Examples of Gaming Investigations - Fiscal Year 2012
The following examples of gaming investigations are written from public record documents on file in the court records in the judicial district in which the cases were prosecuted.
Vermont Man Sentenced for Laundering Revenue from Bookmaking Business
On August 2, 2012, in Hartford, Ct., Paul J. Graziano, of Burlington, was sentenced to 15 months in prison and three years of supervised release for laundering revenue from his illegal bookmaking business. He was also ordered to forfeit $45,000. According to court documents and statements made in court, Graziano operated an illegal sports bookmaking business that involved at least four other individuals, including a number of sub-bookmakers, each of whom had a network of bettors. As part of his gambling business, Graziano used two online betting web sites. The sub-bookmakers received a commission on losses incurred by their bettors, and sub-bookmakers and bettors also received a 10 percent commission when they brought new gamblers into Graziano’s operation. Between 2006 and December 2009, even though he and his wife had no other employment or source of income, Graziano deposited or caused others to deposit 26 checks, which were payments of gambling debts, into bank accounts that he controlled. The checks totaled approximately $515,329.
Defendants Sentenced on Racketeering Charges in Connection With Offshore Gambling Business
On June 28, 2012, in Boston, Mass., Daniel Eremian, of Boca Raton, Fla. and Todd Lyons, of Beverly, Mass., were sentenced on charges of racketeering and related offenses as a result of their participation in a large scale offshore gambling business. Both men were convicted of racketeering (RICO), racketeering conspiracy, operating an illegal gambling business and wire act offenses. Lyons was also convicted of money laundering, filing false tax returns and interstate travel in aid of racketeering. Eremian was sentenced to 36 months in prison, one year of supervised release and $7.7 million in forfeiture. Lyons was sentenced to 48 months in prison, one year of supervised release and ordered to pay $24.5 million in forfeiture. Lyons was the first defendant in the U.S. to be charged and convicted of violating the Unlawful Internet Gambling Enforcement Act (UIGEA). The statute was enacted by Congress in 2006 to deter the use of the U.S. banking system to pay Internet gambling debts incurred by U.S. citizens. Daniel Eremian and Robert Eremian (currently a fugitive) built a massive online gambling ring called “Sports Offshore,” based in Antigua. The ring employed approximately 50 gambling agents in the United States, who had hundreds of customers. The government presented evidence that this gambling business laundered more than $10 million in checks and wire transfers. Daniel Eremian and Lyons helped run “Sports Offshore” from at least 1997 to 2010. Daniel Eremian originally solicited gambling customers from a Peabody bar and eventually moved to Florida. where he continued to collect money from other gambling agents. Lyons acted as an agent in Massachusetts, driving throughout the state to collect millions of dollars lost by gamblers. The defendants often used FEDEX to ship cash and checks back and forth to Antigua and also utilized a mail drop in Belize to receive proceeds of illegal gambling activities.
Louisiana Man Sentenced for Illegal Gambling Operation and Tax Evasion
On June 7, 2012, in New Orleans, La., Joseph A. Schillace IV was sentenced to 30 months in prison and three years of supervised release for conducting an illegal gambling business and tax evasion. According to his plea agreement, beginning in January 1999 and continuing until April 2011, Schillace conducted, financed, managed, supervised and owned an illegal sports betting business in Louisiana. Schillace admitted that his total unreported income was $819,917 resulting in $207,973 tax due and that he also failed to pay $256,207 in excise taxes. Schillace agreed to pay $464,180 in restitution to the IRS along with interest, penalties, and any further IRS assessments. Schillace was also ordered to pay a $50,000 fine, a $200 special assessment and forfeit a 2008 Infiniti and a 2005 Titan pickup truck.
Illinois Man Sentenced on Gaming and Tax Charges
On February 7, 2012, in Chicago, Ill., Casey Szaflarski was sentenced to 40 months in prison, three years of supervised release and ordered to pay $159,687 in restitution. Szaflarski was convicted in December 2010 on charges of conducting a gambling business, filing false tax returns and failure to file a tax return. According to court documents, Szaflarski owned and operated Amusements, Inc in Berwyn, Ill. which operated gambling machines. Szaflarski is one of eight defendants of a criminal organization.
South Carolina Man Sentenced for Income Tax Evasion
On January 26, 2012, in Florence, S.C., Jerry W. Huene, of Little River, was sentenced to 13 months in prison and two years of supervised released for income tax evasion. Evidence presented at the change of plea hearing established that Huene owned and operated three video gambling establishments in Wilmington, N.C., in violation of state law. Huene filed tax returns for 2004 and 2005 under the business name “Jerry’s Furniture Refinishing,” claiming no income for both years when he actually made approximately $470,000 through operating the gambling businesses. This resulted in tax losses of $146,000. The IRS has seized four vehicles, cash and currency valued at $505,168, and in addition, the IRS seized Huene’s residence located in Little River, South Carolina, because these assets were obtained through the operation of the gambling businesses.
North Carolina Illegal Gambling and Money Laundering Operator Sentenced
On November 10, 2011, in Wilmington, N.C., Wallace Dixon Cox was sentenced to 33 months in prison, three years of supervised release and ordered to pay a fine of $50,000 plus interest for his participation in a conspiracy to operate an illegal gambling business. According to the criminal information, beginning in or about 1999, and continuing until through at least 2006, Cox and others were actively involved in an illegal video poker business and, knowing that the business was illegal, participated in the management and handling of the profits of that business. The conspirators used money generated by the operation of illegal video poker machines in multiple locations to purchase new machines and to purchase and operate new locations with video poker machines. The criminal information also charged Cox and a co-conspirator with attempting to purchase an airplane from a third party using profits derived from the video poker business and requesting that the seller not file legally required currency reports with respect to a proposed $50,000 cash payment, with the intention of hiding the source of those profits.