THE HEAD OF THE INVESTIGATIVE ARM of the state Gaming Commission said she was “extremely concerned” when she learned reputed organized crime members may be part of the group selling land to Wynn Resorts for a casino in Everett. But she conceded there is no section of the gambling law preventing convicted felons from making a profit on such transactions.
Karen Wells, head of the commission’s Investigative and Enforcement Bureau, made the statements under cross examination by Aaron Katz, an attorney for Dustin DeNunzio, one of three Everett landowners charged in federal court with trying to hide a partner’s criminal past.
Katz peppered Wells with questions designed to point out that the background checks required under the gaming law applied only to potential casino license holders and key employees. “Would a landowner find any application or regulation [on the Gaming Commission website] saying they’ll be interviewed by IEB and State Police?” Katz asked.
“No,” Wells admitted.
“If you were to look at the gaming act, would you find a provision that says someone with a criminal record could not profit from a land sale?” he asked.
“No, you would not,” Wells said.
The questioning of Wells came on the second day of testimony in the trial of DeNunzio, Anthony Gattineri, and Charles Lightbody at US District Court in South Boston. They are being tried on charges that they tried to conceal Lightbody’s ownership of 12 percent of a land parcel in Everett that Wynn had agreed to buy for $75 million to build its $2 billion casino. Federal prosecutors charge the trio backdated legal documents in an effort to show Lightbody sold his share months before Wynn became involved.
The question of whether Lightbody, who had been convicted for identity theft, assault and battery, and other crimes, could legally participate in the sale of real estate to a casino operator has been unclear. Other publications have suggested it is illegal under the state gaming act for a convicted felon to profit from a deal involving a casino, but there appears to be no specific law or regulation against it. Defense attorneys at the trial have suggested the owners of FBT Everett wanted Lightbody out of the deal because they feared his criminal background would be a problem.
Wells said her office was contacted by the FBI in July 2013, about halfway through the Gaming Commission’s year-long investigation into Wynn’s suitability as a casino operator in the state. Wells said the agents told her about recorded jailhouse phone calls between Lightbody and reputed mobster Darin Bufalino that indicated Lightbody was kept abreast of all developments with Wynn.
Under questioning by Assistant US Attorney Kristina Barclay, Wells said her office launched an investigation because it was unclear if Wynn was involved in the alleged cover-up and the commission needed to know before issuing a license. Further investigation revealed that Bufalino was a known organized crime associate and Lightbody was a convicted felon.
“Historically, there is a known association between organized crime and the gaming industry,” Wells said. “Confidence in the licensing process is the paramount policy objective of the statute. There were conversations that, when I heard them, there was a concern there was an attempt to conceal Charles Lightbody’s ownership of the land… My concern was if Wynn Resorts was given the license, these folks would obtain a casino premium for the property and it would be profiting folks that were engaged in such questionable conduct.”
Wells said investigators eventually concluded there was no evidence Wynn knew of Lightbody’s involvement, but the casino operator agreed to renegotiate the land deal to reduce the price to $35 million and minimize FBT Everett’s profit. As part of the renegotiation, DeNunzio, Gattineri, and a third partner, Paul Lohnes, were required to sign affidavits stating that they were the owners of KBT Everett and no one else was involved. That, said prosecutors, was part of the wire fraud, when emails and documents were exchanged containing the allegedly false information.
Wednesday’s first witness was Frederick “Trip” McCoy, an investment banker who specializes in the gaming and resort industries. McCoy says he was introduced to DeNunzio in October 2012 and within a few days had an agreement to broker a deal for the former Monsanto land.
McCoy said he reached out to a Wynn official he had known for years and immediately got a call back from Wynn’s then-CFO Matthew Maddox saying that the company was interested. McCoy said all his dealings were with DeNunzio and Gattineri. He later learned Lohnes was the majority owner. He said he never heard Lightbody’s name or the name of Gary Dicicco, another former partner and convicted felon whose involvement was the subject of a Boston Business Journal story that stated such associations could muck up the license process for Wynn.
McCoy testified about a meeting between Wynn officials and Everett Mayor Carlo DeMaria to walk the site on November 14, 2012, three months after Lightbody allegedly sold his share to Gattineri for $1.7 million plus interest. Barclay played portions of the recorded conversations between Lightbody and Bufalino that seemed to indicate Lightbody was still involved in the deal and believed it would go belly-up if his involvement was known.
“Steve Wynn is going to be coming down tomorrow to talk to the mayor,” Lightbody tells Bufalino. “Obviously you know my situation. Do you know this commission [says] not only the casino, but the people selling the land cannot have a criminal record?”
Under cross examination by Katz, McCoy said he presented three options to DeNunzio and his partners: they could attempt to open their own casino on the land and hire a management company; enter a deal in which a casino company would operate on the land and pay a portion of the revenues to KBT; or sell the land outright.
McCoy said in most states, it is only applicants and “qualifiers” – key personnel in casino operations – who would be subject to background checks. “If somebody has a large enough equity concern, they’d be required to undergo a license and background check. But in selling the land outright they would not likely to have to go through that,” McCoy said. “Knowing what I knew about the ownership group, it would seem to me that it was not necessarily what these guys do for a living.”
Charles Rankin, the attorney for Lightbody, repeatedly tried to show there was no attempt to hide his client’s involvement, but ran into problems with McCoy. He asked McCoy about an FBI report following an interview with him that indicated he said if they told him a name, he could tell if it was the fourth partner. The report, according to Rankin, indicated FBI agents said Lightbody and McCoy concurred. McCoy denied ever saying anything to that effect.
“I didn’t say that because I didn’t believe there was a fourth owner,” he insisted. “At no point in time did anyone ever tell me there was a fourth owner in FBT. To the best of my recollection, I did not say that because I did not believe that to be true. I never heard the name Charlie Lightbody from Dustin DeNunzio.”
