In the
United States Court of Appeals
For the Seventh Circuit
Nos. 98-2728 & 98-2750
United States of America,
Plaintiff-Appellee,
v.
David Lanzotti and Connie L. Hughes,
Defendants-Appellants.
Appeal from the United States District Court
for the Central District of Illinois.
No. 94-CR-30014--Richard Mills, Judge.
Argued October 27, 1999--Decided February 15, 2000
Before Bauer, Coffey, and Easterbrook, Circuit Judges.
Bauer, Circuit Judge. 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
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.
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.
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.
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).
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.
Lanzotti and Hughes appeal their convictions and
sentences.
II. Lanzotti's and Hughes' Conviction
A. Aiding and Abetting Instruction
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.
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).
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).
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.
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:
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.
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).
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:
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.
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
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.
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
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.
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:
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
offense of conviction and any relevant conduct;
or a closely related offense, increase the
offense level by 2 levels.
USSG sec. 3C1.1
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.
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).
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
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.
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
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.
All other points and arguments either have been
waived or are without merit.
VI. Conclusion
For the foregoing reasons Lanzotti's conviction
and sentence and Hughes' conviction are affirmed.
Hughes' sentence is vacated and remanded for re-
sentencing.