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Justice News

Department of Justice
U.S. Attorney’s Office
Southern District of California

FOR IMMEDIATE RELEASE
Wednesday, July 27, 2016

Fourteen Men Charged in Illegal Gambling Operation Based Out of Lucky Lady Casino and Card Room

Special Assistant U.S. Attorney Jeffrey D. Hill (619) 546-7924 or Assistant U.S. Attorney Nicholas Pilchak (619) 546-9709

NEWS RELEASE SUMMARY – July 27, 2016

SAN DIEGO – Fourteen men are charged in federal grand jury indictments with participating in a sophisticated bookmaking ring that used the Lucky Lady Casino and Card Room on El Cajon Boulevard as a legitimate front for the illicit operation.

More than 100 agents and detectives from the FBI, San Diego Police Department and IRS Criminal Investigation arrested 9 of the 14 defendants through coordinated actions in California, Nevada and Kentucky.

The FBI’s Organized Crime Squad also executed search warrants at multiple locations in San Diego, including the Lucky Lady Card Room itself. The joint FBI-San Diego Police Department investigation began in 2014, and employed wiretaps and undercover agents to infiltrate the alleged racketeering enterprise and uncover defendants’ illegal gambling activities. Additional subjects remain at large in Canada and Thailand.

Three grand jury indictments were unsealed today. In the first, a dozen defendants are charged with various crimes, including Racketeering Conspiracy to Conduct Enterprise Affairs (RICO), running an Illegal Gambling Business and Transmission of Wagering Information.

According to that indictment, the lead defendant, Sanders Bruce Segal, and others were charged with operating “Segal’s Lucky Lady Sports Book” – an illegal enterprise that connected bookies, sub-bookies and significant bettors with sports gambling websites located outside the United States, some of which were owned and controlled by members of the enterprise.

The other defendants are Stanley Samuel Penn, Petter Magnus Karlsson, David Greg Leppo, Pablo Ballestero Frech, Sydney Bruce Segal, Joseph Edward Spatafore, Minh Triet Dinh Nguyen, James Hang Tear, Ken Pheng Keo, Jason D. Taylor and Jeffrey Alan Burke.

A second indictment charges Ryan Richard Buchardt with Travel Act, Phone and Internet Use in Aid of Racketeering Enterprise; and the third indictment charges Robert Jay Zaben with Transmission of Wagering Information.

According to the indictments, the Lucky Lady Card Room is a licensed gambling establishment offering tightly regulated card games. The Lucky Lady provided a legitimate front for illegal bookmaking operations principally led by Sanders Segal, with the coordination and help of Stanley Samuel Penn, the owner of the Lucky Lady.  Sydney Bruce Segal, Sanders’ son, was the manager of the “cage” at the Lucky Lady, and used his position to commingle cash generated from the card room’s lawful gambling operation with the proceeds from the unlawful sports betting. 

The Segals and Penn depended upon the collaboration of international businessmen, Petter Magnus Karlsson, Pablo Ballestro Frech, and David Greg Leppo, to provide an avenue for United States customers to illegally place bets on sports gambling websites.  Karlsson financed Segal’s Lucky Lady Sports Book and partnered with Leppo, who owned and operated several sports gambling websites hosted outside the United States.  Karlsson also employed Frech to, among other things, manage bets placed by and through Sanders Segal and his betting customers on sports gambling websites.  Karlsson and Leppo met personally with Segal and others in order to transfer cash generated by their illegal bookmaking operation and to coordinate their enterprise. 

Segal’s Lucky Lady Sports Book relied on a network of bookies, including Minh Triet Dinh Nguyen, Ken Pheng Keo, and Sanders Segal himself, who operated out of the Lucky Lady.  Bookie Jason D. Taylor took high-stakes bets from Joseph Edward Spatafore, and mailed illegal bookmaking proceeds to and from Sanders Segal, who connected Spatafore and other select clients with the websites provided by Karlsson, Frech, Leppo and others. Spatafore, a high-stakes bettor, was permitted by the enterprise to collect and place bets for other bettors, and was sometimes granted direct access to the international gambling websites used by the enterprise. 

According to the indictment, sub-bookies James Hang Tear and Jeffrey Alan Burke each managed a “package” of customer accounts, recruited customers, paid off winning bets, collected on losing bets, and delivered payments to their managing bookies. 

Segal’s Lucky Lady Sports Book recruited customers in the Southern District of California and elsewhere, provided them with betting odds, took their bets, and placed them on sports gambling websites.  Bets were placed on the websites either through the bookies’ accounts or, for significant customers, through individual accounts that allowed bettors to directly wager for themselves.  The enterprise also used “runners” to transport profits and proceeds.  The indictment further alleges that the enterprise generated almost a million dollars in illegal bookmaking proceeds. 

“By grafting onto legitimate businesses, organized criminals and shady bookies have too long shielded themselves from law enforcement scrutiny and hidden huge illegal bookmaking profits,” said U.S. Attorney Laura Duffy. “These indictments demonstrate the Department’s commitment to stemming the influence of racketeering activity in San Diego.”

“This case is a classic example of how a legitimate business can be infiltrated and used to facilitate criminal activity by members of a criminal enterprise,” said FBI Special Agent in Charge, Eric S. Birnbaum.  “The FBI is committed to disrupting and dismantling criminal enterprises that seek to use legitimate businesses as a platform for their criminal activity.”

Two defendants were arraigned this afternoon before U.S. Magistrate Judge Nita L. Stormes, the remaining defendants who are in custody are expected to be arraigned tomorrow afternoon.

DEFENDANTS                                                        Case Number: 16CR1695-BEN 

Sanders Bruce Segal

Stanley Samuel Penn

Petter Magnus Karlsson*

David Greg Leppo*

Pablo Ballestro Frech*

Sydney Bruce Segal

Joseph Edward Spatafore

Minh Triet Dinh Nguyen*

James Hang Tear

Ken Pheng Keo

Jason D. Taylor

Jeffrey Alan Burke

SUMMARY OF CHARGES

Count 1: Racketeering Conspiracy to Conduct Enterprise Affairs (RICO Conspiracy), in violation of Title 18, United States Code, Sections 1962(c) & (d)

Maximum penalties: 20 years in prison, 3 years supervised release, and a $250,000 fine

Defendants 1-6

Count 2: Illegal Gambling Business, in violation of Title 18, United States Code, Section 1955

Maximum Penalties: 5 years in prison, 3 years supervised release, and a $250,000 fine

All Defendants

Count 3: Transmitting Wagering Info, in violation of Title 18, United States Code, Section 1084(a)

Maximum Penalties: 2 years in prison, 1 year supervised release, and a $250,000 fine

Defendants 7 and 11

DEFENDANT                                                          Case Number: 16CR1696-BEN 

Ryan Richard Buchardt

SUMMARY OF CHARGES

Counts 1-7: Travel Act / Phone or Internet Use in Aid of Racketeering Activities, in violation of Title 18, United States Code, Section 1952

Maximum Penalties: 5 years in prison, 3 years supervised release, and a $250,000 fine

DEFENDANT                                                          Case Number: 16CR1697-BEN 

Robert Jay Zaben*

Counts 1-5: Transmitting Wagering Info, in violation of Title 18, United States Code, Section 1084(a)

Maximum Penalties: 2 years in prison, 1 year supervised release, and a $250,000 fine

AGENCIES

Federal Bureau of Investigation

San Diego Police Department

Internal Revenue Service – Criminal Investigation

*Still at large

The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.

CAS16-0727-Segal
Updated July 27, 2016