Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

United States v. Useni

February 21, 2008

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
FUAT USENI AND PHILLIP J. COZZO, DEFENDANTS-APPELLANTS.



Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 02 CR 400-James B. Zagel, Judge.

The opinion of the court was delivered by: Manion, Circuit Judge

ARGUED SEPTEMBER 19, 2007

Before BAUER, MANION, and WOOD, Circuit Judges.

Under Illinois law, only charitable organizations are allowed to run certain gambling games such as bingo games, pull-tab games, and raffles as fundraisers for their organizations. In this case, the operators of the Grand Palace Bingo Hall (the "Grand Palace") in Northlake, Illinois, used the Italian American War Veterans (the "IAWV"), a charitable organization, as a front to pocket nearly three million dollars in gambling proceeds. Both Fuat "Frank" Useni and Phillip Cozzo worked at the Grand Palace from its inception until it was sold to a group of IAWV members. A jury convicted Useni and Cozzo of conspiring to commit racketeering offenses and operating an illegal gambling business, as well as several counts of mail fraud and tax fraud. Following their convictions, Useni and Cozzo appealed, challenging various aspects of their respective convictions and sentences. On appeal, the principal question in their challenges to their convictions and sentences is the extent of their involvement in the illegal gambling that occurred at the Grand Palace. We affirm.

I.

Because the jury returned a verdict in favor of the government in this case, we summarize the evidence in the light most favorable to the government. The people who comprised the central witnesses at trial were: Polly Kirby, the manager of the Illinois Department of Revenue's office of bingo and charitable games; Patrick Marotta, the former president and CEO of Gore & Kaye, a wholesale distributor of charitable gaming supplies that was the Grand Palace's primary supplier; Carmen Trombetta and Steven Mariani, IAWV members who were involved in the preparation and operation of the Grand Palace; Carole Johnson, Useni's former girlfriend and a worker at the Grand Palace; Lorraine Mazzei, Cozzo's former girlfriend; Aaron Levitanksy, the Grand Palace's accountant; Donna Dombrowski, the live-in girlfriend of Fred Bingham, the Grand Palace's bookkeeper; and Richard Lexby, an agent for the Internal Revenue Service (the "IRS"). We refer to those witnesses, as well as any other of the witnesses at trial, when their testimony is relied upon in our narrative of the evidence in this case.

A. Illinois Gambling Laws

Illinois has a network of laws and regulations designed to allow charitable organizations to raise money through limited forms of gambling while, at the same time, strictly limiting the use of the money and facilities involved in the gambling in order to prevent fraud and abuse. At trial, Illinois Department of Revenue employees Polly Kirby, Lisa Roberts, and Randi Kaplan testified about Illinois's regulatory scheme for charitable gambling. According to those witnesses, only certain charitable organizations, such as the IAWV, are permitted to run bingo halls. A charitable organization must have a license issued by the state to conduct bingo or pull-tab games.*fn1 See 230 ILCS 20/2; 230 ILCS 25/1. A license, which must be renewed annually, allows the charitable organization to hold bingo or pull-tab games once a week. Illinois law also requires that a charitable organization have a license to conduct raffles, but the licensing of raffles is left to each individual municipality rather than the state. In addition, Illinois law prohibits conducting raffles and bingo games on the same premises. 230 ILCS 25/2(11).

A company or person that is not affiliated with a charitable organization may obtain a supplier's license, which allows that company to sell gambling supplies to the charitable group running the games; or a provider's license, which allows the company to rent a facility to a charitable group conducting games. See 230 ILCS 20/3.1; 230 ILCS 25/1.4-.5. The provider's license, like the bingo and pull-tab licenses, has to be renewed yearly by the state of Illinois. Neither the supplier nor the provider may receive any revenue from the games other than a reasonable sum in exchange for providing their services; the net proceeds of the gambling must go to the charitable organization running the games. See 230 ILCS 20/4; 230 ILCS 25/2. Furthermore, only the members of the charitable organization are allowed to participate in operating the games, including selling bingo cards or pull-tabs, calling numbers, confirming and paying winners, and handling or counting the proceeds from the sale of cards and pull-tabs. Most importantly, only members of the charitable organization are allowed to handle the money earned from the games. Significantly, the members of the charitable organization involved in operating the games must be volunteers and are themselves prohibited from being compensated for their work in running the games. See 230 ILCS 20/4(3); 230 ILCS 25/2(3).

Supplier, pull-tab, and bingo licensees have reporting obligations to the state. Suppliers must file quarterly reports listing such information as the manufacturer's serial number for each pull-tab box sold, the date of the sale, the type of tickets sold, serial numbers for the tickets, and what the ideal gross proceeds would be for each box of pull-tabs. Pull-tab and bingo licensees are required to report quarterly to pay their taxes.*fn2 On a bingo report, a licensee must list the date, the amount of prizes awarded, and the number of players participating for each bingo session held, as well as the gross proceeds from the games that quarter and the amount of tax owed to the state. In contrast, a pull-tab return must report, among other things, each pull-tab game played, the date the particular pull-tab game was played, the manufacturer's serial number for that game, the gross proceeds from the game, the gross proceeds for the sale of pull-tabs that quarter, and the amount of tax owed.

B. Birth of the Grand Palace

While the network of laws, rules, and regulations were designed to prevent fraud, a gambling operation nevertheless presented a lucrative attraction to someone willing to skirt the law. The Grand Palace was the brainchild of William Shlifka,*fn3 a man who had no affiliation with the IAWV. Shlifka planned to have several IAWV posts each apply for separate bingo and pull-tab licenses, which would allow Shlifka to run several sessions of gaming a week. In turn, Shlifka would have the Grand Palace apply for provider's and supplier's licenses so that it could supply the gambling equipment and host the sessions. Shlifka would pay each veteran who worked a nightly gaming session $50 per session and would pay each IAWV post $100 for every gaming session they hosted.

From the beginning, Shlifka involved Cozzo, who was also not a member of the IAWV, in the planning of the Grand Palace. Prior to the opening of the Grand Palace, Shlifka, together with Cozzo, met with several people who would be key to the Grand Palace's success: Steven Mariani, a high-ranking IAWV member who would recruit IAWV posts and members; Patrick Marotta, the president of bingo-supply distributor Gore & Kay who would be the main supplier of gambling equipment to the Grand Palace; and Aaron Levitansky, who would do the accounting work for the Grand Palace. According to Mariani's testimony, Shlifka and Cozzo approached Mariani and asked him to recruit IAWV posts to sponsor the games and offered Mariani $100 for each gaming session hosted by an IAWV post recruited by Mariani. Shlifka also introduced Mariani to "Frank" Useni, another non-IAWV member, as someone who would help run the kitchen and do the janitorial work for the bingo hall. Shlifka and Cozzo next met with Marotta about providing gaming supplies. Marotta testified that Shlifka and Cozzo sought Marotta's advice as to the type of games to run and pull-tabs to use. At that meeting with Marotta, Shlifka referred to Cozzo as his "partner." Shlifka and Cozzo then met with Levitansky about the hall. Levitanksy testified that Shlifka told him that the Grand Palace would make money by renting the hall and selling bingo cards to the IAWV posts, as well as by selling concessions to hall patrons. At that meeting no mention was made of the Grand Palace ever profiting off of the revenue from the games.

After securing the aid of Mariani, Marotta, and Levitansky, Shlifka applied for a provider's license in February 1994, using the names of his wife and daughter as purported officers of the Grand Palace. Several applications for bingo and pull-tab licenses for IAWV posts were also submitted. Donna Dombrowski, Fred Bingham's live-in girlfriend, testified that Bingham, the Grand Palace's bookkeeper and a non-IAWV member, completed the applications for the posts. Each application listed the address of the Grand Palace as the address of the IAWV post submitting the application, though no IAWV post had its place of business at the Grand Palace. Mariani testified that Shlifka gave the money for the license application fees to him, who in turn had money orders made out to be submitted with the applications.

According to the testimony of Lorraine Mazzei, Cozzo's former girlfriend, Cozzo had one of the bingo license applications signed by Mazzei and his sisters. The bingo application required Mazzei and Cozzo's sisters to make several certifications, including that they were bona fide members of the charitable organization and that they had a copy of the rulebook for conducting charitable games and would "be responsible for the conduct of the games in accordance with the provisions of the laws of the State and the rules and regulations of the department governing the conduct of such games." When the bingo and pull-tab license applications were rejected because they were not signed by members of the IAWV, Mariani testified that Shlifka had him obtain the signatures of veterans on amended license applications. After they were submitted, the amended applications were accepted and bingo and pull-tab licenses issued. No license to conduct raffles was ever obtained.

While the licenses were being pursued, Shlifka held two planning meetings. Both meetings occurred before the operation of the games commenced, the first being held in January 1994 and the second in May 1994. Mariani and Carmen Trombetta-an IAWV member who, like Mariani, became deeply involved in the Grand Palace-testified that Useni and Cozzo attended both meetings. At the May meeting, Shlifka instructed the IAWV veterans working the games to deny that they were getting paid, if asked.

C. Operation of the Grand Palace

Once the games commenced, each IAWV post was ostensibly running one of the weekly gambling sessions. In reality, though, the veterans had little control over the games; their contribution was limited to selling pull-tabs, bingo cards, and raffle tickets to the hall's patrons. According to the IAWV members who testified at trial, the veterans did not control which games were played. They were not allowed to count the money generated by the games or be in the back room where the money was kept. They had no idea how much money was generated by the business. And they did not have any control over the checking accounts where the proceeds for the games were deposited.

The real power over the games-and, most importantly, over the revenue generated from the games-was exercised by those who had access to the Grand Palace's back office, all of whom were non-veterans: Shlifka, Bingham, and Shlifka's daughter Laura Dostal, as well as Cozzo and Useni. Shlifka and Cozzo would determine which games would be played. After a veteran had completed selling his allotment of pull-tabs, raffle tickets, or bingo cards, someone from the back office would collect the gaming proceeds from the veteran and take the money to the back room. There, the money was collected and taken by Fred Bingham, the bookkeeper for the Grand Palace and a non-veteran, to deposit in accounts he controlled. Besides handling the money, Bingham, along with Dombrowski, filled out the quarterly bingo and pull-tab returns for the IAWV posts. On those returns, the number of pull-tab games being played was vastly under-reported, as was the revenue generated by the pull-tab games.

Cozzo, along with Shlifka, appeared to be running the hall. According to the testimony of the veterans who worked at the Grand Palace, as well as one of the undercover state revenue agents sent to investigate the Grand Palace's operations, Cozzo announced the rules of bingo prior to the session, sold bingo cards, verified winning bingo numbers, administered the raffles, sold pull-tabs, announced the pull-tab numbers, took the pull-tab proceeds to the back office, brought out new boxes of pull-tabs to sell, paid the veterans, and controlled the pull-tab machine on the wall, removing money from it and fixing it when it malfunctioned. In contrast, Useni worked primarily in the concession area of the Grand Palace. However, witnesses testified that he also verified winning bingo cards, sold pull-tabs and raffle tickets, provided raffle tickets to the veterans to sell, paid the veterans, walked around observing the workers and players, and installed, restocked, and removed the money from the pull-tab machine.

Both Useni and Cozzo were involved in obtaining the pull-tabs from Marotta. Marotta testified that Cozzo often ordered the pull-tabs from Marotta and picked them up at Marotta's place of business. Marotta stated that Useni also picked up the pull-tabs on occasion. Marotta further testified that he sold a tremendous volume of pull-tabs to the Grand Palace-massive in comparison to other bingo operations. Undercover state revenue agents sent to investigate the Grand Palace observed that the number of pull-tab games played at the Grand Palace exceeded the number allowed by law, which varied depending on the type of game played and total payout for the session. Since pull-tabs are required to be registered with the state, Cozzo, along with Shlifka, approached Marotta at one point and asked him to supply them unregistered pull-tabs. Marotta testified that he agreed to provide them with unregistered pull-tabs but that, unbeknownst to Cozzo and Shlifka, he continued to sell them registered pull-tabs.

D. Useni's Ownership of the Grand Palace

In June 1995, Useni purchased the Grand Palace from Shlifka. After the purchase, Useni and Cozzo were in charge of the hall, and they informed the others of the change in leadership. Marotta testified that Cozzo told him that "the heat was on" and that Shlifka was stepping down. Cozzo then told Marotta that he was in charge and, if there were any problems, to contact him. According to Levitanksy's testimony, Cozzo and Useni also met with him and told him that he should direct any questions about the Grand Palace to them. Additionally, Mariani testified that Useni talked to him and told him that he had bought out Shlifka; going forward, Mariani was to take orders from Useni.

Useni applied for a provider's license shortly after purchasing the Grand Palace. On that license, Useni signed a certification which read: "I . . . certify that no employee of mine shall manage or operate the games. I also state that I have read the applicable bingo or charitable games rulebook." Despite that certification, the games continued to be operated the same as they were under Shlifka's regime. Carole Johnson, Useni's girlfriend, testified that, when she asked Useni where the money from the games was going, Useni told her that it was going into a "slush fund" and that he was planning on retiring early.

During his ownership of the Grand Palace, Useni hired Cesar Valera to work in the kitchen of the concession area. The kitchen had been Useni's primary area of responsibility before he purchased the Grand Palace. Valera testified that Useni paid him, like the veterans, in cash and he was not given a W-2.

E. Sale of the Grand Palace to Bingo Partners

Useni's ownership of the Grand Palace did not last long. Just eleven months after purchasing the hall, Useni sold it in May 1996 to Bingo Partners, Inc. ("Bingo Partners"), a group of veterans consisting of Mariani (the organizer), Trombetta, James Sarno, Rosario DiMarco, Sam Lenoci, and Michael Riccio. Mariani testified that Useni had said that he needed to sell "right away."*fn4 According to Johnson, right before Useni sold the Grand Palace to Bingo Partners Useni told Johnson not to talk to anyone who came into the Grand Palace in a suit because Useni thought that might be an FBI agent. Useni also told Johnson that he thought the hall was bugged. Useni and Cozzo, along with Johnson, began shredding the pull-tabs, both the winning and losing tickets, placing the remains in opaque green bags.

The sale to Bingo Partners did not end Useni's and Cozzo's involvement with the Grand Palace. In addition to a $120,000 payment up front in exchange for the Grand Palace, Bingo Partners promised Useni and Cozzo further payments in a series of installments. Mariani testified that Cozzo and Useni repeatedly called Bingo Partners looking for those payments, which were made out of the money collected from the pull-tab machine. Trombetta testified that Cozzo and Useni lent Bingo Partners the money to operate the games to help Bingo Partners get established. Trombetta also testified that Useni promised to let Bingo Partners use his provider's license in exchange for $1000 ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.