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UNITED STATES v. CONLEY

July 6, 1994

UNITED STATES OF AMERICA,
v.
JOHN F. "Duffy" CONLEY, WILLIAM C. CURTIN, SHEILA F. SMITH, JOHN FRANCIS "Jack" CONLEY, THOMAS "Bud" McGRATH, MARK A. ABBOTT, THOMAS ROSSI, WILLIAM STEINHART, ROBERTA FLEAGLE, ROBIN SPRATT, MONICA C. KAIL, WILLIAM J. REED, JOANNE T. SMITH, KENNETH "Ron" GOODWIN, LAWRENCE N. "Neudy" DEMINO, SR., CHRISTOPHER "Chris" KAIL, JOSEPH A. DEVITA, FRANK GAROFALO, THOMAS D. CIOCCO, MICHAEL SUKALY, PHILLIP M. "Mike" FERRELL, ANESTOS "Naz" RODITES, and WILLIAM E. RUSIN, Defendants.



The opinion of the court was delivered by: DONALD J. LEE

 Before the Court is Defendant John F. "Duffy" Conley's challenge to the July 19, 1990 searches of certain premises. (Document No. 377, in part).

 Defendant John F. "Duffy" Conley ("Duffy Conley") has limited standing to challenge the warrants pursuant to which the July 1990 searches and seizures were undertaken. In prior proceedings, the Court ruled that Duffy Conley had Fourth Amendment interests that were implicated by seizures and searches of video poker machines from "locations" -- bars, delicatessens, coffee shops, etc. -- in which Duffy Conley had no reasonable expectation of privacy. United States v. Conley, 856 F. Supp. 1010, 1994 WL 239405, at *1-9, (W.D. Pa. 1994) (Document No. 801). Specifically, the Court held that Duffy Conley's ownership of the video poker machines, which the Court assumed for purposes of its decision, was an interest protected from unreasonable seizures by the Fourth Amendment. Id. [slip op.] at 16, 18, 23. The Court indicated that although the Fourth Amendment does not require a warrant to seize property in an unprotected area, it does require probable cause to seize without a warrant. Id. at 18. Further, the Court held that Duffy Conley had a reasonable expectation of privacy in the inside compartments of the video poker machines, id. [slip op.] at 16, 19-22, 23-24, necessitating a valid warrant or warrant-exception before the compartments properly could be invaded by law enforcement personnel. See also United States v. Conley, 856 F. Supp. 1034, 1994 WL 239406, at *1, slip op. at 1-2 (W.D. Pa. 1994) (Document No. 900). Duffy Conley's "standing" is limited; to the extent that the searches and seizures did not involve his poker machines, they implicated no right secured to him under the Fourth Amendment. *fn1"

 Although the Court indicated that no warrant was needed to seize video poker machines, the Court presumed that the Government would attempt to show probable cause to seize the machines through the warrants that were in fact issued for the locations. Conley, 856 F. Supp. 1010, 1994 WL 239405, at *6 & n.7 (W.D. Pa. Jan. 7, 1994) (Document No. 801). As in the past, the Government has relied solely on the warrants that were in fact issued for the locations searched in 1990.

 All of the searches and seizures on July 19, 1990 were conducted pursuant to warrants issued on the basis of a single master affidavit. As the affiant on the master affidavit was FBI Special Agent Charles Duffy ("S.A. Duffy"), and there are other master affidavits in the record, the July 18, 1990 master affidavit will be referred to as the "Duffy affidavit."

 THE DUFFY AFFIDAVIT

 The Duffy affidavit commences by stating its objective as follows: "The purpose of this Affidavit is to establish probable cause to believe that a number of business establishments operating in and around the City of Pittsburgh are presently operating video poker machines, in violation of the Gambling Device Act, 15 U.S.C. §§ 1171, 1172, 1173, 1177 and 18 U.S.C. § 2." Duffy affidavit, at 1. After describing his credentials and the sources of his evidence, S.A. Duffy turns to a discussion of several of the federal statutes invoked by the applications for search warrants.

 The Duffy affidavit quotes 15 U.S.C. § 1172, which provides in pertinent part:

 
§ 1172 Transportation of gambling devices as unlawful; exceptions; authority of Federal Trade Commission
 
 
(a) General rule
 
It shall be unlawful knowingly to transport any gambling device to any place in a State or possession of the United States from any place outside of such State or possession: . . . .

 15 U.S.C. § 1172. *fn2" The Duffy affidavit then quotes Section 1171, which defines "gambling device" in the related statutory scheme, and describes the origins of "The Erie Cases."

 The Duffy affidavit relates the application for and issuance of warrants which resulted in the seizure of 294 video poker machines in Erie, Pennsylvania. The Duffy affidavit then discusses the two district court opinions that resulted from the civil forfeiture cases instituted against the seized video poker machines. *fn3" The Duffy affidavit quotes extensively from the first of the opinions, authored by Judge Weber. The first quoted portion describes the operation of video poker machines meeting the definition of "gambling device" under Section 1171. *fn4" The quoted portion describes the use of knock-off switches, which remove accumulated credits upon which pay-offs have been made. The Duffy affidavit then quotes Judge Weber's holding as to what poker machines meet the definition of "gambling device" under Section 1171:

 
We, therefore, conclude that all subject video poker machines with knock-off switches and meters, or the provision in wiring, circuitry or programming to accommodate the addition of knock-off switches and meters, are gambling devices within the meaning of the Act.

 Duffy affidavit, at 6 (quoting 294 Various Gambling Devices, 718 F. Supp. at 1246). The Duffy affidavit further states:

 
4. The Court also held that since video poker machines were gambling devices per se, it was not necessary to show actual payoffs on the machines.
 
Evidence of actual payoffs, either directly by the machine or indirectly by a bartender who redeems credits for cash is not necessary to a determination that a machine is a gambling device.

 Duffy affidavit, at 7 (quoting 294 Various Gambling Devices, 718 F. Supp. at 1242). The Duffy affidavit also quoted the second opinion, which was authored by Judge Cohill, and included a copy of the slip opinion. The Duffy affidavit stated that Judge Cohill "held that video poker machines are in violation of 15 U.S.C. § 1171 if they are 'designed and manufactured to facilitate gambling.'" Duffy affidavit, at 7 (quoting 294 Various Gambling Devices, 731 F. Supp. at 1242) (emphasis deleted by S.A. Duffy).

 S.A. Duffy further recites that he is personally familiar with the operation of video poker machines. In describing how such machines operate, S.A. Duffy specifically referenced the knocking off of credits, stating, "The bartender or owner, having verified the number of free games pays the player, then removes (knocks off) the accumulated credits, returning the machine to zero credits." Duffy affidavit, at 8.

 The Duffy affidavit then states:

 
8. I am personally familiar with each address listed herein and know from personal observation and from speaking with agents and officers involved in the investigation that there is a business conducted at each said address. Furthermore, from these discussions and/or from personal knowledge, I have reason to believe that there is located in each identified business establishment one or more gambling devices in the form of video poker machines as more fully described herein.
 
9. Through the investigation referred to herein, certain video poker machines currently located in taverns, coffee shops, and other business establishments in Allegheny County including those listed in this affidavit, were identified. These video poker machines are manufactured by several companies and bear any one of several names. However, regardless of the name used, the operational and play features of all the video poker machines identified herein are fundamentally the same. (See, copy of Holmes' Affidavit which is attached hereto and made a part hereof by reference.)
 
11. I have reason to believe that each of the video poker machines and/or some of the integral or essential components of same was transported in interstate commerce in that manufacturers are located outside the Commonwealth of Pennsylvania. Video poker machines manufactured by Merit Industries of Ben-Salem, PA, are assembled using critical components manufactured beyond the boundaries of the Commonwealth of Pennsylvania. (See copy of Holmes' Affidavit).
 
12. I have been advised by Mr. William L. Holmes of the FBI (retired) that the video draw poker machines referred to herein are designed and manufactured primarily for use to facilitate gambling. Further, I have been advised by Pennsylvania State Trooper William Cunningham and City of Police Detective John Bosetti that they have historically played video poker machines in and around the city [sic] of Pittsburgh during the course of this investigation and received "payoffs" after accumulating the pre-selected number of credits.

 Duffy affidavit, at 8-10. At this point, the Duffy affidavit sets forth location-specific factual averments, which will be summarized shortly. Following the location-specific averments, the Duffy affidavit includes two final paragraphs:

 
14. I have been advised by Pennsylvania State Troopers, City of Pittsburgh detectives and confidential informants that they have historically received or observed payoffs, including those noted above, and on most occasions the person making the payoffs at the establishment recorded the same on a business record generally consisting of a tablet or note card. Further, I have been advised by the same investigators and informants that on each such occasion, the person making the payoff knocked off the machine with a knock-off switch or other device to clear it for use by the next player. I have also been advised by the same Pennsylvania State Troopers and city detectives that they have investigated and seized video poker machines for more than six years in the Allegheny County, Pennsylvania area, and that in that time period they have observed business records in various forms ranging from note pads to ledgers utilized by the establishment to record certain aspects of their video poker machine business such as phone numbers of routemen or servicemen, dates and amounts of money generated by the machine, splits with the vendor or patron/player, and other such similar records.
 
15. Within the past week, law enforcement officers involved in this investigation, confidential informants, cooperating witnesses and your affiant have returned to all of the above-described establishments, with the exception of Matrix and E-Z Mini Self Storage, and have observed video draw poker machines located within those premises.

 Duffy affidavit, at 21-22.

 Before turning to the location-specific averments of the Duffy affidavit, the Court will first turn to the incorporated-by-reference affidavit by former FBI agent William L. Holmes. *fn5" The Holmes affidavit recites the affiant's qualifications. It then describes the historical evolution of knock-off switches and meters from primarily mechanical components to hidden, electronic components. *fn6" The historical evolution section of the Holmes affidavit concludes:

 Holmes affidavit, at 7. The next section recites that manufacturers sell their equipment to vendors, who place them in locations at no cost to the location owner.

 The Holmes affidavit next contains a section entitled "Investigative Intelligence." This section states in its entirety:

 
17. The investigation conducted by the Federal Bureau of Investigation reveals that the following video poker machines are in current operation at the Pine Hollow Country Dairy, Jack's Restaurant, Kail's Coffee Shop, the Coffee Shop and the Idlewood Inn:
 
Hi-Lo Double Up Joker Poker
 
Riviera
 
Draw Poker
 
Draw Bonus
 
Super Draw
 
Top Draw
 
Chicken Draw
 
These devices characteristically contain "bill acceptor" mechanism which allow a player to insert into the device United States currency in one, five and twenty dollar denominations. Units of play (credits, points, etc.) are recorded on a display meter equivalent to the value of the currency inserted. (Each device also contains coin receptacles which allow the inserting of one or more coins, i.e., quarters (consideration).
 
To activate these devices, a player presses a button (start, ante, bet, etc.) to record the number of units or play to be risked on the outcome of the next hand. A "deal" button is pressed to display images of five cards on the video screen. From one to five "discard" buttons are pressed to remove unwanted cards. A "draw button" is pressed to replace those cards that were previously discarded.
 
When a winning combination occurs, a varying number of units of play are awarded (reward), depending upon the value of the hand.
 
A coin, or U.S. currency (consideration) is inserted into the device to initiate play of a game which is based predominantly upon chance, inasmuch as a player cannot appreciably influence the final outcome of play, for an award (reward), which is equal to or greater than the initial consideration.
 
18. Several of these devices typically contain additional feature of "double-up" and/or "jokers wild." The "double-up" feature does not come into play until a winning combination occurs. A player then has the option of taking what was previously won or take a chance on correctly identifying the value of an unknown card to win double what was previously won, or nothing, by pressing the appropriate buttons.
 
In most instances, a player must risk a predetermined number of units or [sic] play (either 2 or 4 credits) to activate the "jokers wild" feature.
 
Activation of the "double-up" feature and/or the "jokers wild" feature does not enhance the ability of a player to influence the final outcome of play, therefore, the game depicted is based predominantly upon chance.
 
A "knock-off" feature is used to remove unused units of play from the video-display meter [sic]. An amount of money equal to the value of the unused "credits" knocked-off is paid to the player by the location owner, or their representative.
 
When this "pay off" occurs, the electronic video-display draw poker devices are being ...

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