Questions linger over gambling operation legal matters

What was the involvement of Lakes Region Greyhound Park general partner Allan E. Hart in the gambling operation that federal authorities cited in their recent indictment of the track’s general manager and assistant general manager?

And was the entire management of the track, in essence, a partner in the operation?

While neither Allan Hart nor the Lakes Region track was mentioned in the federal indictment, these are the questions raised by testimony and documents filed last year as part of an unrelated lawsuit in Merrimack County Superior Court.

Before New Hampshire Business Review first quoted from those documents extensively on its Web site, Hart appeared to be trying to distance himself and the track from the Concord-based International Players Association, only admitting he was a small investor in IPA.

“At no time have I had any involvement in the operations,” Hart said in a Jan. 20 statement to The Union Leader. But later, upon reading the on-line New Hampshire Business Review story, Hart said he has always maintained “I was involved in the start up of the IPA.”

A few days later, after it was clear that other media were picking up the story, Hart told The Union Leader he was “very involved” in the start-up because he wanted to make sure that the operation was legal, but he differentiated that involvement from the day-to-day operation of IPA. He also made it clear that the management of the park had nothing to with IPA.

At deadline, federal investigation of the gambling operation was still continuing.

On Jan. 13, a federal grand jury indicted Hart’s nephew, track general manager Richard J. Hart, and his nephew’s assistant, Jonathan Broome, on charges that they were involved in IPA, a Concord-based limited liability company. Through IPA, the two allegedly acted as intermediaries in wagers on horse racing and other sporting events between a New York company allegedly associated with organized crime and an offshore gambling operation.

They pleaded innocent Jan. 18 in federal court in New York City to the charges.

All told, 17 people were indicted. Prosecutors say three of them, not including Hart or Broome, were associates of the Gambino organized crime family.

Fallout in the wake of the indictments has been felt at Lakes Region Greyhound Park. Two major providers of simulcast racing — Churchill Downs Inc. and the New York Racing Association – have stopped sending telecasts to the track.

In a statement made to New Hampshire Business Review after he read the on-line article, Hart said, “Although the NH Business Review article implies otherwise, I want to be very clear that there is no connection between the track, Allan E. Hart or anyone with an ownership interest in Lakes Region Greyhound Park and the operation of IPA or the allegations contained in the indictment of Richard Hart and Jonathan Broome.

“The attempt by NHBR to draw a different conclusion based on notes and documents in an unresolved lawsuit might make for an interesting story but does not accurately reflect reality.”

The September 2004 suit in Merrimack County Superior Court was brought by Kenneth Hart of Concord and Robert Hart of Everett, Mass., against their brother Richard, the IPA and their attorneys, Ronald E. Cook and Michael M. McLaughlin, who is the registered agent of IPA, seeking an accounting from IPA and its principles.

According to papers filed in the suit, Allan Hart allegedly asked his attorney to set up an agreement with an offshore gambling entity based on the Isle of Man and he attended meetings during which the offshore entity was discussed.

According to the Merrimack County court papers, Hart was to own 7.5 percent of the operation, and lawyers considered naming Allan Hart as owner of record of IPA.

Indeed, according to the deposition testimony of Kenneth C. Hart, the concept of working with an offshore gambling operation was discussed by owners of the dog track for about a decade, suggesting in essence that the track was a partner in IPA.

Allan Hart is not a party to the lawsuit and therefore did not intervene.

The Pari-Mutuel Commission ordered the two indicted employees to disassociate themselves from the park, but ordered no further action because the order was sufficient action to protect the state racing industry and the public interest, said Pari-Mutuel Commission Executive Director Paul Kelley.

“Our understanding was that there was no connection between the race track and the offshore gambling enterprise,” he told New Hampshire Business Review, adding that the commission will be continuing its investigation.

However, in the Merrimack County lawsuit, Ronald E. Cook of the Concord law firm of Cook & Molan, said in a sworn affidavit that it was Allan Hart who “asked if I would assist him in addressing the legal aspects of the proposed new venture” and that “the tasks ultimately assigned to me by Allan E. Hart did not include the organization of a business entity … but rather the negotiating of a wagering agreement with a representative of a business based in the Isle of Man,” a self-governing territory in the British Isles.

It was Allan Hart, Cook said, who told him who would be the equity owners in IPA.

Cook, contacted by New Hampshire Business Review, said “the documents speak for themselves” and would not comment any further.

Other parties in the suit couldn’t be reached for comment.

Offshore arrangement

IPA’s dealing with the Isle of Man venture, Euro Off-Track Limited Partnership, was allegedly one part of a $200 million, wide-ranging illegal gambling conspiracy that involved members of the Gambino organized crime family. The wider conspiracy involved activities that included money laundering, illegally doping race horses and falsely assuming gambling losses to avoid paying taxes, according to the Jan. 13 indictment.

Richard Hart and Broome were accused of acting as go-betweens between the Uvari Group and Euro Off-Track, essentially allowing the money to flow through IPA. Three Uvari family members – Gerald, Cesare and Anthony – were all associates of the Gambino organized crime family, the indictment charged. Hart and Broome dealt mostly with Marvin Meyerowitz, another Uvari member known as “Cookie” — to launder money, the indictment said.

The scheme worked something like this, according to the indictment: Bettors who did not wish to be identified would place a bet on line or by phone. Their losses would be reported not under their own Social Security numbers, but the numbers of those of the Uvari Group partners. Winnings would be reported by the Isle of Man entity and transferred to the bettors themselves. (The Isle of Man’s tax rate on such winnings is far lower than the tax rate on winnings in the United States.)

Such an arrangement allowed the Uvari Group partners to claim losses, resulting in tax refunds as high as $150,000, the indictment said.

The Uvari Group also issued rebates to the anonymous bettors, whether they won or lost.

‘Another gaming venue’

All of this, said the indictment, violated New York state, New Jersey and federal gambling laws, and as a result the government claims it has the right to seize Richard Hart’s home in Londonderry, N.H., as well as confiscate two bank accounts.

Allan Hart, in defense of his nephew and Broome, asserted in a Concord Monitor interview that there is nothing illegal with their role in facilitating the placing of offshore bets. They were simply referring big-dollar gamblers overseas for a fee — referrals that are well within the law, he told the Monitor.

Whether or not the arrangement was legal, Allan Hart and the Lakes Region track were squarely in the middle of it, according to papers filed in the Merrimack County lawsuit.

In an October 2004 deposition taken as part of the suit, Kenneth Hart — who left the track in 2002 after working there for more than a decade — stated that since the mid-1990s, “because of ongoing issues that Lakes Region had within the regulatory body of New Hampshire, we always had the idea of creating an island entity so we could serve our customers.”

By “we,” Kenneth Hart stated, he meant the partners of New Hampshire Gaming Association, the entity that owns the dog track, specifically his uncle Allan and his two brothers and Vincent DiCesare, another partner in the track.

(The brothers’ ownership share of the park is actually owned by Joan G. Hart, the brothers’ mother and Allan Hart’s sister-in-law, according to testimony and documents in the Merrimack County suit. But Kenneth Hart said that she was essentially acting as a trustee for the brothers and was in the process of handing it over legally, though Kenneth Hart didn’t have any documentation to back that claim during questioning.)

IPA, Kenneth Hart said, was “an example of where all the partners wanted to be. … It gave us a vehicle to service customers that we couldn’t service at Lakes Region. It gave us an opportunity to expand into another gaming venue of sports wagering.”

Kenneth Hart presented to the Merrimack County court what he identified as a copy of his handwritten notes of a meeting held Oct. 21, 2002, and attended by “Rick, Al, Vinny, Ken, Bob.” At the meeting, the make-up of the new entity – what would later be IPA — was spelled out.

It would be owned by the same owners as the track, with the addition of one new partner, Anthony Fasulo, director of simulcasting at the Derby Lane dog track in St. Petersburg, Fla. He also is listed as vice president of U.S. Off-Track Inc., formerly known as the Greyhound Channel, a Florida-based corporation licensed in Oregon to act as a hub for multi-jurisdictional Internet and phone gambling. U.S. Off-Track owns and operates the PayDog.com Web site, where it lists Euro Off-Track as one of its partners.

Fasulo, according to Kenneth Hart’s notes, “wants to be a partner but doesn’t want anybody to know.”

According to one ownership chart that Kenneth Hart offered as an exhibit, Fasulo would own 25 percent and the remaining 75 percent would be split among the same owners in the same ratio as their park ownership.

DiCesare would get 30 percent of the IPA, Allan Hart would get 7.5 percent and his three brothers would get 37.5 percent.

Another chart Kenneth Hart provided — entitled “New Hampshire LLC Projected Tax Consequences” – appears to show the same split. The New Hampshire LLC – the entity that later became IPA — was expected to compensate its owners $1.2 million by 2006. Three-quarters of the anticipated New Hampshire business enterprise tax burden, shared by the owners of the track, was labeled LRGP — Lakes Region Greyhound Park.

“LRGP is the partnership in the new venture,” Kenneth Hart scrawled on his notes.

The next meeting, on Oct. 31, 2002, was attended by the same five people. Included on the agenda was “Trip to Isle of Man-Go Barking Mad.” Subjects for the follow-up meeting included “funding account for the IPA.”

A court case

While Kenneth and Robert Hart never attended another meeting of the partnership, IPA apparently was going full speed ahead.

McLaughlin filed a certificate of formation in November 2002 listing himself as registered agent, manager and member of IPA and his law office as the firm’s registered office. But the exact make-up of IPA depended on the legal advice of Miles Benham, an attorney from the Isle of Man, wrote Cook in a Dec. 27 letter to Ken Hart.

Benham’s law firm is “actively involved in the island’s growing on-line gambling and bookmaking industry,” according to the law firm’s Web site. “Mr. Benham acts on behalf of a number of bookmakers, both domestic and international.”

Benham had recently outlined a deal between IPA and Euro Off-Track, even submitting a draft contract, and legal justification for offshore betting. The problem, relayed Cook, was that IPA needed someone to sign the wagering contract.

“To the extent that the Isle of Man requires certain kinds of disclosures and that those disclosures pose a problem with respect to Rick’s nomination, then the alternate will be Al Hart.”

Apparently such disclosure problems did not apply to McLaughlin, whose name is the only one associated with IPA in filings with the secretary of state.

In 1983, McLaughlin was sentenced to prison for his role in the Stewart-Myers investment scandal, at the time the largest investment fraud in New Hampshire history in which 279 people were scammed out of $6.3 million.

He ended up serving 19 months in prison and was disbarred, but eventually was reinstated in 1996.

Kenneth and Robert Hart said they didn’t hear anything more about the partnership after that, until November 2003, when Cook told the two brothers’ attorney that McLaughlin was holding a 75 percent interest in IPA on behalf of DiCesare, Al Hart and Richard Hart, pending decisions on the membership.

Also in November 2003, Kenneth and Robert Hart started receiving mysterious $10,000 checks at the end of 2003 from IPA followed by a 1099 tax form from a Misty Lane Trust (apparently named after Richard Hart’s home) saying that each of the brothers made $73,373 — more money than they actually received.

Instead of cashing the checks, the brothers went to an attorney, who demanded an accounting.

In August 2004, Cook finally told the brothers’ lawyer that a group was establishing a “lawful internet-based wagering enterprise” and that “certain members of that group, not including your clients, requested that we proceed.”

However, “one of the members of the LLC – Misty Lane Trust – does entail some sort of interest in the names of Robert and Kenneth.”

But the following month, Richard Joyal — attorney for Joan Hart, the brothers’ mother – notified the brothers’ attorney that Misty Lane Trust was never actually established. That’s when the two brothers went to Merrimack County Superior Court. Shortly before Christmas (and shortly after a judge refused to throw out the case), Cook finally agreed to turn over the IPA documents in his possession. The plaintiffs are still seeking additional information from other parties in the suit. A hearing is scheduled for April.