Cohen Again Challenges 2000 Conviction

25 March 2004

World Sports Exchange founder Jay Cohen was released Tuesday from Nellis Federal Prison Camp, where he served 17 months of a 21-month federal prison sentence, and moved to a halfway house in Oakland, California, where he will spend the next 30 days.

Cohen was one of 21 offshore sports book operators indicted in March 1998 for violating the U.S. Wire Act and was convicted in a New York federal court trial in February 2000. He was the only one of the 21 to face the charges in a U.S. court.

Cohen plans to seek employment outside of the interactive gaming industry, but his battle in the U.S. courts is not over. He remains steadfast in his belief that he committed no crime in operating World Sports Exchange on the Internet, and his legal team is trying to get his conviction vacated.

Cohen unsuccessfully appealed the ruling in 2001 and then filed a writ of certiorari with the Supreme Court, which ultimately chose not to hear the case. But new discoveries by the Cohen legal team during the last year could bring the case back to life.

"After the trial, we became aware of additional information that gave rise to claims of constitutional proportions," an attorney for Cohen explained.

The court dismissed a habeas corpus petition filed on Cohen's behalf, but his legal team has since been granted the right to appeal the dismissal. The petition, which must show that the court ordering the detention or imprisonment made a legal or factual error, presents two claims: misrepresentation by the prosecution and selective prosecution.

The misrepresentation claim concerns the legal status of Capital OTB in New York. Cohen testified that he based the WSEX business model on that of Capital OTB, and the prosecution argued that Cohen's business was different because the Interstate Horseracing Act of 1978 exempted licensed OTB betting from the Wire Act.

Cohen's legal team discovered after the trial, however, a letter from the Department of Justice to New York Senator Patrick Leahy (dated June 9, 1999), contradicting the prosecution's position. The letter states:

The Interstate Horse Racing Act does not allow for such gambling, and if a pari-mutuel wagering business currently transmits or receives interstate bets or wagers (as opposed to intrastate bets and wagers on the outcome of a race occurring in another state), it is violating federal gambling laws.

Click here to view the letter in its entirety.

Editor's Note: The Cohen indictment and the cited DOJ letter both came prior to the 2000 amendment to the Interstate Horse Racing Act, which clarifies an exemption for interstate OTB and interactive race betting.

The acceptance of the misrepresentation claim would result in another trial at which the conviction could be vacated or upheld with Cohen being sentenced to time already served.

The second claim argues that Cohen was the victim of selective prosecution because Capital OTB was never prosecuted for violations of the Wire Act, even though the government had knowledge of Capital OTB's activities. The acceptance of that claim would result in the dismissal of the underlying indictment.

The attorney from Cohen's legal team is cautiously optimistic about the defendant's chances.

"It is hard to predict what a court of appeals will rule," he said. "We feel the arguments are compelling and the constitutional arguments are substantial in this case. In the end, we just hope to get the conviction vacated."

Cohen's position could also be strengthened by this week's WTO ruling in favor of Antigua in its case against the United States.

A WTO panel found that the U.S. is in violation of the WTO's General Agreement and Trade and Services by trying to block Internet gambling business from taking action from U.S. players. The panel also said the United States cannot prevent Antigua from conducting offshore gambling business or international money transfers.

The WTO ruling came down Wednesday, Cohen's first full day at the halfway house.

If Cohen's conviction is upheld, he will serve two years on probation following his time at the halfway house.

Emily Swoboda is the senior staff writer at IGamingNews. She lives in St. Louis, Mo.