Court Opinion

ID: 767908
Source: CourtListenerOpinion
Date Created: 2012-04-18 08:45:54+00
Date Added: 2024-06-11T17:55:31.657829
License: Public Domain

205 F.3d 951 (7th Cir. 2000)
United States of America,    Plaintiff-Appellee,v.David Lanzotti and Connie L. Hughes,    Defendants-Appellants.
Nos. 98-2728 & 98-2750
In the  United States Court of Appeals  For the Seventh Circuit
Argued October 27, 1999Decided February 15, 2000

Appeal from the United States District Court  for the Central District of Illinois.  No. 94-CR-30014--Richard Mills, Judge. [Copyrighted Material Omitted][Copyrighted Material Omitted]
Before Bauer, Coffey, and Easterbrook, Circuit Judges.
Bauer, Circuit Judge.

1
David Lanzotti  ("Lanzotti") and Connie L. Hughes ("Hughes") were  found guilty of participating in an illegal  gambling business in violation of 18 U.S.C. sec.  1955. Lanzotti was also convicted of conspiracy,  18 U.S.C. sec. 371, in the first trial of this  case. United States v. Lanzotti, 90 F.3d 1217  (7th Cir. 1996). Both now appeal their  convictions and sentences.

I.  Background

2
For approximately 10 years, Lanzotti and Howard  Furkin ("Furkin"), under the guise of a  legitimate business called Allstar Music, Inc.  ("Allstar"), operated a large scale gambling  business. Allstar, owned by Furkin, leased  amusement machines to bars and service clubs.  Lanzotti originally persuaded Furkin to enter  into the gambling business in which Furkin, using  fictitious names, purchased video and poker  machines with cash. These cash purchases were not  reported to either the Internal Revenue Service  or to Allstar's own accountants. The machines  were then converted into gambling devices and  placed in various bars and taverns in which they  had already established a connection. The bars  would pay the winning patrons and then split the  profits with Allstar.

3
By 1992 Allstar had close to 250 gambling  machines in approximately seventy-five locations  with an average weekly income that varied between  several hundred dollars to as much as three  thousand dollars per bar. Lanzotti and Hughes  were responsible for servicing the machines and  collecting the profits. Hughes only worked as an  employee of Allstar for approximately two years  but continued to work as Lanzotti's assistant in  the gambling business. They were the primary  contacts between the bar owners and Allstar.  Lanzotti also owned one of the bars and on at  least one occasion dealt directly with a gambling  customer's payoff dispute.

4
Neither Lanzotti nor Furkin reported the income  they received from the gambling machines to the  Internal Revenue Service. In fact, they  encouraged bar owners to lie about how much money  they had received from the gambling machines. To  protect themselves from the IRS, Lanzotti and  Furkin entered into backdated lease agreements  with the bar owners to purposefully misrepresent  the income received from the machines. In these  fictitious lease agreements, bar owners paid a  flat rate, which was less than half the gross  earnings, for the machines each week.

5
On January 18, 1995, a jury convicted Lanzotti  and Hughes and other defendants for violating 18  U.S.C. sec. 1955. Lanzotti was also convicted of  conspiracy. On June 8, 1995, the district court  granted a new trial with respect to the gambling  charge for Lanzotti and Hughes because the jury  instructions inadequately described the aiding  and abetting theory to the jury. Lanzotti and  Hughes moved to prevent the retrial based on  double jeopardy grounds. The district court  denied their motion and this Court of Appeals  affirmed that decision. United States v.  Lanzotti, 90 F.3d 1217 (7th Cir. 1996).

6
Lanzotti and Hughes were retried on the  gambling charge and on February 11, 1998, were  again found guilty. A joint sentencing hearing  was held for both defendants on June 29, 1998.  Lanzotti, with a two-level enhancement for  obstruction of justice, was sentenced to 120  months incarceration followed by three years of  supervised release, and ordered to pay $500,000  in restitution to the Internal Revenue Service.  Hughes, with a three-level enhancement for her  supervisory role in the business, was sentenced  to twenty months incarceration followed by three  years of supervised release. She has served her  time and has been released from custody.

7
Lanzotti and Hughes appeal their convictions and  sentences.

II.  Lanzotti's and Hughes' Conviction
A.  Aiding and Abetting Instruction

8
The defendants appeal their convictions on the  grounds that aiding and abetting a state gambling  law violation fails to satisfy the federal  gambling statute's (18 U.S.C. sec. 1955)  requirement that the gambling business violate  state law.

9
We review the evidence and all reasonable  inferences that can be drawn therefrom in the  light most favorable to the Government, and we  will affirm if any rational trier of fact could  have found the essential elements of the crime  beyond a reasonable doubt. United States v.  Jackson, 103 F.3d 561, 567 (7th Cir. 1996). Only  when the record contains no evidence, regardless  of how it is weighed, from which a jury could  find guilt beyond a reasonable doubt will a jury  verdict be overturned. United States v. Furkin,  119 F.3d 1276, 1280 (7th Cir. 1997).

10
Section 1955 makes it a crime for whoever  conducts, finances, manages, directs, or owns all  or part of an illegal gambling business. 18  U.S.C. sec. 1955 (a). In order to establish a  violation under 18 U.S.C. sec. 1955, the  government must prove the existence of an illegal  gambling business. One requirement is for the  government to establish that the business  violated a law of the state in which it was  conducted. 18 U.S.C. sec. 1955(b)(1)(i). The  indictment in this case charged the defendants  with violating Illinois law 720 ILCS 5/28-1.  Subsection (a)(1) of this provision provides that  a person commits the offense of gambling when he  "[p]lays a game of chance or skill for money or  other thing of value." 720 ILCS 5/28-1(a)(1).  Subsection (a)(3) provides that a person commits  the offense of gambling when he "[o]perates,  keeps, owns, uses, purchases, exhibits, rents,  sells, bargains for the sale or lease of,  manufactures or distributes any gambling device."  720 ILCS 5/28-1(a)(3).

11
Lanzotti argued that the use of the aiding and  abetting theory in connection with a state law  violation created a new offense. This court, in  affirming the district court, disagreed and  stated that the indictment and the prosecution's  factual theory of the case described a violation  of state law under the aiding and abetting and  (a)(3) theories but was insufficient under  (a)(1). United States v. Lanzotti, 90 F.3d 1217,  1224 (7th Cir. 1996). Although the jury was given  the aiding and abetting instruction, the district  court granted a new trial because it was not  "fully and fairly communicated by the jury  instructions." Id.

12
In the new trial, the government established  that by providing the bars with the machines to  be played, Lanzotti and Hughes aided and abetted  the patrons playing games of chance for money.  The jury was then instructed with Illinois  Pattern Jury Instruction 5.03 which states:

13
A person is legally responsible for the conduct  of another person when, either before or during  the commission of an offense, and with the intent  to promote or facilitate the commission of an  offense, he knowingly solicits, aids, abets,  agrees to aid, or attempts to aid the other  person in the planning or commission of an  offense.

14
The instruction was not objected to by the  defendants, therefore it is reviewed under a  plain error standard. United States v. Brothers,  955 F.2d 493, 496 (7th Cir. 1992).

15
Under federal law, the crime of aiding and  abetting requires knowledge of the illegal  activity that is being aided and abetted, a  desire to help the activity succeed and some act  of helping. United States v. Garcia, 45 F.3d 196,  199 (7th Cir. 1995). The jury was instructed with  this court's pattern Instruction 5.08 which  states:

16
Any person who knowingly aids, abets, counsels,  induces or procures the commission of a crime is  guilty of that crime. However, that person must  knowingly associate himself with the criminal  venture, participate in it, and try to make it  succeed.

17
In evaluating the merit of challenged jury  instructions to which objections were properly  raised in the proceedings below, we review the  charge in its entirety and ascertain whether the  jury was misled in any way and whether it had an  understanding of the issues and its duty to  determine those issues. United States v. Boykins,  9 F.3d 1278, 1285 (7th Cir. 1993); United States  v. Loscalzo, 18 F.3d 374, 383 (7th Cir. 1994). If  the instructions are adequately supported by the  record and are fair and accurate summaries of the  law, the instructions will not be disturbed on  appeal. Id. In this case, the instructions  clearly informed the jury correctly about aiding  and abetting and no error occurred.

B.  Expert Witness

18
Lanzotti and Hughes further argue that the  district court abused its discretion in refusing  to allow their expert witness, James Jordan, to  testify. Rule 702 establishes two admissibility  requirements for expert testimony: (1) the expert  must be qualified, and (2) the subject matter of  the expert's testimony must consist of  specialized knowledge that will be helpful or  essential to the trier of fact in deciding the  case. United States v. Buscaglia, 25 F.3d 530,  533 (7th Cir. 1994); United States v. Stevenson,  6 F.3d 1262, 1266 (7th Cir. 1993); Fed.R.Evid.  702. A court has wide discretion in determining  the competency of a witness as an expert and the  relevancy of his testimony with respect to a  particular subject. The district court's decision  will be overturned on appeal only if manifestly  erroneous. Stevenson, at 1267.

19
In this case, the district court denied the  defendants' motion to establish Jordan as an  expert. The defendants did not provide the court  with any information regarding Jordan's resume,  curriculam vitae, or credentials that would  qualify him as an expert in the area of gambling.  In fact, Jordan works for the Illinois Liquor  Control Commission which regulates liquor, not  gambling, and is not qualified to render an  expert opinion on whether or not Cherry Master  and Poker machines are illegal. The district  court did not abuse its discretion in denying  defendants' motion to supplement their witness  list.

III.  Lanzotti's Sentence and Restitution
A.  Sentence

20
Lanzotti appeals the two-level enhancement of  his sentence for obstruction of justice. He  contends that the court double counted when it  used the same conduct to establish his conspiracy  offense to justify the enhancement for  obstruction of justice.

21
We give great deference to a sentencing court's  determination that a sec. 3C1.1 enhancement is  appropriate. United States v. Hickok, 77 F.3d 992, 1007 (7th Cir. 1996). Indeed, we will  overturn a factual finding in the sentencing  context only if our review of the record leaves  us with "a definite and firm conviction that a  mistake has been committed." Id. (quoting  Anderson v. City of Bessemer City, 470 U.S. 564,  573, 105 S. Ct. 1504, 1511, 84 L. Ed. 2d 518  (1985)).

Section 3C1.1 provides that:

22
If the defendant willfully obstructed or impeded,  or attempted to obstruct or impede, the  administration of justice during the course of  the investigation, prosecution, or sentencing of  the instant offense of conviction, and the  obstructive conduct related to the defendant's  offenseof conviction and any relevant conduct;  or a closely related offense, increase the  offense level by 2 levels.

USSG sec. 3C1.1

23
Application Note 7 to sec. 3C1.1 provides that an  adjustment may be made if a significant further  obstruction occurred during the investigation,  prosecution, or sentencing of the obstruction  offense itself.

24
Lanzotti's contention that the court double  counted is not supported by the record. In fact,  this court has previously held that, while some  overlap will occur concerning the evidence of  obstruction as it relates to the various  enhancements and the departure, each represent  different considerations under the Guidelines.  Furkin, 119 F.3d 1276, 1284. In other words, the  different guidelines address different concerns  relating to a defendant's obstructive conduct.  Id. Additionally, both the application notes to  sec. 3C1.1 and this Court's case law make it  clear that improperly attempting to influence a  witness (including by counseling a potential  witness to make false statements to investigating  authorities) indeed qualifies as obstruction of  justice under U.S.S.G. sec. 3C1.1. United States  v. Friend, 104 F.3d 127, 131 (7th Cir. 1997).

25
In this case, the court found that the  defendant created false documents to conceal the  true nature of his gambling operations, including  backdating leases, and his conduct was extensive  and pervasive. The court further found that when  Lanzotti became aware of the IRS investigation,  he tried to influence witness testimony. He  encouraged the various bar owners, including  David Hampsten, to lie about their payment  arrangement with Allstar. To reduce his expenses,  Lanzotti wanted them to say they paid a flat rate  for the machines instead of splitting the  profits. Regardless of the payment arrangement,  the income was never turned into Allstar or  recorded, unlike the income from their non-  gambling machines. These findings are clearly  consistent with Application Note 7's discussion  of obstruction. Lanzotti's two-level enhancement  was warranted.

B.  Restitution

26
Lanzotti argues that there was inadequate  justification for the sentencing court to order  restitution without citing any legal authority in  support of his contention. We repeatedly have  made clear that perfunctory and undeveloped  arguments, and arguments that are unsupported by  pertinent authority, are waived (even where those  arguments raise constitutional issues). United  States v. Berkowitz, 927 F.2d 1376, 1384 (7th  Cir. 1991); See, e.g., United States v. Brown,  899 F.2d 677, 679 n. 1 (7th Cir. 1990); United  States v. Petitjean, 883 F.2d 1341, 1349 (7th  Cir. 1989); United States v. Williams, 877 F.2d 516, 518-19 (7th Cir. 1989); Fed.R.App.P.  28(a)(4). A party urging us to reverse a district  court's judgment has an obligation to argue why  we should reverse that judgment, and to cite  appropriate authority to support that argument.  See Brown, 899 F.2d at 679 n. 1; see also Beard  v. Whitley County REMC, 840 F.2d 405, 408-09 (7th  Cir. 1988). "The premise of our adversarial  system is that appellate courts do not sit as  self-directed boards of legal inquiry and  research, but essentially as arbiters of legal  questions presented and argued by the parties  before them." Carducci v. Regan, 714 F.2d 171,  177 (D.C. Cir. 1983) (Scalia, J.). It is not this  court's responsibility to research and construct  the parties' arguments. Williams, 877 F.2d at  518; Beard, 840 F.2d at 408-09.

27
Lanzotti does not provide this court with any  evidence that the sentencing court abused its  discretion in ordering restitution. Berkowitz,  927 F.2d 1376, 1384. The Guidelines contemplate  full restitution whenever possible and the  defendant must establish that full restitution is  unwarranted under the circumstances to reduce or  alleviate that obligation. United States v.  Brown, 47 F.3d 198, 206 (7th Cir. 1995); 18  U.S.C. sec. 3663(a)(2) (Victim and Witness  Protection Act of 1982 (VWPA)). In other words,  the burden is on the defendant to show why  restitution is unwarranted. The lack of  documentation that Lanzotti benefitted from the  unreported income is beside the point. Lanzotti,  as a member of the conspiracy, is liable for the  actions of his coconspirator, which includes  restitution where appropriate. United States v.  Brewer, 983 F.2d 181, 205 (10th Cir. 1993);  United States v. Chaney, 964 F.2d 437, 452-53  (5th Cir. 1992).

IV.  Hughes' Sentence

28
Hughes argues that the district court erred in  imposing a three-level enhancement in connection  with her gambling conviction. The court found  that Hughes acted as a manager or supervisor as  defined under U.S.S.G. sec. 3B1.1 (b) of the  sentencing guidelines. This finding lacks a  factual predicate and constitutes clear error.  The fact that Hughes was Lanzotti's girlfriend  and a participant in the collection does not  render her a manager or a supervisor. She was not  an employee of All-Star, she never received a  paycheck, and only went to the office  occasionally on her own. Hughes' sentence is  vacated and remanded to the district court for  the limited purpose of re-sentencing Hughes  without the three-level enhancement for being a  manager or supervisor.

29
All other points and arguments either have been  waived or are without merit.

VI.  Conclusion

30
For the foregoing reasons Lanzotti's conviction  and sentence and Hughes' conviction are affirmed. Hughes' sentence is vacated and remanded for re-  sentencing.