By Matthew Walberg
Chicago Tribune
State regulators grant video gambling license to convicted felon, 2 others connected to illegal gambling
Tribune findings question state's vetting process for video gambling
When Illinois lawmakers voted to legalize video gambling six years ago, supporters hailed it as a way to boost state revenues and end decades of illegal video gambling that had long been a lucrative enterprise for organized crime.
Proponents argued that state officials would have the authority to weed out shady characters through video gambling regulation, but the Tribune found the state has issued licenses to people with ties to crime and illegal gambling anyway.
The findings raise questions about the state's vetting process for license applicants and whether many of the same people who illegally operated video gambling machines for years are still part of the process now that the machines are legal.
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In one case, the Illinois Gaming Board approved licenses for a man who admitted in federal court he installed illegal terminals in west suburban taverns and then falsified tax documents so he and the bar owners could hide the illicit income.
The board also licensed a man previously charged with felony syndicated gambling for allegedly working with his father to install illegal video gambling machines in McHenry County bars. Those charges were later dropped as part of a plea deal. That man now serves as president of a trade organization that has lobbied for video gambling.
And the board said it didn't know a Rockford restaurant owner it licensed was a convicted felon who once stole $146,000 from a South Carolina hotel.
Nonetheless, Gaming Board officials said they were satisfied they made the right decision in granting licenses to the first two individuals and while national criminal databases did not reveal the third man's criminal past, "database errors like this are rare."After the Tribune found the conviction in a routine records search, the board said it may take action on the license at its Wednesday meeting.
Applicants for video gambling licenses must fill out a disclosure statement, submit to background checks, and pay fees ranging from $50 for terminal handler licenses to $5,000 for terminal operator licenses. Owners of establishments where operators place the machines do not have to pay an application fee but must also submit to a background check. Licensed terminal operators and establishments each pocket 35 percent of the profits from the terminals.
The Gaming Board has broad powers to deny licenses to individuals or businesses based on criminal history, past personal or business activities and associations, or involvement in illegal gambling. To date, the Illinois Gaming Board has issued nearly 7,000 licenses, the bulk of which have gone to about 5,000 establishments where a combined 20,000 machines have been installed. Fewer than 400 applicants have been denied a license.
"It certainly raises very serious questions," said Rep. Scott Drury, D-Highwood, who last year unsuccessfully tried to pass legislation that would have strengthened the Gaming Board's ability to deny licenses.
"At a minimum, the General Assembly should be looking into how the Gaming Board is carrying out its duties and conducting its investigations and making determinations about licenses. Ultimately, this is an issue of public trust."
Vince Dublino didn't want to say anything when he was approached by a reporter last month in one of three bars he owns along a two-block stretch of Roosevelt Road in Berwyn.
"I really don't want to talk about it," he said, as lights from video gambling terminals flickered and flashed behind a low wall at the back of Vinny's Cafe.
He was more talkative at the 2010 trial of Mike "The Large Guy" Sarno and other Chicago Outfit members, where he told a federal jury that he had for years installed illegal video poker machines at local watering holes.
Testifying under a grant of immunity, Dublino said he would visit each bar every week or so to count up the money and split the proceeds with the bar owners after paying off the winners under the table. He told the jury he then underreported the income on the machines on his taxes and on the tax forms he filled out for the taverns he serviced. On top of that, he told jurors he was still operating the so-called gray games at the time of his testimony, when video gambling in Illinois was still illegal.
Dublino testified that in summer 2002, an irate Sarno accosted him outside a Berwyn bar after learning the witness planned to install illegal video gambling machines in a Lyons diner that was on the mobster's turf.
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"(Sarno) said, 'Hey you (expletive) punk, I wanna talk to you,'" Dublino told jurors. "I said, 'Who you calling a (expletive) punk?' ... He said, 'Stay the (expletive) away from the 47th Street Grill stop.'"
A short time later, two men delivered a cryptic message that "the clocks would run backward" if he didn't back away from his plan. After the visit came a series of threatening, anonymous phone calls. Then, at around 1 a.m. on Feb. 25, 2003, a pipe bomb blast destroyed Dublino's business on 16th Street in Berwyn.
Sarno was convicted of the bombing and is serving a 25-year sentence.
Dublino's admissions of illegal gambling and tax fraud weren't sufficient to bar him from receiving a handler's license from the Gaming Board in 2013. The following year, the board granted him his first establishment license at his bar in Berwyn, Nonna D's, which allows him to pocket 35 percent of the profits from each of the five machines he installed. This year, the board granted establishment licenses allowing him to install five machines each in Vinny's Cafe and another bar he owns.
"The board's investigation revealed no evidence that Dublino is a member of organized crime but did indicate that he cooperated with law enforcement by testifying against organized crime at the trial of Mike Sarno," Gaming Board spokesman Paul Prezioso said in an email response to Tribune questions about Dublino's licenses. "Mr. Dublino's known record does not disqualify him from licensure."
'Mob associates'
The Gaming Board also knew about the 2001 arrest of Philip A. Webb Jr. after a McHenry County Sheriff's Department undercover investigation into illegal video gambling.
Both Webb and his father, Philip R. Webb Sr., owned ASAP Vending & Games Inc., which supplied video gambling machines to local bars and split the proceeds with them, according to police reports.
At the time, the elder Webb told investigators "he used to have to pay 10 percent of all gambling proceeds to his mob associates but that for the past several years he has been able to pocket all the proceeds because most of his mob associates have either been killed or been sent to prison."
Both Webbs were subsequently charged with felony syndicated gambling and felony obstruction of justice, but Philip A. Webb Jr. did not have to stand trial because his father agreed to plead guilty if prosecutors dropped the charges against his son, Webb Sr.'s defense attorney Tom Loizzo said.
According to state business filings, Webb Jr. continued to operate the company. In 2012, the Gaming Board issued him a handler's license and granted his company, now called R.A.W. Vending & Games Inc., an operator's license.
Webb, who did not respond to a request for comment, now serves as president of the Illinois Coin Machine Operators Association, a trade organization that represents companies that make, sell and operate amusement devices, vending machines and video gambling terminals.
The organization lobbied for legalizing video gambling in Illinois and has poured money in the campaign coffers of legislators who championed the Video Gaming Act.
Prezioso noted Webb was never convicted and that the board has "no evidence that would disqualify him from licensure."
Former Gaming Board Chairman Aaron Jaffe said that while he doesn't recall what investigators presented to the board regarding Dublino and Webb Jr., he would not have approved licenses for either man based on the Tribune's findings.
"Is it possible to drop the ball? Absolutely," said Jaffe, who left the board in November. "I don't know who did the examination; I don't know if they looked at the court records or what they told the board on this particular case. But most of the staff is made up of state troopers, and they do know how to do an investigation."
Licensed felon
While the Gaming Board knew of Dublino and Webb's backgrounds, it said it knew nothing of John J. Conforti's criminal past.
In 1997, a grand jury in Horry County, S.C., charged Conforti with felony breach of trust with fraudulent intent for stealing $146,000 from a Days Inn Hotel he managed, according to court records. He pleaded guilty and was sentenced to 5 years probation and a $75,000 fine.
A few years later, he moved to Rockford, where he opened Mr. C's Family Restaurant. When Conforti applied in 2013 for a license to have five machines in his business, he answered "none" to the question about whether he has ever been convicted of a crime.
He said to the Tribune that his attorney in South Carolina told him the conviction had been expunged and that if he was ever asked if he had a conviction, he should say no. Horry County officials said a conviction for that crime cannot be expunged.
But Conforti didn't have to talk about that case when Gaming Board investigators interviewed him as part of his background check. He said they asked him questions about his restaurant and brought up a minor arrest for marijuana possession in 1975 when he was a teenager, but they never mentioned his South Carolina case.
Gaming Board records show Conforti's machines have grossed a little more than $200,000 since he obtained his license in December 2013.
Prezioso said the board missed the conviction because South Carolina authorities did not report the case to national law enforcement databases. The Tribune found evidence of it using a popular public records aggregator and quickly confirmed it in readily available public records.
Jaffe had no recollection of Conforti's case but said board staff conducts thousands of investigations and "some states are more helpful than other states." He said the board has been short about 100 staff needed to handle the influx of work that came with legalized video gambling.
"I do think it's important that we were never fully funded to have all the people that we were supposed to have," he said. "And I imagine that with cutbacks now, it's going to be even worse."