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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.
Instead, the court addressed his argument under the Cotton decision.
In Cotton, the Supreme Court clarified that the term “jurisdiction” referred to a court’s power to hear a case. It held that “defects in an indictment do not deprive a court of a power to adjudicate a case.”
Rubin contended that Cotton was limited to not depriving courts of subject-matter jurisdiction when there are omissions in an indictment or inadequate facts presented for the crime. He claimed he was arguing something different—that the conduct he was charged with is not a crime under the UIGEA.
“We do not read Cotton so narrowly,” Cabranes wrote. “The Court did not speak merely of omissions; rather, it invoked the broader concept of ‘indictment defects.’”
Cabranes said this was the first time the Second Circuit had addressed the issue squarely, but three sister circuits, the D.C., Sixth and Tenth Circuits, have rejected the notion that failure to state an offense deprives the court of jurisdiction.
“In order to invoke a district court’s jurisdiction, an indictment need only allege that a defendant committed a federal criminal offense at a stated time and place in terms of plainly tracking the language of the relevant statute,” Cabranes wrote. “When such jurisdiction is established, a district court has authority to decide all other issues presented within the framework of the case, including whether to accept a guilty plea.”
Arguing for Rubin at the circuit was Fordham University School of Law graduate Timothy Straub, one of five students with Fordham’s Lincoln Square Legal Services clinic who worked on the case under the guidance of Professor Ian Weinstein, associate dean for Clinical Programs, and Professor James Cohen.
Over the years, Weinstein said Wednesday, the circuit has heard more than a dozen cases argued by students at the clinic.
“We regret that the court didn’t see the legal issues as we did and it seems surprising that a person can plead to, and be punished for, conduct that simply was not criminalized by the statute,” Weinstein said.
Assistant U.S. Attorneys Jared Lenow and Brent Wible represented the federal government.