United States v. Salvatore

REVISED
UNITED STATES COURT OF APPEALS
For the Fifth Circuit

No. 96-30221

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

VERSUS

SEBASTIAN SALVATORE, also known as Buster, also known as Harry,
ANTHONY JOSEPH TUSA, JR., also known as A.J.,
VICTOR JOSEPH TUSA, SR., also known as Vic,

Defendants-Appellants.

Appeals from the United States District Court
for the Eastern District of Louisiana
April 14, 1997

Before DUHÉ, BENAVIDES, and STEWART, Circuit Judges.

DUHÉ, Circuit Judge:

Anthony Tusa, Victor Tusa, and Sebastian Salvatore appeal

their convictions arising from their participation in a scheme to

operate certain organized crime-controlled companies that

circumvented the licensing requirements of Louisiana’s Video Draw

Poker Devices Control Law. For reasons that follow, we affirm.

BACKGROUND

In 1991, Louisiana enacted the “Video Draw Poker Devices

Control Law” (hereinafter “the Video Poker Law” or “the Act”),
which legalized video poker machines in Louisiana subject to the

terms of the Act. See La. R.S. 33:4862.1 et seq. (recodified at

La. R.S. 27:301-:324 (West Supp. 1997)). To operate in the State,

all video poker machine manufacturers, distributors, and owners

must be licensed. See id. at 33:4862.11 (recodified at La. R.S.

27:311). To be licensed, each applicant must satisfy certain

“suitability” criteria, which provide that no license will be

issued to any person convicted of certain criminal offenses, and

which require each applicant to be a person of good character who

does not pose a threat to the public interest. See id. at

33:4862.10(A)-(B) (recodified at La. R.S. 27:310(A)-(B)). The Act

also creates a continuing duty on the part of all licensees to

inform the Video Gaming Division of the Louisiana State Police--the

agency charged with overseeing the video poker industry--of any

facts that they believe would be a violation of the Video Poker

Law. See id. at 33:4862.10(C) (recodified at La. R.S. 27:310(C)).

The Appellants, and fourteen co-defendants, were indicted for

operating a criminal enterprise that subverted the licensing

requirements of Louisiana’s Video Poker Law. The purpose of the

enterprise was to own and operate organized crime-controlled

companies engaged in the video poker industry. To this end,

certain of the co-defendants known to be involved in organized

crime conspired with apparently legitimate “front men” or “straw

men,” who obtained video poker licenses from Louisiana by

intentionally concealing the presence of organized crime from the

Video Gaming Division. Once established and licensed, these “front

2
companies” obtained funding and purchased video poker machines from

Bally Gaming, Inc. (“Bally Gaming”), a licensed video poker

machine manufacturer. Thereafter, the enterprise sought to “skim,

divert, and steal” funds collected by these crime-controlled

companies and to funnel such money to associates of New Orleans-

based and New York-based organized crime families.

The heart of the Government’s case-in-chief consisted of the

testimony of Christopher Tanfield and FBI Agent Richard McHenry.

Tanfield, a cooperating co-defendant, provided an inside view of

the business side of the criminal enterprise. Agent McHenry, the

primary case agent, testified to the meaning of numerous

conversations and the identity of individuals covertly recorded by

an FBI microphone, telephone wiretap, and video camera, all hidden

inside Frank’s Deli on Decatur Street, a primary meeting spot of

the conspirators.

Tanfield testified that he and Steven Bolson, another co-

defendant who pleaded guilty, incorporated and operated two

businesses known as Worldwide Gaming of Louisiana, Inc. (“Worldwide

Gaming”) and Louisiana Route Operators, Inc. (“LRO” or “Louisiana

Route Operators”). Worldwide Gaming was licensed to sell and

distribute video poker machines in Louisiana. LRO was licensed as

a route operator company, meaning that it could own video poker

machines, place the machines in businesses, and receive revenues

from the operation of the machines. As apparently legitimate

“front men,” Tanfield and Bolson, initially designated as vice-

president and president of Worldwide Gaming and LRO, respectively,

3
obtained licenses for these companies from the Video Gaming

Division by deliberately concealing the fact that the companies

were, in reality, fronts for organized crime. Tanfield described

his dealings with individuals associated both with the New Orleans-

based Marcello crime family, including Anthony Carollo (the “boss”

of the family), Joseph Marcello, Jr., Frank Gagliano, Sr., Joseph

Gagliano, and Sebastian Salvatore, and with the New York-based

Gambino crime family, including Joseph Corozzo and John Gammarano.

All of these individuals were co-defendants of the Appellants who

pleaded guilty before the Appellants’ trial.

Through Worldwide Gaming and LRO, Tanfield and Bolson operated

under the direction of organized crime as wholesalers in the video

poker industry. After buying video poker machines and borrowing

money from Bally Gaming, Worldwide Gaming and LRO would then sell

these machines to and participate in the routes of certain

businesses in Louisiana. Money thus received by Worldwide Gaming

and LRO was then funneled to organized crime. One of the

businesses with which Tanfield dealt was Bayou Casino Inc. (“Bayou

Casino”), the route operator company owned and operated by Victor

and Anthony Tusa. As outlined below, Tanfield repeatedly

inculpated the Tusas and Salvatore in the criminal enterprise.

Before trial, all of the indicted co-defendants, except for

the three Appellants, pleaded guilty to various federal offenses.

The Appellants proceeded to trial and were convicted. Anthony and

Victor Tusa were each convicted of mail fraud, 18 U.S.C. § 1341

(counts 12-14). Sebastian Salvatore was found guilty of violating

4
the Racketeer Influenced Corrupt Organizations Act (“RICO”), 18

U.S.C. §§ 1962 (count 1); conspiracy to violate the RICO Act, 18

U.S.C. § 1962 (count 2); mail fraud, 18 U.S.C. § 1341 (counts 3-7,

9-10); conducting an illegal gambling business, 18 U.S.C. §§ 1955

(counts 8, 11); wire fraud, 18 U.S.C. § 1343 (counts 16-31); and

interstate travel and communication in aid of racketeering, 18

U.S.C. 1952 (count 37). The Tusas were each sentenced to 10 months

incarceration on all counts to run concurrently, and each was

ordered to pay restitution of $37,048 and a fine of $11,838.

Salvatore was sentenced to 18 months incarceration on all counts to

run concurrently, and was ordered to pay restitution of $25,000.

ANALYSIS

I. SUFFICIENCY OF THE EVIDENCE

A. Standard of Review

A criminal conviction must be upheld if any rational jury

could have found that the evidence established the essential

elements of the crimes charged beyond a reasonable doubt. See

Jackson v. Virginia, 443 U.S. 307, 319 (1979); United States v.

Ismoila, 100 F.3d 380, 387 (5th Cir. 1996). We view the evidence,

including all reasonable inferences drawn therefrom and all

credibility determinations, in the light most favorable to the jury

verdict. See United States v. Resio-Trejo, 45 F.3d 907, 910 (5th

Cir. 1995). The evidence need not exclude every reasonable

hypothesis of innocence, see United States v. McCord, 33 F.3d 1434,

1439 (5th Cir. 1994), but if the evidence “gives equal or nearly

equal circumstantial support to a theory of guilt and a theory of

5
innocence,” the conviction must be reversed. United States v.

Salazar, 66 F.3d 723, 728 (5th Cir. 1995).

B. The Tusas

To sustain the Tusas’ mail fraud convictions, the Government

had to prove: (1) the existence of a scheme to defraud, (2) the use

of the mails to execute the scheme, and (3) the specific intent on

the part of the defendants to commit fraud. See United States v.

Fagan, 821 F.2d 1002, 1008 (5th Cir. 1987). The Tusas assert that

they were legitimate businessmen operating within the confines of

the Video Poker Law, and they maintain that the Government did not

establish that Bayou Casino was controlled by organized crime.

Accordingly, they contend that the Government failed to establish

that they had the specific intent to defraud. The Tusas repeatedly

draw exculpatory inferences from the evidence purportedly showing

that they operated a legitimate business, but we must accept all

reasonable inferences in the light most favorable to the verdict.

See Resio-Trejo, 45 F.3d at 910. Doing so, we conclude that the

evidence was sufficient to support the Tusas’ mail fraud

convictions.

In establishing that Bayou Casino, the Tusas’ video poker

route operator company, was controlled by organized crime, the

Government relied primarily upon the testimony of Christopher

Tanfield and the audiotapes of numerous inculpatory conversations

between the Tusas and other co-defendants recorded by the

Government microphone and telephone wiretap hidden at Frank’s Deli.

Tanfield’s testimony establishes that organized crime did have

6
significant control over Bayou Casino, and it is undisputed that

the Tusas did not inform the Video Gaming Division of such control,

as required by the Video Poker Law. Specifically, Tanfield

testified that Joseph Marcello Jr. both instructed Tanfield to give

the Tusas preferential treatment and also mediated disputes that

arose between the Tusas and other companies involved in the

enterprise. In addition, Tanfield testified that Bayou Casino

eventually (in November 1992) became a front company for organized

crime.

Tanfield’s testimony was supported by the audiotaped

conversations and FBI Agent Richard McHenry’s testimony regarding

those conversations. Although the actual text of the taped

conversations was at times seemingly innocuous, Agent McHenry

testified extensively as to the meaning of the conversations and

“interpreted” them for the jury. The tapes, and Agent McHenry’s

testimony regarding the tapes, establish that the Tusas dealt

extensively with Carollo, Marcello, and the Gaglianos; that the

Tusas believed these people to be involved in the operation and

control of Worldwide Gaming and LRO; and that Carollo, Marcello,

and the Gaglianos had some degree of control over Bayou Casino.

Although the tapes do not rule out the Tusas’ contention that they

engaged in arms-length, legitimate business negotiations with

Tanfield, Bolson, Carollo, Marcello, and the Gaglianos, it is also

reasonable to draw, as the jury did, more inculpatory inferences

from the tapes. See McCord, 33 F.3d at 1439.

Upon reviewing the evidence in the light most favorable to the

7
verdict, we conclude that a reasonable jury could have believed

that the Government proved beyond a reasonable doubt that the Tusas

committed the essential elements of mail fraud.

C. Salvatore

Salvatore was convicted of RICO, RICO conspiracy, mail fraud,

wire fraud, interstate travel and communication in aid of

racketeering, and conducting an illegal gambling business.

Salvatore assumes that his convictions on the substantive offenses

were based upon co-conspirator liability under Pinkerton v. United

States, 328 U.S. 640 (1946), and he therefore addresses the

sufficiency of the evidence as it relates to his conviction for

RICO conspiracy only. Although Salvatore admits to attending

meetings with the members of the Marcello crime family, he contends

that the evidence regarding these meetings merely establishes his

presence, and not his participation in the conspiracy.

To satisfy the intent requirement of conspiracy, the

Government must prove that a defendant knew of the conspiracy and

voluntarily joined it, and that a defendant had the requisite

intent to commit the underlying substantive offenses. See Ismoila,

100 F.3d at 387. We will not readily infer a defendant’s knowledge

of and decision to join a conspiracy, and a defendant’s mere

association with a conspirator is not by itself sufficient to

sustain a conspiracy conviction. See United States v. Ross, 58

F.3d 154, 159 (5th Cir.), cert. denied, 116 S. Ct. 404 (1995).

As with the Tusas, much of the Government’s proof is based

upon the testimony of Christopher Tanfield. Tanfield testified

8
that Salvatore was present, along with co-defendants Anthony

Carollo, Joe Marcello, the Gaglianos, John Gammarano, and Joseph

Corozzo, at a meeting in late 1991 in which the conspirators

decided to allocate the profits from the video poker enterprise to

the New York crime family, the New Orleans crime family, and to

individuals such as Tanfield and Bolson to raise capital for the

scheme. Tanfield also testified that Salvatore was present at a

December 1992 meeting where the conspirators discussed moving LRO’s

assets to other front companies to prevent Bally Gaming from

foreclosing on LRO.

In addition, Tanfield described how money from Worldwide

Gaming and LRO was to be shifted into offshore banks from which the

conspirators, including Salvatore, could withdraw funds by means of

debit cards so that the profits from Worldwide Gaming could be

funneled to members of the conspiracy in a way that was non-

traceable. He testified that Joe Gagliano told him that Salvatore

“was going to get a piece of the deal,” meaning, in Tanfield’s

opinion, that Salvatore was “going to get one of these credit

cards.”

Agent McHenry’s testimony concerning the audiotaped

conversations bolstered Tanfield’s inculpatory testimony regarding

Salvatore’s participation in the criminal enterprise. Agent

McHenry testified that the tapes reflected that after Anthony

Carollo was hospitalized with a heart attack, John Gammarano

decided that should anything further happen to Carollo, the

conspirators should talk to either Joe Marcello or Sebastian

9
“Buster” Salvatore. McHenry also testified that after Bally Gaming

delivered the video poker machines to Worldwide Gaming, Salvatore

and the other co-defendants were given a private tour of the

Worldwide Gaming facility.

The Government also introduced a recording of a phone

conversation between Joe Gagliano and Salvatore wherein Gagliano

tells Salvatore, “They’re here,” and Salvatore responds, “All

right. I’ll be there in about 20 minutes.” Agent McHenry testified

that the FBI’s video surveillance reflected that this call was

placed shortly after co-defendants Gammarano and Corozzo of the New

York-based Gambino family arrived at Frank’s Deli. The tapes also

reflect that, on at least three other occasions, Salvatore was

informed that the conspirators were at the Deli and was told that

his presence was requested there. In addition, the jury heard a

tape of a phone conversation between Carollo and Salvatore in which

Carollo told Salvatore to meet him at an unnamed school, which

Agent McHenry identified as the RETS Electronic Training Center in

Metairie. The FBI’s videotape surveillance confirmed that

Salvatore was present at RETS that evening for the meeting in which

the conspirators, according to Tanfield, discussed hiding LRO’s

assets from Bally.

Agent McHenry also testified about a conversation recorded by

the deli microphone wherein Salvatore was overheard discussing the

scheme with his co-conspirators. Finally, the deli microphone

picked up a conversation in which Joe Gagliano was describing to

an unindicted co-conspirator an argument between Frank Gagliano Sr.

10
(Joe’s father) and Sebastian Salvatore. Referring to this

conversation, Agent McHenry testified that “Joe Gagliano is

expressing his frustration because members of the family have been

hustling and trying to get this thing going with Worldwide Gaming

and LRO for a year now, and Mr. Salvatore, obviously he’s going to

get his piece of it, but he hasn’t maybe been living up to his end

on putting it all together for them.”

In conclusion, the Government proved beyond a reasonable doubt

that Salvatore knew of the conspiracy and voluntarily joined it.

Although establishing that a defendant merely associated with the

conspirators is insufficient to prove membership in a conspiracy,

see United States v. Jackson, 700 F.2d 181, 185 (5th Cir. 1983),

Salvatore’s repeated and requested presence at meetings in which

the details of the conspiracy were discussed does confirm that he

knew of the conspiracy and voluntarily joined it.

II. MAIL FRAUD

The indictment charged the Appellants with mail fraud for

their participation in a scheme to defraud the State by

fraudulently obtaining route operator and distributor licenses for

their companies. The Appellants contend that their mail fraud

convictions must be reversed because the video poker licenses do

not constitute “money or property” as required by the mail fraud

statute, 18 U.S.C. § 1341. We review this issue of law de novo.

See United States v. Loney, 959 F.2d 1332, 1334 (5th Cir. 1992).

Whether video poker licenses are money or property for the purposes

of the mail fraud statute is an issue of first impression in this

11
Circuit, and for reasons that follow, we conclude that video poker

licenses do constitute money or property as required to support a

mail fraud conviction.

The Supreme Court opinions in McNally v. United States, 483

U.S. 350 (1987), and Carpenter v. United States, 484 U.S. 19 (1987)

guide our decision. In McNally, the defendants were convicted of

mail fraud for their participation in a “self-dealing patronage

scheme [that] defrauded the citizens and government of Kentucky of

certain ‘intangible rights,’ such as the right to have the

Commonwealth’s affairs conducted honestly.” McNally, 483 U.S. at

352. The Supreme Court reversed the convictions, holding that

although the mail fraud statute protects property rights, it “does

not refer to the intangible right of the citizenry to good

government.” Id. at 356. The Court concluded that “any benefit

which the Government derives from the [mail fraud] statute must be

limited to the Government’s interests as property holder.” Id. at

358 n.8.

Shortly thereafter, the Supreme Court limited McNally, noting

that the mail fraud statute protects intangible as well as tangible

property rights. See Carpenter, 484 U.S. at 25. In Carpenter, the

defendants, a Wall Street Journal columnist and a securities

broker, were convicted of mail fraud arising from the pre-

publication release of confidential business information to be

published in the Journal’s “Heard on the Street” column. See id.

at 22-24. The Court affirmed the mail fraud convictions, holding

that “[c]onfidential business information has long been recognized

12
as property,” and that the defendants’ scheme deprived the Journal

of its intangible property right to keep the information

confidential. See id. at 26-27.

Although neither McNally nor Carpenter directly answer the

question at issue, they teach that: in considering whether video

poker licenses constitute property under the mail fraud statute, we

must determine whether Louisiana has an interest in the licenses as

a property holder. Cf. McNally, 483 U.S. at 358 n.8.

Appellants rely upon a number of circuit court decisions

holding that various state-issued licenses are not property for the

purposes of the mail fraud statute. See United States v. Schwartz,

924 F.2d 410, 417-18 (2d Cir. 1991) (arms export license); United

States v. Granberry, 908 F.2d 278, 280 (8th Cir. 1990) (school bus

operator permit); United States v. Kato, 878 F.2d 267, 268-69 (9th

Cir. 1989) (pilot license); Toulabi v. United States, 875 F.2d 122,

125 (7th Cir. 1989) (taxicab driver license); United States v.

Murphy, 836 F.2d 248, 254 (6th Cir. 1988) (bingo license); United

States v. Dadanian, 856 F.2d 1391, 1392 (9th Cir. 1988) (gambling

license). All of these decisions are based on one or both of the

following rationales: (1) although issued licenses constitute

property in the hands of the licensees, unissued licenses in the

hands of the licensor are not property; and (2) the government has

only a regulatory interest, and not a property interest, in its

issuance of the licenses.

In response, the Government references two circuit court

decisions holding that certain licenses constitute property for the

13
purposes of the mail fraud statute. See United States v.

Bucuvalas, 970 F.2d 937, 945 (1st Cir. 1992) (liquor license);

United States v. Martinez, 905 F.2d 709, 715 (3d Cir. 1990)

(medical license). Further, since this appeal was taken, another

federal district court in Louisiana has held that video poker

licences are property for purposes of the mail fraud statute. See

United States v. Cleveland, 951 F. Supp. 1249, 1258 (E.D. La. 1997)

(Vance, J.). These decisions all conclude that there is no

relevant difference, for the purposes of the mail fraud statute,

either between issued and unissued licenses, or between the

government’s regulatory interests and its property interests in the

licenses at issue. We agree with the First and Third Circuits, and

with Judges Clement and Vance of the Eastern District of Louisiana,

that there is no justification for drawing a distinction between

issued and unissued licenses, and we also agree that Louisiana has

more than just a regulatory interest in the video poker licenses.

A. The Legal “Bundle of Rights”

We begin with the proposition that the concept of property

rights should be given a broad interpretation for the purposes of

the mail fraud statute. See United States v. Loney, 959 F.2d 1332,

1336 (5th Cir. 1992); Murphy, 836 F.2d at 253. Indeed, this Court

has noted that property may be defined as “something of value.”

See Loney, 959 F.2d at 1336 (citing McNally, 483 U.S. at 358).

Supreme Court precedent also supports this view. See McNally, 483

U.S. at 356 (noting that the phrase, “any scheme or artifice to

defraud,” must be “interpreted broadly insofar as property rights

14
are concerned”); Carpenter, 484 U.S. at 26-27 (holding that the

Wall Street Journal possessed a property right in the exclusivity

of confidential business information).1

More specifically, courts define property as a legal “bundle

of rights” that one possesses in connection with a particular

object. See Brotherton v. Cleveland, 923 F.2d 477, 481 (9th Cir.

1991). Included in this bundle of property rights are the rights

“to possess, use and dispose” of a particular article. See Loretto

v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 435 (1982).

Necessarily encompassed within the right to use and dispose of an

object is the right to control that object--and in the case of

licenses, the right to control their issuance. See Bucuvalas, 970

F.2d at 945 (noting that the city of Boston had a property right in

its ability to control the issuance of liquor licenses). “When we

say that we own something, one of the things that we mean is that

we can determine what to do with it. We can either keep it or

transfer it to someone else. And we can choose those persons to

whom we will transfer it.” Granberry, 908 F.2d at 280. Indeed,

Carpenter itself supports the position that the right to control is

included in the bundle of rights known as “property,” for in that

1
In addition, Congress narrowed the impact of McNally by
enacting 18 U.S.C. § 1346, which provides: “For the purposes of
this chapter, the term ‘scheme or artifice to defraud’ [a term
found in § 1341] includes a scheme or artifice to deprive another
of the intangible right of honest services.” Although we do not
affirm the Appellants’ convictions on the grounds that they
deprived Louisiana of its right to honest services, § 1346 is
relevant because it evidences Congress’s intent to define the reach
of the mail and wire fraud statutes broadly. See Cleveland, 951 F.
Supp. at 1259 n.6.

15
case the Supreme Court held that the defendants defrauded the Wall

Street Journal of its right to control the disclosure of

confidential business information. See 484 U.S. at 28.

Louisiana’s interest in video poker licenses fits squarely

within the above interpretation of “property rights.” The Video

Poker Law demonstrates that Louisiana zealously sought to protect

its right to control the licenses. In particular, the Act mandates

that a person seeking to obtain a license must apply to the Video

Gaming Division for approval and must meet certain “suitability”

criteria set forth in the Act. See La. R.S. 33:4862.10 (recodified

at La. R.S. 27:310). We see no relevant difference between the

Wall Street Journal’s right to restrict the pre-publication release

of confidential business information and Louisiana’s right to

choose the persons to whom it issues video poker licenses. As the

Third Circuit noted in Martinez, 905 F.2d at 714, the Journal lost

the intangible right to disseminate confidential information in the

manner in which it pleased. Similarly, because of the Appellants’

fraudulent scheme, Louisiana was stripped of its right to bestow

the video poker licenses on those parties meeting its criteria.

B. The Issued/Unissued Distinction

Moreover, we are in full agreement with those courts that have

found the distinction between issued and unissued licenses to be

“esoteric.” See id.; Cleveland, 951 F. Supp. at 1261. The courts

that have embraced this distinction--and consequently have held

that an unissued license is not property--provide no justification

whatsoever for making the distinction. See Granberry, 908 F.2d at

16
280; Kato, 878 F.2d at 269; Murphy, 836 F.2d at 253-54. It is

perhaps true, as some other courts have surmised, that the issued-

unissued distinction is based upon the reasoning that an issued

license has great value in the hands of the licensee but an

unissued license has negligible value in the hands of the

government. See, e.g., Martinez, 905 F.2d at 713; Cleveland, 951

F. Supp. at 1261. But, as do Martinez and Cleveland, we also

reject this questionable logic.

First, the law of the Fifth Circuit “strongly suggests that

the strained distinction between issued and unissued licenses

should be rejected.” Cleveland, 951 F. Supp. at 1261. In Loney,

959 F.2d at 1334, the defendants were convicted of wire fraud based

upon a scheme to defraud American Airlines of frequent-flyer award

coupons. We held that the award coupons--as owned by an airline--

are property for purposes of the wire fraud statute,

notwithstanding the fact that airlines cannot use the award coupons

themselves and that the award coupons arguably have little monetary

value to the airlines. See id. at 1336; see also Cleveland, 951 F.

Supp. at 1261. We have thus refused to draw a distinction between

issued and unissued frequent-flyer award coupons, and we likewise

see no relevant distinction between issued and unissued video poker

licenses.

Second, it is simply not the case that unissued video poker

licenses have only negligible value to Louisiana. In the hands of

the licensee, the license is “something of value,” for it allows

the licensee to operate the video poker machines and collect

17
significant revenue from their use; in the hands of Louisiana, the

license has value both because (1) the State expects to collect an

up-front fee (before issuance) and a percentage of net revenues (in

the future) from the putative licensees and (2) the State values

its rights to control the licenses and to choose the parties to

whom it issues the licenses. The licensee and the licensor may

value the video poker license differently; nevertheless, the

license is valuable to both.

Third, as a number of courts have noted, the contention that

“‘licenses are property in the hands of the licensees, but never in

the hands of the government represents an inversion of historical

fact.’” Cleveland, 951 F. Supp. at 1261, (quoting United States v.

Turoff, 701 F. Supp. 981, 989 (E.D.N.Y. 1988)); see also Martinez,

905 F.2d at 714. As noted by Professor Reich in his seminal

article on property rights, a license is an example of government

“largess” that “is originally public property, comes from the

state, and may be withheld completely.” Charles Reich, The New

Property, 73 Yale L.J. 733, 778 (1964) (cited in Martinez, 905 F.2d

at 714; Cleveland, 951 F. Supp. at 1261; Turoff, 701 F. Supp. at

989-90).

C. The Regulatory Interest/Property Interest Distinction

We are equally unimpressed with the argument that Louisiana

has only a regulatory interest, and not a property interest, in the

video poker licenses. Those courts articulating this distinction

usually focus on the fact that the issuance of a license is nothing

more than a physical manifestation of the government’s intent to

18
regulate. See Schwartz, 924 F.2d at 417 (arms export license);

Toulabi, 875 F.2d at 125 (taxicab driver license). In Schwartz,

for example, the defendants were convicted of wire fraud for

fraudulently obtaining arms export licences allowing them to sell

certain munitions to foreign purchasers. See Schwartz, 924 F.2d at

416. In holding that such licenses do not constitute money or

property under the mail fraud statute, the Second Circuit focused

on the fact that it was merely fortuitous that the government chose

to regulate arms sales by means of a license as opposed to a less

formal symbol of government regulation. See id. at 417. That

court stated:

[T]he government’s power to regulate does not a fortiori endow
it with a property interest in the license; that is, the mere
issuance of a document designed to formalize the government’s
regulation does not thereby create a property interest for the
government.

Id.

The Second Circuit’s logic, however, is not instructive in the

instant case because of the difference between video poker licenses

and arms export licenses. Unlike the arms export license analyzed

in Schwartz, a video poker license does not merely signify

government approval of an individual’s right to take part in a

particular regulated industry; it also evinces the State’s intent

to participate in that industry.

We agree, as an initial matter, that the right to regulate a

particular industry does not a fortiori give the regulator a

property interest in licenses signifying the government’s

regulation. Rather, a state’s property interest in its licenses

19
derives at least in part from the character of the licenses

themselves. The issuance of the video poker licenses signifies not

only that the licensee is eligible to participate in Louisiana’s

regulated video poker industry, but also defines the licensee’s

legitimate participation in an enterprise from which Louisiana

derives significant revenues. “One of the main reasons for the

recent legalization of video poker was that it was considered an

ongoing source of revenue for the State.” Cleveland, 951 F. Supp.

at 1262. As such, the Video Poker Act requires the licensees to

pay a significant, up-front fee for their licenses and also to

deposit 22.5% of their net revenues into the state treasury as a

franchise fee. La. R.S. 33:4862.11 (recodified at La. R.S.

27:311). Simply put, Louisiana has much more than a regulatory

interest in the video poker licenses; it has a direct and

significant financial stake in its role as issuer of the licenses.2

2
The facts and reasoning of Toulabi, 875 F.2d at 125, also
illustrate why video poker licenses are different than other types
of licenses. In that case, the Seventh Circuit held that taxicab
driver licenses are not money or property under the mail fraud
statute: “From the government’s perspective, however, the license
is a promise not to interfere rather than a sliver of property.”
See id. Indeed, in Chicago, a putative cab driver may obtain a
license by paying a minimal fee of $50 and by passing a local
geography test. It is not difficult to see why the Toulabi court
reasoned that a cab driver license is a manifestation of the
government’s regulatory power: once an applicant shows that he is
capable of navigating the streets of Chicago, the city will issue
a license to him and promise not to interfere. In Louisiana,
however, the State has a significant financial stake in the video
poker industry, and once the licenses are issued, the State
continues to “interfere” with the licensees in the sense that it
receives 22.5% of each licensee’s net revenues.
The Seventh Circuit itself distinguished Toulabi when it held
that a defendant may be convicted under the mail fraud statute for
fraudulently obtaining a cable television franchise. See Borre v.
United States, 940 F.2d 215, 221 (7th Cir. 1991). That court

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 D. The Louisiana Statute

Finally, the Appellants contend that the Video Poker Law

itself illustrates that the State has no property interest in the

video poker licenses:

Any license applied for, granted, or issued under the
provisions of this Chapter is a pure and absolute privilege,
and the awarding, denial, or withdrawal of which is solely
within the discretion of the division and, except as provided
in this Chapter, without recourse at law. Any license issued
or renewed under the provisions of this Chapter is not
property or a protected interest under the constitutions of
either the United States or the state of Louisiana.

La. R.S. 33:4862.1(D) (recodified at La. R.S. 27:301(D)) (emphasis

added). We reject the Appellants’ contention for a number of

reasons.

First, this subsection does not speak to whether video poker

licenses constitute a property interest of the State of Louisiana.

Read as a whole, this subsection instead demonstrates that it was

Louisiana’s intent to circumscribe the property rights of the

licensees, but not such rights of the State itself. Indeed, the

first sentence of this subsection states that the “division,” i.e.,

the Video Gaming Division of the Louisiana State Police, has the

discretion to award, deny, or withdraw the licenses. We conclude

that the Louisiana legislature sought, by means of this section, to

stated, “a cable television franchise represents far more than a
mere ‘promise not to interfere’ by the government.” Id. (quoting
Toulabi, 875 F.2d at 125). While we recognize that there are
differences between fraudulently obtaining a video poker license
and fraudulently obtaining a television franchise, we believe that
video poker licenses (signifying the right to participate in the
video poker industry) are much more analogous to the right to
operate a television franchise than they are to the right to drive
a taxicab.

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maintain its own control and ownership of the video poker licenses,

and we are in full agreement with the Cleveland court that section

4862.1(D) evinces the Louisiana legislature’s intent to strengthen

its own property interest in the licenses by limiting the property

rights of the licensees. See Cleveland, 951 F. Supp. at 1263.

Second, even assuming, arguendo, that section 4862.1(D) limits

the State’s property right in the video poker licenses, we are not

bound by that limitation for purposes of the federal mail fraud

statute. Congress certainly could have defined property solely by

reference to state law, but it chose not to do so in § 1341. Thus,

we agree with the district court that when determining whether

something is “property” for purposes of the federal mail fraud

statute, it is appropriate to look not only to state statutes but

also to “traditional property law.” See Carpenter, 484 U.S. at 26

(noting that confidential business information “has long been

recognized” as property, and citing 3 W. Fletcher, Cyclopedia of

Law of Private Corporations § 857.1 at 260 (rev. ed. 1986));

Martinez, 905 F.2d at 713 (referring to the “traditional property

law” of Pennsylvania). Under traditional property law, licensees

have a protected property interest. See Martinez, 905 F.2d at 713

(citing Mackey v. Montrym, 443 U.S. 1, 10 (1979); Beauchamp v. De

Abadia, 779 F.2d 773, 775 (1st Cir. 1985); Keney v. Derbyshire, 718

F.2d 352, 354 (10th Cir. 1983)); Cleveland, 951 F. Supp. at 1263.

The Louisiana legislature--despite section 4862.1(D)--itself

recognized that video poker licensees have at least some property

rights in the video poker licenses, for it legislated that a person

22
whose license is suspended or revoked has the right to a hearing

before the Video Gaming Division and the right to appeal the

decision of the Division to a particular Louisiana court. See La.

R.S. 33:4862.10(E) (recodified at La. R.S. 27:310(E)).

For the foregoing reasons, we hold that video poker licenses

constitute money or property as required by the mail fraud statute.

III. ANONYMOUS JURY

The Appellants also challenge the district court’s decision to

empanel an anonymous jury. A district court’s decision to use an

anonymous jury is entitled to significant deference, and we review

only for abuse of discretion. See United States v. Sanchez, 74

F.3d 562, 564 (5th Cir. 1996); United States v. Krout, 66 F.3d

1420, 1426 (5th Cir. 1995), cert. denied, 116 S. Ct. 963 (1996).

This Court has previously noted that empanelment of an

anonymous jury is a “drastic measure” that should be utilized only

in limited circumstances. See Krout, 66 F.3d at 1427.

Accordingly, we have held that such a practice is constitutional

when necessary “to ensure against a serious threat to juror safety”

so long as the defendants are not stripped of their rights to

conduct an effective voir dire and to maintain the presumption of

innocence. See id. The district court must base its decision to

empanel an anonymous jury “on more than mere allegations or

inferences of potential risk.” Id. In keeping with this concern,

however, we will affirm the use of an anonymous jury when “the

evidence at trial supports the conclusion that anonymity was

warranted.” Id.

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 Factors that may justify impanelment of an anonymous jury

include:

(1) the defendants’ involvement in organized crime; (2) the
defendants’ participation in a group with the capacity to harm
jurors; (3) the defendants’ past attempts to interfere with
the judicial process or witnesses; (4) the potential that, if
convicted, the defendants will suffer a lengthy incarceration
and substantial monetary penalties; and, (5) extensive
publicity that could enhance the possibility that jurors’
names would become public and expose them to intimidation and
harassment.

Id. A district court may certainly consider evidence other than

that relating to these five factors when deciding whether to

empanel an anonymous jury, for the decision to do so should be

based upon the “totality of the circumstances.” See United States

v. Branch, 91 F.3d 699, 724 (5th Cir. 1996) cert. denied, 1997 WL

188940, cert. denied, 1997 WL 188966, cert. denied, 1997 WL 188946,

cert. denied, 1997 WL 189035 (Apr. 21, 1997).

Finally, we have also affirmed a district court’s decision to

empanel an anonymous jury when there is no showing that the use of

an anonymous jury either prejudiced the defendant’s ability to

select an impartial jury or undermined the defendant’s presumption

of innocence. See id. at 724-25.

Turning to the totality of the circumstances in this case, we

are convinced that the district court did not abuse its discretion

in empaneling the anonymous jury. Salvatore and the Tusas were

closely connected with organized crime; indeed, many of their co-

defendants with ties to organized crime had already pleaded guilty.

Moreover, this Court previously upheld the empanelment use of an

anonymous jury in an earlier trial of Felix Riggio, one of the

24
Appellants’ co-defendants, after determining that there had been

specific death threats to witnesses in that case. See United

States v. Riggio, 70 F.3d 336, 338 n.4, 339-40 (5th Cir. 1995),

cert. denied, 116 S. Ct. 1366 (1996). Further, in one of the in

camera hearings before the district court, the Government showed

that the Manhattan District Attorneys’ office was investigating

whether co-defendant Joseph Corozzo had tampered with a juror in

connection with his acquittal of criminal charges in New York.

Although we note that Riggio and Corozzo pleaded guilty before

trial, their involvement in the video poker conspiracy establishes

that Appellants participated in a criminal enterprise and conspired

with individuals having the capacity and willingness to interfere

with the judicial process. Cf. Krout, 66 F.3d at 1427 n.7 (noting

that specific evidence linking defendants to organized crime “alone

can . . . translate into the requisite showing for the empanelment

of an anonymous jury”).

Even though the Appellants ultimately did not receive lengthy

terms of imprisonment, they--especially Salvatore--initially faced

potentially long sentences. Additionally, despite the fact that

many of the co-conspirators had pleaded guilty, the publicity

surrounding the trial was quite extensive, thus enhancing the

possibility that the jurors’ names would have become public.

Furthermore, none of the Appellants have pointed to any

prejudice or adverse impact on their ability to conduct effective

voir dire. The district court’s procedures in empaneling the jury

had only a minimal impact upon the case, as the court merely

25
substituted numbers for the jurors’ names. The court also allowed

the Appellants extensive voir dire and furnished the Appellants

with the results of detailed juror questionnaires. Neither the

information gleaned from these questionnaires nor the voir dire was

deficient in any way, and therefore the district court adequately

protected the Appellants’ right to an effective voir dire. See

Branch, 91 F.3d at 724 (noting that defendants were not deprived of

an effective voir dire when they were provided with the answers to

detailed juror questionnaires).

Moreover, the district court’s use of an anonymous jury did

not frustrate the Appellants’ presumption of innocence. The

court’s instruction to the jury was a “plausible and nonprejudicial

reason for not disclosing their identities” to either the

Government or the defendants. United States v. Paccione, 949 F.2d

1183, 1192 (2d Cir. 1991). The court explained that the case was

a high profile one and that keeping the jurors’ names confidential

would protect them from unwanted phone calls:

Now with any potentially high profile case, we’re all
subject to quack phone calls and anonymous letters and that
sort of thing. I want to protect the defendants as well as
the government from any belief on any part of the jury that
any such communications are coming from one side or the other.
In other words, I don’t want the defendants to be
characterized as anyone who would be sending anonymous
communications to the jury; I don’t want the government to be
characterized as someone who is trying to influence the jury
improperly.
The use of an anonymous jury is to ensure that both sides
will get a fair trial. It’s not being done because of any
apprehension on the part of this court that you would be in
danger or subject to improper pressures if your name had been
disclosed.

Such an explanation is indeed plausible and nonprejudicial. The

26
court’s instruction comports fully with the Appellants’ presumption

of innocence and compares favorably with instructions approved in

other anonymous jury cases. See Branch, 91 F.3d at 725; Riggio, 70

F.3d at 340 & n.23; United States v. Edmond, 52 F.3d 1080, 1093

(D.C. Cir.), cert. denied, 116 S. Ct. 539 (1995); United States v.

Tutino, 883 F.2d 1125, 1133 (2d Cir. 1989).

IV. SEVERANCE

The Tusas present two reasons why the district court erred in

denying their motion for severance. First, they contend that they

were forced to endure trial by an anonymous jury, which was

necessary only because of Sebastian Salvatore. Second, they claim

that nearly the entire trial consisted of evidence irrelevant and

highly prejudicial to them, viz., evidence of mafia ties not

implicating them.

We review for abuse of discretion. United States v. Rocha,

916 F.2d 219, 227 (5th Cir. 1990). “To demonstrate an abuse of

discretion, a defendant must show that he suffered specific and

compelling prejudice against which the district court could not

provide adequate protection, and that this prejudice resulted in an

unfair trial.” Id. A district court should grant a severance

motion “if there is a serious risk that a joint trial would

compromise a specific trial right of one of the defendants.”

United States v. Walters, 87 F.3d 663 (5th Cir.) (internal

quotation marks omitted), cert. denied, 117 S. Ct. 498 (1996).

The Tusas’ first argument is meritless because, as discussed

above, empaneling the anonymous jury did not violate any of their

27
constitutional rights. The Tusas were part of the same criminal

conspiracy as was Salvatore; the totality of the circumstances

justify the court’s decision to withhold the jurors’ names and

addresses from the parties; and the court’s jury instructions

ensured that the Tusas suffered no prejudice. The Tusas’ second

contention is likewise without merit because evidence of the

criminal enterprise was relevant to their guilt, for they were

charged with concealing criminal ties to their outwardly legitimate

business.

V. CONSTRUCTIVE AMENDMENT OF THE INDICTMENT

The Tusas also contend that their convictions must be reversed

because the trial court allowed the Government to constructively

amend its indictment. Alternatively, they maintain that the

Government’s proof constituted a prejudicial variance.

Only the grand jury can amend the indictment to broaden it.

See United States v. Doucet, 994 F.2d 169, 172 (5th Cir. 1993). A

constructive amendment of the indictment occurs when the Government

changes “its theory during trial so as to urge the jury to convict

on a basis broader than that charged in the indictment.” Id. A

constructive amendment of the indictment can also occur if the

Government is allowed to prove “an essential element of a crime on

an alternative basis permitted by the statute but not charged in

the indictment.” United States v. Slovacek, 867 F.2d 842, 847 (5th

Cir. 1989). Reversal is required when a conviction is based upon

an indictment that has been constructively amended. See id.

A variance occurs where the evidence proves facts different

28
from those alleged in the indictment, but does not modify an

essential element of the charged offense. See United States v.

Puig-Infante, 19 F.3d 929, 935 (5th Cir. 1994). We review a

variance under the harmless error standard, see Slovacek, 867 F.2d

at 848, and we will reverse a conviction only upon a showing that

the variance prejudiced the defendant’s substantial rights. See

Puig-Infante, 19 F.3d at 936. In determining whether a defendant

has suffered prejudice, “our concern is that ‘the indictment

notifies a defendant adequately to permit him to prepare his

defense, and does not leave the defendant vulnerable to a later

prosecution because of failure to define the offense with

particularity.’” Id. (quoting United States v. Hernandez, 962 F.2d

1152, 1159 (5th Cir. 1992)).

Counts 12-14 of the indictment charged that the Tusas and

others devised a scheme to defraud the State of Louisiana by

fraudulently obtaining state video poker route operator
licenses for Bayou Casino, Inc. through intentionally
concealing the involvement of organized crime . . . in Bayou
Casino, Inc. as true owners, operators, and controllers of
this video draw poker license-applicant route operator
company.
In was a part of the scheme and artifice to defraud, that
the defendants would use co-defendants A.J. Tusa and Vic Tusa
as apparently legitimate “front men” or “straw men” in
attempting to secure the electronic video gaming device
licenses and mask the New Orleans organized crime family’s
hidden ownership interest in Bayou Casino, Inc. gaming
operations.

The Tusas argue that during trial “the government abandoned the

argument that the Tusas hid organized crime ownership of Bayou

Casinos.” Instead, the Tusas contend, the Government (1) presented

evidence that the Tusas failed to disclose a contractual

29
relationship with Louisiana Route Operators, and (2) argued that

the Tusas’ failure to disclose the LRO contract was a violation of

their “continuing duty” under the Video Poker Act to inform the

Video Gaming Division of their business contacts.

We think that the evidence presented by the Government did not

constructively amend the indictment or constitute a prejudicial

variance because evidence of the Tusas’ failure to disclose their

contract with the mob-controlled LRO is an example of the

concealment of mob interests charged in the indictment. The Tusas

disagree, asserting that “the government did not argue that the

existence of the LRO contract was evidence of the mob’s secret

ownership of Bayou Casinos. Rather, as stated by the government

prosecutors, it was the failure to disclose the contract itself

that became the subject of the mail fraud under the government’s

amended charge.”

The Tusas’ argument has little merit. The indictment charges

that the Tusas concealed the involvement of organized crime in

Bayou Casino. The record shows the same: Joseph Marcello, Jr.

instructed Christopher Tanfield to give the Tusas preferential

treatment; Marcello mediated disputes that arose between the Tusas

and other video poker ventures; Anthony Carollo instructed Victor

Tusa not to sign a particular business agreement; and the Marcello

crime family contracted to receive 25% of Bayou Casino’s profits

through an arrangement with LRO. Although LRO’s 25% interest in

Bayou Casino is perhaps the most explicit documentary evidence of

organized crime’s significant control over Bayou Casino, it is by

30
no means the only evidence of such control. The Government’s

contention that the Tusas violated their “continuing duty” under

state law is simply another way of proving that the Tusas concealed

the mob’s control of Bayou Casino.

VI. CO-CONSPIRATOR STATEMENTS

Finally, the Tusas contend that the district court erred by

admitting co-conspirator statements into evidence pursuant to Fed.

R. Evid. 801(d)(2)(E). They also assert that, under United States

v. James, 590 F.2d 575, 582 (5th Cir. 1979), the court should have

required the Government to show, prior to admitting the

declarations of the co-conspirators into evidence, that the Tusas

were part of a conspiracy. We review for abuse of discretion. See

United States v. Triplett, 922 F.2d 1174, 1180 (5th Cir. 1991).

A statement is not hearsay if it is “a statement by a

coconspirator of a party during the course and in furtherance of

the conspiracy.” Fed. R. Evid. 801(d)(2)(E). By a preponderance

of the evidence, the offering party must prove that there is a

conspiracy involving the declarant and the nonoffering party and

that the statement was made during the course and in furtherance of

the conspiracy. See Triplett, 922 F.2d at 1181. To connect a

defendant to a conspiracy, the Government must show that the

defendant knew of the conspiracy and voluntarily joined it. See

Ismoila, 100 F.3d at 387.

As we resolved above, the evidence establishes that there was

a conspiracy, that the Tusas voluntarily joined it, and that the

statements were made during the course and in furtherance of the

31
conspiracy. When reasonably practicable a district court should

require a showing of a conspiracy and the defendants connection

with it before admitting the statements of a co-conspirator.

United States v. Fragoso, 978 F.2d 896, 900 (5th Cir. 1992); James,

590 F.2d at 582. Contrary to the Tusas’ contention, however, the

district court did in fact require the Government to submit

evidence linking the Tusas to the charged conspiracy before it

ruled, prior to trial, that the Government had “produced at least

enough evidence to keep the issue open through trial.” Although

the court left open the possibility that it would reconsider its

decision after hearing all the evidence, the court confirmed its

determination at the close of the Government’s case.

The record therefore supports not only the finding that the

Tusas were linked to the conspiracy and that the statements were

made during the course of and in furtherance of the conspiracy, but

it also reflects that the court made a preliminary determination

prior to trial that the co-conspirator statements were admissible.

We therefore conclude that the district court did not abuse its

discretion in admitting the co-conspirator statements into evidence

pursuant to Fed. R. Evid. 801(d)(2)(E).

CONCLUSION

For the foregoing reasons, we affirm the Appellants’

convictions on all counts.

AFFIRMED.

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