## Facts

- A federal grand jury returned a multi-count indictment charging Baron Lombardo and several individual and corporate co-defendants with offenses arising from an alleged scheme to provide payment-processing services for illegal online gambling websites.
- The indictment alleged an “Enterprise” that operated a payment-processing website referred to as the “Gateway,” used to route bettor payments to gambling sites and confirm when funds were received so bettors could gamble online.
- When bettors paid by Visa or MasterCard, the Gateway allegedly processed credit-card information by misclassifying charges to conceal their gambling nature, causing banks to process transactions they otherwise might have blocked.
- The indictment alleged that the Enterprise paid at least one bank employee to help facilitate approval and processing of these disguised transactions.
- When bettors used Western Union, they were allegedly instructed to wire funds to the Philippines, where an Enterprise agent collected the money and deposited it into bank accounts held by the Enterprise.
- The indictment further alleged that funds were held in foreign banks and later transferred back into the United States through payments to accounts, entities, individuals, and certain trusts associated with the Enterprise.
- Among other counts, the indictment charged violations of the Wire Act, 18 U.S.C. § 1084 (Counts 16–19), and a RICO conspiracy (Count 1), with additional allegations including bank fraud and money laundering.
- Defendants filed three motions to dismiss: (1) a motion attacking the Wire Act counts, (2) a motion attacking the RICO conspiracy count, and (3) a motion to dismiss based on U.S. treaty obligations and related domestic and international law, relying in part on the WTO General Agreement on Trade in Services (GATS) and WTO dispute-settlement rulings concerning cross-border internet gambling.
- Defendants argued that WTO/GATS developments, the Charming Betsy canon, and international comity prevented the government from prosecuting conduct involving transmissions and payments tied to the Philippines.
- The government responded that Congress, in implementing the Uruguay Round agreements, limited any domestic legal effect of WTO rulings and provided that conflicting federal statutes remain controlling unless changed through the political branches.

## Issues

1. Whether the indictment’s RICO conspiracy count and Wire Act counts were facially sufficient to state federal offenses.
2. Whether WTO/GATS obligations and WTO dispute-settlement rulings can be invoked by criminal defendants to require dismissal of federal RICO and Wire Act charges.
3. Whether the Charming Betsy canon or international comity requires the court to construe or apply the Wire Act (and related charges) to avoid conflict with asserted international obligations, thereby barring prosecution.

## Decision

- The court denied the motion to dismiss the Wire Act counts (Counts 16–19).
- The court denied the motion to dismiss the RICO conspiracy count (Count 1).
- The court denied the motion to dismiss based on GATS, WTO rulings, Charming Betsy, and international comity (as to Counts 1 and 16–19).
- The prosecution was allowed to proceed; the court treated the Wire Act and RICO motions as challenges to the sufficiency of the indictment and rejected the treaty-based defenses as a basis for dismissal.

## Legal Principles

- On a pretrial motion to dismiss, an indictment is generally sufficient if it alleges the essential elements of the offenses charged, fairly informs the defendants of the charges, and enables them to plead double jeopardy in a later prosecution.
- An indictment that tracks statutory language and includes enough factual detail to provide notice will not be dismissed merely because defendants dispute the government’s evidence or characterization of events.
- The Wire Act, 18 U.S.C. § 1084(a), expressly reaches transmissions in interstate or foreign commerce; allegations that defendants used wire communications to transmit wagers or information assisting in placing bets can state an offense at the pleading stage.
- WTO agreements and WTO dispute-settlement decisions do not automatically create privately enforceable defenses in U.S. criminal cases and do not displace conflicting federal statutes without action by the political branches.
- Where Congress has provided, in implementing trade agreements, that WTO determinations do not by themselves change U.S. law, courts apply existing federal statutes as written in domestic prosecutions.
- The Charming Betsy canon applies to genuine statutory ambiguity; it does not authorize a court to override clear statutory text or congressional instructions about the domestic effect of international trade rulings.
- International comity is a discretionary doctrine and does not require dismissal of federal criminal charges where Congress has legislated to reach conduct in interstate or foreign commerce and the indictment alleges substantial connections to the United States.

## Conclusion

United States v. Lombardo held that the indictment sufficiently alleged RICO conspiracy and Wire Act offenses arising from an alleged online-gambling payment-processing enterprise, and that defendants could not obtain dismissal by relying on WTO/GATS rulings, Charming Betsy, or international comity because WTO decisions did not alter domestic criminal statutes and the Wire Act’s express coverage of foreign commerce supported proceeding with the prosecution.


United States v. Lombardo, 639 F. Supp. 2d 1271 (2007)