By Paige Topper
On June 25, 2015, in the criminal case of United States v. Parker, a published opinion, the Fourth Circuit vacated the defendants’ convictions of illegal gambling. The Fourth Circuit found that the government failed to disclose material impeachment information relating to a government witness who testified about a fifth participant in the gambling operation.
Fifth Participant Requirement Under 18 U.S.C. § 1955
Jack Parker and Douglas Taylor (“Defendants”) were convicted for conducting an illegal gambling business under 18 U.S.C. § 1955. Section 1955 defines an illegal gambling business in part as a business that involves five or more persons who partake in all or part of the business (“five-participant requirement”). At the trial court level the Defendants stipulated that they operated a sports gambling business together. The government claimed that Defendants were linked to another two-person gambling operation conducted by Brett Parker and Bryan Capnerhurst. The government further argued that because Defendants and the other gambling business shared both clients and the proceeds or losses from those clients, Brett, Bryan, Jack, and Douglas all participated in the same gambling business.
In order to meet the five-participant requirement, the government presented several theories. One of the theories was that Brett’s wife, Tammy Parker, participated in the business by using the gambling income for family expenses and maintaining the financial records. In support of this theory, the government provided testimony from its witness, Ben Staples, who claimed that he assisted Tammy in preparing federal tax returns in which she disclosed the income from the gambling business. The government also presented evidence that Tammy would occasionally accept payments for bets when Brett was not home.
Prior to Defendants’ trial, the government received notice that the Securities and Exchange Commission was investigating Ben Staples for fraud. However, the government did not disclose this information to Defendants’ attorneys. It was only after Defendants were found guilty of illegal gambling that their defense counsel learned of the SEC complaint. Defendants requested a new trial based on the government’s failure to disclose impeachment evidence as required by Brady v. Maryland. The trial court concluded that the government did not violate Brady because the SEC investigation was not material evidence.
Establishing a Brady Violation
The Supreme Court in Brady held that suppression of evidence that favors the defendant violates due process when the evidence is material to guilt or punishment. To establish a Brady violation, a defendant must show (1) that the undisclosed information was favorable, either because it was exculpatory or impeaching, (2) the information was material, and (3) the prosecution knew about the evidence and failed to disclose it.
Defendants Proved All Three Prongs of Brady Violation
First, the Fourth Circuit concluded that the SEC investigation of Ben Staples was favorable because it was impeaching. The Fourth Circuit reasoned that the evidence of the investigation would have demonstrated Staples’ potential desire to receive favorable treatment in his fraud case by testifying as a government witness in this case. Furthermore, the evidence would show Staples’ untruthful character.
Second, the Fourth Circuit found that the SEC investigation was material. At trial the jurors were not asked to specify the identity of the fifth participant in the gambling business and thus the Fourth Circuit could not know whether any juror relied on Tammy’s involvement to satisfy the five-participant requirement. However, the Fourth Circuit determined that, based on the relative strengths of the government’s theories for the five-participant requirement, there was a reasonable probability that at least one juror viewed Tammy as the fifth participant. Thus, the Fourth Circuit looked to whether impeaching Staples’ testimony would have had a reasonable probability to change a single juror’s view of Tammy’s involvement in the gambling business. The Fourth Circuit found that Staples’ testimony is the only evidence that firmly established Tammy’s active management of the gambling proceeds and thus the testimony provided critical evidence to support the government’s theory that Tammy was the fifth participant.
The Fourth Circuit did not explicitly address the third prong of the Brady test, but held that the government violated its obligation under Brady by failing to disclose the evidence of the SEC investigation to defense counsel. The Fourth Circuit was not persuaded by the government’s argument that a Brady violation had not occurred because Defendants were aware of the SEC investigation. While Jack and Brett might have been aware that Ben Staples was involved in a scam, the Fourth Circuit concluded this evidence was not enough to relieve the government from its disclosure obligations under Brady.
Fourth Circuit Vacated Defendants’ Convictions and Remanded
The Fourth Circuit held that the government violated its disclosure obligations under Brady by failing to disclose impeachable evidence relating to Ben Staples, a government witness. In particular, the Fourth Circuit concluded that the SEC investigation was material to the outcome of the case. Therefore, the Fourth Circuit vacated the convictions and remanded. The Fourth Circuit noted that it did not enter judgments of acquittal because, while the evidence is not overwhelming, the government formed a sufficient basis for defendants’ convictions for illegal gambling under § 1955.