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Thursday, April 9, 2015

FORMER GAMBLING SUPPLY STORE OWNER PLEADS GUILTY IN CASE INVOLVING ILLEGAL GAMBLING AND CHARITY

FROM:  U.S. JUSTICE DEPARTMENT
Tuesday, March 31, 2015
Former Owner of Ohio Gambling Supplies Store Pleads Guilty to Gambling, Tax and Obstruction Offenses

The former co-owner of R&J Partnership Ltd. doing business as Reece’s Las Vegas Supply (RLVS), a gambling supplies store located in Dayton, Ohio, has pleaded guilty to conspiracy to operate an illegal gambling business and operating an illegal gambling business, conspiracy to defraud the United States and witness tampering.  The charges were part of an indictment unsealed on Sept. 26, 2014, announced Acting Assistant Attorney General Caroline D. Ciraolo of the Justice Department’s Tax Division.

The other defendants charged in the indictment, including Douglas A. Sanders, Jason S. Pulaski, Michael E. Gedeon, Jennifer Williams and Walter F. Dyer, previously pleaded guilty to illegal gambling and obstruction of justice offenses.

According to the indictment and the statement of facts as part of the plea agreement, between February 2004 and May 2011, Reece Powers II oversaw the recruitment of local 501(c)(3) non-profit charitable organizations to sponsor poker fundraisers that included casino-like card games.  Powers entered into arrangements with the charitable organizations to control all of the funds generated from the poker fundraisers.

These poker fundraisers were exempted from the general prohibition against games of chance under then-existing Ohio laws, subject to the requirement that all the funds received from the games of chance, after deducting only prizes paid out and necessary expenses sanctioned under law, be transferred to the charitable organization for their sole benefit and use.  Powers, with the help of his co-conspirators, took a portion of the money generated from the poker fundraisers and used those funds to pay the events’ workers, among other things, in violation of Ohio law and federal gambling laws.

Powers provided false accountings to the charitable organizations of the funds received from the events and skimmed a portion of the money.  Powers either supervised or personally distributed illegal cash payments to his co-conspirators and employees who worked as card dealers, cashiers, chip sellers, pit bosses, tournament directors and managers.  Powers and his co-conspirators also falsely held themselves out as uncompensated volunteers at the poker fundraisers.

In 2009, Powers and Allen Beck, a former business broker, conspired to defraud the Internal Revenue Service (IRS) in attempting to sell RLVS.  Beck previously pleaded guilty to a conspiracy charge.  In an effort by Powers to evade taxes, Powers and Beck arranged the sale to make it appear as if the business and its associated real estate was sold for an amount less than its actual sale price.

In February 2010, Powers also tampered with a witness testifying before a federal grand jury by instructing the witness to testify falsely that the witness and other RLVS staffers did not get paid for working at the poker fundraisers.  Previously, Pulaski, Gedeon, Williams and Dyer each pleaded guilty to committing obstruction of justice by falsely testifying before a federal grand jury that they were uncompensated volunteers at the poker fundraisers.

U.S. District Judge Timothy Black of the Southern District of Ohio did not schedule a sentencing date.  Powers faces a statutory maximum sentence of 35 years in prison and a fine of $1,000,000.

Acting Assistant Attorney General Ciraolo commended special agents of IRS-Criminal Investigation, who investigated the case, and Assistant Chief Jorge Almonte and Trial Attorneys Christopher P. O’Donnell and Austin F. Furman of the Tax Division, who are prosecuting the case.  Ciraolo also thanked the U.S. Attorney’s Office of the Southern District of Ohio for their substantial assistance.