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Internet gambling and the future of technology

By in News
Wed May 10, 2000 at 10:51:24 PM EST
Tags: Freedom (all tags)
Freedom

An attorney and friend for Jay Cohen, the only person ever convicted of gambling on the Internet, has asked the Internet community to show their support by writing a letter to the sentencing judge. The trial, and the events leading up to it have been covered by MSNBC, ABC's 20/20, Yahoo! Internet Life, The San Francisco Weekly and others.


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.



Robert Blumenfeld
Mendel Guzman Blumenfeld, LLP
5809 Acacia Circle
El Paso, Texas 79912
915.587.7878
915.587.8808 (Fax)
e-mail: bblu@acaciapark.com

 

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.

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Display: Sort:
Internet gambling and the future of technology | 20 comments (20 topical, editorial, 0 hidden)
gambling is so dumbthat anyone who ... (1.60 / 5) (#5)
by haiku san on Wed May 10, 2000 at 06:20:32 PM EST

haiku san voted -1 on this story.

gambling is so dumb
that anyone who does it
deserves to be jailed.

Re: gambling is so dumbthat anyone who ... (none / 0) (#8)
by haiku san on Wed May 10, 2000 at 11:29:42 PM EST

you moderators
really do stink as much as
the ones at slashdot.

jesus, folks, i was just posting something that you may have happened to not agree with. great job.

[ Parent ]

Re: gambling is so dumbthat anyone who ... (none / 0) (#9)
by rusty on Wed May 10, 2000 at 11:36:48 PM EST

Psst-- friendly hint: most people here read at "Newest first, Ignore ratings". When there's only 7 comments, you shouldn't get too upset about the rating. :-)

____
Not the real rusty
[ Parent ]
Re: gambling is so dumbthat anyone who ... (none / 0) (#14)
by Paul Dunne on Thu May 11, 2000 at 03:06:13 AM EST

here we have no moderators and rating has no real effect
http://dunne.home.dhs.org/
[ Parent ]
Re: gambling is so dumbthat anyone who ... (3.00 / 1) (#10)
by evro on Thu May 11, 2000 at 12:19:55 AM EST

people have the right
to do whatever they want
with their hard-earned cash
---
"Asking me who to follow -- don't ask me, I don't know!"
[ Parent ]
In order to get around the apathy o... (3.30 / 3) (#4)
by deimos on Wed May 10, 2000 at 07:29:46 PM EST

deimos voted 1 on this story.

In order to get around the apathy of most people today, if this sending a letter was automated on a website, it would be much more effective. The ACLU has been very successful in making it two clicks to email and fax the correct representative and senator on various issues. So much so that their servers are now overloaded when they send out their "action alerts". Surprisingly, it works. You will at least get a snail mail letter or a return email from the rep/senator stating their position, etc. Yes, it is a form letter, but does acknowledge the receipt of your letter/fax. This isn't an ad for the ACLU, but more the fact that automating the letter and the subsequent email is much better and more effective. The apathy and laziness is a whole other issue which probably isn't going to be resolved here.
irc.kuro5hin.org: Good Monkeys, Great Typewriters.

Personally, this reminds me a lot o... (none / 0) (#6)
by feline on Wed May 10, 2000 at 07:34:02 PM EST

feline voted 1 on this story.

Personally, this reminds me a lot of the decision to restrict porography, it was unfair to do so, and so is this restriction of gambling.

I really don't see why, if someone has the balls to take a chance and they're of legal age (not the same with porn, anyone of any age should be able to utililize that) that they cannot do so.
------------------------------------------

'Hello sir, you don't look like someone who satisfies his wife.'

Sick of the "... and the future of ... (4.50 / 2) (#2)
by Velian on Wed May 10, 2000 at 09:13:36 PM EST

Velian voted -1 on this story.

Sick of the "... and the future of ..." talk.

Nice attitude (none / 0) (#11)
by evro on Thu May 11, 2000 at 12:22:55 AM EST

Yes, I wish this site dealt only with history. The future? Pshaw. More stories about Queen Elizabeth!!
---
"Asking me who to follow -- don't ask me, I don't know!"
[ Parent ]
Yes. We need more discussion on th... (none / 0) (#3)
by Wah on Wed May 10, 2000 at 09:47:13 PM EST

Wah voted 1 on this story.

Yes. We need more discussion on the interpretation of the many, many laws we all live under.
--
Fail to Obey?

Re: Yes. We need more discussion on th... (none / 0) (#7)
by Wah on Wed May 10, 2000 at 11:03:39 PM EST

aaah,, so that's how that works. Please excuse me, I'm still a frickin' idjit.
--
Fail to Obey?
[ Parent ]
This stuff is really scary. It rea... (4.00 / 4) (#1)
by FlinkDelDinky on Wed May 10, 2000 at 10:26:06 PM EST

FlinkDelDinky voted 1 on this story.

This stuff is really scary. It really disturbs me. I'm not a gambler but I don't see why people who enjoy gambling shouldn't be allowed to gamble. I know there are people who don't (can't?) control themselves when gambling. But why should that disallow the rest of gamblers from enjoying their hobby or proffession.

Are who going to ban fast-food because some people become dangerously fat from it? And if we do that, and there are still really fat people, what then?

I'm against the drug war too. Pretty much for the same reasons. The people with problems have problems. A law will not change that. It will merely take a freedom away from you.

I get the idea that (legally) taking temptations away from people is somehow supposed to transform them into more responsable people. The reality is that responsability requires strength and freedom. You need freedom to be responsable. If you take freedom away you are less responsable and therefor weaker. My spelling is fine, you have a reading problem.

Re: This stuff is really scary. It rea... (none / 0) (#17)
by puppet10 on Thu May 11, 2000 at 11:25:50 AM EST

Just to futher scare you more news from the drug "war" there was an article on /. in the YRO section about a bill currently going through congress (a similar bill has already passed the senate) making it unlawful to "teach or demonstrate the manufacture of a controlled substance, or to distribute by any means information pertaining to, in whole or in part, the manufacture or use of a controlled substance, with the intent that the teaching, demonstration, or information be used for, or in furtherance of, an activity that constitutes a Federal crime" (HR2987) While slightly mitigated by the requirement of intent this is still quite a chilling attack on free speech.

[ Parent ]
Re: Internet gambling and the future of technology (3.00 / 1) (#12)
by evro on Thu May 11, 2000 at 12:28:18 AM EST

I find the worst thing about outlawing gambling is that the government itself does it! The big "news" the past few days is all about how there's a US$350M Jackpot in "The Big Game." So we can all participate in the state-sponsored roulette table but we can't play our own game. I sometimes wonder how politicians sleep at night knowing they are doing the opposite of the job for which they elected (namely, protecting our freedoms). We cannot gamble, unless it benefits the government (or, as they like to say, 'the children.' I really doubt the billions generated from the lottery are really going to education, as we are told). Blah to politicians everywhere! Blah, I say!
---
"Asking me who to follow -- don't ask me, I don't know!"
Re: Internet gambling and the future of technology (none / 0) (#13)
by Paul Dunne on Thu May 11, 2000 at 02:58:58 AM EST

The guy's an American, correct? He thought to make a quick buck by exploiting what he saw as a loopwhole in American law, correct? Nevertheless, a judge and jury convicted him, correct? So where's the story? What next? "How evil anti-spammers destroyed my business empire" by Spam King (what's his name)?

Think about it. The assertion is, that any American who doesn't like the laws passed in the USA should be able to shift his server off-shore and carry on regardless. Is that really a good thing? What's the point of having laws, then? You may well believe that, in this instance, fools and their money should be soon parted (Vegas can do it, so why not this fellow?); but if you apply that principle to any law that someone doesn't like, pretty soon you don't have any law. I don't think many people would actually want to live in the resulting "society".
http://dunne.home.dhs.org/

Re: Internet gambling and the future of technology (none / 0) (#15)
by Anonymous Hero on Thu May 11, 2000 at 09:50:20 AM EST

Are you going to feel this way when an American travelling in the middle east is arrested and sentenced to death for doing something on the net that is legal in the US but illegal in that country?

Do think all american corporations with operations overseas comply with all american laws in their overseas offices/plants/factories?

OSHA, EPA, minimum wage, disabilities, others?

When was the last time an american corporation was convicted by an american court for polluting the air in another country in violation of american laws but within the laws of the country where the factory is located?

Think about it. The assertion is, that any American who doesn't like the laws passed in the USA should be able to shift his FACTORY off-shore and carry on regardless. Is that really a good thing? What's the point of having laws, then?

Yes, what is the point?



[ Parent ]

Re: Internet gambling and the future of technology (none / 0) (#16)
by Paul Dunne on Thu May 11, 2000 at 10:00:25 AM EST

The points you raise are valid, but they are not at issue. The courts have decided that the deciding factor as to whether a US law is being broken by Internet activities is not where the server is physically located, but whether services are being provided from that server to Internet nodes located within US juristiction. This seems to me to be a reasonable judgement.

Whether US corporations should have their world-wide activities subject to the same scrutiny as in the US is a moot point. I suspect one could argue a strong case in its favour -- but it has nothing to do with this case.
http://dunne.home.dhs.org/
[ Parent ]

Re: Internet gambling and the future of technology (none / 0) (#19)
by Anonymous Hero on Fri May 12, 2000 at 06:47:54 PM EST

My first question was:

Are you going to feel this way when an American travelling in the middle east is arrested and sentenced to death for doing something on the net that is legal in the US but illegal in that country?

In you response, you di not comment on that one. Here goes again.

The courts have decided that the deciding factor as to whether a US law is being broken by Internet activities is not where the server is physically located, but whether services are being provided from that server to Internet nodes located within US juristiction. This seems to me to be a reasonable judgement.

Let me make it very clear:

Country J has laws against showing people in swim suits. American citizen has a web site with pictures of people on the beach in swim suits. Citizen of Country J views web site of American citizen from his own country.

Courts in Country J hold that American citizen has broken the law by providing services to Internet nodes located within Country J's jurisdiction.

American citizen's timing is bad. Said citizen happens to be travelling in Country J on vacation and is arrested. The penalty for said crimes in Country J is death and American citizen is put to death.

Anything wrong with this picture?

Now, let's turn it around...

Can American citizen set up an internet casino in the US so long as he only takes bets from Internet nodes outside the US jurisdiction?

AH and lovin it...

[ Parent ]

Re: Internet gambling and the future of technology (none / 0) (#20)
by Paul Dunne on Sat May 13, 2000 at 02:59:07 AM EST

I should have made myself clearer then. This is an American citizen, living in America, breaking American laws by trying to exploit a loophole in those laws, right? Your hypothetical case is different from that, but, what is wrong with it? It might not fit in with Western ideas of justice, but arguably said non-Americans are perfectly within their rights to apprehend someone who has broken their laws -- if they can get this case to stand up in their courts, which I doubt. (I'm not an American, by the way). But really, I don't see what this has to do with the case at issue. I do think I see what you're getting at, and if the case involved a non-American providing a service from a non-American site that happened to be illegal in America, then I would agree with you, there is no case for him to answer under American law -- if the US authorities don't like this stuff coming in, they are going to have to do what Singapore does, or just shut up about it.
http://dunne.home.dhs.org/
[ Parent ]
Re: Internet gambling and the future of technology (none / 0) (#18)
by Rand Race on Thu May 11, 2000 at 12:48:38 PM EST

You mention Las Vegas but fail to make the next logical step. How is my going to Vegas to gamble different than my going to Antigua on the internet to gamble? Can I be tried for gambling here in Tennesee if I went to Nevada won some money and brought it back? The answer would be no, so why should I be liable for doing virtually what is legal in meatspace?

The purpose of anti-gambling laws is to avoid the socially detrimental effects of having a gambling-based local economy (at least here where the statute limits establishments not persons). My gambling in Antigua has no more effect on my local area, gambling wise, than my gambling in Vegas, playing slots at the Cherokee Reservation, buying Georgia lottery tickets, or playing the stock market.
"Question with boldness even the existence of God; because if there be one, He must approve the homage of Reason rather than that of blindfolded Fear." - Thomas Jefferson
[ Parent ]

Internet gambling and the future of technology | 20 comments (20 topical, 0 editorial, 0 hidden)
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