The Last Undercover (18 page)
Headquarters had already given its approval for such an operation. It was an arrow for my quiver, a tool that could be used should the topic of overseas sex tours be raised. I was also prepared to accept or purchase child pornography and enter into relationships where I would offer to exchange it when I returned to San Diego. I planned to remain flexible in Miami and aggressively pursue any investigative lead that might arise.
HALF-FULL OR HALF-EMPTY?
Los Angeles, 1996
U
nder IRS rules, any winning wager with the odds of 300-1 or greater require filling out certain tax forms in order to receive the winnings. At the track, the winning bet is called a “sign-up.” One of the cottage industries that survive on the fringes of big-time gambling is made up of those who do sign-ups for others. They’re called “signers” or “ten percenters”—a term derived from the fee the signer often charges the gambler.
In simple terms, if the wager pays $10,000, the track, before paying the winner, automatically deducts 28 percent in federal taxes. Thus the winner would only collect $7,200 from the window. He could offset the winnings with his losing wagers, but he would have to file a federal income tax return in order to collect the $2,800 withheld for taxes. Many gamblers don’t wish to bother with the paperwork associated with gambling winnings and often don’t want spouses to know where the additional income was derived. That’s where the signers or ten percenters, come into play. For a fee, they will cash your ticket under their name, charging you ten percent of the winnings.
The Mouth, however, took signing to a new level. Rather than charge you for cashing your ticket, he would actually pay you for the opportunity to sign for your ticket. In other words, he might pay back half the withholdings. You would receive the $7,200 plus half of the $2,800 withheld by the IRS. You walk away with $8,600 ($7,200 plus $1,400). The IRS doesn’t know you won the money and neither does your spouse.
When tax season rolled around, the Mouth would file his taxes, stating that he won the $10,000, but used the many losing Pick Six tickets he held on to, to offset his winnings, even though he may or may not have actually wagered the entire amount represented by the tickets. The IRS refunds the full $2,800 and the Mouth made $1,400 without doing any work other than filling out a few IRS forms on the day you placed the winning wager.
It was a sweet scheme. The track employees looked the other way because signers were viewed as providing a service to gamblers. The IRS had little interest in investigating the violation, and the Mouth was receiving annual refund checks in the hundreds of thousands of dollars. I came to grudgingly admire his initiative; he found a need and met it.
Once we figured out the scheme, it became incumbent on me to win some sign-up wagers—not an easy task. It was difficult enough picking a winning horse in one race, let alone an exotic wager with odds of 300-1 or greater. The track was unable to help, because they could not manufacture winning tickets, even if the FBI agreed to reimburse them. I began handicapping in earnest and eventually wagered and won three sign-ups. I hit the Pick Six twice and hit a triple that paid over $3,700. The Mouth signed for all three of my winning tickets.
Despite our best efforts, we were still no closer to identifying fixed races or implicating our targets in illegal race fixing. I learned that horses were being illegally drugged with clenbuterol, a performance-enhancing drug. I learned that certain trainers would instruct jockeys to hold a horse, preventing it from running to its potential, until the odds were more favorable. I learned that trainers would instruct jockeys to “just give the horse a workout, don’t push it.” I learned that jockeys were reporting to gamblers which horses were strong and which were injured. I learned that jockeys were betting on their own mounts and sometimes on other mounts in the races in which they were riding. All of these facts were unknown to the betting public, who relied only on information found in the
Daily Racing Form
or daily paper. But the fixed race still eluded us.
On January 28, 1996, I was at Santa Anita and had a Pick Six wager where I correctly selected the first five winners with one race to go. When I told the Mouth I was “still alive,” he pulled me aside and said, “I could have gotten into the jockey’s room and guaranteed this thing.” It was the type of information we were seeking, but I could never get him to “guarantee” any race. I did manage to win the last race of the day and win the Pick Six wager. The Mouth did the sign-up.
With probable cause generated from the undercover operation, we were able to wiretap the Greek’s phones. We developed evidence of illegal gambling and identified jockeys in almost daily contact with the Greek and the Mouth. But we never found the smoking gun. It was disappointing. My time at the track was not leading us in the direction we had hoped. Although the case agents and the office supported a six-month extension of the undercover operation, I told them I believed it was a waste of time. I did not think we were going to find sufficient evidence of race fixing. Even if we found a jockey taking payment to adversely influence the outcome of a race, we would still have to prove the horse could have won or should have won. After our experience with the steward at Los Alamitos, I wasn’t sure we could ever get such an expert opinion to corroborate our allegation. It was time to take the investigation in another direction and salvage my six months undercover; it was time to go overt.
We reviewed every piece of evidence gathered and worked closely with two fine assistant United States attorneys, Ed Weiss and Jerry Friedberg, both of whom bucked the system and insured prosecutorial success. We decided to concentrate on the Mouth, the Greek, Fingers, and the jockey. When confronted with the evidence obtained through a wiretap on his home phone, the Greek agreed to plead guilty to federal gambling violations.
Fingers and the jockey proved more of a challenge than the Greek. I took a run at both and the initial results were not positive. Without a confession, there was little chance of obtaining a conviction.
Because Fingers was banned from the track, I never met him while working undercover. We did pick him up while he was conversing with the Greek over the wiretapped phone. Informants provided details of his activities and we continued to seek evidence of his fixing the Los Alamitos races on September 28. I approached Fingers several times overtly as an FBI agent in an effort to elicit admissions from him. But each time, he gave a song and dance and we waltzed around the issue of race fixing. He was smart and provided a challenge. He was also engaging, which is why he was successful at convincing jockeys to risk their careers by accepting a few hundred dollars to hold a horse. He was a consummate con man. He had movie-star good looks and a boyish charm, but both were getting old as we played our cat-and-mouse game.
One afternoon, Fingers agreed to meet me for lunch at a hole-in-the-wall Chinese restaurant in downtown Los Angeles. We took our seats in the back and ordered. As I continued to press Fingers, insisting I was going to indict him for race fixing, he grabbed my water glass, which was half-full.
“Don’t you understand?” he said. “Your glass is half-full. If you agree not to charge me, I’ll cooperate and can give you all kinds of information about what goes on at the track. I can make your glass full.” He poured the water from his glass into mine, filling my glass to the brim.
I leaned forward and spoke in a soft voice. “Several years ago I was working undercover in a drug investigation. The FBI pays me every other Thursday, right? One day, two drug dealers tried to kill me and I shot both of them. The next Thursday, I got my paycheck. It was exactly the same amount as I got the time before. I realized that I get the same amount of money every two weeks whether I shoot somebody or not.” I picked up my now-full glass of water and dumped it over the remaining food on his plate.
“I don’t care whether you cooperate or not, you’re going to jail.”
The possibility of conviction finally sank in. He agreed to accompany me to the FBI office and work out a deal.
Once we got into the FBI interrogation room, his bravado began to show once again and he hinted that he might not accept any deal. I was not going to let him get away. He suspected the jockey was cooperating because through informants we knew details Fingers believed only he and the jockey knew. I would never confirm the jockey’s cooperation, but in fact he was not cooperating. But since Fingers believed the jockey was just as culpable as he and deserved equal punishment, he didn’t want the jockey to receive a lesser sentence.
I played on this fear and his assumptions about the jockey. At one point, I feigned a phone call to the prosecutor. I knew Fingers could hear my side of the conversation. In hushed tones, I told the nonexistent party on the other end of the call to “prepare the same plea agreement we gave the jockey, including time off for cooperation.”
When I returned to my conversation with Fingers, he told me how I “screwed up”: he’d heard my conversation with the prosecutor and now he knew for certain the jockey was cooperating. He capitulated on the spot, afraid of being bested by the jockey. A short time later, Fingers pleaded guilty and was sentenced to prison.
I continued my attempts at cracking the jockey. The evidence was slim, but he knew what he had done. Eventually he succumbed and admitted to his transgressions. He refused, however, to cooperate by implicating others.
In July, 1997, the five-foot-two-inch, 115-pound jockey appeared before a federal judge. In an emotional hearing in which his wife cried throughout the forty-five-minute session, the jockey said, “I’m pleading guilty because I got involved with an unsavory person.” He admitted to taking a $2,100 bribe for holding an even-money horse. The jockey also expressed fear for his safety and the safety of his family. Those fears were compounded by the news that someone broke into the house of the horse’s owner, but were chased off by the owner’s husband. Also, the owner of the other horse the jockey held back found a funeral wreath on his front lawn. Although we never found evidence of systematic fearmongering, the jockey was clearly reluctant to subject himself and his family to danger.
In October, the jockey was sentenced to three years’ probation. At the sentencing the judge said, “You have dedicated your adult life to racing and worked hard to be a success. You worked fifteen years to achieve your goal, yet now you face a lifetime suspension from the California Horse Racing Board. You are a caring and sensitive young man, yet what you did has ruined a successful career.”
The horse owner also spoke during the sentencing.
This is a day when there are no winners. The Arabian racing and breeding business is the other victim. I’ve spent decades to build up my Arabian business and it took only one minute and twenty-one seconds—the time of the race—to tear all this apart. Integrity—you can’t buy that, but you sure can give it away, can’t you?
During the overt phase of the investigation, I received information that an out-of-town owner wanted his injured Thoroughbred horse killed so he could collect the insurance. After moving the horse to a safe location—a sort of a Witness Protection Program for animals—we sent the owner a telegram notifying him of the horse’s death. I flew to Seattle and met with the owner, leading him to believe I was from the insurance company and wanted to settle the claim. After a few tearful moments during which he told me what a great heart the horse had, I informed him that the good news was the horse was alive, and the bad news was I was from the FBI and he was under arrest for mail fraud. “I’ve been deceived!” he shouted, his tears drying abruptly. I guess he never realized that was exactly what he was trying to do to the insurance company.
During the period I was undercover, I heard a great deal about the drugging of horses. Thanks to information our targets were receiving from trainers and others on the inside, we knew horses were being given a clenbuterol “milk shake” before the race. An appropriate wager usually resulted in cashing a winning ticket. The drug was difficult to detect with existing procedures, but thanks to our investigation, the CHRB changed the drug testing procedures, allowing for the identification of this illegal activity.
The Mouth was the last of our targets. He was charged in a seven-count indictment for his tax scheme that had netted him over a million dollars. He was found guilty and sentenced to federal prison.
So . . . although the results of the undercover operation—five convictions for a variety of offenses, as well as the modified testing procedures—were far less than we hoped when we began the investigation, we did experience limited success and I came home alive. So I guess it was a successful investigation.
THE MOST BIZARRE
Los Angeles, 2002
W
hen asked to relate the most bizarre undercover case I ever worked, I never hesitate—one investigation immediately comes to mind.
In 1995, Congress passed the Federal Prohibition of Female Genital Mutilation Act. The congressional findings state, among other things, that “the practice of female genital mutilation is carried out by members of certain cultural and religious groups in the United States . . . and results in the occurrence of physical and psychological health effects that harm the women involved.” The law makes it illegal to perform the surgery on a female under the age of eighteen except when done by a licensed medical professional “for the necessary health” of the child.
I was unfamiliar with this piece of legislation and had no idea the FBI investigated violations of the act. Although I had read about the practice and knew it to be more common among certain Islamic and African populations, I was unaware it was a major problem within the United States.
My knowledge of the problem was enhanced in the summer of 2002, when the Los Angeles office received a complaint from an advocacy group that an individual in the L.A. area was performing illegal circumcisions on underage females. The group received an anonymous e-mail describing how “Todd” performed the operation on a ten-year-old female who was severely injured as a result of the surgery. The case was assigned to the Sexual Assault Felony Enforcement (SAFE) team.