Published: September 12, 2006 08:46 am            

Bingo scam trial begins

LEXINGTON — Trial began Monday in U.S. District Court for two Waco sisters accused of bingo fraud, tax evasion and mail fraud.

Former operators of Jackpot Charity Bingo in Madison County, Rita Faye Tipton and Gloria Ann Williams, appeared for trial before a jury and U.S. District Judge Jennifer Coffman on charges of conspiring from 1998 to 2002 to generate “large amounts of personal income” for themselves by “unlawfully skimming” proceeds from bingo games operated on behalf of four charitable organizations, according to the indictment.

The charitable organizations listed as victims in the indictment are the Waco Volunteer Fire Department, the Waco Volunteer Fire Department Ladies’ Auxillary, the Madison County Ruritan Club and the White Hall Volunteer Fire Department.

Assistant U.S. Attorney Ken Taylor began his opening statement Monday by saying the trial would be a very detailed one with many documents, numbers and testimonies. He estimated the trial would last two weeks.

“This is a two-pronged case,” Taylor said. “It’s really two cases wrapped up into one.”

The first “prong” of the case he intends to show, Taylor said, is that the defendants obtained money by fraud through bingo scams.

“They were running (Jackpot Charity Bingo) illegally as a profit center instead of a charitable organization,” he said.

The second prong has to do with the alleged lack of paying taxes on unreported income gained through the fraud. They also are charged with mail fraud for using the U.S. Postal Service to transfer fraudulent records to the Office of Charitable Gaming.

Taylor outlined for the jury the different types of bingo, including the bingo sheets where the numbers are called out and marked in a pattern as well as pull-tab games similar to lottery tickets.

It is alleged the defendants purchased illegal pull-tab games from out-of-state vendors that were not marked with serial numbers so they could not be traced by the Office of Charitable Gaming. As a result, the proceeds from the unreported pull-tab games allegedly were being pocketed by Tipton and Williams.

According to the indictment, Tipton reported no income in 1999 and 2000 and paid no income taxes. She claimed $1,377 in 2001 and paid the Internal Revenue Service $138. It is alleged that Tipton actually earned $181,278 for the years 1999 to 2001, for which she owed $41,945. Williams reported no income from 1999 to 2001 and paid no taxes. She allegedly earned $203,603 over the three-year period, for which she owed $52,359 in federal taxes.

Taylor said the income the pair allegedly earned that went unreported was the result of profits from the Jackpot Charity Bingo hall where they both allegedly were participating in the operations illegally. The sisters allegedly used the money to pay medical bills, take lavish vacations, gamble at casinos and purchase other items for their personal use.

“They live in paid-up houses and drive paid-up cars,” Taylor said. “They have lots of cash on hand and fund trips for a number of people. Despite that lifestyle, they reported zero income and paid zero taxes.”

Defense attorney Michael Dean disputed Taylor’s statement, saying there was a considerable difference in their theories.

“I’m going to ask three questions,” Dean said. “Did Ms. Tipton and Ms. Williams conspire with anyone to do anything illegal? Did they obtain any money by fraud or skimming proceeds? And these losses, did they happen?”

Dean said the former fire chief of the Waco Volunteer Fire Department, Roger Alexander, will likely be the most important witness in the defense’s case. Alexander was convicted in February in Madison Circuit Court on three felony counts and one misdemeanor count for misappropriating $98,000 in charitable bingo proceeds.

Dean said there was a falling out of sorts between Alexander and Tipton after Jackpot Charity Bingo would not renew the VFD’s lease and Alexander could not participate in bingo at the hall.

“Mr. Alexander was very upset about having to leave,” Dean said. “He swore revenge.”

Alexander reportedly tipped off the OCG about the alleged illegal activities at Jackpot Charity Bingo.

Dean said there are explanations for all of the U.S.’ claims and witnesses from each of the alleged victims will testify on the defendants’ behalf.

“The (United States) wants you to believe the four charities were fronts for the Tipton family,” Dean said. “Witnesses from all the organizations will basically tell you ‘No, that ain’t true.’”

Following Dean’s opening statements, two witnesses testified on behalf of the prosecution. Leah Cooper Boggs, OCG assistant director of the Division of Licensing and Compliance, explained in detail the forms of charitable gaming and reviewed quarterly statements from the charities.

Witness Beverly Rogers, who previously worked as an inspector with the OCG from 1999-2004, performed four undercover investigations of Jackpot Charity Bingo in March 2000. She reported volunteers collecting illegal tips, Tipton’s family members working multiple days for multiple charities and a drastic decrease of pull tab games sold when a regulation agent showed up after gaming had started during her last day of investigation.

The trial will resume at 9 a.m. today.

Kelly Foreman can be reached at kforeman@richmondregister.com or 624-6694.

        

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