Articles Posted in U.S. Court of Appeals for the Seventh Circuit

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Trask was gambling at the Horseshoe Casino when she picked up a $20 bill from the floor. The customer who had dropped the money thought he had been short-changed and reported the loss. Casino personnel reviewed security videos. For 70 minutes Trask was detained by agents of the Indiana Gaming Commission. At the request of the agents, she dumped the contents of her purse and agreed to be patted down; her cell phone was temporary taken from her. Agents seized $8 from the purse. Trask could not find her driver’s license. Agents escorted her to her car, where she found the license and $5, both of which the agents confiscated. She was told she was banned from the casino and would be arrested if she tried to return. Trask filed suit under 42 U.S.C. 1983 and Indiana law. Trask, acting pro se, contacted the casino's lawyer and accepted a settlement of $100. She later left a voicemail, rejecting the settlement, stating that “I had a change of heart and I called you within 24 hours.” The court ordered the settlement enforced and her claims dismissed. The Seventh Circuit affirmed. Trask’s notarized letter to the casino admitted that she agreed to accept $100 in satisfaction of her claims; her belief that she could back out is “unfounded in the law.” View "Trask v. Rodriguez" on Justia Law

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In 2008, Johnston, a horse racetrack executive, promised a $100,000 campaign contribution to then-Governor Blagojevich in exchange for his signature on a bill to tax the largest casinos in Illinois for the direct benefit of the Illinois horse racing​ industry. After Blagojevich’s corruption came to light, the casinos sued the racetracks, alleging a conspiracy to violate the federal Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. 1961, and state‐law claims for civil conspiracy and unjust enrichment. A jury awarded the casinos $25,940,000 in damages, which was trebled under RICO to $77,820,000. The Seventh Circuit affirmed in part, holding that the jury did not have legally sufficient evidence to support a verdict finding a conspiracy to engage in a “pattern” of racketeering activity, as required for liability on a RICO conspiracy theory. The casinos are still entitled to the $25,940,000 in damages on the state‐law claims, but not to have those damages trebled under RICO. View "Empress Casino Joliet Corp. v. Balmoral Racing Club, Inc." on Justia Law

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Two mothers and their sons alleged that Internet gambling websites owe them the money that the men lost in gambling. An Illinois statute imposes criminal penalties on anyone who “knowingly establishes, maintains, or operates an Internet site that permits a person to play a game of chance or skill for money or other thing of value by means of the Internet or to make a wager upon the result of any [such] game,” 720 ILCS 5/28-1(a)(12) and “any person who knowingly permits any premises or property owned or occupied by him or under his control to be used as a gambling place.” It provides that “any person who by gambling shall lose to any other person, any sum of money or thing of value, amounting to the sum of $50 or more ... may sue for and recover ... in a civil action against the winner thereof.” The Seventh Circuit affirmed dismissal. The sons, who used the websites, failed to sue within six months of their losses. The government shut down the sites in 2011. The mothers, who never gambled on the sites, have timely claims, but the defendants are not the winners of any game that their sons played, but are the sites that hosted the gambling. View "Fahrner v. Tiltware, LLC" on Justia Law

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CEOC, the Chapter 11 debtor, owns and operates casinos. Caesars (CEC) is CEOC's principal owner. CEOC borrowed billions of dollars, issuing notes guaranteed by CEC. As CEOC’s financial position worsened, CEC tried to eliminate its guaranty obligations by selling assets of CEOC to other parties and terminating the guaranties. CEOC's creditors, who had received the guaranties, challenged CEC’s repudiation, seeking approximately $12 billion. CEOC, in its bankruptcy proceeding, asserted claims alleging that CEC caused CEOC to transfer valuable assets to CEC at less than fair value, leaving CEOC saddled with debt (fraudulent transfers) and that the guaranty suits will thwart CEOC’s multi‐billion‐dollar restructuring effort, which depends on a substantial contribution from CEC in settlement of CEOC’s claims, and will let the guaranty plaintiffs take precedence over other creditors. The bankruptcy judge, and a district judge refused CEOC's request to enjoin the guaranty suits until 60 days after a bankruptcy examiner completes his report. The bankruptcy judge’s exercise of jurisdiction over the other suits would have been constitutional, but he thought he lacked statutory authority to enter an injunction under 11 U.S.C. 105(a). The Seventh Circuit vacated, finding that the judges misinterpreted the statute and that issuance of a temporary injunction could facilitate a prompt wind‐up of the bankruptcy. View "Caesars Entm't Operating Co., Inc. v. BOKF, N.A." on Justia Law

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In 1997, Player and his wife established EAR, purportedly to refurbish high-tech machinery . In 2005-2009, EAR defrauded creditors and the couple obtained $17 million in fraudulent transfers from EAR. Before the fraud was detected, they used funds for their personal benefit and spent large amounts at the Horseshoe Casino, Player was known to “walk with chips,” rather than cashing them in, and giving chips to a third party to cash in. Neither is illegal, but are potentially indicative of “structuring” transactions to avoid triggering the $10,000 reporting requirement, a federal crime, 31 U.S.C. 5324. When the fraud was discovered, EAR filed for Chapter 11 bankruptcy. The plan administrator sought to avoid transfers to Horseshoe, alleging that Horseshoe had reasons to believe that Player’s money came from EAR. Horseshoe objected to a motion to compel under 31 C.F.R. 1021.320(e), which governs Suspicious Activity Reports filed by financial institutions, including casinos, to detect money laundering and other violations of the Bank Secrecy Act. The district court ordered an ex parte filing by Horseshoe, which was inaccessible to EAR. The Seventh Circuit affirmed denial of the motion, finding that Horseshoe accepted the transfers without knowledge of the fraud at EAR and could not have uncovered the fraud if it had investigated. View "Brandt v. Horseshoe Hammond, LLC" on Justia Law