Justia U.S. 7th Circuit Court of Appeals Opinion Summaries

Illinois legalized riverboat casino gambling in 1990. Since then, the state’s once‐thriving horseracing industry has declined. In 2006 and 2008, former Governor Blagojevich signed into law two bills that imposed a tax on in‐state casinos of 3% of their revenue and placed the funds into a trust for the benefit of the horseracing industry. Casinos filed suit under the Racketeering Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1964, alleging that defendants, members of the horseracing industry, bribed the governor. On remand, the district court granted summary judgment for the racetracks, finding sufficient evidence from which a reasonable jury could find that there was a pattern of racketeering activity; that a jury could find the existence of an enterprise‐in‐fact, consisting of Blagojevich, his associates, and others; sufficient evidence that the defendants bribed Blagojevich to secure his signature on the 2008 Act; but that the casinos could not show that the alleged bribes proximately caused their injury. The Seventh Circuit reversed in part. Viewing the evidence in the light most favorable to the plaintiffs, there was enough to survive summary judgment on the claim that the governor agreed to sign the Act in exchange for a bribe. View "Empress Casino Joliet Corp. v. Johnston" on Justia Law

The Ho-Chunk Nation, a federally recognized Indian Tribe, operates casinos in Wisconsin and nets more than $200 million annually from its gambling operations. Cash Systems, one of three businesses involved in this case, engaged in issuing cash to casino customers via automated teller machines and kiosks, check-cashing, and credit- and debit-card advances. Whiteagle, a member of the Nation, held himself out as an insider and offered vendors an entrée into the tribe’s governance and gaming operations. Cash Systems engaged Whiteagle in 2002 as a confidential consultant. Cash Systems served as the Nation’s cash-access services vendor for the next six years, earning more than seven million dollars, while it paid Whiteagle just under two million dollars. Whiteagles’s “in” was his relationship with Pettibone, who had been serving in the Ho-Chunk legislature since 1995. Ultimately, Whiteagle, Pettibone, and another were charged with conspiracy (18 U.S.C. 371) to commit bribery in connection with the contracts with the Ho-Chunk Nation and substantive bribery (18 U.S.C. 666). Whiteagle was also charged with tax evasion and witness tampering. Pettibone pleaded guilty to corruptly accepting a car with the intent to be influenced in connection with a contract. Whiteagle admitted that he had solicited money and other things of value for Pettibone from three companies, but denied actually paying bribes to Pettibone and insisted that he and Pettibone had advocated for Whiteagle’s clients based on what they believed to be the genuine merits of those clients. Convicted on all counts, Whiteagle was sentenced, below-guidelines, to 120 months. The Seventh Circuit affirmed, rejecting challenges to the sufficiency of the evidence on the bribery charges, the loss calculation, and admission of certain evidence.View "United States v. Whiteagle" on Justia Law

The Tribe operates a Wisconsin casino and financed investment in a Natchez, Mississippi riverboat casino by issuing bonds backed by casino revenue. The bank, as trustee, alleged that the Tribe had breached a bond indenture and sought appointment of a receiver to manage the trust security on behalf of the bondholder. The district court dismissed, holding that the indenture was void, as a gaming facility management contract not approved by the National Indian Gaming Commission (25 U.S.C. 2710(d)(9), 2711(a)(1)), and that the Tribe's waiver of sovereign immunity in the indenture was consequently void. The Seventh Circuit affirmed in part and reversed in part. The indenture was void so that the waiver of sovereign immunity cannot serve as a predicate for jurisdiction. The district court should have permitted the bank to file an amended complaint to the extent that it presented claims for legal and equitable relief in connection with the bond transaction on its own behalf and on behalf of the bondholder so that it could address whether the bank has standing to litigate claims on behalf of the bondholder and determine whether collateral documents, when read separately or together, waive sovereign immunity with respect to any such claims.

Illinois riverboat casinos filed a RICO suit (18 U.S.C. 1961) against racetracks, charging that the owner of two tracks, in cahoots with then-governor, Blagojevich, "bought" statutes requiring casinos to deposit three percent of their revenues to the "Horse Racing Equity Trust Fund" for disbursement to racetracks for use to increase purses and improve the tracks. The district judge issued, then dissolved, a temporary restraining order. The Seventh Circuit reinstated, so that no money is being disbursed, but on rehearing en banc, affirmed. The Tax Injunction Act forbids federal district courts to "enjoin, suspend or restrain the assessment, levy or collection of any tax under State law," if an adequate remedy is available in the state courts, as it is in Illinois 28 U.S.C. 1341. If unlawfulness can be traced to the racetracks, the casinos can seek damages from them. The Act does not bar federal monetary relief, but federal courts cannot freeze the stateâs tax moneys by imposition of a constructive trust. The court extended the TRO for 30 days pending petition for certiorari.