Title: Roberts v. COMMUNICATIONS INV. CLUB, ETC.
Citation: 431 A.2d 1206
Docket Number: N/A
State: rhode-island
Issuer: rhode-island Supreme Court
Date: July 1, 1981

431 A.2d 1206 (1981) Dennis J. ROBERTS II, Attorney General et al. v. COMMUNICATIONS INVESTMENT CLUB OF WOONSOCKET et al. No. 79-294-Appeal. Supreme Court of Rhode Island. July 1, 1981. *1207 Dennis J. Roberts, II, Atty. Gen., Joshua Teverow, Sp. Asst. Atty. Gen., for plaintiffs. Stone, Clifton &amp; Clifton, Walter R. Stone, Providence, for defendants. MURRAY, Justice. On May 7, 1979, the Attorney General filed a complaint in the Superior Court charging the defendants with operating an unauthorized lottery in violation of Art. XLI, sec. 1 of the Rhode Island Constitution. The complaint sought to enjoin the defendants' activities permanently and after a hearing of the Attorney General's allegations, such relief was granted by a Superior Court justice. It is the granting of the requested relief which forms the basis of the defendants' appeal. On May 1, 1979, articles of association were filed in the Secretary of State's office *1208 by the individually named defendants[1] to incorporate the Communications Investment Club of Woonsocket, a nonbusiness corporation. The articles of incorporation stated that the corporate purpose was to bring "people together within and without the state of Rhode Island for the purpose of fostering communications, understanding and trust for our fellow human beings." The record discloses that the Communications Investment Club operated in the following manner. Each person who wished to participate in its plan was required to invest $1,000. Such an investment entitled the investor to the privilege of having his name placed on a list containing names of six other investors. The $1,000 investment was divided equally between the person whose name appeared first on the list and the person whose name appeared last on the list. After the person whose name appeared first on the list had received all of the money he was to receive according to the plan, his name was stricken from the list. Once this was done, the remaining names on the list were all advanced one position and the name of the newest investor was inserted into the sixth position at the bottom of the list. Once an investor's name cleared the first list, he was entitled to invest in another list, which operated in a similar manner. On appeal, two issues have been raised for our consideration. One of the individual defendants named in the complaint, Vincent A. Scirocco (Scirocco), contends that he was deprived of his Fifth Amendment privilege against self-incrimination when the trial justice directed him to answer certain questions after he had refused to answer on the grounds that the answers might have incriminated him. The other issue raised is wither defendants' activities constituted a "lottery" within the meaning of R.I. Const. Art. XLI, sec. 1. With respect to the first issue, defendant Scirocco contends that the trial justice erred in directing him to answer certain questions after he had invoked his Fifth Amendment privilege against self-incrimination. The Attorney General, on the other hand, contends that the answers to the questions given by defendant Scirocco could not have incriminated him and that, at any rate, defendant had waived his right to assert his Fifth Amendment privilege. At this juncture, it would be well to examine the law material to the issues raised by the parties. The constitutional privilege against self-incrimination accords one the right to refuse to incriminate himself. Such privilege extends not only to disclosures that would support a conviction but also to disclosures that would constitute a link in a chain of evidence needed to initiate a prosecution. Hummell v. Superior Court, 100 R.I. 54, 58-59, 211 A.2d 272, 274 (1965) (citing Malloy v. Hogan, 378 U.S. 1, 11, 84 S. Ct. 1489, 1495, 12 L. Ed. 2d 653, 661 (1964)).[2] Although a witness is not exonerated from answering questions by merely declaring that in so doing he would incriminate himself, it must be "`perfectly clear, from a careful consideration of all the circumstances in the case, that the witness is mistaken, and that the answer cannot possibly have such tendency' to incriminate." Hoffman v. United States, 341 U.S. 479, 488, 71 S. Ct. 814, 819, 95 L. Ed. 1118, 1125 (1951) (Emphasis in original.) Accordingly, a waiver of such a privilege is not lightly to be inferred. Smith v. United States, 337 U.S. 137, 150, 69 S. Ct. 1000, 1007, 93 L. Ed. 1264, 1274 (1949). Indeed "`courts indulge in every reasonable presumption against waiver' of fundamental constitutional rights * * *." (Footnote omitted.) Johnson v. Zerbst, 304 U.S. 458, 464, 58 S. Ct. 1019, 1023, 82 L. Ed. 1461, 1466 (1938). To waive this or any *1209 other fundamental constitutional right, one must intentionally relinquish or abandon a known right or privilege; and whether particular conduct amounts to a waiver must be determined from the circumstances of each case. Id. at 464, 58 S. Ct. at 1023, 82 L. Ed. at 1466; Hummell v. Superior Court, 100 R.I. at 58, 211 A.2d at 274 (citing Johnson v. Zerbst, supra). With the foregoing analysis as our guide, we now examine the following colloquy that took place during Scirocco's testimony.[3] Later during Scirocco's testimony the following occurred: The Attorney General then introduced into evidence a verified complaint that defendant Scirocco and the others had previously filed in another related case that they had initiated in the United States District Court for the District of Rhode Island.[4] This document was introduced into evidence as a full exhibit without objection by defendants. The complaint reads, in pertinent part: Assuming, without deciding, that the answers that Scirocco was compelled to give were incriminating under the above-cited cases and that the trial justice therefore erred in requesting Scirocco to give those answers, we conclude that such error, if indeed it was error, was harmless. Even if the trial justice had upheld Scirocco's assertion of his privilege against self-incrimination and had not requested Scirocco to answer the questions posed to him, the same information the questions sought to elicit was eventually placed before the trial justice when plaintiffs introduced into evidence without objection by defendants the federal court complaint. The circumstances of this case are not unlike those in Major v. Grieg, 102 R.I. 379, 230 A.2d 846 (1967). In that case, the plaintiff objected to the admission into evidence of a police report which disclosed that she had admitted fault in an automobile accident in which she was involved with the defendant; however, earlier in the trial the police officer had, without any objection by the plaintiff, read into evidence his version of the statement that the plaintiff had given to him after the accident. According to the police officer, the plaintiff had said the accident was no fault of the defendant. We held that the admission of the report was not prejudicial error, if it was error at all. Id. at 393, 230 A.2d at 854. Furthermore, we cannot say that the testimony in controversy here so influenced the judgment of the trial justice as to have caused him to rest his decision in whole or in substantial part on that evidence. See Corrado v. Providence Redevelopment Agency, 110 R.I. 549, 556-57, 294 A.2d 387, 390 (1972). Indeed the trial justice need not have taken any of the disputed evidence into account in arriving at his decision. Thus, we hold that under the circumstances of this case, if it was error for the trial justice to compel defendant to answer questions posed to him after he had asserted his privilege against self-incrimination, such error was harmless. Turning now to defendants' contention that their activities did not constitute a lottery and are not, therefore, proscribed by our constitution, we find the applicable provision embodied in Art. XLI, sec. 1 of the Rhode Island Constitution, which provides: It is well settled that a "lottery" proscribed in either a state constitution or statute is defined as a scheme or a plan having three essential elements: consideration, chance, and prize. Goodwill Advertising Co. v. Elmwood Amusement Corp., 86 R.I. 6, 12, 133 A.2d 644, 647 (1957). All three elements must be present before a scheme may be termed a lottery. If one of them is absent, the scheme is not a lottery, regardless of its purpose. If all of the elements are present, the scheme is a lottery, regardless of the purpose of its sponsor. Morrow v. State, 511 P.2d 127, 128 (Alaska 1973); accord, Cudd v. Aschenbrenner, 233 Or. 272, 377 P.2d 150 (1962); State v. Wassick, 156 W. Va. 12, 191 S.E.2d 283 (1972). In the case at bar, there is little dispute that the elements of consideration and prize are present. The consideration is the $1,000 that each investor invests in the hope of receiving $32,000, which is the prize. What is disputed by the parties, however, is whether the element of chance is present. In deciding whether the element of chance is present, we adopt, as have most jurisdictions which have faced this issue, the "dominant factor" doctrine, under which a scheme constitutes a lottery when an element of chance dominates the distribution of prizes, even though such a distribution is affected to some degree by the exercise of skill or judgment.[5] Although the scheme in the instant case may have involved some degree of skill or judgment, it is clear that the element of chance permeated it. The operation in the instant case has all the attributes of what is commonly referred to as a "pyramid" scheme. The Attorney General in his brief to this court made the following observations: Other state courts have found that similar schemes constitute illegal lotteries. In Sherwood &amp; Roberts-Yakima, Inc. v. Leach, 67 Wash. 2d 630, 635, 409 P.2d 160, 163 (1965), the Supreme Court of Washington, in discussing the element of chance involved in a scheme whose success was also dependent upon its members inducing other persons to invest, stated: Yet another commentator has stated: In addition, there is a substantial body of case law which supports this view. E. g., State v. Bull Investment Group, Inc., 32 Conn. Supp. 279, 351 A.2d 879 (1974); Commonwealth v. Allen, 404 S.W.2d 464 (Ky. 1966); Sherwood &amp; Roberts-Yakima, Inc. v. Leach, supra. In view of the evidence and the authorities cited, we conclude that the dominant factors in the success or failure of this scheme were beyond the control of the participants.[6] Thus, chance is a dominant element of this scheme and therefore we deem it to be a violation of R.I.Const. Art. XLI, sec. 1. Accordingly, the defendants' appeal is denied and dismissed, the judgment appealed from is affirmed, and the case is remanded to the Superior Court. [1] The individually named defendants who filed the articles of association were Vincent A. Scirocco, Evelina Masse, Hank Daigle, Pauline Baurden, and Paul Pickett. [2] In Malloy v. Hogan, 378 U.S. 1, 84 S. Ct. 1489, 12 L. Ed. 2d 653 (1964), the Malloy court relied upon Hoffman v. United States, 341 U.S. 479, 71 S. Ct. 814, 95 L. Ed. 1118 (1951), as precedent. [3] Scirocco was called as a witness by the Attorney General under our adverse-witness statute, G.L. 1956 (1969 Reenactment) § 9-17-14. [4] In the federal court case, defendants sought injunctive relief against the Attorney General and others to enjoin them from interfering with their operation. [5] E. g., Morrow v. State, 511 P.2d 127 (Alaska 1973); Finster v. Keller, 18 Cal. App. 3d 836, 96 Cal. Rptr. 241 (1971); State v. Steever, 103 N.J. Super. 149, 246 A.2d 743 (1968); Commonwealth v. Laniewski, 173 Pa.Super. 245, 98 A.2d 215 (1953); Seattle Times Co. v. Tielsch, 80 Wash. 2d 502, 495 P.2d 1366 (1972). This doctrine is opposed to the "pure chance" doctrine, under which a scheme is considered a lottery when a person's judgment plays no part in the selection and award of the prize. See Braddock v. Family Finance Corp., 95 Idaho 256, 506 P.2d 824 (1973). [6] Among these factors are market saturation and the likely prospect that not enough new investors will be found in order to ensure a profit to all investors.