United States v. Marder

From CyberOne Wiki
Jump to navigation Jump to search

UNITED STATES, Appellee, v. ARTHUR M. MARDER, Defendant, Appellant.


48 F.3d 564 (1st Cir., 1995)

Before Selya, Circuit Judge, Bownes, Senior Circuit Judge, and Cyr, Circuit Judge.

BOWNES, Senior Circuit Judge. Defendant-appellant, Arthur Marder, was convicted by a jury on all seventeen counts of the indictment against him. Twelve counts of the indictment were predicated specifically on illegal gambling allegedly in violation of Massachusetts General Laws ch. 271, §§ 7 and 17. The counts involving the Massachusetts statutes were: two RICO counts; two counts of using interstate facilities in aid of racketeering; one count of operating an illegal gambling business; and seven counts of money laundering. There can be no doubt of the right of the federal government to base a federal crime upon the violation of a state statute. Sanabria v. United States, 437 U.S. 54, 70, 57 L. Ed. 2d 43, 98 S. Ct. 2170 (1978). ......

Most of the essential facts are not in dispute, only the inferences and conclusions to be drawn from them. We must, of course, review the facts and all inferences to be drawn from them in the light most favorable to the government. United States v. Cotto-Aponte, 30 F.3d 4, 5 (1st Cir. 1994); United States v. Hernandez, 995 F.2d 307, 311 (1st Cir.), cert. denied, 114 S. Ct. 407 (1993).


Defendant owned and operated the Revere Amusement Company ("Revere") from 1981 to 1989. Revere's income came from the operation of video poker machines that were placed in an assortment of bars, taverns, and social clubs in Revere, Massachusetts. The poker machines operated somewhat like slot machines. The machine was activated by inserting money into it, at least a quarter. The player would then manipulate a button to obtain a poker hand. The machine's video screen would display five cards representing a poker hand. Before the "play" began, the screen displayed the payoffs for winning hands; i.e., a hand consisting of three of a kind might pay twelve to one. Credits were given for winning hands. For example, a full house might pay ten credits. After a winning player finished playing the machine, he exchanged his credits for cash. The cash payment was made by the person in charge of the establishment in which the machine(s) was located. Defendant and/or his employees visited the approximately seventeen places where the poker machines were located on a regular basis, usually daily. The proprietors of the establishments were reimbursed for the payoffs and then the machine's proceeds were split with them. Normally, no records were kept of the transactions. And, of course, only defendant and his employees had access to the monies paid into the poker machine.

In 1985 defendant decided to enjoy the fruits of his profitable business and moved to Palm Springs, California. Defendant's son, Steven, then took over the daily operation of Revere. Defendant, however, kept a tight reign on Revere's operations from Palm Springs. He received between $ 4,000 to $ 10,000 in cash by express mail several times a week. At irregular intervals, he asked his employees to keep records of the transactions so he would know what was going on.

Revere's income from the poker machines amounted to about $ 500,000 per year. There was convincing evidence that defendant made regular payoffs to local police officers, politicians, and organized crime. Neither defendant nor his company paid state or federal income tax on the income generated by the video poker game machines.

With this factual background, we turn to the question of whether defendant's poker game business violated the implicated Massachusetts statutes. This is, of course, primarily a question of Massachusetts law. And there is no Massachusetts case directly on point. We first consider Mass. Gen. L. ch. 271, § 17, which provides: § 17. Place for registering bets or dealing in pools; owner or occupant; custodian or depository

Whoever keeps a building or room, or any part thereof, or occupies, or is found in, any place, way, public or private, park or parkway, or any open space, public or private, or any portion thereof, with apparatus, books or any device, for registering bets, or buying or selling pools, upon the result of a trial or contest of skill, speed or endurance of man, beast, bird or machine, or upon the result of a game, competition, political nomination, appointment or election, or whoever is present in such place, way, park or parkway, or any such open space, or any portion thereof, engaged in such business or employment; or, being such keeper, occupant, person found or person present, as aforesaid, registers such bets, or buys or sells such pools, or is concerned in buying or selling the same; or, being the owner, lessee or occupant of a building or room, or part thereof, or private grounds, knowingly permits the same to be used or occupied for any such purpose, or therein keeps, exhibits, uses or employs, or knowingly permits to be therein kept, exhibited, used or employed, any device or apparatus for registering such bets, or for buying or selling such pools, or whoever becomes the custodian or depository for hire, reward, commission or compensation in any manner, of any pools, money, property or thing of value, in any manner staked or bet upon such result, shall be punished by fine of not more than three thousand dollars or by imprisonment in the state prison for not more than three years, or in jail or the house of correction for not more than two and one half years. (Emphasis added.)

We note first that the statute is not limited to bookmaking in the traditional sense. It includes "any device for registering bets, or buying or selling pools, upon the result of a trial or contest of skill, speed or endurance of man, beast, bird or machine, or upon the result of a game . . . ." This is broad and encompassing language. We do not think that it excludes the placing of bets on video poker games as a matter of statutory construction.

Although there are no Massachusetts cases directly on point, there are three that indicate that betting on video poker games violates § 17. In Commonwealth v. Club Caravan, Inc. (and eighteen companion cases), 30 Mass. App. Ct. 561, 571 N.E.2d 405 (Mass. App. Ct. 1991), the court made several significant rulings. It upheld the ruling of the trial judge that "play on the video poker machines in question involved as a matter of law an element of skill, thus qualifying the machines for licensure under Mass. Gen. L. c. 140, § 177 A(1) and (2) as automatic amusement devices." Id. 571 N.E.2d at 406. The court explained:

Since the video poker machines involved an element of skill and ostensibly paid off winners only with free games, the judge correctly dismissed the indictments based solely on having such machines on hand for the use of patrons. The judge correctly ruled, we think, that licensed machines so used were exempt not only from G.L. c. 271, § 7, this exemption being explicit in G.L. c. 140, § 177A(7), but also from G.L. c. 271, §§ 5 and 17, seemingly overlapping statutes which [**8] in relevant part prohibit keeping a place for gaming or keeping gaming apparatus. The purpose of § 177A, to legalize and license machines that utilize some element of skill and pay off winners only with free games, would otherwise be thwarted.

Id. at 407. The court noted that the trial judge differentiated between video poker games and "actual use of the machines for gambling: i.e., paying off in money rather than free games," id. and drew the following line:

Where a machine was used for gambling, i.e., where there was evidence of a payoff to a customer, the judge ruled that the machine, by the express terms of G.L. c. 140, § 177A(6), was in violation of that statute and thus lacked protection from the prohibitions of the gaming laws such as G.L. c. 271, §§ 5, 7, 8, and 17.

We think there was sufficient evidence from which a reasonable jury could find that a video poker machine was "a device for registering bets" within the meaning of § 17. After inserting the required amount of money into the machine, the player selected the number of credits - the amount he wanted to bet. The machine "registered" the bet by displaying the number of credits he had selected and set the odds on winning the poker hand dealt the player. The bets had to be registered by the machine so that the odds could be set. Moreover, the bets had to be registered on the machine because defendant and/or his employees determined, after opening the machine, the amount of reimbursement for payouts due the proprietors of the establishments where the machines were located. And we think it could be reasonably found that the statute included the defendant as one who sold pools "upon the result of a trial or contest of skill" . . . or "upon the result of a game."

We rule, based on the evidence, the words of the statute and Massachusetts case law, that the jury could lawfully find defendant violated Mass. Gen. L. ch. 271, § 17.

Mass. General Laws ch. 271, § 7 provides: § 7. Lotteries; disposal of property by chance

Whoever sets up or promotes a lottery for money or other property of value, or by way of lottery disposes of any property of value, or under the pretext of a sale, gift or delivery of other property or of any right, privilege or thing whatever disposes of or offers or attempts to dispose of any property, with intent to make the disposal thereof dependent upon or connected with chance by lot, dice, numbers, game, hazard or other gambling device, whereby such chance or device is made an additional inducement to the disposal or sale of said property, and whoever aids either by printing or writing, or is in any way concerned, in the setting up, managing or drawing of such lottery, or in such disposal or offer or attempt to dispose of property by such chance or device, shall be punished by a fine of not more than three thousand dollars or by imprisonment in the state prison for not more than three years, or in jail or the house of correction for not more than two and one half years.

Defendant's attack on § 7 takes a different approach than his doesn't-apply challenge to § 17. He acknowledges that "[a] video poker machine which pays off 'hits in cash can amount to a 'lottery' under § 7." Brief at 31. His argument is that it was not proven by the government that chance predominated over skill in playing video poker and therefore there was no lottery within the meaning of § 7.

The Massachusetts law is reasonably clear that for there to be a lottery, chance must predominate over skill in the results of the game, or the element of chance must be present in such a manner as to thwart the exercise of skill or judgment in a game. Commonwealth v. Plissner, 295 Mass. 457, 4 N.E.2d 241, 245 (Mass. 1936). In Commonwealth v. Club Caravan, Inc., 571 N.E.2d at 406, the appeals court held that play on video poker machines "involved as [sic] matter of law an element of skill."

The government contends that there was sufficient evidence for the jury to find that chance predominated over skill in playing video poker. Viewing the evidence in the light most favorable to the government, we agree. There was testimony that the machine dealt the cards electronically, although a player could choose what cards to discard. There was testimony that winning depended on the cards dealt by the machine. A hand of video poker was played before the jury in the courtroom. The jury could judge for themselves whether a substantial element of chance was involved. There was testimony that one hand of video poker took from two to ten seconds to play. Unless a player has a mind like a computer, this is hardly sufficient time to use poker skills. Another factor that the jury could take into consideration in determining whether video poker was a game dominated by chance or skill was the profit that defendant made. Obviously, there were a great many more losers than winners. Skill might have played a role in the video poker games operated by defendant, but it did not dominate.

We rule, therefore, that the jury lawfully could find defendant to have operated a lottery that was prohibited by chapter 271, § 7 of the Massachusetts General Laws.