Gambling prosecutions and asset forfeiture: to protect and profit?

TAGs: asset forfeiture, Oklahoma, Preet Bharara, sports betting, texas

us-asset-forfeitureThis week saw two more guilty pleas in the bicoastal sports betting and poker ring broken up this April by the US Attorney for the Southern District of New York. Following last month’s plea by Hollywood producer Bryan Zuriff, William Barbalat pled guilty on Wednesday to traveling in interstate commerce in aid of an unlawful activity, while Kirill Rapoport pled guilty on Friday to conducting an illegal gambling business.

US Attorney Preet Bharara of Black Friday fame issued a statement saying Barbalat had agreed to forfeit $150k, while Rapoport agreed to fork over $250k. The pair, each of whom helped organize high-stakes poker games at which pots “frequently reached tens of thousands of dollars or more,” face up to five years in stripes when they are sentenced in December.

In Oklahoma, the case involving the September 2012 breakup of a similar sports betting and poker ring saw one of the 10 defendants sentenced on Thursday to 16 months in prison after agreeing to forfeit $500k in gambling proceeds. Gary John Gibb pled guilty in April to illegal gambling after striking a deal to testify against the ring’s leader Teddy Mitchell. The need for that testimony vanished after Mitchell entered his own guilty plea last month. Mitchell’s son Dryden also pled guilty for his involvement in the ring.

The elder Mitchell agreed to forfeit over $1m in real estate and other property and faces up to 25 years in stripes, while the son is looking at 15 years. Following the plea agreement, Mitchell’s attorney Scott Adams told reporters that federal prosecutors would be better off spending their time chasing down violent criminals. “Leave the gamblers alone. They’re not doing anything.” Other than time and writing large checks, that is.

Recent headlines from Texas suggest it’s highly unlikely that US law enforcement will end their pursuit of gambling cases anytime soon. A two-year-old bust of an online credit betting operation was dragged back into the media spotlight this week as representatives of the US Attorney for the Eastern District of Texas and the Internal Revenue Service presented local police in the city of Plano with a check for $4.75m for their role in the March 2011 takedown of the betting operation, which processed wagers online via 25 Curacao-based websites.

The “asset sharing ceremony” in Texas had all the trappings of a lottery winner posing giddily with an oversized novelty check, and underscored just how much local police departments have come to rely on asset forfeiture to fund daily operations. The Department of Justice shared over $500m of their total $1.8b asset forfeitures in 2011 with local police departments who helped bring down deep-pocketed perps. Last year, the DOJ’s forfeiture haul more than doubled to $4.2b, thanks in part to a hefty ‘contribution’ from the parent company of online poker giant PokerStars.

As the DOJ continues to make it rain for local cops, local politicians find it easier to trim police budget allocations, creating a situation in which the cops are incentivized to narrow their law enforcement focus on activities that promise a lucrative payday. In some Texas counties, asset forfeiture accounts for nearly 40% of police budgets. Even more disturbing, individual officers can earn personal bonuses stretching into five-figure paydays that come directly from forfeited assets.

There are ominous echoes here of the controversy surrounding the expanding privately-run ‘for profit’ prison business and how these prison companies’ desire to continually boost profits has led them to spend significant amounts lobbying for laws that allow them to incarcerate individuals for ever lengthier terms on increasingly dubious charges. As former East Texas narcotics officer Simon Porter recently told the New Yorker: “When you allow the profit incentive, that’s when you start getting problems. It’s like the difference between serving in the Army and working for Blackwater.”


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