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NIGC probe uncovered trail to major racetrack scandal

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NEW YORK - When two Brooklyn gamblers showed up at the 300-seat Tonkawa
bingo hall in north-central Oklahoma in the fall of 2000, they weren't
there to daub bingo cards.

According to federal investigators and a major criminal indictment in the
U.S. District Court in New York City, the two were setting up a betting
network that included two tribal casinos, a simulcast company in Fargo,
N.D., and off-shore "rebate shops" in Curacao, Netherlands Antilles and the
Island of Man in the United Kingdom. Although the tribal outposts in this
web are not charged with any wrongdoing, what the gamblers are accused of
doing has set off one of the biggest scandals in the recent history of
thoroughbred horse racing. In the fallout, some prominent tracks have
dropped their betting and broadcasting contracts with the casinos owned by
the Tonkawa and Coeur d'Alene tribes, along with up to eight international
"rebate shops," even though none of them have been accused of improper
activity.

One of the Oklahoma visitors is alleged to be an associate of the Gambino
organized crime family in New York, providing a very rare example of the
much-rumored mob "infiltration" of Indian gaming. Yet the investigation
that uncovered their scheme was pushed and prodded by the agency designed
to regulate and protect tribal casinos. If anything, the story shows that
the Indian gaming regulatory system is capable of launching a major case,
in spite of foot-dragging from other parts of the federal bureaucracy.

It was a field office of the National Indian Gaming Commission (NIGC) that
stumbled on the horse betting connection between the Tonkawa casino and a
similar operation at the Coeur d'Alene tribal casino in Idaho, NIGC
Commissioner Cloyce V. "Chuck" Choney told Indian Country Today in an
exclusive interview. NIGC investigators pushed the probe when the Federal
Bureau of Investigation declined to commit manpower to the specialized
work, Choney said. And the case was a major impetus for the formation of
the Indian Gaming Working Group, which now provides high-level coordination
for seven federal agencies in casino investigations.

Although the FBI Indian Country Unit hosts the Working Group and the FBI
claims credit for its work, Choney emphasized that NIGC regional directors
lobbied to set it up out of frustration with the low priority federal
agencies assigned to Indian prosecutions. In a statement about the IGWG,
the NIGC said, "illegal activities at Indian casinos were not being
aggressively prosecuted which had an adverse effect on the Indian gaming
industry throughout the United States."

The NIGC investigation started in 2001, Choney said, when the Portland
field office found an unusual pattern of telephoned horse betting in its
audit of the Coeur d'Alene Casino in Worley, Idaho. The Commission staff
approached the FBI office in Coeur d'Alene, Choney said, and "at that time
the FBI turned them down." Choney said the FBI office felt it didn't have
the auditing expertise to take on what promised to be a complicated paper
trail.

As the Gaming Commission staff followed the trail on their own, it led them
south to the Tonkawa casino in a remote stretch of north-central Oklahoma.
"They alerted our Tulsa office," Choney said.

Choney said that the same New York group of bettors was using both the
Coeur d'Alene and Tonkawa off-track betting services, which offered rebates
on high-volume wagering. Neither casino has been accused of wrongdoing.
"Rebate shops" in themselves are not illegal and in fact can be defended as
an antidote to the high take-outs - deductions for racetrack fees, race
purses and taxes - from pari-mutuel betting pools which reduce the payouts
to bettors. But the New York group, said Choney, "was using the same scam"
at the tribal casinos' that led to its massive indictment Jan. 13 in the
U.S. District Court in Manhattan.

The 76-page, 88-count indictment charged 17 individuals with a variety of
money laundering, gambling and Wire Act violations. Several, including some
well-known horsemen, were also charged with conspiracy to dope a horse in a
race at Aqueduct Racetrack. Although the indictment focused on betting
through two off-shore companies, located on the Isle of Man between England
and Ireland and on Curacao in the Caribbean, Choney said the same pattern
showed up at the tribal casinos.

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According to the indictment, the betting group run by members of the Uvari
family disguised the identity of their clients by giving them account
numbers, numerical codes and PIN numbers that had actually been assigned to
the Uvaris. Following Internal Revenue Service rules, each account carried
a Social Security number, but instead of putting down the bettors' numbers,
the Uvari group members used their own. The New York group would pay the
winnings to the anonymous bettors, but used the losses, which were in their
own names, as income tax deductions, the indictment alleged.

A spokesman for the Coeur d'Alene Casino said that whatever happened at the
beginning of the investigation, the casino now requires all telephone
bettors to provide notarized identification. "We feel we set an example of
how things ought to be done," said Director of Communications Bob Bostwick.

Two members of the Uvari group made the trip to Oklahoma in the fall of
2000 and, charged the indictment, "discussed illegal gambling at the
Tonkawa Indian Reservation." They were Anthony Uvari, who along with his
father and uncle was identified in the indictment as "an associate of the
Gambino Organized Crime Family of La Cosa Nostra," and another Brooklynite
named David Applebaum, also, according to the indictment, called "Pebbles."
There are different versions of the impression they made.

According to the New York Daily News, an anonymous informant was alarmed
that the mafia appeared to be moving in on the casino's race book, which
had opened only a few months earlier, and called the Integrity Hotline of
the Thoroughbred Racing Protective Bureau. But Choney was struck by the
lack of reaction to the visitors.

"They must have stuck out like a sore thumb," said Choney, a member of the
Comanche Nation of Oklahoma and former FBI agent with 24 years of service
in Oklahoma. But no one in the 300-member tribe notified authorities, he
said. "There was not a peep."

The pace of the investigation picked up sharply after December 2002, when
new commissioners were sworn in at the NIGC, which was previously hamstrung
by vacancies. The new board, led by Chairman Phil Hogen, toured regional
offices in February 2003. Said Choney, "The regional staff in Portland told
us about the difficulty they were having in getting the FBI to take the
case."

Back in D.C. the following month, commission members raised the issue with
Interior Secretary Gale Norton. According to the account on the NIGC Web
site, Norton requested the commission to try to organize a federal law
enforcement work group.

The NIGC listed the barriers to aggressive federal prosecution. The dollar
amounts in casino crimes, whether embezzlement, vendor fraud or employee or
patron scams, usually didn't meet the threshold for a federal case. "In
addition," said the statement, "federal prosecutors had generally assigned
a low priority to Indian casino matters. Federal investigative agencies
also were hampered by lack of manpower, resources and gaming expertise."

A series of meetings with the FBI Indian Country Unit gave rise to the
Indian Gaming Work Group. More agencies joined in, eventually totaling
seven. Because of its wide dispersion, the group kept in touch through a
monthly conference call. One of the first of these calls discussed the
Tonkawa and Coeur d'Alene audits, and the Department of Justice said it
sounded like an investigation under way in New York. The groups turned out
to be the same. The case of the biggest alleged Mob infiltration of tribal
casinos in recent years, and possibly in their history, was on the way to
breaking open.