Commonwealth v. Stewart-Johnson
Commonwealth v. Stewart-Johnson
Opinion of the Court
According to the evidence presented at trial, the defendants participated in and encouraged others to join a classic “pyramid scheme.” A Superior Court jury convicted them of violating G. L. c. 271, § 7 (setting up or promoting a lottery). On appeal, the defendants argue that their motions for required findings of not guilty should have been granted for two distinct
Background. Applying the familiar standard set forth in Commonwealth v. Latimore, 378 Mass. 671, 676-678 (1979), we conclude that the jury could have found the following facts.
The defendants each participated in the pyramid scheme and actively recruited others to join. Their soliciting of others took many forms, including personal conversations, electronic mail messages, and conference calls.
Discussion. 1. Whether the table game is a “lottery.” As noted, the defendants argue that — as matter of law — the table game is not a “lottery” within the meaning of G. L. c. 271, § 7.
We reject the defendants’ argument. As in other classic pyramid schemes, players in the table game stood to turn the expected profit so long as participation in the game kept growing. However, as is self-evident from the mathematics on which such schemes are based, it is inevitable that at some point the pool of potential participants would become saturated. At that point, there would no longer be the supply of new players necessary to feed the ever-growing appetite of the system. As a result, the large group of participants who had not yet completed their dessert would remain unsated and lose the funds they had paid to join. As the United States Supreme Court recognized over a century ago, pyramid schemes “must ultimately and inevitably result in failure.” Public Clearing House v. Coyne, 194 U.S. 497, 515 (1904).
Given that pyramid schemes necessarily follow an ill-fated trajectory, whether someone succeeds or fails by joining one effectively turns on the happenstance of precisely where along that trajectory he joins. Even to the extent that a given player in
The large majority of other courts that have examined similar statutes have come to the same conclusion. For example, in determining that a pyramid scheme fell within the language of a Federal statute that prohibited a “lottery or scheme for the distribution of money ... by lot, chance, or drawing,” the United States Supreme Court concluded that “the amount of such return [achieved by members of the scheme who successfully recruited others] depends so largely, and indeed almost wholly, upon conditions which the member is unable to control, that we think it fulfills all the conditions of a distribution of money by chance.” Public Clearing House v. Coyne, 194 U.S. at 512-513.
To be sure, the fact that money invested in an enterprise may
Further support for our interpretation of G. L. c. 271, § 7, can be found by examining the Legislature’s use of the term “lottery” in a neighboring section of the same chapter. General Laws c. 271, § 6A, inserted by St. 1938, § 144,
“goods or anything of value is sold to a person for a consideration and upon the further consideration that the purchaser agrees to secure one or more persons to participate in the plan by respectively making a similar purchase or purchases and in turn agreeing to secure one or more persons likewise to join in said plan, each purchaser being given the right to secure money, credits, goods or something of value, depending upon the number of persons joining in the plan . . . .”
G. L. c. 271, § 6A. That section provides that anyone who
2. Jury instruction. In a related argument, the defendants contend that the judge provided the jury inadequate instruction on the meaning of the term “lottery.” The Supreme Judicial Court has held that “[wjhether [a] game was predominantly one of chance or of skill [is] a question for the jury.” Commonwealth v. Lake, 317 Mass. at 268. In order for the jury to play its role in deciding that question, the defendants sought to have the jury instructed on the skill versus chance distinction. The trial judge declined that request, and she instead instructed the jury that a “lottery” had to include “some element of chance or luck,” without mentioning the potential role that “skill” might play.
Because the defendants did not preserve their challenge to the jury instruction on what constitutes a “lottery,” our review of any such claim is limited to whether the instruction was erroneous and, if so, whether it created a substantial risk of a miscarriage of justice. Commonwealth v. Alphas, 430 Mass. 8, 13 (1999). Commonwealth v. Ortega, 441 Mass. 170, 180 (2004). We conclude that the instruction was erroneous in that the jury were informed that there needed merely to be “some element” of chance, not that chance had to “predominate[].” See Com
3. The defendants’ role. There was overwhelming evidence upon which the jury could have concluded that the defendants actively touted the pyramid scheme and recruited others to join it. The defendants nevertheless argue that the evidence was insufficient to establish that they “promoted” the scheme.
There was abundant evidence on which the jury could have found that the defendants “promoted” the table game under the definition that the judge correctly provided. Proof that the defendants played some sort of overarching role in promoting the game was unnecessary.
Judgments affirmed.
The defendants were tried jointly over their opposition (together with a third defendant, who was acquitted). On appeal, they do not challenge the judge’s allowance of the Commonwealth’s motion for joinder or the denial of defendant S tewart-Johnson’s motion to sever. However, they do argue that the Commonwealth failed to “differentiate” among certain documents or items found at their home or to link such documents or items to one or the other of them. On this basis they suggest that it would be improper to take such items into account in analyzing whether the evidence was sufficient. Without crediting any such arguments or suggestions, we note that there is no need to rely upon the items in conducting our sufficiency analysis, and we have not done so.
The payments were characterized as “gifts,” with players encouraged to complete form “gifting statements” that referenced Federal tax law. It is not clear whether such statements were employed in a clumsy (and misguided) attempt to comport with the tax laws, or whether they served instead merely as a means of convincing new recruits that the scheme was legal. Instructions to the game also included a list of “magic words” to be used in the recruiting process, as well as words to be avoided. The recruiting efforts relied heavily on allusions to spirituality and social communion. For example, instructions for the marketing of the game encouraged the regular use of prayer at recruiting sessions, and they described the game (when played by women) as a “women’s gifting circle” that “created a powerful way to access the spiritual and physical energies.”
General Laws c. 271, § 7, as appearing in St. 1968, § 115, reads in whole as follows:
“Whoever sets up or promotes a lottery for money or other property of value, or by way of lottery disposes of any property of value, or under the pretext of a sale, gift or delivery of other property or of any right, privilege or thing whatever disposes of or offers or attempts to dispose of any property, with intent to make the disposal thereof dependent upon or connected with chance by lot, dice, numbers, game, hazard or other gambling device, whereby such chance or device is made an additional inducement to the disposal or sale of said property, and whoever aids either by printing or writing, or is in any way concerned, in the setting up, managing or drawing of such lottery, or in such disposal or offer or attempt to dispose of property by such chance or device, shall be punished by a fine of not more than three thousand dollars or by imprisonment in the state prison for not more than three years, or in jail or the house of correction for not more than two and one half years.”
The statute dates to 1719, and it has been amended many times over the centuries. Its language in fact criminalizes a wide range of conduct in addition to “settling] up or promoting] a lottery.” For example, it broadly prohibits
The Supreme Court cited to a dictionary definition of “chance” as “something that befalls, as the result of unknown or unconsidered forces; the issue of uncertain conditions; an event not calculated upon; an unexpected occurrence; a happening; accident, fortuity, casualty.” Public Clearing House v. Coyne, 194 U.S. at 512. As this definition signifies, the concept of “chance” is broader than that of “randomness” (under which specific potential outcomes have an equal probability of occurring).
The pyramid schemes at issue in both Lashbrook v. State, supra, and Solon v. Meuer, supra, were identical to the one at issue here, except that people were said to be sitting in airplanes instead of at tables. See Lashbrook v. State, supra at 774-775; Solon v. Meuer, supra at 993.
See Braddock v. Family Fin. Corp., 95 Idaho 256, 258 (1973) (holding that pyramid scheme not lottery because State follows pure chance doctrine under which “[i]f skill plays any part in determining the distribution [of a prize] there is no lottery” [citation omitted]); State v. DeLuzio, 247 N.J. Super. 101, 109 (App. Div. 1993) (holding that pyramid scheme was not lottery
No exchange of goods, services, or other marketplace values occurs among the participants. There is instead a process of financial musical chairs leaving the late participants without their entry fee and without anything in return.
Neither party cited § 6A in their briefs. We issued an order directing the parties to be prepared to discuss that statute at oral argument, and we questioned both sides about the import of the statute at that time.
The trial judge explained her rejection of the defendants’ request as follows: “If [the jurors] come back with something, I’ll have to instruct at that point but I think to begin rather than talk about skill versus chance at this point in time it’s, I think, based upon the evidence that’s been established in this case.”
In fairness to the trial judge, we note that the “some element of chance” formulation comes verbatim from Mobil Oil Corp. v. Attorney Gen., 361 Mass. 401, 406 (1972). However, the extent of the role played by chance (versus skill) was not at issue in that case, and we do not interpret it as sub silentio overruling Commonwealth v. Lake, 317 Mass. at 267, which it favorably cites.
We also note that the trial judge separately instructed the jury that the Commonwealth additionally needed to prove that the defendants “intended to make the disposal of something of value depend upon or connected with chance by lot, numbers or gain” (an element the Commonwealth itself maintained it had to prove in addition to the defendants’ having promoted a lottery, even though a parsing of the unwieldy language of the statute makes this less than clear). In any event, that additional instruction does not itself cure the problem with the judge’s charge regarding the meaning of “lottery” because the “connected with chance” language is similar to the “some element of chance” formulation.
General Laws c. 271, § 7, subjects to punishment not only one who “sets up or promotes a lottery,” but also one who “aids either by printing or writing, or is in any way concerned, in the setting up, managing or drawing of such lottery.” See note 4, supra. Although the indictments alleged that each defendant “set up and/or promoted or aided in the set up and/or promotion of a lottery,” the trial judge presented the case to the jury based solely on a “promoting” theory.
The defendants apparently did not request an alternative definition, and in any event, they did not object to the instruction but instead declared themselves “content” with it. Nor do they actually argue on appeal that the judge erred in defining “promote” as she did.
Through a great deal of evidence, the Commonwealth sought to prove at trial that the defendants did in fact play a far larger role in promoting the scheme than did the average participant (for example, through taking the lead in organizing conference calls and the like). We need not resolve the relative extent of their roles in comparison to other participants, because in the case before us that ultimately goes at most to the wisdom of the Commonwealth’s decision to target them, and not other participants, for prosecution, rather than to the sufficiency of the Commonwealth’s evidence to prove the crime charged. For the same reason, we need not resolve whether there is any merit to the defendants’ suggestions that, in conducting our sufficiency analysis, we should not rely on some of the evidence through which the Commonwealth had sought to demonstrate the leadership role each defendant played. See note 2, supra.
In passing, the defendants complain that the Commonwealth based its case on “many separate and discrete acts,” and they suggest that the judge erred by not providing a specific unanimity instruction (even though none was requested). We see no merit in this argument. “Generally, a defendant is entitled to a specific unanimity instruction only ‘when the Commonwealth has proceeded on “alternate theories” ’ of guilt, defined as ‘separate, distinct, and essentially unrelated ways in which the same crime can be committed.’ ” Commonwealth v. Lonardo, 74 Mass. App. Ct. 566, 571 (2009), quoting from Commonwealth v. Santos, 440 Mass. 281, 287-288 (2003). “The law does not require that ‘the jury must be unanimous in their parsing of the details as to how a crime was committed.’ ” Commonwealth v. Lonardo, supra, quoting from Commonwealth v. Santos, 440 Mass. at 289.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.