Wichita Men Plead Guilty To Federal Gambling, Tax Charges

WICHITA, KAN. – Two Wichita men pleaded guilty Friday to federal gambling and income tax charges, U.S. Attorney Tom Beall said.

Danny Chapman, 67, Wichita, Kan., pleaded guilty to one count of operating an illegal gambling business and one count of tax evasion. Daven Flax, 46, Wichita, pleaded guilty to two counts of operating an illegal gambling business and one count of making a false statement on a tax return.

Chapman: Online sports betting

In his plea, Chapman admitted he worked as a sports bookmaker in the Wichita area and had at least five people working for him. Chapman and his subordinates took bets on sporting events from clients in their “book” of bettors and collected their losses. They arranged for clients to place bets through online gambling web sites that were created and hosted in Costa Rica. Chapman and subordinates kept a portion of the money they collected. His gross revenue from bookmaking exceeded $2,000 in a single day.

Chapman failed to pay almost $345,000 in federal income taxes on his earnings from illegal gambling. In order to evade taxes, he purchased vehicles in cash and registered them in the name of other persons, including a colleague and a nephew. He frequently purchased money orders and cashier’s checks using the names of family members.

Flax: Poker games in Wichita, sports betting

In his plea, Flax admitted he operated an illegal gambling business in Wichita. He conducted and managed illegal poker games at numerous locations in Wichita. His income came from taking a cut or “rake” from the amount of money wagered. He was responsible for paying employees including dealers, waitresses and caterers as well as paying for the use of commercial properties where poker games were held. The games were not open to the public. Only gamblers who were invited could play.

In addition, Flax worked as a sub-bookie for Chapman’s sports betting operation.

Flax failed to pay more than $65,000 in federal income taxes on his earnings from illegal gambling.

Chapman and Flax will be sentenced at a later time. Upon conviction, the crimes carry the following penalties:

          Illegal gambling business: Up to five years in federal prison and a fine up to $250,000.

          Tax evasion: Up to five years and a fine up to $250,000.

          Making a false statement on a tax return: Up to three years and a fine up to $100,000.

Beall commended the FBI, the Internal Revenue Service, the Wichita Police Department, Assistant U.S. Attorney Aaron Smith and Assistant U.S. Attorney Mona Furst for their work on the case.