Judge Could Accept Gambling Guilty Plea, Circuit Says

, New York Law Journal

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Slot machine displaying www
Slot machine displaying www

The U.S. Court of Appeals for the Second Circuit on Wednesday said alleged defects in an indictment are not jurisdictional in nature, meaning a district judge can accept a guilty plea under that indictment.

The Second Circuit rejected defendant Ira Rubin's claim that his indictment was faulty because the conduct he was charged with—funneling illegal gambling money into banks under the pretense it was legitimate retail proceeds—was not a crime under the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA).

Ira Rubin argued before the court that the 2002 U.S. Supreme Court case of United States v. Cotton, 535 U.S. 625, which holds that defects in an indictment do not strip a court of jurisdiction to hear a case, did not apply to the facts of his case. As a result, Rubin claimed that Judge Lewis Kaplan (See Profile) lacked the authority to take his plea.

But addressing the issue for the first time in the Second Circuit, Judges Jose Cabranes (See Profile), Peter Hall (See Profile) and Denny Chin (See Profile), in United States v. Rubin, 12-3777-cr, rejected what they said was a "narrow" reading of Cotton.

The judges read Cotton more broadly, finding Rubin's claim about his conduct in the indictment was non-jurisdictional in nature, and held Rubin had waived his argument by entering an unconditional guilty plea.

Rubin was sentenced by Kaplan in 2012 to three years in prison after pleading guilty to conspiracy to violating the UIGEA, 18 U.S.C. §372 and 31 U.S.C. §5363, conspiracy to commit wire fraud and mail fraud and conspiracy to commit money laundering.

He had been charged in an indictment brought against several people and three leading Internet poker companies who allegedly deceived banks and financial institutions by processing illegal gambling payments though third-party payment processors. Rubin and other third-party processors allegedly disguised the gambling payments by creating phony websites for clothing, jewelry and sporting goods.

On Dec. 12, 2013 at the circuit, Rubin argued he was convicted of a "non-offense" under the UIGEA, which applies to those "engaged in the business of betting or wagering."

The statute explicitly excuses the activities of a financial transaction provider, and Rubin claimed he qualified because he was not in the business of betting or wagering and did no more than handle gambling funds.

In the circuit's opinion Wednesday, Cabranes wrote that the court did not have to reach the question of whether Rubin was, or was not, in the business, because Rubin had waived the issue for appeal.

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