Tobacco Farmer Sentenced For Money Laundering Through Slot Machines

Tobacco farmer gets six years in prison for laundering $2 million through slot machines

William D. Humphries, a South Carolina tobacco farmer, leaves federal court in Syracuse after a judge sentenced him to six years in prison for laundering the profits of marijuana dealers by running $1.9 million through slot machines at the Akwesasne Mohawk Indian reservation in Northern New York. (John O'Brien | jobrien@syracuse.com)

 

By John O'Brien | jobrien@syracuse.com

 

The Post-Standard

SYRACUSE, N.Y. -- A South Carolina tobacco farmer was sentenced to six years in prison today for trying to conceal the profits of drug dealers by running the money through slot machines at the Akwesasne Mohawk Indian Reservation in Northern New York.
U.S. District Judge Norman Mordue imposed the sentence on William D. Humphries, 67, of Lake City, S.C.
A federal jury last year convicted Humphries of 41 counts of money laundering, along with traveling in aid of racketeering, wire fraud conspiracy to defraud Canada of tax revenue, and conspiring to manufacture tobacco products without a license.
The Canadian government lost $40 million in tax revenues that it would have received if the cigarettes hadn't been sold on the black market by the manufacturer Humphries was selling his tobacco to, Assistant U.S. Attorney Carl Eurenius said.
As he was leaving the courthouse, Humphries denied trying to launder illegal profits by running money through slot machines.
"I was just merely playing," he said. "I still play. I don't launder money."
A federal grand jury indicted Humphries on charges of exchanging marijuana-smelling cash for clean cash 178 times between May 2006 and March 2009 by using the slot machines.

The total amount of exchanged cash was $1.9 million, for an average of $10,700 every time he visited the casino to make the switch, according to the indictment.
A co-conspirator and admitted marijuana dealer, Patrick Johnson, wore a body wire for agents with the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, court papers said. Johnson secretly recorded Humphries explaining how he was laundering the cash, according to court papers.
Mordue received 26 letters of support from Humphries' friends and relatives, many of them citing his outstanding generosity with needy people in South Carolina. His wife, Lynda Humphries, was among the letter-writers.
"I do not know and for what reason these ugly lies have been said about David," she wrote, using his middle name. "He is the most caring and generous man God ever made."
Johnson and Hank Cook owned a cigarette-making company at Akwesasne. They were paying Humphries in cash for the tobacco he supplied from his farm in South Carolina.
The cash always had a strong scent of marijuana because the cigarette makers were also heavily into selling pot, federal prosecutors said in court papers.
After he was paid in May 2006, Humphries was pulled over by police. A police dog alerted to the marijuana scent on the money, and officers seized the $88,000 in cash Humphries had in his car.
Mordue noted today that Humphries never submitted a claim for that cash -- an indication that Humphries knew it was the illicit profits of drug dealers.
After that, Humphries started exchanging the smelly money for clean cash by putting the bills into slot machines, one by one, at the Mohawk Bingo Palace, prosecutors said.
Humphries wasn't accused of marijuana trafficking. He was accused of laundering money he knew was the proceeds of crimes.

SYRACUSE, N.Y. -- A South Carolina tobacco farmer was sentenced to six years in prison today for trying to conceal the profits of drug dealers by running the money through slot machines at the Akwesasne Mohawk Indian Reservation in Northern New York.

U.S. District Judge Norman Mordue imposed the sentence on William D. Humphries, 67, of Lake City, S.C.

A federal jury last year convicted Humphries of 41 counts of money laundering, along with traveling in aid of racketeering, wire fraud conspiracy to defraud Canada of tax revenue, and conspiring to manufacture tobacco products without a license.

The Canadian government lost $40 million in tax revenues that it would have received if the cigarettes hadn't been sold on the black market by the manufacturer Humphries was selling his tobacco to, Assistant U.S. Attorney Carl Eurenius said.

As he was leaving the courthouse, Humphries denied trying to launder illegal profits by running money through slot machines.

"I was just merely playing," he said. "I still play. I don't launder money."

A federal grand jury indicted Humphries on charges of exchanging marijuana-smelling cash for clean cash 178 times between May 2006 and March 2009 by using the slot machines.

The total amount of exchanged cash was $1.9 million, for an average of $10,700 every time he visited the casino to make the switch, according to the indictment.

A co-conspirator and admitted marijuana dealer, Patrick Johnson, wore a body wire for agents with the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, court papers said. Johnson secretly recorded Humphries explaining how he was laundering the cash, according to court papers.

Mordue received 26 letters of support from Humphries' friends and relatives, many of them citing his outstanding generosity with needy people in South Carolina. His wife, Lynda Humphries, was among the letter-writers.

"I do not know and for what reason these ugly lies have been said about David," she wrote, using his middle name. "He is the most caring and generous man God ever made."

Johnson and Hank Cook owned a cigarette-making company at Akwesasne. They were paying Humphries in cash for the tobacco he supplied from his farm in South Carolina.

The cash always had a strong scent of marijuana because the cigarette makers were also heavily into selling pot, federal prosecutors said in court papers.

After he was paid in May 2006, Humphries was pulled over by police. A police dog alerted to the marijuana scent on the money, and officers seized the $88,000 in cash Humphries had in his car.
Mordue noted today that Humphries never submitted a claim for that cash -- an indication that Humphries knew it was the illicit profits of drug dealers.

After that, Humphries started exchanging the smelly money for clean cash by putting the bills into slot machines, one by one, at the Mohawk Bingo Palace, prosecutors said.

Humphries wasn't accused of marijuana trafficking. He was accused of laundering money he knew was the proceeds of crimes.

http://www.syracuse.com/news/index.ssf/2014/03/tobacco_farmer_gets_xx_years_in_prison_for_literal_money-laundering_on_mohawk_in.html

 

NY localities hurt

NY localities hurt as Indian casino cash dries up

MICHAEL HILL, Associated PressCopyright 2012 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

MICHAEL HILL, Associated Press

Sunday, July 29, 2012

ALBANY, N.Y. (AP) — Since the casino cash stopped flowing, Salamanca has laid off workers, Niagara Falls has cut back on cleanups and county reserve funds have dried up in the North Country.

The struggling municipalities in western and northern New York are collateral damage in a high-stakes confrontation between the state and Indian tribes involving gambling dollars.

The Seneca and Mohawk tribes have for years withheld casino payments to the state, claiming that New York violated contracts with the tribes by allowing gambling in their exclusive territories.

Consequently, the state stopped sending money — more than $100 million so far — to municipalities where Indian casinos operate.

Without their share of casino money, the local governments are straining to provide basic services.

And with no compromise in sight, arbitrators may have to resolve the long-running dispute.

"Our piggy bank is empty now," said Niagara Falls Mayor Paul Dyster, whose city is out almost $60 million in casino payments.

The Seneca Nation of Indians, which operates casinos in Buffalo, Niagara Falls and Salamanca, stopped sending payments starting in 2009. They say the state violated the compact that gives the Seneca exclusive gambling rights west of the Finger Lakes when it allowed three western New York harness tracks to operate video lottery terminals.

Seneca President Robert Odawi Porter said about $400 million worth of withheld payments to the state have been placed in escrow. A quarter of the money would have gone to host cities like Buffalo and Niagara Falls.

"We're not going to sit by idly while we're being cheated," Porter said.

The St. Regis Mohawks, who operate a casino on their land straddling the Canadian border, separately decided in October 2010 to stop making payments, citing slot machines operating on Indian territory elsewhere in northern New York. After two years, Franklin and St. Lawrence counties and four local towns are out $12 million.

The losses in casino revenue are a small part of New York state's $132 billion budget, but is felt keenly in the smaller municipalities struggling to balance their books.

St. Lawrence County Administrator Karen St. Hilaire said the county has eliminated positions, cut back programs and hasn't replaced equipment. Next door in Franklin County, the lack of casino cash is complicating plans to help pay for a natural gas pipeline. If the money doesn't flow, the cost will have to be shouldered by local taxpayers, said County Manager Thomas Leitz.

"We have made a commitment so we'll have to find a way to finance it," he said.

In western New York, Salamanca Mayor Jeffrey Pond said the roughly $5 million a year from the Senecas was about half the city budget. Salamanca laid off 49 people and has gotten by with a no-interest loan from the state.

In Niagara Falls, Dyster said the city had to cut back on cleanup crews that fixed up vacant lots, and was not able to invest extra money to promote itself as a destination for weddings for same-sex couples after the state legalized gay marriage a year ago.

Leaders of both tribes cast the issue in terms of gambling and broken promises, though some observers believe the long-simmering resentment among Indians over the state's efforts to tax Indian cigarettes played a role as well. The dispute also intensified as the state considers a constitutional amendment to allow casinos on non-Indian land.

Discussing the payment dispute with reporters in June, Gov. Andrew Cuomo said he wouldn't rule out approving non-Indian casinos in western New York.

"If there are no payments, then you would argue, there's no exclusivity," he said.

Senecas, Mohawks and state officials all express sympathy to the local communities for their lost payments — and they blame each other for it.

"It's unfortunate that the state has really put them in the middle of our dispute and left them high and dry," Porter said.

Cuomo spokesman Richard Azzopardi said that under state law, New York can only make a local-share payment out of revenue received from slot machines but there's no revenue to share.

"We have made it clear to the Senecas and the Mohawks that they can make payments to local communities directly and that these payments will be recognized and credited by the state," Azzopardi said. "They have apparently chosen not to do so."

The issue of payments — from the Indians to the state and from the state to local communities — could wind up before arbitrators.

"They have basically ignored our attempts to settle our issues," the Mohawk council said in a statement.

Where gambling operations get to locate could add to the pressure if New York legalizes casinos on non-Indian land. The state Legislature approved a measure to amend the state constitution, but needs to take another vote before voters can make the final decision in a referendum, possibly next year.

Proponents are focusing on the New York City area and the Catskills, far away from New York's Indian casinos. The Mohawks say they aren't worried.

"It will cost the state a tremendous amount of capital to get to where the Indian casinos are in the state," the Mohawks say.

Read more: http://www.stamfordadvocate.com/business/article/NY-localities-hurt-as-Indian-casino-cash-dries-up-3744442.php#ixzz223b53tSo


NY localities hurt as Indian casino cash dries up
Wall Street Journal
Associated Press. ALBANY, N.Y. — Since the casino cash stopped flowing, Salamanca has laid off workers, Niagara Falls has cut back on cleanups and county reserve funds have dried up in the North Country. The struggling municipalities in western and ...

Online cheating scheme

Poker players sue to get to the bottom of online cheating scheme
By Mike Brunker, msnbc.com

Eight poker players who say they were victims of a cheating scheme on the popular Ultimate Bet website are suing a Canadian company and unnamed individuals, alleging they violated U.S. laws aimed at combatting organized crime, defrauded players and negligently offered crooked card games.

The lawsuit, filed last Friday in U.S. District Court in California, alleges that the defendants — 6356095 Canada Inc., formerly known as Excapsa Software Inc., and up to 10 Jane or John Does — violated the federal Racketeer Influenced and Corrupt Organizations (RICO) Act, committed fraud and exhibited negligence by enabling the theft of at least $20 million from high-stakes poker players who gambled on the Ultimate Bet website.

It seeks compensation of at least $1.73 million and far more in punitive damages on behalf of the plaintiffs: Daniel Ashman, Brad Booth, Thomas Koral, Greg Lavery, Dave Lizmi, Daniel Smith, Joseph Sanders and Dustin Woolf.

Possibly more important in unraveling the longstanding mystery of the largest known case of online poker cheating, the lawsuit seeks documentation that Ultimate Bet's shadowy parent companies and regulators with the Kahnawake Gaming Commission (KGC) have never made public.


--------------------------------------------------------------------------------

The KGC, the regulatory agency of the Mohawk Council of Kahnawake in southern Ontario, announced in September 2008 that its investigation found that a single individual — former World Series of Poker champ Russ Hamilton — was behind the cheating case. But many players believe that it was the result of a broader conspiracy.

Among them is Haley Hintze, a former writer and editor of PokerNews and now a poker blogger who is working on a book on the cheating scheme due out by summer. In it, she told msnbc.com on Thursday, she will identify at least three others who directly participated in the theft and attempts to cover it up.

Representatives of Excapsa Software could not be reached for comment on the lawsuit. A spokesman for the KGC had no comment on the lawsuit or whether it would respond to any subpoenas.

Ultimate Bet acknowledged that $20 million was stolen from players at the site between 2003 and 2008 through the use of a "backdoor" in the gaming software that allowed the cheater or cheaters to see opponents hole cards in high stakes tournaments. The operators of Ultimate Bet refunded most or all of that money.

But the suit alleges that the company “substantially underestimated” the losses by failing to consider money that wasn’t wagered when the cheaters realized their opponent had them beat.

Read 2008 story about the case: Poker site cheating plot a high-stakes whodunit

“The key to the massive success of the cheating players is not simply that they were able to profit by bluffing when their opponent was weak or betting when they had the best hand, but that they were able to fold and not play … whenever their hand was strong (but) not the best,” it argues. “Thus every time a player had a flush, the cheater would fold a lower flush or straight; every time a player had a full house, the cheaters would fold a flush.”

“There are significant doubts about the methodology of the refunds given to players,” said Alan Engle, a partner in the Meador & Engle law firm in Anaheim Hills, Calif., who filed the suit. “That’s always been a closed process and there are inherent difficulties in calculating the amount of the theft.”

Engle said the early part of the case will probably focus on jurisdictional issues, but he said he is confident that he can prevail on any challenges because Ultimate Bet focused its marketing on U.S. bettors.

“Anyone victimized by someone in a foreign nation over the Internet is in no way required to bring a case in a foreign nation,” he said.

Excapsa Software, now known as 6356095 Canada Inc., is currently in the midst of liquidation proceedings in Canada.

Sheldon Krakower, who is handling the corporate dismemberment for XMT Liquidations of Montreal, said he would soon seek guidance from the Ontario court overseeing the case before responding to the lawsuit.

“We will be filing our seventh report to the Ontario court specifically addressing this matter imminently,” he told msnbc.com on Thursday. “… We need direction from the court on that.”

In a report to Excapsa shareholders in May 2011, Krakower indicated that $7 million U.S. had recently been released to shareholders, and that $4.2 million was being held in escrow until the end of the year. It is not clear whether that money remains in escrow.

Ultimate Bet, which merged with another online gaming site, Absolute Poker, in 2008 to form the Cereus Poker network, was among a handful of online Poker sites that had their U.S. operations shut down in April of last year when the U.S. Justice Department indicted them on charges of violating the Unlawful Internet Gambling Enforcement Act of 2006, money laundering and other charges. The feds also froze bank accounts holding the bankrolls of U.S. players, many of whom have yet to be repaid.

"Give me the revenue and nobody will get hurt"

County wants part of revenue from Ganienkeh slot machines
Officials push for revenue from Ganienkeh Territory gaming

PLATTSBURGH — Clinton County officials say it is time they get a cut of the revenue from slot machines on Ganienkeh Territory in Altona.

County Treasurer Joseph Giroux told legislators recently that the county should get part of the handle from the 110 slot machines they believe to be operating on properties at Ganienkeh Territory.

"We'd like to get part of the handle, and, if not, we'd like the state to have those machines removed," Giroux said.

STOLEN LAND

Ganienkeh Mohawks say they don't think so.

"When are we going to get some revenue for the lands they stole—" Ganienkeh spokesman Tom Delaronde, said, referring to ancestral claims that Native Americans were pushed off their lands by settlers hundreds of years ago.

AKWESASNE DEAL

Mohawks at Akwesasne, some 90 miles west of Altona, have had an agreement with the state and St. Lawrence and Franklin counties to share part of the revenue generated from nearly 2,000 slot machines on the reservation since 2004.

The pact calls for Mohawks to have exclusivity on gaming operations in seven counties: Franklin, Clinton, Essex, Hamilton, Jefferson, St. Lawrence and Warren. The deal calls for the state, those counties and four towns — Bombay, Fort Covington, Brasher and Massena — to receive payments.

That agreement has come under scrutiny recently as Akwesasne Mohawks claim that by allowing the slot machines at Ganienkeh, the state violated the agreement.

Mohawks have since stopped paying the state its portion of the slot revenue but have continued to pay St. Lawrence and Franklin counties and the towns.

NOT INVOLVED

Delaronde said Ganienkeh Mohawks are not part of the Akwesasne tribal government and not involved with their dispute with the state.

"This is our land, our territory, it belongs to the people of the Mohawk Nation, and we will take care of our people," he said.

OFF-TERRITORY LAND

Giroux said the county is seeking slot revenue from the Ganienkeh slot machines in part because several properties in Altona off the Ganienkeh Territory have been purchased in recent years by Mohawks who have not paid taxes on the lands.

The Mohawks, Giroux explained, claimed the lands purchased were to be part of Ganienkeh, which was created in 1977 by an agreement with the state.

FORECLOSURES

The county foreclosed on nine parcels last year and regained title to the properties, including the new golf course off Rand Hill Road, but Mohawks continue to occupy the lands.

The county is also in the process of foreclosing on three more parcels.

The county has lost more than $200,000 in tax revenue from the disputed properties since the Mohawks purchased them.

"If we are not going to get revenue in taxes, then we should get it from the slots," Giroux said.

"Revenue is revenue."

BELONG TO MOHAWKS

Delaronde said the parcels in question belong to the Mohawks.

"This is not a one-person entity, it belongs to the people," he said.

Giroux said an agreement on slot revenue would also help the Mohawks, who aim to market their new golf course, which opened this past summer.

"They put a lot of money into that golf course; I am sure they want people to go to it."

Delaronde said the golf course is doing just fine.

STATE HELP

Giroux is asking legislators to approve a resolution formally asking the state for assistance in collecting revenue from the slot machines in Altona.

Legislators will vote on the resolution at Tuesday's meeting.

County Legislators Keith Defayette (R-Area 6, Schuyler Falls) and Jackie Walker (R-Area 8, City and Town of Plattsburgh) agreed with the idea of asking for some of the slot-machine revenue.

"We know it (slots) exists, they know it exists; we should ask for some of the handle," Defayette said.

Walker said it is not fair to other property owners who pay taxes to allow lands purchased by Ganienkeh Mohawks to go untaxed.

"The golf course is not paying taxes, and that's not fair either."

New York State: Mohawks shaft state

Mohawks won't back down, refuse to pay the state
ARBITRATION REQUESTED: St. Regis Mohawks claim unrelated tribe in Ganienkeh operating slots, infringing on their rights

HOGANSBURG — The St. Regis Mohawk Tribe is standing by its previous statements that the state has knowingly allowed another tribe to operate slots and break its exclusive gaming rights.

The Mohawks are requesting arbitration and say that if the arbitrator agrees with them, they will attempt to get the state's share of the gaming compact returned.

"That's an issue that we're going to be bringing up with the state," Chief Mark H. Garrow said. "I think it's preliminary to look to attach any number to that or any process before we go to arbitration."

Since 2004, the tribe has sent more than $30 million in gaming revenue to the state alone. More of the casino's revenues also are sent to St. Lawrence and Franklin counties, as well as the towns of Brasher, Massena, Fort Covington and Bombay, via Albany. The tribe is not looking to have that money returned.

Mohawk follow the leader withhold revenue

Tribe claims state in violation of Tribal Gaming Compact

AKWESASNE TERRITORY - The St. Regis Mohawk Tribal Council, after consultation with the community at their monthly Tribal Meeting, has discontinued casino Revenue Share to the State of New York. “The state has violated the exclusivity provisions of the Mohawk-State Gaming Compact,” stated Tribal Chief Monica Jacobs.

The 2004 Compact amendment approved the play of slot machines at the Tribe’s Akwesasne Mohawk Casino. The State of New York is obligated to ensure that the St. Regis Mohawk Tribe has the exclusive right to install and operate slot machines in Clinton, Essex, Franklin, Hamilton, Jefferson, St. Lawrence and Warren Counties. Violation of this obligation relieves the Tribe of its requirement to continue to make revenue sharing payments to the State of New York.

The St. Regis Mohawk Tribal leadership believes that the State has failed to take steps to protect the Tribe’s exclusive gaming franchise. Therefore, the State of New York has not lived up to its obligations under the Compact. "We cannot continue to make payments to the State of New York, when they have not upheld their end of our agreement,” said Tribal Chief Mark Garrow. “Under federal law, a State cannot tax a tribal gaming operation. Instead, Revenue Sharing is made in exchange for the exclusive right to operate slot machines. The State has failed to protect that right.”