Ex-Larimer County GOP leader charged with theft for gambling addiction

Arrest warrant issued for embattled ex-Larimer GOP chair Carillo
Gambling payments alleged to have drawn the attention of Homeland Security
By John Tomasic

As the 2012 race in Colorado’s always hotly contested 4th congressional district officially kicked off this week, Republicans in Larimer County, the most populous county in the district, are suffering through another humiliating chapter in the unfolding history of incompetence and corruption that plagued the county party under the recent direction of Larry Carillo. Police issued a felony theft arrest warrant for the former party chairman Tuesday, accusing him of stealing more than $17,000 to pay bills and gambling debts. Carillo is alleged to have unwittingly set up payments to a company created by the Department of Homeland Security to fight online gambling and money laundering. Carillo paid more than $27,000 in online gambling debts while he was party chairman.

Mounting evidence suggests Carillo was struggling personally and part hapless and part opportunist as party chair from February 2009 to February 2011. He failed repeatedly to file campaign finance reports, racking up roughly $65,000 in state fines.

State Senate President Brandon Shaffer, a Longmont Democrat, announced Monday he was running to unseat CD4 Republican freshman Congressman Cory Gardner in 2012. The race is sure to be hard fought. Shaffer has eyed the seat for some time, running briefly to represent CD4 in 2008, before withdrawing to make room for Democrat Betsy Markey, who that year unseated Republican social conservative Marilyn Musgrave.

Carillo was replaced as Larimer GOP chairman by Tom Lucero, one-time CU regent and Republican CD4 2010 candidate. Lucero told Bob Moore at the Fort Collins Coloradoan that the warrant for Carillo’s arrest represents a big step forward out of the swamp of mismanagement and bad news that has dogged the local party for months.

“We’re finally able to bring closure to this and we’re able to move on to the final step, which is our [campaign finance fine] appeals process with the secretary of state and we’ll be able to very soon put this chapter behind us and close the book on it.”

Carillo on Tuesday afternoon told Moore he was planning to surrender to Fort Collins police. The Coloradoan has owned the story of the struggling Larimer County GOP.

Former Larimer County Republican leader charged with theft of party funds
Written by
Robert Moore

Former Larimer County Republican Party Chairman Larry Carillo paid $27,300 to online gambling operations around the time he is accused of stealing more than $17,000 from the party, according to an affidavit that led to a warrant for Carillo's arrest Tuesday.

Carillo is charged with theft between $1,000 and $20,000, a fourth-degree felony that carries a penalty of up to four years in prison and a $500,000 fine.

A warrant was issued for his arrest, but he is not in custody, according to a news release from Weld County District Attorney Ken Buck.

In a phone interview with the Coloradoan Tuesday afternoon, Carillo said he was making arrangements to surrender to Fort Collins police but declined further comment. The warrant set a bond at $10,000.

Current Larimer County Republican Party Chairman Tom Lucero, who was elected at the end of March, praised other GOP leaders for identifying problems in late February and early March and going to police with their concerns.

"We're finally able to bring closure to this and we're able to move on to the final step, which is our (campaign finance fine) appeals process with the secretary of state and we'll be able to very soon put this chapter behind us and close the book on it," Lucero said.

The arrest warrant was issued a little over four months after Carillo resigned suddenly after a two-year term as party chair. He quit Feb. 28 after other party officials confronted him about not filing any of the Larimer GOP's required campaign finance reports in 2010. The party is facing $65,000 in potential fines from the secretary of state for those delinquent filings.

The affidavit detailing Carillo's alleged crimes spells out a series of payments from party funds to Carillo and two of his companies; a number of unauthorized ATM withdrawals using his party debit card; as well as payments from party funds to cover Carillo's personal phone, cable and cell phone bills.

Those payments also are detailed in a series of amended campaign finance reports the Larimer GOP is in the process of filing with the secretary of state.

The current leadership of the party provided the Coloradoan with a summary of the alleged improper expenditures last week as it began updating its reports.

Gambling connection

Among the alleged improper ATM withdrawals were two at Black Hawk casinos totaling $500 in August 2009. That same day, Carillo also withdrew $500 from a Loveland ATM, and used the debit card to get $300 cash from a payday lender, according to the affidavit from Fort Collins police Detective Robert Brown.

Brown's affidavit indicates that that Carillo had built up other gambling debts at the time he was taking money from the Larimer County Republican Party.

The affidavit said Frank Bishop, an investigator with the Weld County District Attorney's Office, reviewed Carillo's personal bank records from January 2009 through August 2010. He found 244 "preauthorized withdrawals" totaling $27,300 to fund online gambling activity, Brown said in the affidavit.

"Twenty-one withdrawals were in the name of 'Linwood Payment Solutions,' which was an entity that had been created as an undercover site by Homeland Security ... to identify and prosecute illegal online gambling and money laundering. Investigator Bishop was advised by (Immigration and Customs Enforcement) to identify and prosecute online gambling and money laundering," Brown said in the affidavit.

Federal officials earlier this year indicted three people and seized bank accounts and domain names tied to several offshore gambling sites after a two-year investigation. None of the online players were charged.

Lucero said the gambling debt outlined in the affidavit surprised him and others who knew Carillo.

"That was shocking to everybody," he said.

'Putting money back'

The affidavit said Larimer GOP External Vice-Chair Devon Lentz confronted Carillo in February about a number of the payments. He told her "that he was putting money back into the account," according to the affidavit.

"He also told Mrs. Lentz, 'there was a difference in taking and not intending to give back, (and) it's expensive to be chair,' " the affidavit said.

Records also showed that checks totaling $5,350 from Carillo's two businesses - Fossil Creek Media and Branch Media Group - were deposited to the Larimer GOP account between Aug. 14 and Nov. 25, 2009. Another $1,500 check from Fossil Creek Media was later deposited but returned for insufficient funds.

Those deposits could create a problem for the Larimer GOP because under the law they are contributions from a limited liability company. Such contributions generally are legal as long as the donor provides specific paperwork required by statute, but Carillo never did that, GOP officials have said.

The fine for accepting LLC contributions without the proper documentation is $50 a day per donation, so Carillo's donations have put the party at risk of more than $200,000 in civil penalties. However, no such fines could be levied without a formal complaint to the secretary of state, and no such complaint has been made, officials said.

In addition, Carillo's failure to file any campaign finance reports for the party has led the secretary of state to levy $65,000 in fines to the Larimer GOP.

The party is seeking to have the fines reduced, and the Secretary of State's Office has said it would wait until after Buck's office wrapped up the criminal investigation before finalizing the fine.

The secretary of state also is waiting for the party to file amended campaign finance reports for 2009 and 2010, a process that started last week.

Financial problems

The current Larimer GOP leadership asked Fort Collins police in March to open a criminal investigation after they began reviewing boxes of financial records that Carillo turned over.

Larry Abrahamson, the district attorney for Larimer County, recused himself from any potential prosecution because he had previously donated money to the county GOP.

Buck accepted the assignment as special prosecutor. He was the Colorado GOP's 2010 Senate nominee, losing to incumbent Sen. Michael Bennet. But he said that did not create a conflict of interest under Colorado law.

Public records show that Carillo has been facing financial problems.

His home went into foreclosure in November 2010, shortly after he and his wife divorced. The foreclosure sale has been postponed twice and is now scheduled for July 13.

Carillo last week entered into a court settlement with Capital One Bank to repay more than $5,000 in credit card debt. The terms call for him to pay $100 a month for several months, and then $250 a month until the debt is repaid.