Unpublished Disposition, 881 F.2d 1084 (9th Cir. 1987)

MEMORANDUM^* 

Carolyn Cannon appeals her conviction for participating in an illegal gambling business in violation of 18 U.S.C. § 1955. Cannon alleges that the district judge erred in denying her motion for acquittal and in improperly instructing the jury.

BACKGROUND

Carolyn Cannon was employed as a bookkeeper/secretary for Leisure Machines from 1980 through 1984. Leisure Machines, which is owned and operated by Cannon's husband James, is in the business of providing video poker machines and other vending machines to taverns and restaurants in the Salem, Oregon area. Video poker machines are not proscribed by Oregon law as long as winners are not rewarded with cash. However, Leisure Machines and various tavern owners agreed to make cash payouts to winners. Cash payouts dramatically increased the revenue generated from the machines, which was split evenly between Leisure Machines and the tavern owners.

On February 25, 1987, Cannon was indicted on one count of participating in an illegal gambling business in violation of 18 U.S.C. § 1955.¹  Cannon pleaded not guilty and was tried by a jury before District Judge James M. Burns. At the close of all the evidence, Cannon moved for a judgment of acquittal pursuant to Fed. R. Crim. P. 29. Cannon alleged that the government had failed to prove that she conducted, managed, or directed a gambling business. The motion was denied and the case was submitted to the jury. The court gave the following jury instruction with reference to the term "conduct":

The term 'conduct' as it is used in connection with the gambling business and under the statute in question here means to perform any act, function, or duty which is necessary to or helpful in the operation of the business. A person may be found to conduct a gambling business even though he or she is a servant or employee having no part in the control of the business and no share in the profits. A mere bettor or customer of a gambling business cannot properly be said to conduct the business.

The jury returned a guilty verdict with the specific finding that Cannon had conducted an illegal gambling business. Cannon was placed on probation for a period of five years. She now appeals her conviction.

Cannon's appeal involves two assignments of error. First, Cannon claims that the district court improperly denied her motion for acquittal. Cannon argues that, given the evidence presented at trial, no reasonable juror could have found that she conducted, managed, or directed an illegal gambling business as required under 18 U.S.C. § 1955. Cannon does not deny that she was an employee of an organization which was engaged in illegal gambling operations. Nor does she deny that she had full knowledge of the extent of the illegal gambling. Instead, she reads section 1955 to apply only to personnel who perform functions which are necessary or indispensable to a gambling operation. Under this interpretation, it was error to submit the case to the jury because Cannon's conduct fell outside the scope of section 1955 as a matter of law.

Cannon's second assignment of error relates to the district court's jury instruction concerning the term "conduct". The jury instruction stated, in part, that conduct "means to perform any act, function, or duty which is necessary to or helpful in the operation of the business" (emphasis added). Cannon claims that the phrase "or helpful" misstates the law under section 1955 as it includes individuals who were not intended to be subject to prosecution. Because both assignments of error are premised on the assertion that section 1955 does not apply to individuals whose activities are merely helpful to a gambling operation, they will be treated simultaneously.

STANDARD OF REVIEW

On appeal from the denial of a motion for acquittal, this court reviews de novo the sufficiency of the evidence and affirms if, viewing the evidence in the light most favorable to the government, a rational juror could have found all the elements of the crime beyond a reasonable doubt. United States v. Wolf, 820 F.2d 1499, 1502 (9th Cir. 1987), (citing Jackson v. Virginia, 443 U.S. 307, 319 (1979)), cert. denied, 108 S. Ct. 1222 (1988); United States v. Buras, 633 F.2d 1356, 1359 (9th Cir. 1980).

This court reviews jury instructions as a whole to determine whether they are misleading or inadequate. United States v. Burgess, 791 F.2d 676, 680 (9th Cir. 1986). Challenges to the language or formulation of the instructions justify reversal only for an abuse of discretion. United States v. Alcantar, 832 F.2d 1175, 1178 (9th Cir. 1987). However, a defendant is entitled to an instruction concerning his theory of the case if it is supported by law. United States v. Echeverry, 759 F.2d 1451, 1455 (9th Cir. 1985).

DISCUSSION

18 U.S.C. § 1955 has been interpreted very broadly to include all individuals who participate in an illegal gambling enterprise. In Sanabria v. United States, 437 U.S. 54, 70 n. 26 (1978), the Supreme Court stated that " [n]umerous cases have recognized that 18 U.S.C. § 1955 (1976 ed.) proscribes any degree of participation in an illegal gambling business, except participation as a mere bettor." Prior to the Sanabria decision, we held that section 1955 applies to both " 'high level bosses and street level employees' ", but not to mere players or bettors. United States v. Sacco, 491 F.2d 995, 1002 (9th Cir. 1974) (en banc) (quoting H.Rep. No. 1549, 91st Cong., 2d Sess., reprinted in 1970 U.S.Code Cong. & Admin.News 4007, 4029). See also United States v. Calaway, 524 F.2d 609, 616-17 (9th Cir. 1975) ("Congress clearly meant to count all persons acting in the gambling business, not just those employed in a supervisory capacity."), cert. denied, 424 U.S. 967 (1976).

Other circuits have also interpreted section 1955 to apply to all participants in an illegal gambling organization. See, e.g., United States v. Grezo, 566 F.2d 854, 857 (2nd Cir. 1977); United States v. Ceraso, 467 F.2d 653, 656 (3rd Cir. 1972); United States v. Jenkins, 649 F.2d 273, 275 (4th Cir. 1981); United States v. Colacurcio, 659 F.2d 684, 688 (5th Cir.Unit A Oct.1981), cert. denied, 455 U.S. 1002 (1982); United States v. Merrell, 701 F.2d 53, 55 (6th Cir.), cert. denied 463 U.S. 1230 (1983); United States v. Greco, 619 F.2d 635, 638 (7th Cir. 1980); United States v. Bennett, 563 F.2d 879, 882 & n. 4, 883 (8th Cir.), cert. denied, 434 U.S. 924 (1977).

In the preceding line of cases, the courts unequivocally stated that section 1955 applies to all participants in an illegal gambling operation, including those whose activities are merely helpful to the gambling business. However, the cases all involved participants whose activities were directly related to the gambling function itself.²  The courts did not address the applicability of section 1955 to participants in an organization which is engaged in illegal gambling but who have neither a connection to nor knowledge of the organization's illegal gambling function.

To avoid convictions where mens rea is absent, the trial court must inform the jury that the defendant knew, or should have known, of the alleged gambling. In this case, however, the district court fully instructed the jury on the requirement that the defendant must have knowingly and intentionally participated in the operation with knowledge that it was a gambling business which she knew involved illegal gambling. Furthermore, the record contains ample evidence that Cannon possessed actual knowledge that Leisure Machines was engaged in illegal gambling. Indeed, at oral argument, Cannon's counsel admitted that there were facts sufficient for a jury to find that she had knowledge of the gambling operation.

In affirming Cannon's conviction, we reject each of her arguments. Cannon first invites us to adopt the "strict necessity" test of United States v. Boss, 671 F.2d 396 (10th Cir. 1982), as the law of this circuit. Boss, the sole case to narrowly interpret section 1955, held that waitresses who served drinks to gamblers were not subject to prosecution under section 1955. The court criticized the decisions of other circuits which had applied section 1955 to individuals whose activities were merely helpful to an illegal gambling operation. Because Boss is inconsistent with the Supreme Court's decision in Sanabria and our previous decisions in Sacco and Calaway, we decline to accept Cannon's invitation.

Cannon also contends that section 1955 only applies to individuals who have direct contact with gamblers. Under this constricted reading of the statute, prosecution of "high level bosses" would be barred because they rarely have direct contact with gamblers. As section 1955 is intended to punish those who "prey systematically upon our citizens", H.Rep. 1549, 91st Cong., 2d Sess. (1970), reprinted in 1970 Code Cong. & Admin.News at 4029, and has been held to apply to "high level bosses", Sacco, 491 F.2d at 1002, we find this contention to be wholly without merit.

Finally, Cannon argues that she is outside the scope of section 1955 because she is an employee of a business which merely supplies goods to other organizations which are engaged in illegal gambling. Cannon relies on United States v. Tucker, 638 F.2d 1292 (5th Cir.Unit A Mar.1981), cert. denied, 454 U.S. 833 (1981), for this proposition. In Tucker, the court stated that the necessary or helpful test of section 1955 is not so expansive that it would apply to a business which supplies liquor to a gambling organization. Id. at 1296 n. 8. In the present case, Cannon was employed by a business which not only knowingly supplied the very instrumentality of illegal gambling, but also knowingly arranged the illegal activity and shared in its profits. As a result, Cannon falls squarely within the scope of section 1955.

AFFIRMED.