On February 28, 2013, the Virginia Supreme Court issued an opinion in which it declined to address the legality of playing poker in the state but left open the possibility for the issue to be decided in a future case. The full opinion in the case, Daniels v. Mobley, is available here.
Charles Daniels, a former poker hall operator who operated charitable bingo halls in Portsmouth, Virginia, for decades, filed suit in 2010 seeking a declaratory judgment that Texas Hold ‘em poker is legal under Virginia’s gambling statute.
Under Virginia law, “illegal gambling” is defined as:
“the making, placing or receipt of any bet or wager in the Commonwealth of money or other thing of value, made in exchange for a chance to win a prize, stake or other consideration or thing of value, dependent upon the result of any game, contest or any other event the outcome of which is uncertain or a matter of chance, whether such game, contest or event occurs or is to occur inside or outside the limits of the Commonwealth.”
The law also states that:
“Nothing in this article shall be construed to prevent any contest of speed or skill . . . where participants may receive prizes or different percentages of a purse, stake or premium dependent upon whether they win or lose or dependent upon their position or score at the end of such contest.”
Daniels argued that the outcome of Texas Hold ‘em poker is determined by skill and not luck and therefore the game does not violate the Virginia statute. In the circuit court Daniels presented testimony of two math experts and a world champion poker player to support the skill argument.
The lower court ruled that poker was a game of chance, stating that “all the evidence indicates that the outcome of any one hand is uncertain.” Daniels then appealed the case to the Virginia Supreme Court.
The state Supreme Court declined to address the legality of poker, holding that the court could not rule on the case because the request for a declaratory judgment on the status of Texas Hold ‘em poker “failed to present a justiciable controversy over which the circuit court could exercise jurisdiction.” Since there was no justiciable controversy, the Supreme Court held that the circuit court did not have jurisdiction to rule on the claim.
The court did not directly address the argument that poker is a game of skill and not chance, an argument that has been accepted by other courts. It thus left the door open for the argument to be made in the future.
Daniels also argued that the state’s anti-gambling statute is unconstitutionally vague. The Supreme Court affirmed the ruling of the circuit court that the statute is not unconstitutionally vague because it gives fair notice and an individual of ordinary intelligence can discern its meaning.
In our view, poker is a game of skill and not chance and thus should not be considered gambling under the Virginia statute. The Virginia Supreme Court’s decision to rule on other grounds left poker supporters with a lost opportunity, but there will be other opportunities to make the argument in this and other courts.
In a January 23, 2013, ruling, the U.S. Court of Appeals for the 7th Circuit held that an Indiana law that prohibited most registered sex offenders from using social media websites was unconstitutional because it was “not narrowly tailored to protect the state’s interest.” The decision was restricted to the Indiana statute on sex offenders and did not extend its reasoning to another, related issue – whether courts can permissibly, as a condition of probation or supervised release, restrict white-collar criminals from using the Internet.
The fatal flaw of the Indiana law, the appeals court held, was that it was overbroad because it targeted substantial protected speech, rather than retaining a narrow focus on the specific evil of improper communication to minors.
The 7th Circuit noted that the Indiana statute affected First Amendment rights because it controlled expression via social media and limited the ability to receive information and ideas.
In recent cases of various sorts, including e-commerce cases, federal courts have proved all too willing to imposed Internet bans that trample on various constitutional rights. We focused on this problem in a National Law Journal article a couple of years ago that argued that courts go too far when they impose a broad ban on the use of the Internet against a defendant who had committed online fraud.
In the sex-offender case, Doe v. Marion County Prosecutor, the 7th Circuit acknowledged the strong state interest in protecting minors from harmful online communication, but explained that the ban must be narrowly tailored to target only the appropriate evil. All parties agreed that there is nothing inherently dangerous about using social media – except when a sex offender communicates with minors, which is only a “minuscule subset of the universe of social network activity.”
The same principle ought to be applied to restrictions on Internet use placed upon those who have been found guilty of fraud in e-commerce. Not all Internet usage should be treated as suspect.
Towards the end of its opinion, the court discussed Internet restrictions in the context of conditions of probation or supervised release. The court distinguished between a criminal statute, as in Indiana, that governs the protected speech of the general populace (including registered sex offenders) and the sentences imposed by district courts that may govern Internet usage.
The court said its opinion “should not be read to affect district courts’ latitude in fashioning terms of supervised release.” It elaborated that “Our penal system necessarily implicates various constitutional rights . . . a court could conceivably limit a defendant’s Internet access if full access posed too high a risk of recidivism.”
Somewhat ironically, the court noted that “The alternative to limited Internet access may be additional time in prison, which is surely more restrictive of speech than a limitation on electronics.” Although the 7th Circuit was not willing to expand its protection of Internet usage to the sentencing and probation context, we still think that its strong protection of Internet usage in the First Amendment context bodes well for future challenges in that context.
The Department of Justice continues to show that, even when Congress places limits on the reach of federal criminal statutes, prosecutors will concoct novel theories to try to evade those limits. The latest example of that trend is in the case of Juthamas Siriwan, former governor of the Tourism Authority of Thailand, and her daughter, Jittsopa Siriwan.
The Siriwan prosecution arises out of the 2009 indictment of movie producer Gerald Green and his wife, Patricia Green, for violations of the Foreign Corrupt Practices Act – the first case ever filed against individuals in the entertainment business under that statute. The Greens were accused of paying $1.8 million to receive nearly $14 million in business from the Thai tourism authority between 2002 and 2007, including a contract to manage the Bangkok International Film Festival. In 2009, a federal jury in Los Angeles convicted the Greens, who were each sentenced to six months in prison plus six months of home confinement.
The 2009 indictment also charged the Siriwans with crimes, but not under the FCPA. The government could not pursue the Siriwans under the FCPA, because the statute applies only to individuals and entities who give (or attempt, promise or agree to give) bribes, and not to the recipients of those funds. Instead, in an attempt to avoid the limited scope of the FCPA, the government charged that each wire transfer of the bribes by the Greens to the Siriwans’ bank accounts constituted a transaction designed “to promote the carrying on of” the bribes, and therefore constituted violations of U.S. anti-money laundering statutes.
Siriwan’s lawyers have filed a motion to dismiss the charges, noting that “[n]o court has allowed the making of a payment that is an essential element of the predicate unlawful activity – such as a bribe in a bribery case – to constitute ‘promotion’ of that same activity.” The motion is to be argued in October.
This case will be watched closely by criminal defense attorneys – not only those who focus on FCPA cases, but also those who work in other areas involving overseas activity. A decision in favor of the government in this case could signal an opportunity for government prosecutors to assert enormous extraterritorial reach in the application of the money laundering statutes, and an ability to evade the limitations of the FCPA in seeking to prosecute not only those who give bribes but also the foreign officials who receive them.
The charges against Jared Loughner for shooting Representative Gabrielle Giffords put into sharp focus a little-known federal statute, 18 U.S.C. 351. This law provides for a death penalty for killing a member of Congress, a presidential or vice presidential candidate, or a Supreme Court justice, as well as imprisonment up to life for attempting to kill such a person. Loughner is charged under this statute with attempting to kill Giffords.
The background of this law is interesting. When President John F. Kennedy was assassinated in Dallas in 1963, it was not a federal crime to kill a U.S. president. Had alleged assassin Lee Harvey Oswald been tried, the trial would have taken place in a Texas state court. In 1965, Congress passed a law, 18 U.S.C. 1751, making it a federal crime to kill, kidnap, or assault the President or the Vice President.
In 1968, presidential candidate and U.S. Senator Robert F. Kennedy was assassinated in Los Angeles. That was not a federal crime at the time, and Sirhan Sirhan was convicted in California state court for the murder and sentenced to death. (That sentence was commuted to life in prison in 1972, when that state abolished the death penalty, and Sirhan remains in a California state prison.) In 1971, Congress enacted 18 U.S.C. 351, which extended the protection of the Federal criminal law to members of Congress, paralleling that extended to the President and the Vice President.
Of course, in the absence of a federal law, Loughner could have been prosecuted, convicted, and sentenced in an Arizona state court. There has been some recent discussion of this statute in the legal blogs. See the Concurring Opinions blog and Josh Blackman’s blog.
Why did Congress find it necessary or desirable to make this a federal crime? Probably not because it was concerned that state prosecutors and courts would not take this crime seriously or would not hand down appropriate punishments. Most likely, Congress wanted to express a national consensus that an attack on an elected federal representative or similar official is, in effect, an assault on the government and on the nation itself. And it may have desired, in national times of sorrow and anger precisely like the one we are in now, to allow the nation as a whole to take action to ensure justice. The federal courts are such a vehicle for national action.
The following opinion article by Ifrah PLLC founding partner A. Jeff Ifrah and associate Steven Eichorn appeared in the National Law Journal on October 11, 2010.
Banned from the Internet
Prohibiting a defendant on probation from conducting any business online is overly restrictive and not reasonably related to legitimate sentencing goals.
By A. Jeff Ifrah and Steven Eichorn
The Internet is becoming the town square for the global village of tomorrow.” — Bill Gates, founder of Microsoft Corp.
Given the pervasiveness of the Internet, it is curious to us that some courts have been all too willing to prohibit Internet use for defendants on probation or supervised release. Are such Internet bans narrowly tailored to affect “only such deprivations of liberty or property as are reasonably necessary,” a statutory factor in the conditions of release issued by a judge? Recent cases suggest the answer is no.
Internet bans are most commonly issued by courts as a condition of probation in child pornography cases in which the defendants may have utilized the Internet as a tool to lure their victims. But even when the courts have permitted Internet bans in such cases, they have often noted the harshness of a complete ban and have listed numerous factors to consider before imposing a ban, such as whether it “is narrowly tailored to impose no greater restriction than necessary,” the “availability of filtering software that could allow [the defendant's] Internet activity to be monitored and/or restricted” and the duration of the ban. In such cases, appeals courts are diligent in reminding trial courts that such bans must be reasonably related to the statutory factors and that total restrictions “rarely could be justified” even for child pornography defendants. U.S. v. Burroughs, 613 F.3d 233 (D.C. Cir. 2010).
Given the limitations imposed in child-pornography cases, the growing number of Internet bans in white-collar cases raises our eyebrows. Is an Internet ban appropriate for a defendant who used the Internet to perpetrate a fraud like a telemarketing scheme or investment fraud? Starting with the U.S. Court of Appeals for the 9th Circuit more than 10 years ago in U.S. v. Mitnick, 145 F.3d 1342 (9th Cir. 1998), and much more recently with the 3d Circuit in U.S. v. Keller, 366 Fed. Appx. 362 (3d Cir. 2010), courts seem more than willing to say “yes.” Courts seem to have concluded that such bans are reasonably related to legitimate sentencing goals, are no more restrictive than necessary and do not impermissibly restrict any First Amendment rights. See, e.g,. U.S. v. Suggs, 50 Fed. Appx. 208 (6th Cir. 2002) (computer hacker).
In the most recent case on the topic, U.S. v. Keller, the 3d Circuit upheld the following Internet ban for a defendant convicted of traditional mail fraud: “[T]he defendant shall cease and no longer create or conduct any businesses/websites via the internet for the [three-year] period of supervision.” While this may not on its face sound onerous, it is crucial to know that Eric Keller did not use the Web to perpetrate a fraud on his customers.
Keller had owned and operated a retail candy business through several Web sites. In order to deliver the candy to the customers, Keller shipped the candy via United Parcel Service. Using fraudulent information, Keller set up 12 different UPS shipping accounts. When one shipping account was suspended for nonpayment, Keller just abandoned that account and opened another account. Keller accomplished this by using various aliases and other trickery. Ultimately, UPS suffered a loss of approximately $155,650.
Despite the fact that the Internet was not used to perpetrate a fraud on Keller’s customers, the court saw fit to ban Keller from using the Web in the future for doing business. This lack of a nexus between the fraud at issue and the role of the Internet was also present in an earlier case decided by the 6th Circuit in 2002. In that case, the defendant, Thomas Suggs, was banned from using a personal computer for anything whatsoever. Just like the defendant in Keller, Suggs committed a crime that did not involve perpetrating a fraud on customers over the Internet; Suggs’ crime involved an investment scheme involving the financing of computers.
Clearly, courts would not apply a complete ban on conducting business for a defendant who operated many fraudulent brick-and-mortar companies with separate storefronts. Courts readily understand that banning a defendant from conducting any further business is not reasonably related to legitimate sentencing goals and is much more restrictive than necessary. So why are courts willing to place a complete ban on Internet business for defendants who use the Internet to conduct their business and bar them from “the town square for the global village of tomorrow?” And why are courts handing down more restrictive Internet bans in white-collar cases than those handed out in Internet child pornography cases?
The answer may be related to some judges’ lack of appreciation of the importance of the Internet in today’s society. We hope that, as online commerce becomes universally perceived as being as routine as business conducted in a brick-and-mortar store, courts will be careful to ensure that this critical form of communication with customers is not restricted in the absence of compelling circumstances. Anything less would clearly constitute “deprivations of liberty or property” that are far from “reasonably necessary.”