted at the
residence of his daughter, Darlene Aucoin Toca, in Jefferson
Parish, Louisiana. Aucoin, along with Steven Bertolino, a part-
owner of the business, and William Condon, a salaried employee,
came to Darlene's house on a daily basis to use a four-phone rotary
system that had been set up to take wagers.
In early October, Aucoin, Bertolino and Condon moved their
operation to New Orleans. The United States made an application
for a court-authorized wiretap on the four phones at the apartment as well as the phone at Aucoin's residence, which also was being
used in the gambling operation. Judge Carr approved the
government's application. A wiretap was installed.
During the course of the electronic surveillance, thousands of
gambling-related conversations were intercepted. These
interceptions revealed that Aucoin, Bertolino and Condon were
running a large-scale interstate sports bookmaking business, with
customers in California, Oklahoma, Ohio and Virginia as well as
throughout Louisiana. As bookmakers, they took bets primarily on
college and professional football, from at least 80 customers.
Fifteen of those customers bet $5000 a game. An FBI gambling
expert, who analyzed the intercepted conversations, calculated that
in one four-week period the business took in approximately $1.7
million.
The wiretap interceptions revealed the manner in which the
business operated. Virtually every day, Aucoin would discuss the
betting line and otherwise receive line information from Newport
News, Virginia. Aucoin regularly exchanged line information with
other bookmakers. These included individuals in Baton Rouge,
Plaquemines, New Orleans and Lake Charles, Louisiana. These
individuals also acted as sources for Aucoin to lay off bets if he
had too many wagers on one side of a game.
On December 2, 1988, NOPD obtained a search warrant from the
Criminal District Court in Orleans Parish. The warrant was executed
on December 4, 1988 and Aucoin, Bertolino and Condon were arrested.
The two room apartment contained a rotary telephone system, with
3 wire cutters across the lines, a television used to monitor games
on which bets were being taken, and written material. This
material consisted of books containing handwritten line
information, sheets listing football wagers, and bottom sheets.
Bottom sheets record net amounts due and owing from the
bookmaking operations' customers. At the time of his arrest,
Aucoin asked NOPD officers on the scene for a copy of the bottom
and wagering sheets. Aucoin told the officers that if he did not
get the sheets, it would put him out of business because he would
not know to whom he owed money or who owed money to him. This
request was refused.
After being released on bond on the evening of December 4,
Aucoin immediately began attempting to obtain copies of the seized
bottom and wagering sheets. As he discussed with his daughter
Darlene that evening:
The most important thing is the papers. The papers could break me if they don't give me the papers back...Cause I got 80 people could tell me I owe'em anything....
He also phoned his friends Wilson Abraham and Paul Burke to
ask them to contact New Orleans District Attorney Harry Connick on
his behalf and request that he immediately get copies of these
bookmaking papers. Aucoin explained to Burke on the night of
December 4:
Now if I don't get the papers back, Paul, that could break me. I mean...this could destroy me... All I want copies is that I can check bottoms with 80 customers...
4 Aucoin's calls with his attorney Patrick Fanning initially
were minimized. However, on December 5, Aucoin related to
Bertolino that Fanning told him he would get Aucoin's "papers back
not by telling the DA you wanna check bottoms," but by relating the
necessity of having the sheets to file his IRS wagering tax return.
Aucoin originally thought this was not a good idea, because his tax
return was not really due. He ultimately decided, however, that
his lawyer's advise was correct and obtained copies of his papers
on December 9. He used them to settle up with customers.
Immediately after the December 4 raid, the bookmaking
enterprise relocated and moved back to Darlene Aucoin's house. The
Jefferson Parish Police Department learned of this operation,
contacted informants and obtained a search warrant. A raid was
conducted on December 12. Bookmaking records were seized.
Soon after their release, appellants again re-established the
bookmaking operation at Darlene's residence. NOPD learned of this
and notified the Louisiana State Police ("LSP"). Search warrants
on both Aucoin's residence and his daughter's home were issued.
The warrants were executed on January 2, 1989. Aucoin, Bertolino,
Condon and Claude Toups, a lookout, were arrested. Very few sheets
with bets were found during the search. The majority were hidden
in the attic under the insulation. These were retrieved after the
police left.
Section 1962(c) was Properly Applied to Appellants
Appellants argue that the district court violated rules of
statutory construction in upholding their conviction under the
5 collection of unlawful debt prong of the RICO statute.
Section 1962(c) of the RICO statute provides:
It shall be unlawful for any person employed or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt.
Liability under this section may be based on "either of `a pattern
of racketeering activity,' or of `collection of unlawful debt.'" H.
J., Inc. v. Northwestern Bell Telephone Company, 492 U.S. 229, 232,
109 S.Ct. 2893, 2897, 106 L.Ed.2d 195 (1989)(emphasis added).
Subsection (6) of §1961 expressly defines "unlawful debt" as:
a debt (A) incurred or contracted in gambling activity which was in violation of the law of the United States, a State or political subdivision thereof, or which is unenforceable under State or Federal law in whole or in part as to principal or interest because of the law relating to usury, and (B) which was incurred in connection with the business of gambling in violation of the law of the United States, a State or political subdivision thereof, or the business of lending money or a thing of value at a rate usurious under State or Federal law, where the usurious rate is at least twice the enforceable rate. (emphasis supplied).
The collection by appellants of illegal gambling debts arising
out of the Aucoin bookmaking business, which admittedly was
operating in violation of Louisiana law, constitutes a violation of
RICO. We decline appellants' invitation to jettison the clear
language of the statute.
Contrary to their suggestion, the legislative history provides
no support for their argument that additional requirements must be
6 read into the unlawful debt prong of the statute. The House Report
on the statute simply explains that the term "unlawful debt"
includes debts incurred in connection with an illegal gambling
business, and that the prohibition in §1962(c) against the conduct
of the enterprise through the prohibited pattern of activity or
collection of debt "is without exception." H. Rep. 91-1549, 91st
Cong., 2d. Sess. reprinted in 1970 U.S.C.C.A.N. 4007, 4032-33.
Lack of any further elaboration by Congress does not provide a
basis for "overrid[ing] the words of the statute." Sedima, S.P.R.L.
v. Imrex Co., Inc., 473 U.S. 479, 495, 105 S.Ct. 3275, 3284 n.13,
87 L.Ed.2d 346 (1985)(refusing to limit RICO statutory language).
Appellants resort to the rule of lenity is unavailing. "[T]he
`touchstone' of the rule of lenity `is statutory ambiguity.'"
Bifulco v. United States, 447 U.S. 381, 387, 100 S.Ct. 2247, 2252,
65 L.Ed.2d 205 (1980); Lewis v. United States, 445 U.S. 55, 65,
100 S.Ct. 915, 921, 63 L.Ed.2d 198 (1980). The Supreme Court
explained in United States v. Turkette, 452 U.S. 576, 587, 101
S.Ct. 2524, 2531 n.10, 69 L.Ed.2d 246 (1981), a case in which it
declined to apply the rule of lenity to the RICO statute:
[T]hat "rule," as is true of any guide to statutory construction, only serves as an aid for resolving an ambiguity; it is not to be used to beget one. . . . The rule comes into operation at the end of the process of construing what Congress has expressed, not at the beginning as an overriding consideration of being lenient to wrongdoers.
See also, Taylor v. United States, 495 U.S. 575, 596, 110 S.Ct.
2143, 2157, 109 L.Ed.2d 607 (1990)(rule of lenity "cannot dictate
7 an implausible interpretation").4
In their briefs and oral argument, appellants insist that "the
RICO statute must be read to require that any gambling-based RICO
[collection of unlawful debt] prosecution using a state or local
law crime as its predicate be one that carries a one-year jail
term." They make this assertion even though they concede that the
statute "literally" imposes no such requirement.
Appellants argue, by isolated references to the legislative
history of RICO, that §1962(c) should be limited to large-scale,
illegal gambling businesses that are part of organized crime. The
Supreme Court has rejected just such attempts to extract from
RICO's legislative history. The Court has noted, "RICO's language
supplies no grounds to believe that Congress meant to impose such
a limit on the Act's scope," and has pointed out that in those
titles of the Organized Crime Control Act "where Congress did
intend to limit the new law's application to the context of
organized crime, it said so." H. J., Inc., 109 S. Ct. at 2903.
Appellants in this case operated an illegal gambling business
that handled millions of dollars each year. It involved over 80
bettors in numerous states. More than 15 individuals were
4 Appellants reliance on Yellow Bus Lines, Inc. v. Local Union 639, 913 F.2d 948 (D.C. Cir. 1990) (en banc) is misplaced. There, the D. C. Circuit focused on the participation element of §1962(c). The court referred in passing to the rule of lenity in holding that RICO could not be stretched so far as to allow Yellow Bus to civilly sue a union seeking recognition, by alleging in its complaint that Yellow Bus was the enterprise and the Union was participating in the conduct of its affairs. The court noted such a reading would "fly in the face of the statute's language and purpose." Id. at 955.
8 associated with the operation business. They were admittedly
professional illegal bookmakers. It is clear to us that Congress
intentionally created a statutory scheme where proof of the
collection of unlawful debt is a "substitute for a showing that
appellants engaged in two or more predicate acts forming a pattern
of racketeering activity." United States v Eufrasio, 935 F.2d 553,
563 n.12 (3rd Cir.1991). Both, RICO and §1955 were enacted at the
same time as part of a single legislative scheme, the Organized
Crime Control Act of 1970. See Pub. L.91-452, §803 (codified as 18
U.S.C. §1955), §901 (codified as 18 U.S.C. §§ 1961 et seq).
Section 1955 is expressly referenced in the RICO statute. Clearly
Congress intended that the collection of unlawful debt prong and
the pattern of racketeering prong should complement and not
supersede one another. In RICO cases, defendants have been charged
and convicted of violating both offenses.5 See, e.g., United
States v. Angiulo, 847 F.2d 956, 960 (1st Cir. 1988); United
States v. Giovanelli, 945 F.2d 479, 486 (2d Cir.1991); Eufrasio,
5 Counsel for the United States in oral argument summarized his position - utilizing this language:
In essence, we just contend that what Congress wanted to do was to single out for special treatment the collection of unlawful debt through an organized enterprise. Congress believed that that had certain potential pernicious effects and that is why it set forth specific language in there in addition to the pattern racketeering language to deal with that.
This Court agrees with this characterization and analysis of Congressional intent. There is no ambiguity introduced by the fact that two parts of a single statute (the pattern of racketeering prong and the collection of unlawful debt prong) punish separate violations. United States v. Galvan, 949 F.2d 777 (5th Cir.1991).
9 935 F.2d at 557-58.
For similar reasons, appellants' argument that "because [they]
were charged with violations of 18 U.S.C. 1955 in Count 2, they
should have been prosecuted under the pattern of racketeering prong
because it is more specific and because the penalty it imposes for
gambling offenses is less severe," must be rejected. The fact that
one statute prescribes a felony and the other prescribes a
misdemeanor does not affect the prosecutor's authority to choose
among statutes. United States v. Smith, 915 F.2d 959, 962 n.4 (5th
Cir. 1990); United States v. Oldfield, 859 F.2d 392, 398 (6th
Cir.1988)(quoting United States v. Schaffner, 715 F.2d 1099, 1102
(6th Cir.1983)); United States v. Cavada, 821 F.2d 1046 (5th Cir.
1987).
Sections 1962(c) and 1955 are not Constitutionally Defective
Appellants press their contention that the RICO statute and
§1955 are both void for vagueness on their face and as applied.
This is true, they say, because "identical gambling offenses are
treated entirely different depending on whether the Government
elects to prosecute an individual under the pattern of racketeering
prong of RICO or the unlawful debt collection prong of RICO." We
reiterate again that, "when conduct violates more than one criminal
statute, the Government may prosecute under either so long as it
does not discriminate against any class of defendants."6 Moreover,
a single statute may penalize more than one offense. United States
6 Cavada, 821 F.2d at 1048 (quoting United States v. Batchelder, 442 U.S. 114, 123-24, 99 S.Ct. 2198, 2204, 60 L.Ed.2d 755 (1979)).
10 v. Galvan, 949 F.2d 777 (5th Cir.1991)(upholding consecutive
sentences for defendant under §1512(a)(1)(A) and (C)).
Appellants would re-write RICO contending that "a violation of
the unlawful debt collection prong of RICO should normally be
punished less severally than the 18 U.S.C. §1955 violation." They
claim the two prongs cannot be logically reconciled, because one
provides a violation for a pattern of racketeering activity
involving two §1955 violations and the other provides for a
violation under the unlawful collection of debt. They insist that
the "Government is attempting to punish one aspect of the gambling
business (the collection of unlawful gambling debts) more severely
than the entire gambling business." The short answer is that
Congress decided that the collection aspect warrants a greater
penalty. The fact that another statute is available is
irrelevant.7
Next, appellants contend that RICO is unconstitutionally void
for vagueness because "the collection of illegal gambling debts may
not be an element of a local, state or federal gambling offense."
Section 1961(6) clearly defines an unlawful debt as, inter alia, a
debt "incurred or contracted in gambling activity which was in
violation of the law of the United States, a State or political
subdivision thereof. . . [and] which was incurred in connection
with the business of gambling in violation of the law of the United
7 Appellants reference to the Sentencing Guidelines misses the point. Congress chose to punish those persons participating in an enterprise through the collection of an unlawful debt stringently. The punishment is definite and certain. There is no vagueness.
11 States, a State or political subdivision thereof." Appellants knew
they were operating a bookmaking business in violation of Louisiana
law and admitted as much at trial. Their assertion that "[t]here
is no provision of Louisiana or federal law that criminalizes the
collection of gambling debts" is incorrect. Section 1955 prohibits
the conducting of an illegal gambling enterprise and La. Rev. Stat.
14:90 penalizes the conducting of a gambling business. The
collection of money owed on wagers is an essential part of the
gambling business.
Finally, appellants contend that §1962(c) is
unconstitutionally vague because it purportedly eliminates the need
for criminal intent. The Indictment charged that they did
"knowingly and willfully conduct and participate, directly and
indirectly, in the conduct of the affairs of the enterprise through
the collection of unlawful debt ...." The jury was instructed that
the crimes "charged require proof of specific intent before a
defendant can be convicted," that "the Government must prove beyond
a reasonable doubt that the defendant knowingly and willfully
conducted or participated in the conduct of the affairs of the
enterprise through the collection of an unlawful debt," and that
the "Government must show that a defendant knowingly and willfully
omitted or caused. . . at least one collection of the unlawful
debt."
Appellants assert that "there was no criminal intent in the
present case" and that they did not believe they were violating the
law in collecting their bookmaking winnings. The jury found that
12 this was not true.
"[W]here defendants know that their conduct is violative of state law, their wrongful purpose ab initio, established beyond a reasonable doubt, leaves them in no position to claim that they had no intention of violating a federal statute which, in fact, denounced the unlawful conduct as also constituting a federal crime. Defendants may have misunderstood the full reach of the federal statute but they deliberately took that risk when they set out upon a calculated violation of the laws of [the state]." United States v. Thaggard, 477 F.2d 626, 632 (5th Cir. 1973).
The Conversations Between Aucoin and Counsel
The district court conducted an in camera review of the
conversations between Aucoin and his counsel. It rejected the
invocation of the attorney-client privilege. The ruling was pegged
on the crime-fraud exception because there was prima facie evidence
that Aucoin had sought and obtained this advice in furtherance of
criminal activities. The application of the attorney-client
privilege is a question of fact to be determined in light of the
purpose of the privilege and guided by judicial precedent. The
clearly erroneous standard of review applies to the district
court's factual findings. Fed.R.Civ.P. 52(a), Byram v. United
States, 705 F.2d 1418 (5th Cir. 1983). We review the application
of the controlling law de novo.
There were 25 intercepted conversations between Aucoin and
counsel. The evidence presented to the district court constituted
prima facie evidence that the crime-fraud exception applied.
Aucoin admitted that he operated in violation of Louisiana law.
13 The jury subsequently found beyond a reasonable doubt that he
violated RICO. The evidence demonstrated that Aucoin sought the
return of his gambling records for the purpose of continuing to
operate his illegal gambling business. His counsel, with knowledge
of Aucoin's participation in illegal activity and desire to
continue these activities, orchestrated a plan to obtain for the
Aucoin gambling enterprise documents critically necessary to its
continued operation and then assisted in the execution of this
plan. Then, too, the excerpted conversations reveal that counsel,
even after the return of Aucoin's records, assisted the enterprise
in its efforts to insulate itself from further raids by local
enforcement. Combining the contested conversations with
intercepted conversations between Aucoin and others, concerning
what advice he had been given by his lawyer, it was certainly
proper and appropriate to apply the crime-fraud exceptions.
The district court's ruling, even if erroneous, would not
suffice for reversal of Aucoin's conviction unless it affected a
substantial right of his. United States v. Scott, 678 F.2d 606,
612 (5th Cir. 1982); United States v. Moody, 923 F.2d 341, 352
(5th Cir.1991), cert denied, 112 S.Ct. 80 (1991). In the context
of suppression of evidence, the test for harmless error is "whether
the trier of fact would have found the defendant guilty beyond a
reasonable doubt [if the evidence had been suppressed]." Moody,
923 F.2d at 352.
This case is not "the `MAW' AND `PAW' operation down the
street that operates out of the corner grocery store" as analyzed
14 by defense counsel during oral argument. There was overwhelming
evidence of guilt. The primary evidence supporting the convictions
was the intercepted conversations between Aucoin and his bettors
and other bookmakers. Two of Aucoin's bettors testified that they
placed bets with him and he collected the bets personally, or
through others. The contested conversations were logically
harmless, given the theory of defense. Defendants admitted
conducting a million dollar illegal gambling operation. They
merely contested whether that operation consisted of five or more
people. The contested conversations primarily concern attempts to
recover seized gambling records. They were therefore logically
harmless to the jury's decision whether the Aucoin operation
included five or more people. There was overwhelming evidence
apart from the conversations with Fanning that Aucoin's operation
involved at least 15 people.
Convictions on Both Counts of the Indictment Did Not Violate 8 Double Jeopardy
Appellants argue that their conviction and sentencing under
both RICO and §1955 violate the Double Jeopardy Clause of the
constitution by punishing them twice for the same conduct. The
Double Jeopardy Clause of the Fifth Amendment states that no person
"shall be subject for the same offense to be twice put in jeopardy
of life or limb." U.S. Const. Amend. V. It is well settled that
this clause protects against a double prosecution for the same
8 Aucoin was sentenced to 15 months in prison as to Counts 1 and 2 to run concurrently. Condon and Bertolino were each sentenced to 6 months in prison to run concurrently.
15 offense. But it is equally well established that a defendant may be
charged, convicted, and sentenced in the same case for violating a
statute and a RICO predicated on that statute. E.g. United States
v. Erwin, 793 F.2d 656, 669 (5th Cir. 1986); United States v.
Phillips, 664 F.2d 971, 1009 n.55 (5th Cir. 1981); see also United
States v. Pungitore, 910 F.2d 1084 (3d Cir. 1990)(affirming
convictions of two defendants for violating §1955, collection of
unlawful debt RICO, and pattern of racketeering RICO). Thus, in
the present case, the defendants' reliance on the Double Jeopardy
Clause is misplaced.
The elements of the statutes differ. The gambling statute
requires proof that five or more persons were participating in the
business, that the business was in substantially continuous
operation for 30 days or more, or that the business had gross
revenue of $2000 in any single day. 18 U.S.C. §1955(b)(1). None
of these elements are required to prove a RICO violation.
Similarly, RICO requires proof that an enterprise existed, and that
the person participated in the conduct of the enterprise through
the collection of an unlawful debt. 18 U.S.C. §1962(c). Although
collection of debts is a necessary part of a gambling operation,
debt collection is not a specified element of §1955.
The Gambling Records Seized From Aucoin
The United States introduced bottom sheets, books containing
handwritten line information, and sheets with football wagers.
These had been seized from Aucoin during searches conducted in
December of 1988 and January of 1989. The evidence, including
16 statements by Aucoin on recorded conversations, revealed that
Aucoin used these materials to operate his illegal gambling
business. Asserting his Fifth Amendment right against self-
incrimination and citing 26 U.S.C. §4424, Aucoin sought the
suppression of all the seized materials.
He voluntarily maintained the records for the purpose of the
illegal gambling enterprise. He contended that the materials
seized in the three raids in 1988 and 1989 were maintained by him
for the purpose of complying with tax laws and that consequently
their use in this prosecution was barred under the Fifth Amendment
and §4424. The district court found that the records, "while they
may have assisted [Aucoin] in preparing his tax return, were
obviously maintained in addition as the basic business records of
his alleged gambling enterprise." This was certainly correct. The
records were not the type required to be kept for tax purposes. On
their face, many of the documents seized from the gambling sites,
such as the books containing line information obtained from other
bookmakers, were unrelated to calculating wagers. The documents
were used to set the betting odds and to keep track of wagers made
by individual bettors, total amounts wagered on each side of each
game, and the amounts to be collected or paid. The experienced
vice investigators who examined the seized records agreed that they
were the type of records maintained by bookmakers, and were
essential to carrying on this illegal gambling business.
Once again, error, if any, from the introduction of the
gambling records was harmless. See Arizona v. Fulminante, ______
17 U.S. _____, 113 L.Ed.2d 302 (1991). The intercepted conversations
and the testimony at trial conclusively demonstrated the operation
of a large-scale gambling operation using numerous other persons to
set his line, take bets, pay and collect from bettors, obtain line
information and lay off excess bets. There is no factual dispute
in this case. Appellants concede that the gambling business
satisfied all the elements of §1955, except for the requirement
that five or more people take part in conducting the business. We
reiterate, Aucoin's assertion that he, Bertolino, and Condon were
the only persons involved in operating the illegal gambling
business, is just not true. The testimony and tape evidence
conclusively showed that Darlene Aucoin, Iris Ethridge and many
others provided services that were necessary or helpful to the
gambling business, and that numerous persons regularly exchanged
line information or took lay off bets from Aucoin. see e.g.,
United States v. Jones, 712 F.2d 115, 120 (5th Cir. 1983); United
States v. Colacurcio, 659 F.2d 684, 688 (5th Cir.1981), cert.
denied, 455 U.S. 1002, 102 S.Ct. 1635, 71 L.Ed.2d 869 (1982);
United States v. Tucker, 638 F.2d 1292, 1295 (5th Cir.1981), cert.
denied, 454 U.S. 833, 102 S.Ct. 132, 70 L.Ed.2d 111 (1981).
We have reviewed each of defendants-appellants' arguments and
find them to be without merit. We affirm the judgments of sentence
and conviction with respect to each.
AFFIRMED