Cover Stories Fall 2003

Rhode Island Racetrack Executives Indicted on Federal Bribery Charges

Providence: The chief executive officers of Lincoln [Greyhound] Park and its London-based parent company were indicted Sept. 9 on federal charges of conspiracy to bribe former Rhode Island House Speaker John B. Harwood's law firm in exchange for "official favors." The scheme was allegedly aimed at winning approval from the nine-member Rhode Island Lottery Commission, which includes six legislators, to obtain additional video slots for the racetrack and to block a proposed tribal casino.

The 22-count indictment was returned in U.S. District Court in Providence and was announced jointly by the U.S. Attorney's Office, the FBI, and the Rhode Island State Police, the agencies that conducted the 24 month investigation. Daniel Bucci, CEO of the Lincoln track; Nigel Potter, chief executive of the track's parent company, London-based Wembley PLC; and Lincoln Park, Inc. were charged with conspiracy and wire fraud. The 17-page indictment handed down by the grand jury cited 21 transatlantic faxes sent by Bucci and Potter, allegedly detailing the bribery scheme.

Neither Harwood, who still represents Pawtucket in the state legislature, nor his law partner and cousin, Daniel V. McKinnon, who has represented Lincoln Park for ten years, were charged with any criminal offenses; both have denied any wrongdoing. While the indictment describes their firm as the intended recipient, it does not say if they ever accepted or received the money.

The indictment alleges a conspiracy to pay the law firm up to $4.5 million over a six-year period to "improperly influence" then-Speaker Harwood and other unnamed "public officials" to use "their influence, appointment power, and authority" to obtain Lottery Commission authorization to add "in excess of 1,000" video lottery terminals (VLTs) at the Lincoln track; to obtain Lottery Commission authorization for the installation of coin-drop slot machines; and to "prevent legislation facilitating the development of a Narragansett Tribe" casino.

The defendants are accused of proposing to make payments to the law firm, which were intended as a bribe but disguised as "legitimate payment" for legal services, such as a bonus. The statutory maximum penalty for an individual convicted of each offense is five years in federal prison and a $250,000 fine; the maximum penalty against a corporation is a $500,000 fine.

Through his lawyer, Anthony M. Traini, Bucci said, "Neither I nor anyone associated with Lincoln Park has ever asked Mr. McKinnon to do anything illegal or in any way improper, or to attempt to exercise political influence." A statement issued by the law firm of Duffy & Shanley on behalf of Lincoln Park Inc. called the charges "totally baseless and without any merit whatsoever." Potter, through his attorney C. Leonard O'Brien of Providence, called the charges "entirely mistaken." O'Brien said, "My client is coming to the U.S.; he wants to resolve this matter." He said Potter hoped his co-operation would persuade the court to al-low him to travel back and forth to his home in England while the charges are pending.

Harwood and McKinnon issued separate statements. "I have never been asked to use any political influence to benefit Lincoln Park," Harwood said. McKinnon issued a statement claiming the only payments he ever received from owners of the track were for "routine hourly billings for legal work performed."

Indian Casino Plans Derailed
The defendants also sought to forestall state legislation favorable to a Narragansett tribal casino, which the tribe has sought for a number of years. Matthew Thomas, Chief Sachem of the Narragansett Indians, said the allegations give credence to his own long-standing suspicions that "influence at high levels stymied" the repeated efforts of the tribe and its backers to get their West Warwick casino proposal on the ballot. "We have tried to play by the rules, and see where it got us?" Thomas said.

In June 2000, the House Finance Committee voted 10-7 to kill legislation that would have allowed a public referendum on the Narragansett tribe's proposed casino in West Warwick. Thomas said the tribe would consider suing for damages if the defendants are convicted.

The two-year federal grand jury investigation was triggered by allegations leveled by two of Wembley's highest-ranking executives in the company's U. S. subsidiary after they were fired, without explanation, on April 18, 2001. In a wrongful-termination lawsuit filed in U.S. District Court in Denver one month later, Francis J. Sherman, the former president of Wembley USA, and David G. Brents, the chief financial officer, alleged they had been fired in retaliation for refusing to carry out an "improper and illegal scheme" to pay millions of dollars to an unnamed Rhode Island lawyer. Sherman and Brents had direct oversight of the Lincoln track.

The grand jury convened in Providence in January 2002, one month after Sherman and Brents reached an undisclosed settlement with Wembley. McKinnon represented Wembley in its legal dispute with Sherman and Brents.

Aftermath
Sept. 10: Wembley announced that both Bucci and Potter were taking paid leaves to prepare their defense. Potter resigned from Wembley's board of directors. On the same day, Wembley's stock plummeted 22 percent on the London Stock Exchange after shareholders learned of the indictments. The investment firm of Merrill Lynch cut its rating on Wemley from neutral to sell. Analyst Andrew Burnettt said the worst-case scenario for Wembley would be revocation of its license to operate VLTs at Lincoln Park.

Sept. 14: The Providence Journal published a chronology of actual and alleged events that took place from June 20, 2000 through Sept. 9, including excerpts of the 21 faxed messages between Bucci and Potter contained in the indictment.

Sept. 19: Bucci and Potter were arraign-ed in U.S. District Court in Providence before federal magistrate Robert W. Lovegreen. Both men pleaded not guilty to all counts and were released on bail as they await trial before U.S. District Court Judge Mary Lisi. Lovegreen set a $50,000 bail with security for Bucci, while Potter was freed on $100,000 cash bail. Lovegreen rejected prosecutor James Leavey's request that Potter be kept in the United States while awaiting trial.

Sept. 23: Following a 90-minute private meeting with Wembley Chairman Claus Hultman at the State House, Gov. Donald Carcieri told The Providence Journal, "The future of Lincoln Park is in limbo, and I want it resolved."

Oct. 7: In a second meeting, Carcieri told Hultman he wants a new owner to take over the Lincoln track. Senate President William V. Irons said the governor's comments were "totally inappropriate in trying to achieve the best outcome for our citizens."

Oct. 8: Carcieri said in a television interview that he is unwilling to negotiate with the current owners over the revenue guarantees the track wants in trade for going forward with a $50 million expansion. The Lottery Commission approved an additional 1,300 video slots for Lincoln in January, but the track put its expansion plans on hold after the Legislature reduced the track's share of the machines revenue last year.

[Editor's Note: In addition to Lincoln Park, Wembley also owns the Mile High, Post Time, and Pueblo dog tracks in Colorado. The company has budgeted $10 million to promote a Colorado ballot initiative -Amendment 33-that, if approved by voters in November, would allow the tracks to operate VLTs. See Legislative Updates in this issue for details.]

Sources: The Providence Journal: Katherine Gregg, Liz Anderson, David McPherson, The Associated Press; The Boston Herald: Scott Van Voorhis; Woonsocket Call: Jim Baron; Denver Post: Jason Blevins; Rocky Mountain News: Roger Fillion, Karen Abbott, Michele Ames; The (London) Mirror: Andrew Penman, Michael Greenwood, Guy Dennis; Sunday (London) Telegraph, Damian Reece