United States v. Marder

UNITED STATES COURT OF APPEALS
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
FOR THE FIRST CIRCUIT

No. 93-1882

UNITED STATES,

Appellee,

v.

ARTHUR M. MARDER,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Mark L. Wolf, U.S. District Judge]

Before

Selya, Circuit Judge,

Bownes, Senior Circuit Judge,

and Cyr, Circuit Judge.

Richard J. Shea for appellant.

Cynthia A. Young, Attorney, Department of Justice, with whom

Donald K. Stern, United States Attorney, District of Massachusetts,

and Ernest S. Dinisco, Assistant United States Attorney, were on brief

for appellee.

February 2, 1995

BOWNES, Senior Circuit Judge. Defendant-appellant,
BOWNES, Senior Circuit Judge.

Arthur Marder, was convicted by a jury on all seventeen

counts of the indictment against him. Twelve counts of the

indictment were predicated specifically on illegal gambling

allegedly in violation of Massachusetts General Laws ch. 271,

7 and 17. The counts involving the Massachusetts statutes

were: two RICO counts; two counts of using interstate

facilities in aid of racketeering; one count of operating an

illegal gambling business; and seven counts of money

laundering. There can be no doubt of the right of the

federal government to base a federal crime upon the violation

of a state statute. Sanabria v. United States, 437 U.S. 54,

70 (1978).

The five other counts charged income tax evasion

(three counts), a count of conspiracy to defraud the United

States by impeding the lawful functions of the IRS, and a

count of illegally structuring monetary transactions.

Defendant mounts three challenges to his

conviction: that there were no illegal gambling offenses

under the Massachusetts statutes, and that, if there were,

the court's instruction on them was erroneous; that the

currency transaction conviction lacked sufficient evidentiary

foundation, and the court erred in its instruction on it; and

that there were sentencing errors.

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Most of the essential facts are not in dispute,

only the inferences and conclusions to be drawn from them.

We must, of course, review the facts and all inferences to be

drawn from them in the light most favorable to the

government. United States v. Cotto-Aponte, 30 F.3d 4, 5 (1st

Cir. 1994); United States v. Hernandez, 995 F.2d 307, 311

(1st Cir.), cert. denied, 114 S. Ct. 407 (1993).

I. ILLEGAL GAMBLING UNDER THE MASSACHUSETTS STATUTES
I. ILLEGAL GAMBLING UNDER THE MASSACHUSETTS STATUTES

Defendant owned and operated the Revere Amusement

Company ("Revere") from 1981 to 1989. Revere's income came

from the operation of video poker machines that were placed

in an assortment of bars, taverns, and social clubs in

Revere, Massachusetts. The poker machines operated somewhat

like slot machines. The machine was activated by inserting

money into it, at least a quarter. The player would then

manipulate a button to obtain a poker hand. The machine's

video screen would display five cards representing a poker

hand. Before the "play" began, the screen displayed the

payoffs for winning hands; i.e., a hand consisting of three

of a kind might pay twelve to one. Credits were given for

winning hands. For example, a full house might pay ten

credits. After a winning player finished playing the

machine, he exchanged his credits for cash. The cash payment

was made by the person in charge of the establishment in

which the machine(s) was located. Defendant and/or his

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employees visited the approximately seventeen places where

the poker machines were located on a regular basis, usually

daily. The proprietors of the establishments were reimbursed

for the payoffs and then the machine's proceeds were split

with them. Normally, no records were kept of the

transactions. And, of course, only defendant and his

employees had access to the monies paid into the poker

machine.

In 1985 defendant decided to enjoy the fruits of

his profitable business and moved to Palm Springs,

California. Defendant's son, Steven, then took over the

daily operation of Revere.1 Defendant, however, kept a

tight reign on Revere's operations from Palm Springs. He

received between $4,000 to $10,000 in cash by express mail

several times a week. At irregular intervals, he asked his

employees to keep records of the transactions so he would

know what was going on.

Revere's income from the poker machines amounted to

about $500,000 per year. There was convincing evidence that

defendant made regular payoffs to local police officers,

politicians, and organized crime. Neither defendant nor his

company paid state or federal income tax on the income

generated by the video poker game machines.

1. Steven Marder was indicted along with his father; he pled
guilty prior to trial.

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With this factual background, we turn to the

question of whether defendant's poker game business violated

the implicated Massachusetts statutes. This is, of course,

primarily a question of Massachusetts law. And there is no

Massachusetts case directly on point. We first consider

Mass. Gen. L. ch. 271, 17, which provides:

17. Place for registering bets or
17. Place for registering bets or
dealing in pools; owner or occupant;
dealing in pools; owner or occupant;
custodian or depository
custodian or depository

Whoever keeps a building or room, or
any part thereof, or occupies, or is
found in, any place, way, public or
private, park or parkway, or any open
space, public or private, or any portion
thereof, with apparatus, books or any

device, for registering bets, or buying

or selling pools, upon the result of a

trial or contest of skill, speed or

endurance of man, beast, bird or machine,

or upon the result of a game,

competition, political nomination,
appointment or election, or whoever is
present in such place, way, park or
parkway, or any such open space, or any
portion thereof, engaged in such business
or employment; or, being such keeper,
occupant, person found or person present,
as aforesaid, registers such bets, or
buys or sells such pools, or is concerned
in buying or selling the same; or, being
the owner, lessee or occupant of a
building or room, or part thereof, or
private grounds, knowingly permits the
same to be used or occupied for any such
purpose, or therein keeps, exhibits, uses
or employs, or knowingly permits to be
therein kept, exhibited, used or
employed, any device or apparatus for
registering such bets, or for buying or
selling such pools, or whoever becomes
the custodian or depository for hire,
reward, commission or compensation in any
manner, of any pools, money, property or

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thing of value, in any manner staked or
bet upon such result, shall be punished
by fine of not more than three thousand
dollars or by imprisonment in the state
prison for not more than three years, or
in jail or the house of correction for
not more than two and one half years.
(Emphasis added.)

We note first that the statute is not limited to

bookmaking in the traditional sense. It includes "any device

for registering bets, or buying or selling pools, upon the

result of a trial or contest of skill, speed or endurance of

man, beast, bird or machine, or upon the result of a game . .

. ." This is broad and encompassing language. We do not

think that it excludes the placing of bets on video poker

games as a matter of statutory construction.

Although there are no Massachusetts cases directly

on point, there are three that indicate that betting on video

poker games violates 17. In Commonwealth v. Club Caravan,

Inc. (and eighteen companion cases), 571 N.E.2d 405 (Mass.

App. Ct. 1991), the court made several significant rulings.

It upheld the ruling of the trial judge that "play on the

video poker machines in question involved as a matter of law

an element of skill, thus qualifying the machines for

licensure under Mass. Gen. L. c. 140, 177 A(1) and (2) as

automatic amusement devices." Id. at 406. The court

explained:

Since the video poker machines
involved an element of skill and
ostensibly paid off winners only with

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

Id. at 407. The court noted that the trial judge

differentiated between video poker games and "actual use of

the machines for gambling: i.e., paying off in money rather

than free games," id. and drew the following line:

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

Id. at 407-08. The court explicitly refrained from ruling as

to the applicability of 17 to video poker machines. It

explained:

An argument was made by the defendants
below that 17 was aimed at bookie
operations, i.e., registering of bets on
contests such as horseracing, dog racing,
football point spreads, or numbers,
rather than at slot machines or other
gambling devices. The argument, rejected
by the judge, is not advanced in this
appeal, which concerns only indictments

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dismissed by the judge. We intend no

ruling as to the applicability of 17 to

video poker machines.

Id. at 408 n.6. (Emphasis added.)

It was held in Commonwealth v. Boyle, 189 N.E.2d

844, 846 (Mass. 1963) that, "possession of gaming apparatus

anywhere is punishable" and "[t]he possession of any recorded

memorandum intended to be a minute of a bet is sufficient to

demonstrate a violation of either Mass. Gen. L. c. 271 7 or

17 or both of these sections, depending upon the contents of

the memorandum."

In Commonwealth v. Sousa, 600 N.E.2d 1012 (Mass.

App. Ct. 1991), the appeals court noted that, registering a

bet "usually connotes a recording or notation." It also

stated: "One may 'register' a bet, however, by committing it

to memory." Id. at 1016.

We think there was sufficient evidence from which a

reasonable jury could find that a video poker machine was "a

device for registering bets" within the meaning of 17.

After inserting the required amount of money into the

machine, the player selected the number of credits - the

amount he wanted to bet. The machine "registered" the bet by

displaying the number of credits he had selected and set the

odds on winning the poker hand dealt the player. The bets

had to be registered by the machine so that the odds could be

set. Moreover, the bets had to be registered on the machine

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because defendant and/or his employees determined, after

opening the machine, the amount of reimbursement for payouts

due the proprietors of the establishments where the machines

were located. And we think it could be reasonably found that

the statute included the defendant as one who sold pools

"upon the result of a trial or contest of skill" . . . or

"upon the result of a game."

We rule, based on the evidence, the words of the

statute and Massachusetts case law, that the jury could

lawfully find defendant violated Mass. Gen. L. ch. 271, 17.

Mass. General Laws ch. 271, 7 provides:

7. Lotteries; disposal of property by
7. Lotteries; disposal of property by
chance
chance

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

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house of correction for not more than two
and one half years.

Defendant's attack on 7 takes a different

approach than his doesn't-apply challenge to 17. He

acknowledges that "[a] video poker machine which pays off

'hits in cash can amount to a 'lottery' under 7." Brief at

31. His argument is that it was not proven by the government

that chance predominated over skill in playing video poker

and therefore there was no lottery within the meaning of 7.

The Massachusetts law is reasonably clear that for

there to be a lottery, chance must predominate over skill in

the results of the game, or the element of chance must be

present in such a manner as to thwart the exercise of skill

or judgment in a game. Commonwealth v. Plissner, 4 N.E.2d

241, 245 (Mass. 1936). In Commonwealth v. Club Caravan,

Inc., 571 N.E.2d at 406, the appeals court held that play on

video poker machines "involved as [sic] matter of law an

element of skill."

The government contends that there was sufficient

evidence for the jury to find that chance predominated over

skill in playing video poker. Viewing the evidence in the

light most favorable to the government, we agree. There was

testimony that the machine dealt the cards electronically,

although a player could choose what cards to discard. There

was testimony that winning depended on the cards dealt by the

machine. A hand of video poker was played before the jury in

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the courtroom. The jury could judge for themselves whether a

substantial element of chance was involved. There was

testimony that one hand of video poker took from two to ten

seconds to play. Unless a player has a mind like a computer,

this is hardly sufficient time to use poker skills. Another

factor that the jury could take into consideration in

determining whether video poker was a game dominated by

chance or skill was the profit that defendant made.

Obviously, there were a great many more losers than winners.

Skill might have played a role in the video poker games

operated by defendant, but it did not dominate.

We rule, therefore, that the jury lawfully could

find defendant to have operated a lottery that was prohibited

by chapter 271, 7 of the Massachusetts General Laws.

The Jury Instruction -- Waiver or Forfeiture
The Jury Instruction -- Waiver or Forfeiture

Defendant claims that the court erred in

instructing the jury on the Massachusetts statutes relative

to gambling by refusing to read the statutes in their

entirety to the jury. There was no objection by defense

counsel. Failure to object to a jury instruction usually

means that our review is conducted under the "plain error"

doctrine. In this case, however, the government argues

strenuously that defendant waived any objection to the

instruction and is, therefore, foreclosed from arguing the

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issue on appeal. We start our analysis by rehearsing what

happened in the trial court.

At the pre-charge conference the district court

started to discuss the government's instruction request,

number 38. This request asked that the texts of Mass. Gen.

Laws ch. 271, 7 and 17 be read in full to the jury. Then

followed this colloquy between the court and counsel. The

prosecutor is Tuteur; defense counsel is Duggan.

THE COURT: And, we will go into
Government's 38.
And, I don't think I am going to give
this law in the description of Section 17
and 19. What I would be inclined to tell
them is the following -- and, I think it
may be the end of the Government's 38.
MR. TUTEUR: 38-A as well.
THE COURT: Well, I am inclined to
tell them just what is the last paragraph
of Government *38. You are instructed
that the video poker machines are used
for amusement purposes only by offering
nothing more than the opportunity to win
games. However, when the evidence
indicates beyond a reasonable doubt, or
proves beyond a reasonable doubt that
video poker machines are used for
gambling, that is, where cash payoffs are
given, then Massachusetts law has been
violated. Okay?
MR. TUTEUR: Can I back the Court up
for just a minute. On the illegal
gambling business, is the Court inclined
to give an instruction regarding gross
revenue?
THE COURT: Right. I am going to
cover that. I am going to cover 38(a) on
licensing and basically tell them what
they want to hear. And, I think on these
stipulations tomorrow that they should
not focus on the license but on whether
the evidence proves they were used for
gambling.

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MR. DUGGAN: Back on 38 where the
General Laws, Massachusetts General Laws
271 and 17 is cited, and the notion that
the statute is violated where one with
the intent to --
THE COURT: I just told you, I am not.
I mean*, if it is true, if the last
paragraph of their 38 is true,2 I am not
going to tell them what 271 and 17 say.
I think it is just tremendously confusing
in the context of this case. Okay?
MR. DUGGAN: Yes.
THE COURT: I mean the key is: Have
they proved beyond a reasonable doubt
that they are used for gambling, that you
get money for games? That is a crime,
there is no dispute under state law on
that. The rest of this stuff is just --

It is the government's contention that defense

counsel's (Duggan) answer "Yes" to the court's question,

"Okay?" was an acceptance and approval of the instruction

and, therefore, he cannot raise the issue on appeal.

The most authoritative case on waiver and

forfeiture under Fed. R. Crim. P. 52(b) is United States v.

Olano, 113 S. Ct. 1770 (1993). The Court pointed out:

Waiver is different from forfeiture.
Whereas forfeiture is the failure to make
the timely assertion of a right, waiver
is the "intentional relinquishment or
abandonment of a known right." . . .
Whether a particular right is waivable;
whether the defendant must participate
personally in the waiver; whether certain
procedures are required for waiver; and
whether the defendant's choice must be
particularly informed or voluntary, all
depend on the right at stake. . . . Mere

2. The last paragraph of government's request number 38 is
not in the record. We do not think it is necessary for
understanding the issue.

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forfeiture, as opposed to waiver, does
not extinguish an "error" under Rule
52(b). . . . If a legal rule was
violated during the District Court
proceedings, and if the defendant did not
waive the rule, then there has been an
"error" within the meaning of Rule 52(b)
despite the absence of a timely
objection.

Id. at 1777 (citations and quotations omitted).

Our survey of the cases in this esoteric procedural

corner of the federal law convinces us that defendant did not

waive the issue. In United States v. Lakich, 23 F.3d 1203

(7th Cir. 1994), counsel had overnight to think how the jury

should be instructed in response to its question about

entrapment. The next morning the court, after eliciting

comments from counsel, read its proposed instruction to them.

Both counsel explicitly agreed to the court's instruction.

The court of appeals held that under these circumstances

defendant had waived any objections to the instruction. Id.

at 207-08.

Lakich is a far cry from the case before us. In

the instant case the court cut off defense counsel's question

before it was finished. It is difficult to determine just

what defense counsel was going to ask, particularly in light

of the fact that it was the government that requested the

Massachusetts statutes be read in their entirety to the jury.

For aught we know, defense counsel was simply agreeing that

the statutes were confusing. Or perhaps he thought it

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prudent to simply say, "Yes" and move on. In any event, we

think the attempted colloquy between defense counsel and the

court is too thin a peg on which to hang a finding of waiver.

This case clearly does not fall within the ambit of

waiver resulting from a tactical decision not to object. See

United States v. Mihm, 13 F.3d 1200, 1204 (8th Cir. 1994);

United States v. Coonan, 938 F.2d 1553, 1561 (2d Cir. 1991).

We are also reluctant to find a waiver in these

circumstances because the cases in our own circuit send out

conflicting signals. In United States v. Rojo-Alvarez, 944

F.2d 959, 971 (1st Cir. 1991), we held that there was a

waiver when, after the court reworded an instruction in

response to defendant's objection, defense counsel stated he

was satisfied with the reworded instruction. Even assuming

that this is the law of the circuit,3 there was no direct

inquiry from the court in the instant case nor an unequivocal

assent to the instruction by defense counsel. There are two

prior cases in this circuit that cut the other way. In

United States v. Espinal, 757 F.2d 423, 426 (1st Cir. 1985),

we held: "When a charge is given as requested by counsel,

the defects, if any, must rise to the level of plain error

affecting substantial rights in order to justify reversal."

There was no mention of waiver. In United States v. Drougas,

748 F.2d 8, 30 (1st Cir. 1984), we held that defense

3. Rojo-Alvarez was not an en banc opinion.

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counsel's explicit approval of an instruction bars any

objection except upon the grounds of plain error. These two

cases appear to be somewhat at odds with United States v.

Kakley, 741 F.2d 1, 3 (1st Cir. 1984), which held that

requesting an instruction that is given amounts to "invited

error," and whatever error occurred may not be raised on

appeal. All of the cases cited in this paragraph were

decided prior to Olano. This panel regards the question as

open.

Because of the uncertainty as to whether defense

counsel had explicitly approved the instruction and in light

of the conflicting decisions of this circuit, we decline to

finda waiverhere. We, therefore,turn toa plainerror analysis.

United States v. Olano, 113 S. Ct. 1770, considers

in detail the doctrine of plain error under Fed. R. Crim. P.

52(b). Its teaching may be capsulized as follows: "'Plain'

is synonymous with 'clear' or, equivalently, 'obvious.'" Id.

at 1777. The requirement of Rule 52(b) that the error affect

substantial rights "means that the error must have been

prejudicial: It must have affected the outcome of the

District Court proceedings." Id. at 1778. And "[i]t is the

defendant rather than the Government who bears the burden of

persuasion with respect to prejudice." Id. Correcting plain

error should be made where "a miscarriage of justice would

otherwise result." This "means that the defendant is

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actually innocent . . . but we have never held that a Rule

52(b) remedy is only warranted in cases of actual innocence."

Id. at 1779. The standard that guides the correction of a

plain error is whether the error "'seriously affect[s] the

fairness, integrity or public reputation of judicial

proceedings.'" Id. (quoting United States v. Atkinson, 297

U.S. 157, 160 (1936)).

In United States v. Whiting, 28 F.3d 1296, 1309

(1st Cir. 1994), we assumed that the error affected

substantial rights, but found that the error neither caused a

miscarriage of justice nor seriously affected the fairness,

integrity or public reputation of the judicial proceeding.

We need not go that far at this juncture. We have

carefully reviewed the trial record and find that the

district court's refusal to read the full text of each

statute did not rise to the level of plain error because it

did not affect the outcome of the trial. It was not

prejudicial and did not affect substantial rights as those

terms are defined in Olano. This ruling is not intended to

suggest that the instruction as given was error, plain or

otherwise.

II. THE ILLEGAL STRUCTURING
II. THE ILLEGAL STRUCTURING

Defendant asserts error in his conviction under 31

U.S.C. 5322(b) and 5324(c), which proscribe the

structuring of currency transactions to evade the regulatory

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and statutory requirement that banks report to the IRS all

currency transactions in amounts greater than or equal to

$10,000. Citing Ratzlaf v. United States, 114 S. Ct. 655

(1994), which held that conviction under these statutes

requires proof "that the defendant acted with knowledge that

his conduct was unlawful," id. at 657 (interpreting meaning

of statutory term "willful"), defendant argues that the

instructions given at his trial did not require the jury to

make the elemental determination that he knew the structuring

in which he was engaged was unlawful in order to convict

him.4 Conceding that he did not interpose a contemporaneous

objection at trial, defendant contends that the erroneous

instructions constitute plain error, see Fed. R. Crim. P.

4. Ratzlaf was decided after the trial of this case but

prior to appellate argument.

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52(b), and require reversal of his structuring conviction.5

In light of the teaching of Ratzlaf, we think it

clear that error was committed here. The willfulness

5. In his reply brief, defendant raises a belated argument
that we should apply an unspecified "more favorable"
reviewing standard in assessing his challenge to the
structuring conviction. In defendant's view, his failure to
object to the structuring instructions given at his trial was
excusable because Ratzlaf had not yet been handed down and

because all of the circuits which had then issued opinions on
the meaning of the term "willful" in the context of the anti-
structuring statute had defined it in a manner consistent
with the district court's instructions. Thus, defendant
contends, the law "did not support a request for the
instruction later mandated in Ratzlaf."

Even if we were to view this argument as properly
before us, cf. Sandstrom v. Chemlawn Corp., 904 F.2d 83, 86

(1st Cir. 1990) (deeming waived, in a civil case, an argument
not made in appellant's opening brief), we would not find
excusable defendant's failure to object to the now-challenged
instructions. At the time of defendant's trial, settled law
in this circuit foreshadowed the Supreme Court's conclusion
in Ratzlaf that a conviction for structuring requires proof

that defendant acted with knowledge that his conduct was
unlawful. See United States v. Bank of New England, N.A.,

821 F.2d 844, 854 (1st Cir.) ("A finding of willfulness under
the Reporting Act must be supported by proof of the
defendant's knowledge of the reporting requirements and his
specific intent to commit the crime.") (citations omitted)
(interpreting the meaning of 5322's willfulness provision
in a context other than 5324's anti-structuring
provisions), cert. denied, 484 U.S. 943 (1987). Moreover, at

this same time, we had withdrawn an opinion and reheard en

banc a case which raised the precise question eventually

decided in Ratzlaf: the meaning of 5322's willfulness

provision in the anti-structuring context. See United States

v. Donovan, No. 91-1574 (1st Cir. Feb. 6, 1992), reh'g en

banc granted, opinion withdrawn, (1st Cir. Mar. 18, 1992),

opinion reissued as redacted, 984 F.2d 493 (1st Cir. 1993),

cert. granted and judgment vacated, 114 S. Ct. 873 (1994).

In light of this authority and these events, of which
defendant should have been aware, defendant's argument that
his failure to object was excusable rings hollow.

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requirement of 5322 and 5324 demands a jury finding that

the defendant knew that the structuring in which he was

engaged was unlawful. See Ratzlaf, 114 S. Ct. at 663.

Defendant's jury was not, however, instructed to make this

elemental determination in order to convict. In relevant

part, the trial court instructed the jury:

[T]o prove this offense the Government
has to prove beyond a reasonable doubt
that the defendant knew each [of the
banks] are required to file a currency
transaction report.

A person structures a transaction if he .
. . intended to evade the requirement.

[T]he Government has to prove . . . this
was done willfully, that is, that the
defendant knew of the reporting
requirement and that the structuring had
the purpose of evading that requirement.

Finally, the Government has to prove that
the defendant in the process of
structuring this transaction . . . was
also violating another law of the United
States in connection with that.

Thus, the jury was told that conviction was proper

if it found that defendant knew of the reporting requirement,

acted to evade it, and violated some other law of the United

States in so acting. The instructions were not tantamount to

charging that in order to convict, the jury must find that

defendant knew that acting to evade the reporting requirement

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was unlawful.6 The absence of such an instruction

constitutes a clear violation of the defendant's due process

right to have the prosecution persuade the fact-finder beyond

a reasonable doubt of the facts necessary to establish each

element of the offense charged, and defendant's Sixth

Amendment right to a jury trial. Sullivan v. Louisiana, 113

S. Ct. 2078, 2080-81 (1993) (collecting cases) (the Sixth

Amendment jury-trial right carries within it a right to have

the jury find, beyond a reasonable doubt, all of the facts

necessary to establish each element of the offense charged).

While the question whether error occurred here is

rather easily answered in hindsight, the questions whether

6. Noting that jury instructions are not to be reviewed in
isolation, but rather "in the context of the overall charge,"
Cupp v. Naughten, 414 U.S. 141, 147 (1973), the government

contends that a general instruction on willfulness given
elsewhere in the charge was sufficient to have conveyed to
the jury the appropriate structuring mens rea requirement.

The instruction on which the government relies provided:
"And, for all of the counts except the tax evasion count
which has a different definition of willfulness, the concept
of willfulness means that somebody has acted willfully, that
he acted knowingly and not by accident or mistake, and
deliberately in violation of a known legal duty."
In our view, this instruction cannot be viewed as
having cured any error in the specific structuring
instruction. While the general willfulness instruction
stated that the defendant had to have acted in violation of
some known legal duty, it does not explicitly inform the jury
that the defendant had to know that structuring itself was
illegal. Furthermore, by indicating that willfulness means
something different in the structuring and tax evasion
contexts (the latter of which differs from most other
criminal law areas by requiring specific knowledge that the
conduct at issue was criminal), the jury could have inferred
that the actual knowledge of illegality required in the tax
evasion context was not required in the structuring context.

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the second and third prerequisites to reversal under Rule

52(b) -- i.e., whether the error was plain and affected

defendant's substantial rights -- are considerably more

complicated. Although the challenged instructions are

clearly incorrect in light of Ratzlaf, Ratzlaf was not

decided at the time of defendant's trial. Moreover, the

great weight of then-existing authority indicated that actual

knowledge of the illegality of structuring by the defendant

was not a precondition to conviction. See Ratzlaf, 114 S.

Ct. at 665 (collecting cases). Thus, this case raises an

issue that the Olano court explicitly reserved: "We need not

consider the special case where the error was unclear at the

time of trial but becomes clear on appeal because the

applicable law has been clarified." Olano, 113 S. Ct. at

1777; but see United States v. Frady, 456 U.S. 152, 163

(1982) ("By its terms, recourse may be had to [Rule 52(b)]

only on appeal from a trial infected with error so 'plain'

the trial judge and prosecutor were derelict in countenancing

it, even absent defendant's timely assistance in detecting

it.") (dictum) (emphasis supplied).

This issue has engendered a split in the circuits

since the Olano decision. Compare, e.g., United States v.

Calverley, 37 F.3d 160, 162-63 (5th Cir. 1994) (en banc)

(error must be clear or obvious at time of trial); United

States v. Washington, 12 F.3d 1128, 1138 (D.C. Cir.) (same),

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22

cert. denied, 115 S. Ct. 98 (1994); with United States v.

Viola, 35 F.3d 37, 42 (2d Cir. 1994) (Rule 52(b) can be

invoked even where the error was not clear or obvious at the

time it was committed); United States v. Retos, 25 F.3d 1220,

1230 (3d Cir. 1994) (same); United States v. Jones, 21 F.3d

165, 172 (7th Cir. 1994) (same).

In addition, the question whether the error

affected the defendant's substantial rights is not without

controversy. Olano made clear that substantial rights have

been affected only where there has been prejudice to

defendant, and then confirmed that the Rule 52(b) prejudice

inquiry is indistinguishable from ordinary, harmless-error

review except for the fact that the burden of proof is upon

the defendant. 113 S. Ct. at 1777-78. In the present

context, this gives rise to a problem we recently noted:

contemporary Supreme Court cases suggest two separate modes

of harmless-error analysis where the challenged error is a

jury instruction that misdefines (or omits) an element of the

offense charged. Whiting, 28 F.3d at 1309 and n.12

(collecting cases). One mode would look to whether there was

sufficient record evidence to establish the unfound element;

the other would look only to whether the jury made findings

functionally equivalent to the missing finding. Id.; see

also Ortiz v. Dubois, 19 F.3d 708, 717-18 (1st Cir. 1994)

(Stahl, J., dissenting) (explicating latter inquiry in the

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23

habeas context), cert. denied, S. Ct. (U.S., Jan. 9,

1995) (No. 94-5650). As one might imagine, the determination

of harmlessness vel non is often different under these two

modes of analysis.

Neither of these two issues need be resolved in

this case. Even if we find that the error here was plain and

affected defendant's substantial rights, we may not respond

to it unless it "seriously affects the fairness, integrity or

public reputation of judicial proceedings." Olano, 113 S.

Ct. 1778-79. In this case, we think that the error cannot be

viewed as having seriously compromised any of these three

values.

First, there is relatively little risk that the

error resulted in the miscarriage of justice engendered by

the conviction of an innocent man. Olano, 113 S. Ct. at

1779. Although there is no direct evidence in the record

that defendant knew of the illegality of structuring, we

previously have recognized that willfulness, as a state of

mind, can rarely be proved by such evidence; instead, "it is

usually established by drawing reasonable inferences from the

available facts." Bank of New England, 821 F.2d at 854; see

also Ratzlaf, 114 S. Ct. at 663 n.19. Here, any claim of

lack of knowledge of the illegality of structuring tends to

be belied by defendant's conduct. The evidence shows that,

on February 18, 1987, defendant's then-wife, Lynne Marder,

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acting at defendant's behest, used cash to purchase $11,460

worth of cashier's checks in amounts of $5,000, $3,960, and

$2,500 from three separate banks in Derry, New Hampshire.

While it certainly would make sense for a person cognizant of

the reporting requirement but unaware of the illegality of

structuring to make two separate purchases at two separate

banks -- e.g., a purchase of $5,000 and a purchase of $6,460

-- in order to obtain $11,460 without triggering a report to

the IRS, the fact that defendant instructed his wife to make

three separate purchases at three separate banks suggests

that defendant had a purpose beyond evasion of the reporting

requirement: concealment of his structuring. And proof of

concealment tends to prove knowledge of illegality. See

United States v. Sorrentino, 726 F.2d 876, 880 (1st Cir.

1984) (citing Holland v. United States, 348 U.S.121, 125

(1954)).

Moreover, our circuit has recently ruled that jury

instructions misdescribing or failing to describe an element

of the offense do not per se seriously affect the fairness,

integrity or public reputation of judicial proceedings.

Whiting, 28 F.3d at 1309-10 (declining to find plain error in

a jury instruction which allowed the jury to convict a

defendant for receipt or possession of an unregistered

firearm without making the elemental determination that the

weapon in question was a "firearm" within the meaning of the

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statute). While we in no way disparage the importance of the

due process and Sixth Amendment rights that may be undermined

when jury instructions misdescribe or fail to describe an

element of the offense charged, we simply do not think that a

deprivation of these rights in all circumstances is so

"shocking," as to require automatic reversal even where the

defendant has failed to bring the error to the attention of

the trial judge. See United States v. Griffin, 818 F.2d 97,

100 (1st Cir.) (describing errors suitable for reversal under

plain error doctrine), cert. denied, 484 U.S. 844 (1987).

On the civil side we recently held, following

circuit precedent, that:

The "plain error" rule "'should be
applied sparingly and only in exceptional
cases or under peculiar circumstances to
prevent a clear miscarriage of justice.''
Wells Real Estate, 850 F.2d at 809

(quoting Nimrod v. Sylvester, 369 F.2d

870, 873 (1st Cir. 1966)); see Elgabri,

964 F.2d at 1259. Under the "plain
error" exception, an erroneous
instruction warrants a new trial only
where the error "seriously affected the
fairness, integrity or public reputation
of the judicial proceedings." See Lash

v. Cutts, 943 F.2d 147, 152 (1st Cir.

1991); Smith, 877 F.2d at 1110.

Poulin v. Greer, 18 F.3d 979, 982 (1st Cir. 1994).

Finally, we do not think that the challenged

instructions, in light of the particulars of this case,

warrant an exercise of our discretion to determine whether

the error "seriously affect[s] the fairness, integrity or

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public reputation of judicial proceedings." Olano, 113 S.

Ct. at 1779. Our recent decision in Whiting, which is

binding on us, undergirds this conclusion. While the

evidence of the omitted element is certainly less strong here

than it was in Whiting, see Whiting, 28 F.3d at 1309

(documenting the overwhelming record evidence that the weapon

in question was indeed a "firearm" within the meaning of the

statute), it is, as we have noted, not insubstantial.

Furthermore, the error here was far more excusable than in

Whiting. At the time the defective instructions were given,

they were in accord with the law of every circuit that had

issued an opinion on the meaning of the anti-structuring

statute's willfulness provision. Thus, we simply do not

believe that they can reasonably be viewed as having caused

the type of error which calls into serious question the

fairness, integrity or public reputation of judicial

proceedings. See United States v. Figueroa, 976 F.2d 1446,

1456 (1st Cir. 1992) (ruling that any error in the trial

court's failure to admit evidence of a cooperating witness's

criminal record for impeachment purposes did not seriously

affect the fairness, integrity or public reputation of

judicial proceedings in view of the conflict regarding the

admissibility of such evidence among the circuits and the

absence of on-point First Circuit precedent), cert. denied,

113 S. Ct. 1346 (1993). To be sure there are cases from

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other circuits to the contrary. See Retos, 25 F.3d at 1232

(concluding without analysis that a defective willfulness

instruction given prior to Ratzlaf in a structuring case

seriously affects the fairness, integrity or public

reputation of judicial proceedings); Jones, 21 F.3d at 173

(same); United States v. Rogers, 18 F.3d 265, 268 (4th Cir.

1994) (same). We recognize that these other circuits may

well have a valid rationale for their view, but we are bound

by our own precedent. Furthermore, we think that it is the

better solution to this problem.

In sum, we decline to vacate defendant's

structuring conviction under the plain error doctrine.

III. THE SENTENCING
III. THE SENTENCING

No transcript of the sentencing hearing has been

furnished us. We do not know whether it has been lost in

transit or one was not requested. Although a transcript

would have been helpful, the issues raised by defendant can

be competently decided without one.

In its judgment and conviction order, the court

followed the procedure set forth in U.S.S.G. 5G1.2, which

provides in pertinent part:

5G1.2. Sentencing on Multiple Counts
5G1.2. Sentencing on Multiple Counts

of Conviction
of Conviction

(c) If the sentence imposed on the
count carrying the highest
statutory maximum is adequate

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to achieve the total
punishment, then the sentences
on all counts shall run
concurrently, except to the
extent otherwise re-quired by
law. 7

7. See United States v. Quinones, 26 F.2d 213, 215-17 (1st

Cir. 1994), for a discussion of the district court's
discretion to order that sentences be served consecutively
notwithstanding the dictates of U.S.S.G. 5G1.2. This is not
an issue in this case.

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The commentary to 5G1.2 explains:

This section specifies the procedure
for determining the specific sentence to
be formally imposed on each count in a
multiple-count case. The combined length
of the sentences ("total punishment") is
determined by the adjusted combined
offense level. To the extent possible,
the total punishment is to be imposed on
each count. Sentences on all counts run
concurrently, except as required to
achieve the total sentence, or as
required by law.

This section applies to multiple
counts of conviction (1) contained in the
same indictment or information, or (2)
contained in different indictments or
informations for which sentences are to
be imposed at the same time or in a
consolidated proceeding.

Usually, at least one of the counts
will have a statutory maximum adequate to
permit imposition of the total punishment
as the sentence on that count. The
sentence on each of the other counts will
then be set at a lesser of the total
punishment and the applicable statutory
maximum, and be made to run concurrently
with all or part of the longest sentence.
If no count carries an adequate statutory
maximum, consecutive sentences are to be
imposed to the extent necessary to
achieve the total punishment.

The district court sentenced the defendant to 140

months incarceration, which was in accord with the Guidelines

Sentencing Range, on his RICO and Money Laundering counts (1,

2, 4-10), "to be served concurrently on each other." The

balance of the sentence was as follows:

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30

120 months on each of counts 19 & 20 to
be served concurrently on each other as
well as on counts 1, 2, 4-10;
60 months on each of counts 3,11,12, 16-
18, to be served concurrently on each
other as well as on counts 1,2,4-10 and
counts 19 & 20.

Defendant does not object to the overall sentence.

He does argue that the court erred in imposing a sentence of

120 months on Counts 19 & 20 (conspiracy to defraud the IRS

and structuring) and 60 months on Counts 16-18 (tax evasion).

In his reply brief defendant acknowledges that the sentences

on Counts 16-18 "lawfully reached the statutory maximum"

because of the provisions of U.S.S.G. 5G1.2 and its

commentary. He therefore concedes that his attack on the

sentences on counts 16-18 is contingent on reversal of the

judgment on those counts carrying the 140-month sentence.

Because this contingency has not occurred, the attack on the

sentences for counts 16-18 fails.

As the government points out, however, the court

erred in sentencing defendant to a concurrent sentence of 120

months on Count 19 for conspiring to defraud the United

States. The applicable statute, 18 U.S.C. 371, provides

for a fine of not more than $10,000 or imprisonment of not

more than five years, or both. Defendant's sentence on this

count should have been a concurrent sentence of sixty months.

We must remand to the district court for a correction of the

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sentence on Count 19. In all other respects, the sentence of

defendant is upheld.

Remanded for correction in sentencing; the judgment
Remanded for correction in sentencing; the judgment

of the district court is in all other respects
of the district court is in all other respects

Affirmed.
Affirmed.

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