## Facts

- Sports Off Shore (SOS) operated from Antigua as a bookmaking business taking wagers from customers in the United States by telephone and internet.
- SOS offered wagering on team sports and horseracing and allowed customers to bet using deposit accounts or on credit.
- SOS used U.S.-based agents to recruit bettors, communicate betting instructions, collect losses, and distribute winnings within the United States.
- Todd Lyons acted as an SOS agent in Massachusetts by instructing bettors how to place bets, collecting and paying funds, and functioning as a “bank” for other agents.
- Daniel Eremian acted as an SOS agent in Florida by arranging betting on credit and settling accounts directly and through subagents.
- Federal and state law enforcement investigated SOS and its personnel, relying in part on wire communications and searches that generated evidence used at trial.

## Issues

1. Whether the Wire Act, 18 U.S.C. § 1084, applies to internet-based wagering communications transmitted in interstate or foreign commerce.
2. Whether defendants were entitled to a Wire Act safe-harbor jury instruction for transmissions allegedly between jurisdictions where sports betting is legal.
3. Whether the evidence was sufficient to prove the Wire Act’s mens rea and the statutory requirement tied to “sporting events or contests.”
4. Whether applying the Wire Act to an Antigua-based operation constituted an impermissible extraterritorial application.
5. Whether the district court erred in admitting an SOS directory of agents and in denying suppression of evidence from wiretaps and search warrants (Lyons).
6. Whether evidence was sufficient to support Lyons’s convictions for money laundering and Travel Act offenses, and whether lack of final UIGEA regulations barred UIGEA convictions.
7. Whether prosecutorial remarks improperly commented on Lyons’s failure to testify in violation of the Fifth Amendment.
8. Whether RICO-related proof, venue, sentencing, and forfeiture determinations were legally erroneous or unreasonable.

## Decision

- The First Circuit affirmed all convictions and sentences for both defendants.
- The court held the Wire Act covers internet transmissions because the statute reaches use of a “wire communication facility” in interstate or foreign commerce.
- The court upheld the district court’s refusal to give a safe-harbor instruction because the record did not support legality of the underlying betting activity in both relevant jurisdictions.
- The court found sufficient evidence of defendants’ knowing participation as agents and of conduct involving betting on sporting events or contests to sustain the Wire Act convictions.
- The court rejected the extraterritoriality challenge, emphasizing substantial domestic conduct (U.S. bettors, collections and payouts, and U.S.-routed communications).
- The court upheld admission of the SOS agents directory and found no reversible evidentiary error.
- The court upheld the wiretaps and search warrants challenged by Lyons as supported by probable cause and (for the wiretaps) statutory necessity.
- The court rejected Lyons’s challenges to money-laundering, Travel Act, and UIGEA convictions, including his argument that UIGEA liability depended on final implementing regulations.
- The court found no reversible Fifth Amendment violation from the prosecutor’s remarks and upheld RICO, venue, sentencing, and forfeiture rulings.

## Legal Principles

- Statutory prohibitions referring to use of a “wire communication facility” may apply to modern internet-based communications when the text covers transmissions in interstate or foreign commerce.
- The Wire Act safe harbor applies only when the relevant transmissions are between jurisdictions where the underlying wagering on the sporting event or contest is legal; a defendant must establish a record basis for the instruction.
- An extraterritoriality defense fails when the charged conduct is materially domestic, even if an enterprise is headquartered abroad, where the offense conduct centers on U.S. customers, U.S.-based agents, and U.S.-linked communications and transactions.
- Evidence supporting unlawful gambling and related offenses may include organizational records (such as an agents directory) when relevant to structure and participation and not unfairly prejudicial.
- Title III wiretaps and search warrants are upheld when supported by probable cause and applicable statutory requirements (including necessity for wiretaps) and when warrants are sufficiently particular.
- Criminal liability under UIGEA may attach based on statutory prohibitions without conditioning prosecution on issuance of final implementing regulations.
- Prosecutorial comment violates the Fifth Amendment only if it was intended, or would naturally and necessarily be taken by the jury, as a comment on the defendant’s failure to testify.

## Conclusion

The First Circuit affirmed convictions and sentences arising from an offshore online sports-betting operation, holding that the Wire Act reaches internet communications, the safe harbor was inapplicable on the record presented, the prosecution was not impermissibly extraterritorial given substantial U.S. conduct, and the challenged suppression, evidentiary, sufficiency, UIGEA, Fifth Amendment, RICO, venue, sentencing, and forfeiture claims did not warrant reversal.


United States v. Lyons, 740 F.3d 702 (1st Cir. 2014)