This case is significant to the Internet community as a whole for several reasons:
1. The Judge decided, and the jurors agreed, that even though the servers were
physically located in Antigua (where Internet Gambling is regulated by the Antigua
Parliament), the act of receiving the wager was in the United States.
If and when the government gets around to taxing e-commerce (either on the
state or federal level), these issues of geography must be settled. Is the point
of sale where the consumer originated the transaction (it is according to the
Federal Judge that heard this case), or is the point of sale at the physical
location of the company's server (could be anywhere - Exodus, Above.net), or
perhaps its in the state in which the company is incorporated?
If the origination is the locale, then the ramifications are staggering. Every
transaction on the Internet would be subject to the taxation of the county the
web surfer happened to be in when the sale is made. What if he were traveling
and the order was made overseas, but shipped to a US address? What about keeping
up with the morass of ever changing tax laws within every civil municipality
in this great country? It could happen - the local city and county governments
are going argue they deserve a piece of the taxation pie if (and when) Congress
declares fair game on Internet commerce. Its a logistical nightmare waiting
to happen and for now, at least, this federal court and a jury of 12 US citizens
are comfortable with it.
2. The first act of government imposed Internet censorship is to come in a
version of the Kyl
Bill (Also known as the Internet Prohibition Act - the House already passed
a version of the bill) and is most likely to reach the current President's desk
before he leaves office.
Logic dictates that since a federal court has convicted a man of gambling on
the Internet, that more legislation is not needed.
However, the Kyl Bill (which makes exception for off track greyhound and horseracing
in states where its legal) seeks to force Internet Service Providers to filter
any sites offering online gambling.
The question here is: Is the technology available to filter web sites at the
ISP level? If the answer to that question "yes", then wouldn't the
use of a proxy server by the client make such filtering meaningless? Why pass
filtering laws mandating AOL, Mindspring and others to deny access to sites
offering online gambling if people are already being indicted and convicted
for violating older gambling laws? The most compelling comment on the direction
of Internet censorship comes from Bartlett Cleland, the director of The Center
for Technology Freedom speaking
to the house subcommittee on crime.
For many, the most compelling question after examining the events leading up
to the trial and conviction is this:
3. When was the last time we heard about anyone making a moral stand for something
when there was so much to lose?
Cohen could have remained at large (4 of those originally indicted are still
fugitives), lived anywhere in the world except the United States, and enjoyed
a 7-8 figure yearly income.
However, when he left his job at the Pacific Stock Exchange five years ago
to start a virtual, online version of the commodities market based on sporting
events, he believed what he was doing was allowed by law. He wrote letters to
congress about his venture, consulted with attorneys, and made sure the banking
infrastructure was in place that would allow him to to move money from Antigua
to the US, and the pay taxes to the IRS on any income from the venture.
In short, his belief that his actions were morally "right" and not
in violation of US laws was MORE than some weak rationalization to be a bookmaker,
as further evidenced by his actions after being indicted.
Shortly after a nationally televised press release announcing the indictments
by Janet Reno and the Department of Justice, Cohen came back voluntarily to
turn himself him (his 2 business partners did not, and remain American fugitives
living in Antigua). Many legal
pundits believed the DOJ picked the easiest cases it could to prosecute,
and would win easily.
Said Cohen, after his conviction:
I could have had a deal anytime I wanted. The Feds did not want
to try this case. But I wouldn't take a deal and here's why. I didn't
think I did anything wrong and I still don't. I told my lawyer in
writing, "I don't care if they kick it down to littering, you
won't hear the word guilty roll off my tongue." I still stand
by that quote today. It doesn't take a genius lawyer to cut a deal
with the government, 92% of federal cases plead out.
Remove gambling from the equation - maybe its your collection of MP3's, or
a copy of DeCSS that might one day serve as the impetus (God forbid) for a federal
indictment handed down with your name on it.
Suppose you were charged for doing something you believed to the very of core
of your being was allowed under law - would you come back and fight and take
a moral stand?
No matter how "right" I was, one could find me on the beaches of
sunny St. Johns for the rest of my life, laptop with solar
powered battery in tow...
Here's the letter asking for support on behalf of Cohen and his attorney:
RE: Letters for Jay Cohen
I am writing to ask you to consider writing a letter on behalf of Jay Cohen
to the judge who will be sentencing him in late May.
As you may have heard or read about, in early March 2000, Jay Cohen was convicted
by a jury on several counts of wire fraud in federal district court in New
York. The case stemmed from Jay's involvement as president and founder of
the World Sports Exchange, a very successful, honorable and visible online
sports book based in Antigua. The facts of the case were not in material dispute
at trial. Jay never denied that he was the founder and leader of the WSE.
His position was at trial and remains today that the WSE's business is completely
legal because it is based in Antigua. Jay and his defense team have also taken
the position that WSE's operations are based in Antigua and are outside the
jurisdiction of applicable U.S. law. At the bottom of this e-mail are links
to a few articles on Jay's case, which received much national publicity. Jay
is set to be sentenced in late May. The press has written articles stating
that Jay could be sentenced to prison for up to 19 years and fined a significant
amount. This is true. However, it is my understanding that the federal sentencing
guidelines for Jay's conviction recommends that the judge sentence him to
prison for 18 months, and that is the most likely sentence in the case. Jay
can also be fined. The judge who will be sentencing Jay has discretion in
deciding on any sentence. For instance, the judge could recommend a "downward
departure" that would allow Jay to serve no prison time at all. The Judge
could also impose a fine and no prison time. That is why I am writing.
Jay's attorney, Ben Brafman, has asked friends, family, supporters and
well-wishers to write letters asking the Judge for compassion and leniency
in sentencing Jay. If you know Jay or anything about his case, or believe
in his integrity and honesty, I urge you to write a letter on Jay's behalf.
Here are Jay's lawyer's instructions on how to write such a letter:
1. IMPORTANT: Mail the letter to Jay's lawyer, Ben Brafman, at the following
address: Brafman & Ross, P.C., 767 Third Ave., 26th Floor, NY, NY 10017. Mr.
Brafman will assemble the letters and present them to the Judge. Please send
them as soon as possible, because the sentencing date is only four weeks away.
2. IMPORTANT: Even though you are sending the letters to Mr. Brafman, you
should address the letter as follows: Honorable Thomas P. Griesa, United States
District Judge, Southern District of New York, United States District Courthouse,
500 Pearl Street, NY, NY 10007.
3. Begin your letter "Dear Judge Griesa" or "Your Honor", introduce yourself,
including a little about you and what you do for a living. You and type or
handwrite the letter, but only write on one side of the page.
4. Explain how you know Jay, how long you've known him and under what circumstances
you have known him.
5. Describe why you have a high opinion of Jay, how you personally know his
good qualities. Feel free to state that you are aware he has been convicted
but that does not change your high opinion of him.
6. Please keep the tone of your letter respectful and courteous, and avoid
the urge to criticize the flawed judicial system or Jay's clear innocence.
The tone should be a plea for leniency and compassion. The tone of the letter
should not be an argument to the Judge about how offshore gambling is legal
or ok, because the Judge has clearly rejected that concept. You may know the
Judge is wrong, but this letter is not the time to argue about that.
If you have any questions about this process, please contact me at the below
address or, contact Melinda Sarafa at Ben Brafman's office, 212.750.7800.
Thank you for your consideration.
Mendel Guzman Blumenfeld, LLP
5809 Acacia Circle
El Paso, Texas 79912
The cynic in me says its futile to waste the time of putting pen to paper,
but in deference to my eternal soul (and a good nights sleep) I'll do it anyway.