Monday, April 11, 2016
Earlier this year lawyers for the state of New Jersey presented arguments for the legalization of sports betting in Atlantic City's casinos and at the state's racetracks.
The legal arguments before the Third Circuit Court of Appeals included lots of posturing from both the state and the professional and collegiate athletic organizations that oppose the idea. Ethics and integrity were the buzz words thrown around by lawyers for the NCAA, MLB, NFL and NBA. Economics was the linchpin of the state's positon.
New Jersey just wants a piece of the action.
An obscure case playing out in the same federal courthouse at Sixth and Market Streets helps drive home the state's point.
There's money, serious money, to be made in taking bets on sporting events.
Just ask Leonard Stango, a 68-year-old South Philadelphian who quietly ran a sports book that over a three-year period beginning in 2006 generated over $5 million. That, according to authorities, was just a slice of Stango's business which Assistant U.S. Attorney Nancy Potts wrote "spanned years" and generated "significant profits -- over $2 million tax free."
Stango's case offers a glimpse into the economics of bookmaking. It's part of a financial world often dominated by organized crime. But it's one in which low-key operators can generate significant income without attracting the attention of either the wiseguys or the feds.
Leonard Stango may have been one of those operators.
Described by his attorney as a "small time bookmaker,” Stango pleaded guilty two years ago to violating banking and IRS laws through a series of financial transactions centered around his sports book during the three years in question.
In what appeared to be a major break, he was sentenced to just one day in jail by U.S. District Court Judge Timothy J. Savage. Savage, at a sentencing hearing in July 2014, cited Stango's age, poor health and the fact that he had no prior convictions in imposing what federal prosecutors contended was less than a slap on the wrist. In addition to one day in jail, Stango was also ordered to forfeit $5000,000 and pay $446,990 in restitution to the IRS.
The U.S. Attorney's Office, which was seeking a sentence of from 78 to 97 months, appealed the ruling. Last year the Third Circuit vacated the sentence and sent the case back to Savage who has yet to schedule a new sentencing hearing.
Stango's lawyer, Brendan McGuigan, said he will again argue that his client should not be imprisoned.
"I don't think he deserves to do time," McGuigan said. "Who does it benefit?
McGuigan said his client has pleaded guilty and does not deny that he made significant money during the years in question. But he said that was an aberration.
"This whale fell into his lap," said McGuigan.
The story, still lacking a lot of detail, is that sometime in 2006 Stango was contacted by a big time bettor who needed someone to take his action. That bettor has never been identified. But authorities allege that over the course of the next three years the gambler wagered more than $5 million with Stango, paying with checks that Stango deposited in his own bank accounts.
McGuigan doesn't dispute the numbers, but says his client did not pocket all the profits. In fact, he said, Stango had to find a bigger bookmaker to whom he could "edge off" some of the action because it was larger than anything he had ever dealt with.
Sources say that larger bookmaker was the late Joseph "Joe Vito" Mastronardo, the gentleman gambler who died last year in prison after pleading guilty to federal gambling charges and being sentenced to 20 months in jail.
Stango was hardly in Mastronado's league, according to his lawyer.
"This was not a sophisticated (bookmaking operation)," McGuigan said.
In a memo filed prior to the original sentencing hearing, McGuigan wrote Stango was "not some criminal master mind who ran a sophisticated operation." That point was underscored, he said, by the fact that Stango "accepted payment by way of documented checks by the large scale bettor, which surely no experienced, large scale bookmaker would do."
He also noted that only after a bank clerk alerted him, did Stango realize that making withdrawals in excess of $10,000 from a bank account would require the bank to file a report with the IRS. Systematic withdrawals of less than $10,000 to avoid those reports is known as "structuring," a form of money-laundering and the lead charge in the indictment handed up against Stango.
That indictment, in January 2014, charged Stango with intentionally limiting his cash withdrawals to less than $10,000 in order to circumvent banking laws and with failing to report income to the IRS.
The numbers, built in part from Stango's records of bank deposits and withdrawals, tell the story.
The indictment charged that in 2006 Stango took in $1,400,940 and retained $566,000. In 2007 he received $1,474,900 and retained $332,000. And in 2008 he received $2,464,700 and retained $911,000.
The prosecution alleged that Stango made 345 cash withdrawals from various bank accounts during that period, but that the withdrawals were always between $5,000 and $10,000.
"His criminal conduct in this case spanned years and was far from an isolated, aberrant act," wrote Potts, the prosecutor handling the case.
"His crimes were crimes of greed," she added.
Earlier this year Potts filed a motion asking Judge Savage to reschedule the sentencing hearing. The issue has been before him since the Appellate Court vacated the original one-day sentence last April. Potts has indicated that the prosecution will seek jail time in line with the guidelines which, depending on your interpretation of the mathematics involved, could range to from four to eight years.
In vacating the original sentence and sending the case back to Judge Savage, a three-member appellate panel called the one-day sentence "an extraordinary downward variance" from what the court had determined was a guideline range of 63 to 78 months. It also said that Savage had failed to sufficiently explain the reasons for the significant departure.
At the sentencing hearing, Savage had cited Stango's age and health, the fact that he had pleaded guilty and that he had accepted responsibility.
"When I look at the factor that requires us to protect the public from the defendant's further crimes, I am convinced that this defendant will not engage in any illegal conduct in the future," Savage said. "Mr. Stango was not a drug lord who was structuring drug money. He was not at the apex of any gambling operation."
The prosecution argued that Stango had been less than forthright in providing his own financial records and that the serious nature of the crime warranted a prison term. Those arguments as well as Stango's ongoing medical problems are expected to be at issue when the resentencing hearing is finally rescheduled.
McGuigan described Stango as "an elderly, non-violent offender who suffers from numerous health problems."
These include a knee replacement that has left him in pain and causes difficulty in walking. He has also been "diagnosed with blood clots, eyesight issues, deafness, high blood pressure, osteoporosis and a fractured vertebrae," McGuigan noted in a pre-sentence memo filed two years ago. "He needs numerous medications and regular, frequent doctor visits."
None of that has changed and Stango is now two years older as he awaits resentencing, McGuigan said.
Like the state of New Jersey, Stango is awaiting a court ruling. He's facing a possible jail sentence for doing exactly what the State of New Jersey wants to do. And for what his lawyer says bookmakers throughout the region continue to do day in and day out.
"Let me put it this way, putting Lenny Stango in jail is not going to put a dent into sports betting in the Commonwealth of Pennsylvania," said McGuigan.
George Anastasia can be reached at George@bigtrial.net.