United States v. $734,578.82 ( 2002 )

Opinions of the United
2002 Decisions States Court of Appeals
for the Third Circuit
4-15-2002
USA v. $734,578.82
Precedential or Non-Precedential:
Docket No. 00-2500
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PRECEDENTIAL
Filed April 15, 2002
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 00-2500
UNITED STATES OF AMERICA
v.
$734,578.82 IN UNITED STATES CURRENCY;
$589,578.82 IN UNITED STATES CURRENCY
AMERICAN SPORTS, LTD.; INTERCASH LTD. IOM,
Appellants
On Appeal for the United States District Court
for the District of New Jersey
(Dist. Ct. No. 99-cv-00013)
District Judge: Hon. Katharine S. Hayden
Argued: July 30, 2001
Before: BECKER, Chief Judge, McKEE, Circuit Judge, and
WEIS, Senior Circuit Judge
(Opinion Filed: April 15, 2002)
CLARK E. ALPERT, ESQ. (Argued)
DAVID N. BUTLER, ESQ.
ANDREW M. MOSKOWITZ, ESQ.
Alpert Butler Sanders &
Norton, P. C.
The Alpert Professional Building
449 Mt. Pleasant Avenue
West Orange, NJ 07052
Attorneys for Appellants
ROBERT J. CLEARY, ESQ.
United States Attorney
MICHAEL A. HAMMER, ESQ.
(Argued)
Assistant United States Attorney
970 Broad Street, Suite 700
Newark, NJ 07102
Attorneys for Appellee
OPINION OF THE COURT
McKEE, Circuit Judge.
American Sports Ltd. and Intercash Ltd. I.O.M appeal the
district court’s grant of summary judgment in favor of the
government and the resulting final order of civil forfeiture of
United States currency seized from bank accounts
established in relation to an illegal gambling business. See
18 U.S.C. S 1955. For the reasons that follow, we will
affirm.
I. FACTUAL BACKGROUND1
Intercash Ltd. I.O.M. ("IOM") is a corporation operating
in, and organized under the laws of, the Isle of Man.
American Sports Limited ("ASL") and related companies are
owned and operated by Gary Bowman.2 ASL and its related
companies operate in the United Kingdom under valid
licenses issued by that government. Intercash Financial
Services, Ltd. ("IFS-Canada"), is a Canadian corporation
located in Toronto, Canada. Ivan and Juliana Olenych are
members of the Board of Directors of IFS Canada. Although
it is not readily apparent from the government’s brief, when
the government refers to "IFS" it means both IOM and IFS-
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1. The facts are not in dispute. By a Stipulation, dated December 3,
1999, the parties agreed that the facts are as pleaded in the
Government’s First Amended Verified Complaint of Forfeiture in Rem.
2. The related Bowman-owned sports betting companies are American
Sports Betting Service, Sports Action International and International
Sports Betting Corp.
2
Canada. See Government’s Br. at 2. In the government’s
view, IOM and IFS-Canada are the same entity. IFS (i.e.,
IOM and IFS-Canada) was established with funds provided
by Bowman and one of his companies, American Sports
Betting Service. American Sports Betting Service is located
in England.
Intercash Financial Services is a New Jersey corporation
("IFS-NJ") operating in South Bound Brook, New Jersey. It
was incorporated in New Jersey in 1995 and its corporate
records list Michael Sydor, Dennis Pokoyoway and Yar
Jacobs as its district managers. IFS-NJ had three telephone
numbers, but it was not listed in the New Jersey telephone
books or Yellow Pages. Moreover, there are no hours of
operation posted for IFS-NJ anywhere in the building where
the office is located. Entry to IFS-NJ’s office is controlled by
an electronic buzzer inside the office. Telephone calls to the
office are not answered in a manner that informs the caller
that he/she has reached the offices of IFS-NJ. Rather, the
phone is merely answered with a "hello."
Bowman promoted his companies on the Internet in
advertisements claiming that the companies provided
recreational betting services and accepted wagers on
sporting events throughout the world. These advertisements
detailed the wagering services that Bowman and his
companies provided and explained that ASL provided a
betting service and accepted wagers on most sporting
events throughout the world. Most of Bowman’s business
was derived from North American sports such as
professional and college football and basketball games.3
Bowman’s advertisements also explained how to remit
money, set up an account and place bets. Funds were to be
remitted via Western Union wire transfer for deposit in
Fleet Bank, N.A., account number 2753-10-3191 to
establish accounts and to place bets. ASL is the holder and
beneficiary of that Fleet Bank account. Once a bettor
established an account, he/she could then call Bowman’s
company in England via international toll-free telephone
_________________________________________________________________
3. Bowman claims that most of his customers are from the United States
and Canada.
3
numbers to confirm the deposits and to immediately begin
gambling on various sporting events around the world.
Dennis Pokoyoway was IFS-NJ’s district manager, ran its
daily operations, and deposited funds received from bettors
into Fleet Bank accounts 2753-10-4767 and 2753-10-3191.
IFS-NJ received wire transfers of funds, ranging from $20
to at least $2,000, from bettors throughout the United
States. The wire transfers were typically completed through
Western Union where IFS-Canada/IOM maintained account
number APH081580. IFS-NJ received and processed the
wire transfers.
After IFS-NJ received a wire transfer, it deposited those
funds into accounts maintained for the benefit of IFS-
Canada/IOM and ASL, including Fleet Bank account
number 27523-10-4767, maintained in the name of and/or
for the benefit of IFS-Canada; and Fleet Bank account
number 2753-10-3191, maintained in the name of and/or
for the benefit of ASL.4
Large sums of money were regularly transferred from
Fleet Bank account number 2753-10-4767 to 2753-10-
3191. For example, in October of 1996, approximately $1.2
million was transferred, and another $550,000 was
transferred in November of 1996. Funds in account number
2753-10-3191 were paid out to bettors all over the United
States.
IFS-NJ also tallied the funds received on an hourly basis
and sent the hourly tallies to Bowman in England. Bettors
were therefore able to call ASL and other Bowman betting
companies using the aforementioned international
telephone numbers to confirm their deposits. This allowed
them to place bets soon after wiring money to IFS-NJ.
Two examples cited by the government illustrate IFS-NJ’s
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4. IFS-NJ deposited thousands of dollars each day into those accounts.
These deposits represented wagers from numerous bettors across the
United States. For example, on December 9, 1996, Pokoyoway made
deposits ranging from $2,000 to $15,000 for IFS-Canada. In addition,
Western Union corporate security officers informed Federal Bureau of
Investigation agents in October of 1996 that IFS-NJ had been sending
Gary Bowman as much as $90,000 per day.
4
role in Bowman’s gambling operations. The first is the case
of Wisconsin bettor, Brian Taff, who sent $32,000 to IFS-NJ
via Western Union. Taff ’s telephone records revealed calls
to Bowman in Manchester, England, and investigators
subsequently discovered documents related to sports-
betting in his garbage.5 The government argues that it is
reasonable to conclude that Taff wired the $32,000 to IFS-
NJ so that he could place bets with Bowman. These funds
were included in an accounting that IFS-NJ subsequently
sent to Bowman. According to the government, Taff ’s funds
were eventually deposited into one of the accounts at Fleet
Bank maintained by either ASL or IFS-NJ.
The government’s second example is a confidential source
that wired Western Union transfers to IFS-NJ to place
sports bets of more than $25,000 during 1995. Although
the confidential source was aware that the bets were
forwarded to a gambling house in England, the source
knew that his/her funds went through accounts handled
by IFS-NJ.
On December 3, 1998, Pokoyoway (IFS-NJ’s district
manager), pled guilty in state court in New Jersey to
charges of promoting gambling in the third degree, and
conspiracy to promote gambling in the third degree. In
doing so, he admitted that from August 1995 to
approximately December 15, 1996, he deposited funds from
Western Union wire transfers into Fleet Bank accounts
owned by IFS and ASL. Pokoyoway told law enforcement
agents that his duties for IFS-NJ included compiling the
aforementioned hourly totals of all checks received by IFS-
NJ and then informing IFS and Bowman (in England) of the
amount of the deposits. According to Pokoyoway, IFS-NJ
received well over $1,000 a day between August 1995 and
_________________________________________________________________
5. Although not relevant to our analysis, it is interesting to note that this
entire forfeiture proceeding began fortuitously when agents of the
Wisconsin Attorney General’s Office informed New Jersey authorities that
they had discovered sports-betting information in Taff ’s garbage. The
contents of his garbage were of interest to Wisconsin authorities because
they suspected Taff ’s involvement in narcotics. The documents in Taff ’s
garbage led to an international investigation into sports-betting that
eventually involved the FBI, the Royal Canadian Mounted Police, and
authorities in England and the United States.
5
December 15, 1996. He estimated that IFS-NJ averaged
twenty to thirty Western Union wire transfers per day, for
a daily total of $4,000 to $5,000. He also acknowledged
that he knew that the incoming funds were derived from
sports gambling.
II. DISTRICT COURT PROCEEDINGS
This litigation began when FBI agents executed a warrant
authorizing the search of IFS-NJ’s office, and seizure of the
contents of Fleet Bank Account number 2753-10-4647, in
the name of and/or for the benefit of, IOM and ASL. The
warrant also authorized the seizure of all funds received by
Fleet Bank for three days after service of the warrant.
Thereafter, agents executed a warrant authorizing seizure of
the contents of Fleet Bank account number 2753-10-3191,
maintained in the name of, and/or for the benefit of, ASL.
This warrant also authorized seizure of funds deposited into
the account for the three days following execution of the
warrant.
Pursuant to these warrants, agents seized $77,660.62
from account number 2753-10-4767 and $268,426.59 from
account number 2753-10-3191. The next day, agents
obtained a warrant to seize Western Union account number
APH081580 in the name of, and/or for the benefit of, IOM.
Agents seized an additional $243,491.61 from that account.
Approximately three years later, the government filed the
instant civil in rem forfeiture action against those funds.
Count I of the complaint alleged criminal violations of 18
U.S.C. S 1955, and sought civil forfeiture pursuant to 18
U.S.C. S 1955(d). Count II alleged violations of 18 U.S.C.
S 1956, and sought forfeiture pursuant to 18 U.S.C. S 981.
Count III alleged violations of 18 U.S.C. S 1957, and sought
forfeiture pursuant to 18 U.S.C. S 981.6
_________________________________________________________________
6. The government subsequently filed a First Amended Verified
Complaint in which it clarified that the actual amount of currency was
$489,578.82. Apparently, $145,000 had been withdrawn from Fleet
Bank account number 2853-10-4767 after agents served the warrant,
but before the bank tendered the proceeds to the government.
6
Following receipt of notice of the forfeiture action, IOM
filed a verified claim to the property seized from Fleet Bank
account number 2753-10-4647 and Western Union account
number APH081580. ASL filed a verified claim for the
property seized from Fleet account number 2753-10-3191.
The parties eventually stipulated to the facts as pleaded in
the government’s first amended complaint. Thereafter, both
sides moved for summary judgment. The district court
granted the government’s motion for summary judgment on
Count I (seeking forfeiture under S 1955(d) for violations of
S 1955), but declined to enter judgment on Counts II and III
because all of the currency was forfeited under Count I,
and the remaining Counts were therefore moot. The court
filed a Final Order of Forfeiture on July 24, 2000, and this
appeal by IOM and ASL (hereinafter collectively referred to
as "Claimants") followed.
III. DISCUSSION
18 U.S.C. S 1955 provides in relevant part:
(a) Whoever conducts, finances, manages, supervises,
directs, or owns all or part of an illegal gambling
business shall be fined under this title 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 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.
18 U.S.C. S 1955(a), (b)(1)(i) - (iii). The term "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,
7
or selling chances therein." 18 U.S.C. S 1955(2). The statute
also authorizes civil forfeiture as follows: "[a]ny property,
including money, used in violation of the provisions of
[S 1955] may be seized and forfeited to the United States."
18 U.S.C. S 1955(d).
A. Burden of Proof in S 1955(d) Civil Forfeiture
Proceedings.
The government bears the initial burden in a forfeiture
proceeding under S 1955. See United States v. On Leong
Chinese Merchants Ass’ n Bldg., 918 F.2d 1289 (7th Cir.
1990).
The government’s burden in a [S 1955(d)] civil forfeiture
is merely to establish probable cause to believe that the
defendant property is subject to forfeiture. Probable
cause is defined as reasonable ground for the belief of
guilt supported by less than prima facie proof but more
than mere suspicion. Of course, probable cause must
be demonstrated with respect to every essential
element of the alleged violation. Once the government
demonstrates probable cause . . . the ultimate burden
shifts to the claimant to prove by a preponderance of
the evidence that the property is not subject to
forfeiture.
Id. at 1292 (citations and internal quotations omitted). This
is identical to the burdens imposed for civil in rem
forfeitures under 21 U.S.C. S 881(a)(6). Thus, in relying
upon On Leong, we are merely applying our understanding
of the burden-shifting procedure described in 19 U.S.C.
S 1615 to this civil forfeiture action brought pursuant to 18
U.S.C. S 1955(d). See United States v. $10,700.00, 258 F.3d
215, 222 (3d Cir. 2001).
If the government satisfies its burden of proof, and the
party opposing forfeiture fails to establish that the property
is not subject to forfeiture, forfeiture will be ordered
regardless of the culpability of the claimant. "[T]he presence
or involvement of the claimant is simply immaterial" to the
government’s right to seek forfeiture. Id. at 1293.7
_________________________________________________________________
7. Forfeitures under S 1955 therefore differ from forfeitures under the
Comprehensive Drug Abuse Prevention and Control Act, 21 U.S.C. S 881
8
The language of [S 1955(d)] does not condition forfeiture
on any suggestions that the claimant itself directed or
managed the illegal gambling operation. [Rather,] [i]t
authorizes the forfeiture of ‘any property . . . used in
violation of the provisions of this section.’ Though one
of the preceding subsections does make it illegal to
‘conduct, finance, supervise, direct, or own all or part
of an illegal gambling business’ . . . the forfeiture
subsection is not limited . . . to property owned by
those who themselves conduct or oversee illegal
gambling businesses.
Id. at 1293 (citations omitted)(emphasis in original). This
disjuncture between criminal culpability and exposure to
forfeiture arises from a legal fiction. " ‘Traditionally,
forfeiture actions have proceeded upon the fiction that
inanimate objects themselves can be guilty of wrongdoing.’ "
Id. (quoting United States v. U. S. Coin and Currency, 401
U.S. 715, 719 (1971)). Therefore, "the object itself is the
formal defendant." Id. Thus, "forfeiture can be ordered even
in the absence of any wrongdoing on the claimant’s part."
Id; see also United States v. Sandini, 816 F.2d 869, 872 (3d
Cir. 1987) ("Civil forfeiture is an in rem proceeding. The
property is the defendant in the case. . . . The innocence of
the owner is irrelevant -- it is enough that the property was
involved in a violation to which forfeiture attaches.").8
B. The Government’s Showing of Probable Cause.
18 U.S.C. S 1955(b)(1)(i) first looks to relevant state law to
_________________________________________________________________
et seq. (West 1981 & Supp. 1984). "Congress engrafted an ‘innocent
owner’ defense to forfeiture under SS 881(a)(4), (6) and (7).’ " United States
v. One 1973 Rolls Royce, 42 F.3d 794, 799 (3d Cir. 1994).
8. But see Calero-Toledo v. Pearson Yacht Leasing Co., 416 U.S. 663, 689
(1974), suggesting in "now-famous dicta that Fifth Amendment just
compensation concerns might preclude a judge from ordering forfeiture
if the owner proves ‘he was uninvolved and unaware of the wrongful
activity, but also that he had done all that reasonably could be expected
to prevent the proscribed use of his property.’ " United States v. On Leong
Chinese Merchants Ass’n Bldg., 918 F.2d 1289, 1293 n.3. (7th Cir.
1990).
9
determine whether a given activity constitutes gambling.
Here, the alleged illegal activity occurred in New Jersey.
Therefore, "[t]he relevant burden of proof requires merely
that the government establish probable cause to believe
that [New Jersey] gambling laws were being violated." On
Leong, 918 F.2d at 1293.
The relevant New Jersey law here is set forth at N.J.S.A.
2C:37-2. That statute makes it a crime to engage in
"promoting gambling," and provides that:
[a] A person is guilty of promoting gambling when he
knowingly:
(1) Accepts or receives money or other property,
pursuant to an agreement or understanding with any
person whereby he participates or will participate in
the proceeds of gambling activity; or
(2) Engages in conduct, which materially aids any
form of gambling activity. Such conduct includes but is
not limited to conduct directed toward the creation or
establishment of the particular game, contest, scheme,
device or activity involved, toward the acquisition or
maintenance of premises, paraphernalia, equipment or
apparatus therefor, toward the solicitation or
inducement of persons to participate therein, toward
the actual conduct of the playing phases thereof,
toward the arrangement of any of its financial or
recording phases, or toward any other phase of its
operation.
N.J.S.A. 2C:37-2a(1), (2) (emphasis added). Moreover,
"gambling" is defined to include "staking or risking
something of value upon the outcome of a contest of chance
or a future contingent event not under the actor’s control or
influence, upon an agreement or understanding that he will
receive something of value in the event of a certain
outcome." N.J.S.A. 2C:37-1b.
Given the breadth of this definition, we agree that the
government clearly established probable cause to believe
that IFS-NJ was "promoting gambling" in violation of New
Jersey law by materially aiding Bowman’s gambling
enterprises.9 IFS-NJ was a integral component of Bowman’s
gambling enterprise. It received funds from bettors
_________________________________________________________________
9. As noted earlier, see supra n.1, the government and the Claimants
stipulated that the facts are as stated in the government’s first amended
complaint.
10
throughout the United States and processed those transfers
so that the bettors could open accounts and place bets with
ASL and other Bowman companies. It sent Bowman an
hourly accounting of these funds. This allowed Bowman to
monitor betting income and it also allowed bettors to call
ASL and Bowman to confirm their deposits and place bets.
IFS-NJ was also part of the payout mechanism that
ensured that winning bettors collected on their wagers. IFS-
NJ clearly "[e]ngage[d] in conduct, which materially aid[ed]
. . . gambling activity." Its conduct was "directed . . . toward
the arrangement of [the gambling activity’s] financial or
recording phases." N.J.S.A. 2C:37-2a(2).
Even though the stipulated facts support the legal
conclusion that IFS-NJ promoted gambling under New
Jersey law, Claimants nonetheless argue that the
government failed to establish probable cause. They argue
instead that the seizure and forfeiture here "represent[ ] a
prosecutorial excess." Claimants’ Br. at 11. Their argument
is largely based upon the generally accepted conflict of laws
principle that a gambling transaction occurs in the country
where the bet or wager is accepted. Id. at 13-14 (quoting
Dicey & Morris, The Conflict of Laws 1468 (1993)). They
insist that the gambling transactions here actually occurred
in England where the bets were ultimately "accepted."
Claimants insist that there was no illegal gambling activity
at all in this case because gambling is legal in England,
and all of the actors there were legally licensed to conduct
a gambling business. According to Claimants, IFS-NJ
merely "performed a facially, neutral, ministerial function in
the United States." Id. at 10. They attempt to buttress this
claim by reminding us that IFS-NJ "was not open to the
public, listed in any telephone directory, or identified in any
advertising material as a place where bets could be placed."
They are also quick to point out that the company’s
"operations did not include fixing odds, declaring winners
or losers, or accepting or relaying bets or wagers." Id. at 5,
12. Claimants largely rest this argument on three cases
which we will discuss in turn.10
_________________________________________________________________
10. Claimants cite a host of cases from various states dealing with
gambling. However, we do not believe that any of them are helpful for the
11
The first is State v. Andreano, 285 A.2d 229 (N. J. App.
Div. 1971). There, the defendant was charged with
bookmaking and gambling in violation of New Jersey law.
His defense at trial was that he was not a bookmaker at all.
Rather, he argued that he was simply acting as a
messenger who took others’ bets to a legal, in-state pari-
mutuel race track as a favor. The trial judge instructed the
jury that under the New Jersey law, "bookmaking" occurs
whenever an individual accepts a bet from another with the
intent of subsequently placing the bet at a pari-mutuel race
track, irrespective of whether that individual acts only as a
conduit and does not benefit from the transaction. On
appeal, the Appellate Division reversed the conviction based
upon that instruction. That court held that "when the bet
is taken by a disinterested individual for placement at a
lawful race meeting, such activity is not bookmaking within
the statutory prohibition." Id. at 231.
Claimants contend that, under Andreano,"mere[ly]
handling . . . funds, [which are] destined for a lawful
location inside or outside the State, does not constitute an
unlawful gaming activity." Claimants’ Br. at 23. Since IFS-
NJ only transferred funds to England, where the relevant
parties were duly licensed and gambling is legal, Claimants
insist that IFS-NJ could not have engaged in illegal
gambling activity under New Jersey law.
However, Claimants’ reading of Andreano is far too
narrow. Andreano was charged with "bookmaking," and the
government here is not claiming that IFS-NJ’s operations
constituted bookmaking under New Jersey law. Moreover,
the statute under which Andreano was charged has since
been repealed. That earlier statute did not prohibit
"promoting gambling" as current law does. The
government’s forfeiture claim rests upon an assertion that
IFS-NJ promoted gambling as currently defined in N.J.S.A.
_________________________________________________________________
simple reason that the government’s seizure and forfeiture is predicated
upon its claim that IFS-NJ violated New Jersey statutory law. Thus, the
issue is whether the government had probable cause to believe that IFS-
NJ’s activities promoted gambling as defined in the New Jersey statute,
not whether the government had probable cause to believe that IFS-NJ’s
operations would have been illegal under British law.
12
2C:37-2, and Andreano does not assist the Claimants in
that regard.11
The second case Claimants rely upon is United States v.
Truesdale, 152 F.3d 443 (5th Cir. 1988). The gambling
operation in Truesdale was strikingly similar to the
operation here. There, World Sportsbook ("WSB") operated
a gambling business in the Dominican Republic, Jamaica,
and in Dallas, Texas. Its operations were legal in Jamaica
and the Dominican Republic. Bettors placed bets by calling
WSB’s Jamaican and Dominican offices, and those offices
accepted and processed the wagers. Bets could only be
placed via "offshore" telephone numbers. However, WSB
opened accounts by sending funds to its Dallas office via
Western Union wire transfer or overnight delivery. WSB
employees in the Dallas office received these funds and
deposited them into various bank accounts in and around
Dallas for WSB.
The federal government successfully prosecuted WSB’s
Dallas employees for illegal gambling in violation of 18
U.S.C. SS 1955 and 1955(b)(1)(i). The government charged
that the employees were guilty of "bookmaking," under
Texas Penal Code S 47.01(2)(A)-(C), and that this
constituted a violation of S 1955. Section 47.01(2)(A)-(C) of
the Texas Penal Code made it a crime to receive, record, or
forward: (1) more than 5 bets or offers to bet in a day; or
(2) more than $1,000 in a day; or (3) to scheme to receive,
record, or forward a bet or an offer to bet. However, the
Court of Appeals for the Fifth Circuit reversed the
defendants’ convictions. The court held that there was
_________________________________________________________________
11. Claimants argue that Andreano is still significant because even
though the statue Andreano was charged with violating was repealed, it
was replaced by the statute at issue here. Claimants maintain that we
should be guided by the repealed bookmaking statute when interpreting
N.J.S.A. 2C:37-2. Reply Br. at 9. This argument ignores the fact that the
relevant statute in Andreano did not prohibit "promoting of gambling,"
and we certainly cannot ignore the difference in the language between
the old and new statutes. "The starting point for interpreting a statute is
the language of the statute itself. Absent a clearly expressed legislative
intention to the contrary, that language must ordinarily be regarded as
conclusive." Temple Univ. v. United States , 769 F.2d 126, 132 (3d Cir.
1985).
13
insufficient evidence that the defendants engaged in
bookmaking under Texas law merely by accepting bets in
Texas. The court’s holding was based upon its conclusion
that the actual bookmaking (i.e. accepting bets), actually
occurred in the Dominican Republic and Jamaica where it
was legal.
Truesdale does, at first blush, support Claimants’
position because here, as in Truesdale, bets were actually
"placed" outside of the United States in a jurisdiction where
betting was legal and where the betting business was
properly licensed. However, the defendants in Truesdale
were charged with bookmaking, and the government’s
averments here are not analogous. Rather, the government
alleges that IFS-NJ was "promoting gambling" under a New
Jersey statute that prohibits conduct "which materially aids
any form of gambling activity," N.J.S.A. 2C:37-2a(2).
Moreover, upon a closer reading, Truesdale actually
undermines Claimants’ position. In Truesdale, bookmaking
was only one of five activities defined as "gambling
promotion" under Texas law. Section 47.03(a)(3) of the
Texas Penal Code made it a separate offense for an
individual to "become[ ] a custodian of anything of value bet
or offered to be bet[ ]" for gain. However, the indictment in
Truesdale did not allege that conduct as a predicate for the
federal prosecution under S 1955. It only broadly alleged
bookmaking. Therefore, "the fact that the [defendants had]
engaged in financial transactions in the State of Texas that
may have run afoul of Section 47.03(a)(3) [was] irrelevant."
152 F.3d at 447. Nevertheless, in Truesdale, the
government argued that the convictions could be upheld
because the underlying financial transactions "were an
essential part of the operation." Id. at 449. The court of
appeals rejected that argument, saying:
The government maintains that these financial
transactions were an essential part of the operation. It
may be true that these financial transactions were
essential to the overall operation, but they do not
establish an essential element of the crime of
"bookmaking" as it is defined by Texas law. The Texas
bookmaking statute prohibits recording, receiving, and
forwarding bets; where and how the money is paid out
14
is irrelevant under section 47.03(a)(2). Becoming a
custodian of money that is used to place bets offshore
would be a violation of section 47.03(a)(3). However, the
indictment did not allege that the appellants violated
section 47.03(a)(3) and the jury was not instructed on
any such violation. Nor was the case tried on that
theory. In short, the government’s case and the jury’s
verdict were focused exclusively on illegal bookmaking,
and we cannot affirm the case on a different theory.
Id. at 449 (emphasis added). The highlighted portion of this
statement is dicta, but it illustrates the distinction between
the circumstances in Truesdale, and the circumstances
here.
The third case Claimants rely upon is California v.
Cabazon Band of Mission Indians, 480 U.S. 202 (1987).
Claimants argue that Cabazon stands for the proposition
that one sovereign cannot criminalize gambling activity that
is legal under the laws of another sovereign. However,
Cabazon is even less helpful to Claimants than Truesdale.
Cabazon was concerned with whether Congress intended to
allow state laws to apply on Indian reservations. The
precise issue was whether a state could apply its gambling
laws to bingo games held on Indian reservations. Id. at 207-
212. In resolving that issue the court merely stated that
nothing in the Organized Crime Control Act (which includes
S 1955) permits the states to enforce federal gambling laws
against Indian tribes. Id. at 213-14. This unique case
involving tribal sovereignty in no way furthers our inquiry
into whether IFS-NJ promoted gambling as defined under
applicable New Jersey law.
Given the language of the relevant statute here, we
conclude that the government established probable cause
that IFS-NJ’s conduct violated New Jersey’s law against
promoting gambling, and the government therefore satisfied
its burden of proof with regard to the first element of
S 1955(b)(1)(i).
However, the government must establish probable cause
as to every essential element of S 1955(b)(1), On Leong, 918
F.2d at 1292, and Claimants allege that the government
ignored the second and third elements of that statute. The
15
government insists that Claimants never raised this
argument in the district court, and the Claimants do not
argue to the contrary. Nor do they elaborate on their
statement that the government ignored the remaining
elements here. Rather, Claimants merely make the general
assertion that IFS-NJ was not an illegal gambling business
and, the defendant funds were therefore not subject to
seizure and forfeiture. Reply Br. at 16.
We generally do not address issues that are raised for the
first time on appeal. Harris v. City of Philadelphia, 35 F.3d
840, 845 (3d Cir. 1994) ("This Court has consistently held
that it will not consider issues that are raised for the first
time on appeal.").12 Here, however, the parties have entered
into a stipulation which allows us to readily dismiss this
additional claim. If we assume arguendo that Claimants
have not waived this argument, it is clear that the
stipulated facts enable the government to satisfy its burden
under the second and third elements of SS 1955(b)(1)(ii) and
(iii).
The second element of S 1955(b)(1) requires that the
"illegal gambling business . . . involve[ ] five or more
persons who conduct, finance, manage, supervise, direct or
own all or part of such business." 18 U.S.C.S 1955(b)(1)(ii).
A person " ‘conducts’ an illegal gambling business [under
the statute] by performing any necessary function in the
gambling operation, other than that of a mere bettor."
United States v. Miller, 22 F.3d 1075, 1077 (11th Cir.
1994)(citation omitted). Here, the parties stipulate that each
of the following seven people conducted the gambling
business: Dennis Pokoyoway, Michael Sydor, Yar Jacobs,
Juliana Olenych, Ivan Olenych, Katharine Sobczak and
Gary Bowman.13
_________________________________________________________________
12. An exception to this general principle exists"in the horrendous case
where a gross miscarriage of justice would occur" if we did not consider
an issue not raised in the district court. Newark Morning Ledger v.
United States, 539 F.2d 929, 932 (3d Cir. 1967).
13. Pokoyoway, Sydor and Jacobs were district managers for IFS-NJ.
Pokoyoway oversaw IFS-NJ’s daily operations and deposited funds
received from bettors into bank accounts maintained for the benefit of
IOM and ASL. Sydor signed the Quick Chek Service application to
16
The third element requires that the gambling operation
"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." 18 U.S.C. S 1955(b)(1)(iii). The
facts as stipulated to in the first amended complaint
establish that IFS-NJ was in operation for more than 30
days, and that IFS-NJ received more than $2,000 in a
single day.
Claimants’ argue that the district court erred in
considering Pokoyoway’s state convictions and admissions
he made during his guilty plea colloquy when determining
if the government satisfied its burden. Inasmuch as the
conviction and colloquy came after the initial seizure of
currency, Claimants maintain that they can not possibly
furnish probable cause for a seizure that already occurred.
Claimants’ Br. at 1.
The second paragraph of S 1955(d)14 incorporates the
_________________________________________________________________
Western Union and received bills sent to IFS-NJ. Ivan and Juliana
Olenych were members of the board of IFS-Canada. They set up IFS-NJ
and recruited and hired Pokoyoway. Sobczak helped Pokoyoway with
bookkeeping, preparing deposits and faxing information to Bowman in
England. Finally, Bowman owned, funded, operated and promoted the
gambling enterprises that IFS-NJ served. Of the seven individuals, only
two -- Pokoyoway and his girlfriend, Sobczak,-- were actually present
in New Jersey. Bowman was in England and the other four were in
Canada.
Claimants argue that each of the people needed to meet the second
element under S 1955(1) must be present in the United States. However,
they cite no authority for that proposition and we have found none. The
government does not respond to that assertion other than listing these
seven individuals and stating that this is sufficient to satisfy the second
element. We agree.
As we have discussed, the offending conduct occurred in New Jersey,
and nothing in S 1955 suggests that Congress intended to require all of
the persons involved in an "illegal gambling business" to be located
inside of the United States so long as the other conditions of the statute
are satisfied. Moreover, no such requirement arises under the Commerce
Clause. See United States v. Boyd, 149 F.3d 1062, 1066 (10th Cir.
1998). Accordingly, we reject Claimants’ position.
14. Which provides: "All provisions of law relating to the seizures,
summary, and judicial forfeiture procedures, and condemnation of
17
burden of proof required for customs forfeitures under 19
U.S.C. S 1615.15 The claimant in a proceeding under S 1615
bears the ultimate burden, however, "probable cause [must]
first be shown for the institution of such suit or action."
There is a circuit split as to whether the government must
demonstrate that probable cause existed before it initiated
forfeiture proceedings under S 1615, or whether the
government can demonstrate probable cause by relying
upon evidence it was unaware of until after proceedings
began. Compare United States v. $191,910.00 in U. S.
Currency, 16 F.3d 1051, 1066 (9th Cir. 1994) (prohibiting
the use of "after-acquired evidence"); United States v.
$91,960.00, 897 F.2d 1457, 1462 (8th Cir. 1990) (same),
with United States v. Premises and Real Property at 4492 S.
Livonia Road, 889 F.2d 1258, 1268 (2d Cir. 1989)(stating
that "after-acquired evidence" can support probable cause);
United States v. $67,220.00 in United States Currency, 957
F.2d 280, 284 (6th Cir. 1992) (adopting Livonia ).
Pokoyoway pled guilty to the state gambling charges on
December 3, 1998. See First Amend. Compl. atP 59.
However, the government did not file its forfeiture
_________________________________________________________________
vessels, vehicles, merchandise, and baggage for violation of the customs
laws; the disposition of such vessels, vehicles, merchandise, and baggage
or the proceeds from such sale; the remission or mitigation of such
forfeitures; and the compromise of claims and the award of
compensation to informers in respect of such forfeitures shall apply to
seizures and forfeitures incurred or alleged to have been incurred under
the provisions of this section, insofar as applicable and not inconsistent
with such provisions. Such duties as are imposed upon the collector of
customs or any other person in respect to the seizure and forfeiture of
vessels, vehicles, merchandise, and baggage under the customs laws
shall be performed with respect to seizures and forfeitures of property
used or intended for use in violation of this section by such officers,
agents, or other persons as may be designated for that purpose by the
Attorney General." 18 U.S.C. S 1955(d).
15. The second sentence of 18 U.S.C. S 1995(d) states: "[a]ll provisions of
laws relating to the seizures, . . . and judicial forfeiture procedures, . . .
of vessels, vehicles, merchandise, and baggage for violation of the
customs laws; . . . shall apply to seizures and forfeitures . . . incurred
under the provisions of this section, insofar as practicable and not
inconsistent with such provisions."
18
complaint until January 4, 1999. Therefore, if we conclude
that forfeiture begins with the filing of the forfeiture
complaint, Pokoyoway’s plea would not be "after-acquired
evidence," and there is no issue as to whether his
conviction and admissions he made during his plea
colloquy can establish the probable cause necessary to
support the forfeiture. On the other hand, since the Fleet
Bank accounts were seized in December 1996, Pokoyoway’s
conviction and plea colloquy statements would be"after-
acquired evidence."
We have not yet addressed this issue directly. However,
we have addressed the question in the context of a civil
forfeiture under 21 U.S.C. S 881. In United States v. Ten
Thousand Seven Hundred Dollars and No Cents
($10,700.00), 258 F.3d 215 (3d Cir. 2001), we stated: "[T]he
government bears the burden of establishing . . . probable
cause to believe that the currency was subject to forfeiture
at the time that it filed the forfeiture complaints in the
District Court." Id. at 222 (emphasis added). Our analysis
was based upon our reading of the respective burdens of
proof for customs seizures under 19 U.S.C. S 1615. As
noted above, the same standard applies to forfeitures under
S 1955 because S 1955(d) incorporates the procedures for
customs forfeitures into the gambling statute. That controls
our inquiry here, and we therefore hold that probable cause
must exist to support the forfeiture when the government
files the forfeiture complaint.16
As noted above, Pokoyoway pled guilty on December 3,
1998, and the government filed its forfeiture complaint
approximately one month later on January 4, 1999. 17
Therefore, admissions Pokoyoway made during his change
_________________________________________________________________
16. This view avoids the obvious questions of fundamental fairness that
would rise from the government attempting to have a court order
forfeiture without first having an adequate factual basis to support the
request.
17. As noted, the government filed a first amended complaint on March
25, 1999 to correct the amount of the defendant currency and the Fleet
Bank account numbers.
19
of plea colloquy were properly considered in the course of
the subsequent forfeiture proceedings under S 1955(d).18
Since the government met its burden of establishing
probable cause that the currency was subject to forfeiture,
the burden shifted to Claimants to establish by a
preponderance of the evidence that the property was not
subject to forfeiture. On Leong, 918 F.2d at 1292. ("Once
the government demonstrates probable cause in a forfeiture
case, the ultimate burden shifts to the claimant to prove by
a preponderance of the evidence that the property is not
subject to forfeiture.").
C. The Claimants’ Burden.
Although Claimants make several arguments in opposing
forfeiture, most if not all of those arguments can be
reduced to a subset of Claimants’ main contention that IFS-
NJ’s activities in New Jersey cannot be illegal because all of
the gambling occurred in England, where the relevant
actors were properly licensed to engage in this activity.
They maintain that the New Jersey gambling statute does
not apply in England where the bets were accepted. They
cite no authority for their basic proposition other than the
testimony of various experts on the legislative history and
intent of New Jersey’s gambling statutes.
Claimants’ experts testified that N.J.S.A. 2C:37-2"was
always intended to apply . . . to the promotion of‘illegal’
gambling only, not gambling under a governmental license."
_________________________________________________________________
18. Claimants cite United States v. One Single Family Residence Located
at 18755 North Bay Road, Miami, 13 F.3d 1493 (11th Cir. 1994) in
stating that Pokoyoway’s conviction "has no significance here, where
there was no testimony." Claimants’ Br. at 1. However, One Family
Residence turned on the district court’s erroneously concluding that a
spouse was estopped from challenging a forfeiture petition filed against
a residence owned by husband and wife as tenants by the entireties. The
Court of Appeals for the Eleventh Circuit reversed because the wife had
not been a party to her husband’s criminal trial and therefore was not
estopped from challenging any of the factual determinations her
husband’s conviction was based upon. The government’s probable cause
showing here is based upon Pokoyoway’s own admissions during his
plea colloquy. Government’s Br. at 26.
20
See Appellants’ Br. at 8. Claimants’ experts testified that
the district court’s interpretation of the statute would
criminalize such things as legitimate interstate banking and
advertising relationships. Id. Although Claimants’ argument
has some appeal, it ignores the text of New Jersey’s statute.
That statute prohibits "conduct, which materially aids any
form of gambling activity," and the scope of that language
is illustrated by the New Jersey Appellate Division’s
analysis in State v. Fiola, 576 A.2d 338 (N. J. App. Div.
1990).
The business in Fiola "involve[d] the solicitation and
receipt of money in New Jersey for the purchase of lottery
tickets issued by other states, the transport of money to
other states to purchase lottery tickets and the return of
the tickets to New Jersey for delivery to customers." Id. at
339. The New Jersey Attorney General petitioned to enjoin
the defendants’ business alleging that it violated the state’s
constitutional and statutory prohibitions against gambling.
The trial court refused to grant an injunction, but the
Appellate Division reversed. That court held that even
though the defendants’ criminal culpability was not at
issue, their "transport of gambling requests and money to
out-of-state gambling sites and the return of lottery tickets
to New Jersey gamblers ‘materially aids [a] form of gambling
activity’ within the intent of N.J.S.A. 2C:37-2(a)(2)." Id. at
340. The Appellate Division held that the defendants’ mere
"possession of lottery tickets for distribution to their
customers violates N.J.S.A. 2C:37-2(a)(2)." Id.Therefore, even if we accept Claimants’ argument that the
gambling occurred outside of New Jersey where it is legal,
their activity inside of New Jersey was nevertheless illegal
because it promoted a gambling enterprise. Claimants’
argument requires that we ignore the wording of the statute
as well as relevant decisions of New jersey appellate courts
that have interpreted it. We will do neither. In fact, despite
Claimant’s insistence that we view IFS-NJ’s conduct
through the narrowest of lenses, it is clear to us that the
conduct here exemplifies the breadth of the statute.
Similarly, we reject Claimants’ assertion that the district
court applied New Jersey criminal law extraterritorially
contrary to the limitations to specific provisions of the New
21
Jersey Crimes Code. See N.J.S.A. 2C:1-3a(1)-(6). More
specifically, Claimants argue that under N.J.S.A. 2C:1-3a(4)
New Jersey’s prohibition against promoting gambling can
not be applied to IFS-NJ’s conduct inside of New Jersey
unless that conduct is also illegal in England. See N.J.S.A.
2C:1-3a(4).
This argument ignores the critical fact that New Jersey
has not attempted to prosecute IFS-NJ for violating its
promoting gambling statute. Rather, the United States
government has instituted civil forfeiture proceedings based
upon IFS-NJ’s violation of 18 U.S.C. S 1955. As noted
above, S 1955 is a criminal statute that is part of the
Organized Crime Control Act. That Act is "a federal law
that, among other things, defines certain federal crimes
over which the district courts have exclusive jurisdiction."
Cabazon Band of Mission Indians, 480 U. S. at 213. We are
therefore concerned with an exercise of federal, not state,
authority. Moreover, as noted above, the forfeiture action is
predicated solely upon conduct that occurred in New
Jersey. Claimants are therefore actually arguing that the
laws of England insulate them from forfeiture based upon
their conduct in New Jersey.19 We reject that argument.
The Claimants next argue that this forfeiture proceeding
is essentially being waged against an innocent, foreign
citizen and his gambling companies. However, this action
does not turn on the culpability of Bowman or his British
or Canadian companies. Moreover, as we noted earlier,
forfeiture is not conditioned upon the culpability of the
owner of the defendant property. We reiterate: the
"innocence of the owner is irrelevant" in a civil forfeiture
proceeding. Sandini, 816 F.2d at 872. Therefore, the legality
and/or licensure of the businesses in England is simply
irrelevant to the issues raised in the instant forfeiture
proceeding.20
_________________________________________________________________
19. Inasmuch as IFS-NJ’s accounts are subject to forfeiture based solely
upon IFS-NJ’s conduct, this case does not raise any issue of whether
IFS-NJ is the alter ego of Bowman or his companies in Canada or the
United Kingdom as Claimants suggest. See Claimants’ Br. at 6.
20. As we noted in United States v. Sandini , civil in rem forfeiture
proceedings "enjoy a venerable history and existed in Mosaic law if not
22
Claimants’ also attempt to draw substance from the rule
of lenity. "The main function of the rule of lenity is to
protect citizens from the unfair application of ambiguous
punitive statutes." United States v. Thompson/Center Arms
Co., 504 U. S. 505, 525 (1992) (Stevens, J., dissenting).
Therefore, where a statute is punitive in nature, the rule of
lenity requires that any ambiguity in the statute be resolved
in favor of the claimant. One 1973 Rolls Royce , 43 F.3d at
801. Claimants argue that even if a "technical violation of
S 1955 could have been made out," the rule of lenity
nevertheless precludes forfeiture under the circumstances
here. Claimants’ Br. at 26. This argument is twofold. First,
Claimants seize upon the district court’s statement that
"there is no law directly defining the criminality of the
conduct in question." App. at 9. Second, they argue that
the district court incorrectly held that the rule of lenity
does not apply to civil forfeiture proceedings. They insist
that this forfeiture was punitive and therefore the rule of
lenity should apply.21
We interpret the first prong of this argument as an
assertion that the district court believed that there was no
New Jersey case law from which it could determine if IFS-
NJ’s activities constituted a violation of N.J.S.A. 2C:37-
2a(2). However, the rule of lenity applies only if there is a
"grievous ambiguity or uncertainty in the statute."
Muscarello v. United States, 524 U.S. 125, 138
(1998)(citation and internal quotations omitted). The
_________________________________________________________________
in other ancient codes as well." 816 F.2d at 872. Therefore, "[h]owever
inapplicable its original justification may be today, in rem, or civil
forfeiture, has become ‘too firmly fixed in the punitive and remedial
jurisprudence of the country to be now displaced.’ " Id. (quoting
Goldsmith-Grant Co. v. United States, 254 U. S. 505, 511 (1921)).
21. While civil forfeitures are usually not regarded as punishment,
Sandini, at 872-873, certain kinds of civil forfeitures can indeed be
punitive. In Austin v. United States, 509 U. S. 602, 619-620 (1993), the
Court held that civil drug forfeitures under 21 U.S.C. SS 881(a)(4) and (7)
are punishment under the Eight Amendment’s Excessive Fines Clause.
See also United States v. One 1973 Rolls Royce, 43 F.3d 794, 819
(1994)(Section 881(a)(4) forfeiture "is punitive and quasi-criminal in
nature.").
23
parameters of New Jersey’s prohibition against promoting
gambling are not ambiguous, and they are certainly not
"grievous[ly]" ambiguous. New Jersey’s statute plainly
includes conduct that materially aids any form of gambling
activity, and it even provides examples of such conduct.
This portion of Claimants’ argument really does not
implicate the rule of lenity as much as it simply reiterates
their belief that IFS-NJ’s activities are beyond New Jersey’s
reach because the bets were accepted in England.
Moreover, the mere possibility that New Jersey’s
promoting gambling statute lends itself to a more narrow
interpretation than the district court allowed (or that the
New Jersey court gave it in Fiola), does not trigger the rule
of lenity. Smith v. United States, 508 U. S. 223, 240 (1993)
(Noting that the possibility of articulating a narrower
construction of a statute does not make the rule of lenity
applicable).
We also reject the second prong of Claimants’ rule of
lenity argument; the district court’s statement that the rule
does not apply in a civil proceeding. That was not the
district court’s holding. Rather, the district court merely
noted that Claimants had failed "to cite any authority for
the argument that the rule of lenity is applicable in a
forfeiture proceeding because of criminality of the
underlying conduct may be a matter of dispute." App. at
13. We have held that the rule of lenity does apply in a civil
forfeiture proceeding when the nominally civil forfeiture
statute is actually "punitive and quasi-criminal in nature."
One 1973 Rolls Royce, 43 F.3d at 819.
However, even when the punitive nature of a civil
forfeiture is sufficient to apply the rule of lenity, the rule
will still not apply where there is little more than a
suggestion of ambiguity. "[M]ost statutes are ambiguous to
some degree . . . . [however,] the rule of lenity only applies
if, after seizing everything from which it can be derived, we
can make no more than a guess as to what Congress
intended." United States v. Muscarello, 524 U.S. at 138(citations and internal quotations omitted). "[A]s is true of
any guide to statutory construction, [the rule] only serves
as an aid for resolving an ambiguity; it is not to be used to
beget one." Callanan v. United States, 364 U.S. 587, 596
24
(1961). "The rule comes into operation at the end of the
process of construing what Congress expressed, not at the
beginning . . . ." Id. Here, we have no problem determining
Congress’s intent from the text of S 1955(1).
The Claimants’ rule of lenity objection to this proceeding
is nothing more than an invitation to read ambiguity into
an unambiguous statute based on their perception that it
is being applied unfairly. We will not accept Claimants’
invitation to manufacture an ambiguity merely to achieve a
result which they believe is fairer than the result required
by the breadth of the statute.
Claimants’ remaining assertion is based upon
international law. They claim the seizure and subsequent
forfeiture violate the "Treaty Between the Government of the
United States of America and the Government of the United
Kingdom of Great Britain and Northern Ireland on Mutual
Legal Assistance in Criminal Matters" ("MLAT"). According
to Claimants, under the MLAT, the United States was
obligated to consult with the United Kingdom’s Home
Secretary before seizing the accounts. They also claim that
the United States did not exhaust certain procedures as
required by the treaty. We again disagree.
The United States and the United Kingdom entered into
the MLAT which became effective on December 2, 1996.
According to the treaty’s Preamble, the parties entered into
that treaty to "improve the effectiveness of the law
enforcement authorities of both countries in the
investigation, prosecution, and combating of crime through
co-operation and mutual legal assistance in criminal
matters." App. at 116. The treaty is primarily concerned
with drug trafficking, and related offenses, and seizure and
forfeiture of proceeds and instrumentalities related to drug
trafficking. Id. The parties to the treaty intended to allow
the United States and the United Kingdom to "develop and
share evidence . . . to facilitate criminal prosecutions
abroad." United States v. Balsys, 524 U.S. 666, 715 (1998)
(Breyer, J., dissenting). However, the treaty explicitly states
that it is not intended to provide a private remedy. It states
in pertinent part:
[t]his Treaty is intended solely for mutual legal
assistance between the Parties. The provisions of this
25
Treaty shall not give rise to a right on the part of any
private person to obtain, suppress, or exclude any
evidence, or to impede the execution of a request.
App. at 116. (emphasis added). Therefore, even it if is
assumed for argument’s sake that the United States
violated the MLAT, Claimants have no private right to
enforce its terms.
Claimants’ essential claim is that the district court had
no jurisdiction to apply United States gambling law to a
British citizen and British companies operating legal
gambling businesses on English soil. To support that
argument, they cite Zoelsch v. Arthur Anderson & Co., 824
F.2d 27 (D.C. Cir. 1987). However, to the extent it applies,
we believe Zoelsch actually supports the district court’s
exercise of jurisdiction. There, in affirming the district
court’s dismissal for lack of subject matter jurisdiction, the
court of appeals stated: "[J]urisdiction is appropriate when
the fraudulent statements or misrepresentations originate
in the United States, are made with scienter and in
connection with the purchase and sale of securities, and
‘directly cause’ the harm to those who claim to be
defrauded, even if reliance and damages occur elsewhere."
Id. at 33. The court concluded that these jurisdictional
prerequisites "are only a slight recasting, if at all, of the
traditional view that jurisdiction will lie in American courts
only over proscribed acts done in this country." Id.Claimants argue that Zoelsch stands for the proposition
that "federal securities law does not apply to conduct in the
United States that was merely preparatory to an alleged
securities violation which occurred overseas." Reply Br. at
18. They then attempt to draw parallels to the S 1955(d)
forfeiture by arguing that IFS-NJ’s activities in New Jersey
were merely "preparatory" to legal gambling activities in
England, and they conclude that the district court therefore
lacked jurisdiction under Zoelsch.
However, Zoelsch affirms that American courts have
jurisdiction "over proscribed acts done in this country[ ]"
that have the required nexus to activities elsewhere. We
therefore find no merit in Claimants’ jurisdictional
challenge to this in rem proceeding over New Jersey
26
property based upon conduct occurring in New Jersey. It
may well be true that British citizens and British
companies will be affected by this in rem action in New
Jersey. This does not mean that the law of New Jersey or
the law of the United States is being applied to those
citizens or companies.
Claimants’ international exhaustion argument arises
from the fact that both the United States and England
belong to the Organization of Economic Cooperation and
Development ("OECD"). Claimants argue that the OECD
requires "consultation and moderation by the U.S. in this
context." Claimants’ Br. at 39-40. However, Claimants
never bother to explain how the government’s institution of
this forfeiture violated requirements of international law or,
if a violation occurred, how it provides a defense from this
forfeiture action.
In a related argument, Claimants insist that
considerations of international comity preclude the instant
forfeiture. That contention is again bottomed on the
Claimants’ belief that the forfeiture is an extraterritorial
application of federal law against British citizens. We have
already explained why there is no extraterritorial
application of federal law to British citizens here.
Claimants also think it significant that S 1955 was
originally aimed at organized crime, that Bowman’s
businesses are entirely legal in England, and that gambling
no longer is regarded as the evil it once was in the United
States. Indeed, argue Claimants, the fact that New Jersey
itself has legalized casinos and lotteries plainly
demonstrates that gambling is no longer associated with
vice. Thus, the argument continues, comity required the
district court to defer to Bowman’s British licenses to
conduct a gambling enterprise. However, the change in
society’s views towards gambling does not offer the district
court a license to ignore a federal statute (or the state
statute it incorporates) under the guise of international
comity.
Comity, . . . is the recognition which one nation allows
within its territory to the legislative, executive, or
judicial acts of another nation, having due regard both
27
to international duty and convenience, and to the
rights of its own citizens or of other persons who are
under the protections of its laws.
* * *
Comity cannot be the source of a disability that
prevents a district court from having the power to
address wrongdoing that impacts a domestic court. . . .
Republic of the Philippines v. Westinghouse Elec. Corp., 43
F.3d 65, 75 (3d Cir. 1995) (emphasis in original)(citations
and internal quotations omitted). Congress prohibited
illegal gambling businesses as defined under state law, and
authorized forfeiture of related property. We have already
discussed how the relevant state law defines gambling
broadly to include any conduct that materially aids any
form of gambling activity. These legislative enactments
reflect the "strong public policies" of the United States
government, and the government is not required to tolerate
activity that it defines as illegal merely because it affects
someone who may live in a country where the activity is
legal.
IV. CONCLUSION
For all of the above reasons, we will affirm the district
court’s grant of summary judgment to the government and
its final order of forfeiture.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
28