An Investigation of Bingo Operations in New York State : a Report by the New York State Commission of Investigation

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1961-12 An investigation of bingo operations in New York State : a report by the New York State Commission of Investigation

New York State Commission of Investigation

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Downloaded from PRISM: https://prism.ucalgary.ca lew York (State) Temporary State Commission] of Investigation! An investigation of bingo operations in New York State

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A report by the New York State Commission of Investigation December 1961

AN INVESTIGATION OF BINGO OPERATIONS IN NEW YORK STATE

A REPORT BY THE NEW YORK STATE COMMISSION OF INVESTIGATION

December 1961 ". . . the commission shall keep the public informed as to the operations of organized crime and problems of criminal law enforcement in the state."

Section 2(10), Chapter 989, Laws of 1958, the Act establishing the Commission of Investigation.

1 0 0 310 THE TEMPORARY COMMISSION OF INVESTIGATION OF THE STATE OF NEW YORK

Commissioners JACOB GRUMET JOHN W. RYAN, JR. MYLES J. LANE GOODMAN A. SARACHAN NATHAN SKOLNIK CARL A. VERGARI Deputy Commissioner Chief Counsel

Assistant Counsel JOSEPH FISCH JOSHUA OKUN JAMES V. HALLISEY JOSEPH N. TAUBER* ELLIOTT L. HOFFMAN* ARNOLD M. WEISS

WARREN E. DOWNING Executive Assistant

JOSEPH D. MILENKY ALBERT SOHN Chief Investigator Chief Accountant

Commission Offices 270 Broadway State Office Building New York 7, N. Y. Buffalo, New York

' Resigned Dei-ember, 1961

TABLE OF CONTENTS

Section Page

Foreword ...... 9 I. INTRODUCTION ...... 11 A. The Game of Bingo ...... 11 B. Pre-Legalization Bingo ...... 12 C. Bingo Legalized ...... 13 D. The Bingo Control Laws ...... 14

II. BINGO LICENSING AND CONTROL ...... 17 A. The Lottery Commission ...... 17 B. The Duties of Local Authorities ...... 18 C. Bingo—Big Business ...... 19

III. THE HISTORY OF THE INVESTIGATION 21 A. William P. Buckner ...... 21 B. The Investigation Proceeds ...... 22 C. The Public Hearing ...... 22

IV. THE BUCKNER OPERATIONS ...... 25 A. The Gamblers' Lobby for Legalization ...... 25 B. Methods of Bingo Operations Prior to Legalization 28 C. The Racketeers' Operation in Legalized Bingo Gambling ...... 30 D. The Corporate Cover ...... 30 E. The Buckner Organization's Bingo Games ...... 31 1. The Army-Navy Union, Garrison 94 33 2. Major F. H. LaGuardia Chapter 116, D.A.V. 40 3. Tuckahoe Post 52, American Veterans of World War II ...... 46 4. The Paid Workers ...... 56 5. Housewives Claim Their Privilege ...... 58 6. Misappropriation of Bingo Profits ...... 58 Section Page V. PROFESSIONAL BINGO IN OTHER AREAS OF THE STATE ...... 61 A. Utica, New York ...... 61 1. The Michael Wynn Operation ...... 61 2. The Milo Merrill Operation ...... 62 B. Investigation in Bronx County ...... 64

VI. COMMERCIAL LESSORS ...... : .... 69

VII. BREAKDOWN IN THE ENFORCEMENT OF THE BINGO CONTROL LAWS 71 A. The Lottery Commission Investigative Staff ...... 72 1. Staff Composition and Organization ...... 73 2. Staff Supervision ...... 74 3. Corruption of Investigative Staff Members 77 B. Local Licensing and Enforcement ...... 88 1. The City Clerk of Yonkers, New York ...... 89 2. The City Clerk's Personal Relationship with Buckner ...... 92 C. Department of Licenses, City of New York . 97 1. Buckner's Influence with the License Department 99 2. Strengthening of Enforcement ...... 102

VIII. SUBSEQUENT EVENTS ...... 105 A. Moreland Act Commission Appointed ...... 105 B. Regulations Promulgated by the New York State Lottery Commission ...... 106 C. Revocation of Licenses ...... 109

IX. RECOMMENDATIONS ...... Ill A. Licensing ...... Ill B. Disposition of Bingo Proceeds ...... 113 C. Municipal Enforcement ...... 115 D. The New York State Lottery Control Commission 116 E. Miscellaneous ...... 118 CONCLUSION ...... 119 INDEX OF SCHEDULES

Schedule No. Page I. Key Statutory Provisions and Regulations for the Preven- tion of Commercialization and Professionalism in Legal- ized Bingo Gambling ...... 15

II. Bingo Financial Statistics ...... 19

III. William P. Buckner Known Bingo Operations .... 32

IV. Misappropriation of Bingo Profits—Analysis of Financial Operations of a Typical Bingo Session—N. Y. Garrison No. 94, Army and Navy Union, U.S.A. 41

V. Estimated Misappropriation of Bingo Profits—William P. Buckner's Bingo Operations ...... 59

INDEX OF APPENDICES

Appendix A. Statement of Chairman on Behalf of the New York State Commission of Investigation at the Commencement of the Public Hearing Concerning Bingo Operations in New York State ...... 120

B. Statement of Chairman on Behalf of the New York State Commission of Investigation, at the Conclusion of the Public Hearing Concerning Bingo Operations in New York State ...... 122

FOREWORD

Since its organization in 1958, the Commission of Investigation, in addition to several major investigations in other fields, and in keeping with its statutory duties, has been persistent in its efforts against organized crime and racketeering. Inevitably, the main front of the battle centered in the area of gambling, the principal source of organized criminal power and finances. Investigations of illegal gambling conducted in Ithaca, Buffalo and throughout central New York against the gambling rackets resulted in major crackdowns, numerous prosecutions, increased public awareness and, in some cases, revitalization of local law enforcement efforts.* In all of these investigations one fact became eminently clear. Lucrative proceeds of gambling filled the treasury which fed the underworld. This report is an account of another of the Commission's investigations into racketeering in gambling—in this case a form of legalized gambling—bingo. The Commission believes this report to be significant in two respects. First, it presents a history of the investigation itself; second, it is a study of the evils that attend an attempt by the community to legalize and control a gambling activity. As the report will demonstrate, racketeers and professional gamblers who operated bingo in violation of the law prior to legalization, continued to enjoy these gambling profits after legalization, using techniques of deception, fraud and corruption of public officials. i

* See: Reports of the Commission of Investigation on Professional Gambling and Law Enforcement in the City of Ithaca, Tompkins County, New York (1959); An Investigation of Law Enforcement in, Buffalo (January, 1961); Syndicated Gambling in New York State (February, 1961).

INTRODUCTION

In order to place the investigation and the facts uncovered by it in a proper frame of reference, brief explanation of certain salient facts are necessary. These include bingo as a big money producing form of gambling, racket operations in bingo prior to legalization, the climate in which legalization was achieved and the laws and enforcement machinery which were devised to provide proper control. The first part of this report will be devoted to these subjects. In subsequent sections of the report, the evidence obtained in the investigation and presented at the public hearing will be detailed. This will be followed by recommendations which it is hoped will result in elimination of abuses, strengthening of the law and genu- ine improvement in the quality of enforcement at both local and State levels.

A. The Game of Bingo Simple, uncomplicated and obviously designed for mass participation, the game of bingo enjoys wide acceptance as an outlet for the urge to gamble. The amendment to the Constitution of the State of New York which legalized the game defines bingo as a game of chance "in which prizes are awarded on the basis of designated numbers or symbols on a card conforming to numbers and symbols selected at random."* This bare statutory description does not adequately describe the game as it was observed played in the large bingo halls. There it took on a unique and distinct atmosphere and flavor closely akin to the gambling houses of Las Vegas or the betting windows at a racetrack. Members of the Commission staff who attended bingo games at various halls as part of the investigation observed elaborate devices

* Article I, Section 9, Subdivision 2, of the Constitution of the State of New York, eff, January 1, 1958.

11 in use. Pingpong ball markers in large glass hoppers were stirred on fountains of blowing air. Electrically operated flash boards gleamed brightly with called numbers. Packed tightly at long tables, row upon row of grimly intent players bent over their cards, heads bobbing in unison to the drone of the caller's voice, eagerly search- ing for that one more number among the many cards in front of them. It was observed that the vast majority of bingo players are of the low income group. Nevertheless, in some places, the average player spent as much as $5.77 a night on admissions and extra game cards.* In the large metropolitan bingo halls most players had no relation to or interest in the sponsoring organization. Many were brought to the games by bus from distant places, including areas outside the State. To understand legalized bingo and the problems which arose in its operation and control, this game must be recognized for what it is. As the Commission found it, and as the playing public on the whole regarded it, legalized bingo was not charitable or civic fund raising. It was gambling—big gambling—with a total gross play in this State of over 108 millions of dollars since legalization.** The large commercial bingo halls, holding bingo games night after night, were found to be no more than gambling operations set up to take slices from this rich pie. Failure on the part of those charged with enforcement of the bingo control laws to recognize these truths contributed in large measure to the abuses which were uncovered by this Commission's investigation.

B. Pre-Legalization Bingo Prior to January 1, 1958, the effective date of legalization, the laws prohibiting the game as an unlawful lottery seemed more honored by violation than by observance and enforcement. Many highly respectable groups conducted bingo games in open violation of the law, frustrating any real desire for enforcement. Sporadic crackdowns and enforcement attempts were wholly ineffective and without true purpose. Despite a temporary closing of bingo games in 1952 and a statement by the then Commissioner of Police of the City of New York that bingo as operated by church and charitable groups was a "violation of law," such operations continued.*** One attempt at enforcement in September, 1954 by the

* New York State Lottery Control Commission, Summary of Financial State- ments of Bingo Operations, March 31, 1961. The state-wide average was $3.62 per night. ** New York State Lottery Control Commission, Press Release, Nov. 30, 1961. ***New York Times, September 23, 1952, p. 1.

12 officer in command of the Brooklyn Morals Squad of the New York City Police Department was the source of open dispute between high ranking police officials.* Under a facade of respectability, the racketeer, professional gambler and promoter was at work reaping in substantial profits. As will be shown later in this report, during the years preceding legalization, religious, civic and veterans groups lent their names as fronts for gambler-controlled bingo operations. The respectable name provided a buffer against the variable and uncertain winds of law enforcement. Techniques employed by professional operators were to provide finances, equipment, workers, and in some cases, suitable public halls, and to set up a full operation under a protective cloak of respectability. In exchange, the organizations were given a small share of the profits or a meager fixed fee. As the investigation and public hearing disclosed, the same techniques were carried over into bingo operations by professional gamblers after legalization. It was in this unhealthy climate that bingo eventually became legal. C. Bingo Legalized During the 1950's, years that marked the unequal conflict between wide-open "illegal" bingo and confused, half-hearted, intermittent law enforcement, the legislative machinery of the State was moving toward eventual legalization by constitutional referendum in the general election of November, 1957. In the three legislative sessions of 1952, 1953 and 1954, twenty- six bills were introduced providing generally for varying measures of bingo legalization. None passed.** The failure of proposed bingo legalization bills to pass resulted in action by the Legislature to leave the ultimate decision to the voters of the State. This was done by the process of constitutional amendment which requires that proposed amendments pass in the Legislature by a majority vote in two separate sessions. After approval in one session the amendment is referred to the next regular legislative session held after the succeeding general election of members of the Assembly. The amendment is then submitted to the voters of the State for ratification.**" Pursuant to these processes the Legislatures of 1955 and 1957 amended Article I, Section 9 of the Constitution providing for the

* New York Times, September 10, 1954, p. 1. ** New York State Legislative Index; 1952, 1953 and 1954. *** See, Article 19, Section 1, Constitution of the State of New York, eff. Jan. 1, 1942.

13 legalization of bingo on a local option basis by an "approving vote of the majority of the electors."* The constitutional amendment also set forth certain restrictions on the operations of bingo games and a requirement of strict regulation, which were later implemented by the Bingo Licensing Law and the State Lottery Control Law. On April 23, 1957, in anticipation of voter approval in the coming November constitutional referendum the Legislature enacted Chap- ter 854 of the laws of 1957, to become effective on January 1, 1958 in the event of a favorable vote on the referendum. The Act called the Bingo Licensing Law amended the General Municipal Law by adding new Article 14-G, containing Sections 475 through 499, inclusive. Article 14-G granted every "municipality" the right to authorize bingo games within its territorial limits after approval by voters at a general or special local election.** Since passage of the law and up to March 31, 1960, voters in 662 municipalities have approved legalized bingo as against nineteen where it has been disapproved. On the same date that it passed the anticipatory Bingo Licensing Law, the Legislature enacted Chapter 853 of the Laws of 1957, called the State Lottery Control Law, taking effect on January 1, 1958. This statute amended the Executive Law of the State of New York by adding Article 19-B, Sections 430 through 439, creating the New York State Lottery Control Commission (hereafter referred to as the Lottery Commission).*** D. The Bingo Control Laws Even a superficial study of early bingo bills, a history of bingo legislation and the final legislation itself clearly indicates that it was the intention of all concerned that only bona fide non profit, religious, charitable, veteran and civic groups should be permitted to conduct bingo for fund raising purposes—and this under strict licensing procedures. The dominant spirit of the law was that all bingo proceeds, less reasonable and necessary minimum expenses, be devoted to charitable and civic purposes. It was contemplated that bingo would be conducted as a community enterprise by unpaid, active members of licensed groups. This spirit and intent was written into key provisions of the law and implemented by regulations duly promulgated by the Lottery Commission.

* New York State Constitution, Article I, Section 9, Subd. 2. ** Section 477, 478, General Municipal Law of the State of New York. :•** Discussed at pages 17 and 72 to 89, infra.

14 SCHEDULE I KEY STATUTORY PROVISIONS AND REGULATIONS FOR THE PREVENTION OF COMMERCIALIZATION AND PROFESSIONALISM IN LEGALIZED BINGO GAMBLING.* 1. Only bona fide religious, charitable, or nonprofit organizations of veterans, volunteer firemen, etc. may be licensed to conduct bingo. (Sections 476, 480, General Municipal Law.) 2. False statements made in applications for licenses or annexed documents are prohibited. (Section 495, General Municipal Law.) 3. The entire "net proceeds" of any licensed game must be devoted exclusively to the purposes of the licensed organization. (Section 479, General Municipal Law.) 4. Only bona fide active members of the licensed organization may participate in conducting or operating games. (Sections 479, 488, General Municipal Law.) 5. No salary or recompense of any kind may be paid to any person engaged in conducting games except $15.00 per occasion for bookkeeping services. (Sections 479, 488, General Municipal Law; Part VI, Rule 4, Rules and Regulations of the New York State Lottery Control Commission.) 6. Payment or receipt of rent for use of bingo premises may not exceed the sum stated in the license application or be based upon percentage of receipts of profits. (Sections 488, 495, General Municipal Law.) 7. Payment for use of bingo equipment by licensees not owning same is prohibited. (Section 488, General Municipal Law.) 8. Transportation of patrons to or from games by or with consent of licensed organizations (and expense incurred thereby) is prohibited without prior written authorization of State Lot- tery Commission. (Part VI, Rule 15, Rules and Regulations, New York State Lottery Control Commission.) 9. Licensed organizations are required to submit to proper authorities duly verified financial statements which fully and accurately set forth all receipts, expenses and profits of bingo games. (Section 491, General Municipal Law.)

* Introduced as Exhibit 3 at the Public Hearing. 15 10. Licensees are required to maintain books and records which fully and truly record all transactions connected with the operation of bingo games. (Section 495, General Municipal Law.) The foregoing provisions, a digest and paraphrase of exact statutory language, are clear and in the main self-explanatory. Whole- sale violations of every one of these provisions were found in the several areas investigated by the Commission. The nature and extent of such violations will be treated in detail later in this report.*

* All statutes and regulations referred to in this report were in effect during the period under investigation. Amendments and additions subsequently made will be so noted.

16 II BINGO LICENSING AND CONTROL

Any valid assessment of the effectiveness of enforcement of bingo control and licensing laws must take into account the respective responsibilities of the Lottery Commission and local licensing and enforcement agencies. Each was enjoined by law to prevent and eliminate the many violations and abuses that this Commission found were threatening to corrupt and destroy the entire fabric of legalized bingo.

A. The Lottery Commission The first section of the Act creating the Lottery Commission declares that its purpose was to "carry out the mandate .. . that the games of chance (bingo) thereby authorized are rigidly regulated to prevent commercialized gambling, prevent participation by criminal and undesirable elements and the diversion of funds from the purposes authorized thereby."* To discharge this basic duty, the law created a commission composed of a Chairman and eight member Commissioners, not more than five of whom may be members of one political party. Appointed by the Governor, by and with the advice and consent of the Senate, the Commissioners serve terms of staggered duration, the Chairman a five year term. The salary of the Chairman, fixed by the Governor, is $17,474 annually, with an additional $3,000 in lieu of expenses. Member Commissioners receive $58.22 a day, plus expenses for each day devoted to Commission business.** The first and present Chairman, Richards W. Hannah of Brooklyn, New York, was appointed by former Governor W. Averell Harriman to a five year term which expires on March 1, 1963. The statute also provides for the office of Administrative Director, with powers as principal executive officer and duties of "general over-all supervision."* * * The Commission is empowered to hire such

* Chap. 853 of the Laws of 1953; Sec. 431, Executive Law of the State of New York. ** Sec. 433, Executive Law of the State of New Yerk. *** Sec. 433, subd. 4, Executive Law of the State of New York. 17 officers and employees as it deems necessary to carry out its function within the amounts made available by appropriation. Since its organization, the Lottery Commission has received annual appro- priations averaging approximately $250,000 per year. The investigative and enforcement functions were carried out by a staff of about 18 investigators (officially entitled representatives) under the immediate supervision of a chief investigator (senior representative).* The entire investigative staff was subject to direction and control by the Administrative Director, John L. Coffey (Pr. H. 586). The Commission was given broad and sweeping powers to carry out its duties, including the powers to compel the appearance of witnesses, to require the production of books and records, to grant immunity, to institute prosecutions and to call upon all departments and agencies of government for assistance. Added to these powerful enforcement tools was the authority to hold hearings and to revoke or suspend licenses.

B. The Duties of Local Authorities Applications for licenses are filed with and processed by the local "clerk of the municipality"** who is obliged to investigate to determine "the merits of each application" according to statutory requirements, and to issue licenses if such requirements are met.*** Regulations of the Lottery Commission require that a prospective licensee first apply to that body for registration and identification prior to making formal application to the local licensing authority. A registration number is issued which is thereafter affixed to all documents submitted in connection with bingo operations. These include applications for licenses and amendments thereto, licenses, financial reports and other papers.**** Final responsibility for the granting of a license rests with local authorities. Indeed, there is a serious legal question as to whether refusal by the Lottery Commission to issue a registration number is a bar to the issuance of the license itself at the local level.*****

* Senior representative Thomas Dorr had supervisory duties in the metropolitan area of New York and generally in the southern and eastern half of New York State. (Transcript of Private Hearing, pages 3 and 4.) Hereafter references to Private Hearing testimony will be designated as Pr. H. and page number. Reference to Public Hearing testimony will be made by page number only. ** Sec. 480, General Municipal Law of the State of New York. *** Sec. 481, General Municipal Law of the State of New York. **** Rules and Regulations of the State Lottery Control Commission, Part II. *•=:=*-:<* See Local 320 Club, Inc. v. Wackerle, 206 N.Y.S. 2d 957 (Sup. Ct., Onon- daga County, Oct. 13, 1960).

18 Briefly stated, the licensing municipal government must determine that the applicant organization is so constituted and will operate its games in such fashion that none of the statutory provisions and regulations as set forth in Schedule I above will be violated if a license is issued. The law imposes upon the "governing body of any municipality" issuing a bingo license the additional duty to control and supervise bingo games held in its jurisdiction. This duty is implemented by a statutory right of entry into bingo premises for the purpose of inspection, and the authority to hold hearings and to revoke or suspend licenses.* The Commission's investigation found that local authorities in those areas which came under scrutiny were indifferent to their responsibilities and failed to exercise their powers. As in the case of the Lottery Commission, local authorities failed in the exercise of their powers to prevent commercialization, participation by criminal elements and perversion of the purposes of the laws. C. Bingo—Big Business Deeply entrenched and widespread at the time of legalization, the reported play for bingo after legalization quickly jumped into multi-million dollar figures. The enforcement breakdown found by this Commission takes on added gravity in light of the following statistics: SCHEDULE II BINGO FINANCIAL STATISTICS** From date of legalization, January 1, 1958 to March 31, 1961 to Oct. 1, 1961 Number of bingo sessions held 107,550 134,583 Number of games had 3,188,967 (not given) Number of persons attending 24,782,528 31.232,340 Gross receipts $ 84,447,084 $108,135,026 Prizes paid $ 60,014,791 $ 76,366.226 Net profits $ 19,201,939 $ 25,259,930 Losses $ 100,815 $ 107,012 These figures clearly demonstrate the rapid and continuing growth of bingo gambling and the significant proportions it had assumed when this Commission undertook its investigation.

* Sec. 484, General Municipal Law of the State of New York. ** As compiled from a report titled "Summary of Financial Statements of Bingo Operation, Oct. 1, 1960 to March 31, 1961," New York State Lottery Commis- sion and release of said Commission dated November 30, 1961. 19 A witness at the public hearing very aptly stated: "These figures . . . should disabuse the public of any notion that bingo is nothing more than a penny game carried on as a fund raising substitute for cake sales and bridge parties." (17) The total gross play set forth above must be considered a minimum figure since it reflects amounts reported rather than amounts actually received. One of the major abuses disclosed by this Commis- sion's investigation was the practice of "taking money off the top" from the cash receipts (34-36). Thus no record of the amount of misappropriated cash appeared either in official financial statements or in the books of licensed organizations which were engaged in this illegal practice.

20 HI THE HISTORY OF THE INVESTIGATION

As part of its active and continuing criminal intelligence program, both the Commission of Investigation and the Criminal Intel- ligence Unit of the New York State Police,* during 1960, were collecting information concerning organized criminal activities in this State. Information obtained during this program indicated that one "Bill" Buckner controlled and operated a number of purportedly legal bingo games in the Hotel Ansonia, in New York City.

A. William P. Buckner Commission intelligence files quickly revealed that William P. Buckner, a resident of New York City, was a notorious, twice- convicted gambler and swindler. On July 6, 1939, Buckner was sentenced to a term of two years and fined $2500 on convictions of conspiracy and use of the mails to defraud (48).** A second conviction in 1949 on a gambling charge in New York City resulted in a sixty day sentence to the Workhouse at Rikers Island Peniten- tiary (49). In the latter case Buckner and others set up a fully equipped gambling casino in a luxury Park Avenue apartment. Under the guise of charity, persons of wealth and prominence in New York society were duped into gambling at roulette, dice and cards and losing large sums of money which went to Buckner and his underworld associates. The incident was widely publicized as the "Park Avenue charity gyp scandal" (49-50). Buckner worked for a time as a croupier in Las Vegas and as a spotter in a New Jersey gambling casino reportedly owned by Joseph Doto, alias Joe Adonis, a well-known hoodlum and racketeer now deported (51). Intelligence files also reflect Buckner's association with racket-operated Havana gambling casinos and such under-

* Under the reorganization of the New York State Police which took effect on April 1, 1961, the Criminal Intelligence Unit and its functions have been incorporated into the Bureau of Criminal Investigation of the New York State Police. ** Buckner served 9 months at the United States Penitentiary at Lewisburg, Pa. and was later pardoned by Presidential order because of honorable service in the United States Armed Forces. This case was known as the "Philippine Railway Bond Scandal."

21 world figures as Frank Ericson, Santos Trafficante, alias Louis Santos, and others.* B. The Investigation Proceeds Immediately upon receipt of information concerning Buckner's bingo activities, the Commission staff, in cooperation with the Crimi- nal Intelligence Unit of the New York State Police, which was then headed by Inspector John J. Quinn, began a preliminary investigation centering on Buckner, his associates and the bingo operation at the Hotel Ansonia. Surveillances were undertaken and inquiries conducted which established that Buckner controlled, financed and operated "legal" bingo games, not only at the Ansonia but in other locations in New York City, Westchester County and Pennsylvania. Members of the Commission staff attended bingo games to determine the nature and extent of these operations. Persons connected with Buckner in this illegal enterprise were identified and their function in the operation ascertained. On the basis of this information, search warrants were obtained. On January 9, 1961, simultaneous searches were made in the apartments and offices of Buckner and of his principal associates. Voluminous books and records were seized, together with large amounts of cash. Those directly involved were served with subpoenas for immediate interrogation. Commission accountants examined and analyzed records, and witnesses were called in private hearings. Over 3,000 pages of testimony were taken of more than fifty witnesses. The investigation led to Utica, New York where considerable effort was expended in uncovering another illegal operation similar in its working to the activities of Buckner at the Ansonia Hotel. Buckner's activities in Yonkers, New York were also brought under scrutiny. Investigation in the Borough of the Bronx, New York City, resulted in the arrest by Special Agents of the Commis- sion of two operators of commercial bingo halls for attempting to bribe a Lottery Commission investigator. By April, 1961, the investigation had developed to a point where the Commission was ready to proceed with the public hearing.

C. The Public Hearing The five day public hearing which climaxed the intensive investigation was held in the Commission's Hearing Room at its offices

* At the public hearing, Buckner refused to answer questions concerning these activities and associations on the ground that his answers to such questions would tend to incriminate him (829-830). 22 in New York City, on April 25, 26, 27 and May 2 and May 3, 1961. Its scope and purpose was outlined in the opening statement of the Commission Chairman, who stated: "It is our aim to hold a constructive hearing which we hope will produce appropriate recommendations and measures to improve present conditions and to insure the achievement of the real purpose of the law."* The following sections of this report will detail the evidence adduced at the public hearing. For the sake of completeness, additional material from the investigation and private hearing will also be set forth.

* Full text reproduced as Appendix A.

IV THE BUCKNER OPERATIONS

Substantial investigation and hearing time was devoted to the activities of William P. Buckner. Nevertheless, it should be clear that this single individual and his unlawful activities were not the primary concern of the investigation (37). The commercialism, abuses, corruption and perversion of the laws clearly illustrated by the bingo operations of Buckner and others were the actual target. Elimination of such abuses and commercialism and the strengthening of the laws and enforcement machinery was the ultimate goal.

A. The Gamblers' Lobby for Legalization In 1950, Buckner left the gambling casinos of Las Vegas, seeking to utilize the bingo training he obtained there in the fertile fields of New York City (57). At that time be visited the Globe Distribu- ting Company, New York City, a company which specialized in the jobbing of bingo equipment (55-56). The operator of the company, Mrs. Mary Hackman, known to the trade as "Bingo Mary", testified that Buckner purchased bingo equipment from her from 1950 to 1955 for games operated by him in New York City. Mrs. Hackman recalled that Buckner financed and operated bingo using three or four established religious groups as fronts, running as many as ten bingo sessions a week at two locations in Manhattan (57-60). Busi- ness expanded for Buckner in the pre-legalization years and the volume of his purchases from Mrs. Hackman during that period increased (62-63). A well informed observer of illegal bingo who numbered sub rosa operations such as Buckner, as well as a large number of religious groups among her customers, Mrs. Hackman commented on illegal bingo: "Q. In those days when Buckner was operating, bingo was illegal? A. Yes. * * * >

25 Q. You needed some kind of sponsoring organization . . . to front? A. Yes.

Q. So that you wouldn't be bothered by the authorities; is that correct? A. Yes.

Q. So if Mr. Buckner had a front, a temple or a veterans group or a church, the police wouldn't, or at least they believed that the police wouldn't bother them? Is that correct. . . . A. Yes." (60)

During their business relationship, Bucknef apparently talked freely with "Bingo Mary," an elderly lady with a spirited and friendly manner. A frequent topic of conversation was the gambler's desire to see bingo legalized and the fear that a determined law enforcement effort would put them out of business (66-67). In September, 1954, in a general police crackdown on bingo, all bingo games in the City of New York closed down. "Vividly" recalling the incident, the witness testified: "Q. How did that affect your business, Mrs. Hackman? A. Well, naturally, I was stuck with a lot of stock.

Q. The business died, didn't it? A. Yes.

Q. It died with respect to manufacturers and other people in the field? A. Yes, that's right. Q. It died with respect to Mr. Buckner, too, didn't it? A. Of course." (68-69)

"We were all edgy to have the bingo games reopened," she continued. At Buckner's request she called a meeting of a number of the leading bingo supply manufacturers and wholesalers at her home in New York City. There Buckner and his principal lieutenant, Eugene F. Keane, outlined a proposed double-pronged attack to get the games opened immediately and to sponsor a drive for legalization. Relying on a court decision* which dismissed a prosecution for illegal bingo on the ground that the operator had provided entertain-

People v. Burns, 304 N.Y. 380 (1952).

26 ment of which bingo was an incidental part, Buckner wanted the assembled group to urge their customers to reopen their games as entertainment (70-75). Unwilling to be openly identified with this move because of his criminal record, Buckner prevailed upon the manufacturers and jobbers to carry out this task—urging respectable groups to circumvent the law by running illegal bingo with an entertainment "gimmick" (70). Buckner also persuaded the group to contribute toward a fund of some $10,000 to $12,000.* (75, 99). The testimony of Mrs. Hack- man continued: "COMMISSIONER LANE: As I understand it, he wanted the ten thousand dollars to use to lobby to legalize bingo? THE WITNESS: Yes, that is right.

BY MR. VERGARI: Q. What was the ten thousand dollars going to be used for? How was it going to be spent? A. They were going to exert every effort to legalize bingo. It would be advantageous because they then wouldn't have this pressure of closing and opening, and you know." (76-77)

A list bearing the names of over 150 religious and civic groups was compiled and all those listed were canvassed by the manufacturer-wholesaler group to get behind the drive (79-80).** In an effort to give the movement a respectable identity, Buckner and Keane devised and directed a so-called "New York Committee for Legalization of Bingo." An attorney was hired by Buckner to handle public contacts and sign letters addressed to public officials urging the legalization of bingo in New York City. Nothing short of amaz- ing is the fact that names of persons of prominence in religious, veterans and civic groups appeared on the letterheads of this committee (Pr. H. 2634-2647).*** Letterheads, correspondence, drafts of letters and mailing lists of the committee were found in Keane's apartment. These papers

* $6,000 was contributed by Sidney Franklin, a bingo equipment manufacturer (99). ** The list was introduced at the Public Hearing as Exhibit 6. *** It was not ascertained if the consent of all these persons was obtained for use of their names.

27 clearly indicate that officials and legislators of the City and State were bombarded with letters from the committee. Although it cannot be shown that the eventual legislation resulted directly from this activity, there can be no doubt that the pressures generated by this lobby which Buckner directed and inspired had its desired effect. Within a year "illegal" bingo was going again at full blast—within three years bingo was legalized.

B. Methods of Bingo Operations Prior to Legalisation Knowledge of the methods and techniques employed prior to legalization by professional promoters is valuable for a fuller understanding of the serious violations and abuses which followed legalization. Since some of Buckner's pre-legalization games spilled over into the new era, it was possible to determine the nature, if not the full extent, of his operations in New York City prior to Janu- ary 1, 1959, the date of legalization there. Dr. Max Koppel, the spiritual leader and founder, in 1938, of a large, active congregation known as Congregation Emes Wozedek of Washington Heights, testified at both the private and public hearing. In 1950, the Congregation purchased for its own use, the Audubon Ballroom at 560 West 166th Street, New York City. At that time the Hood Memorial Baptist Church "sponsored" a Buck- ner controlled bingo game in the premises under a previous and continuing lease (Pr. H. 2501-2503). Some time during the latter part of 1951, Buckner, using the alias of Mr. McKenzie and representing himself as the operator of the Hood Memorial game, obtained Dr. Koppel's consent to run a bingo, at the same hall on another night, using the official name of the Congregation. Buckner, alias McKenzie, offered to pay $100 to the Congregation for each bingo session held, plus a reasonable rental for the hall. Under this arrangement he recruited and provided working crews, furnished equipment and operating finances (Pr. H. 2512-2518). These funds, referred to by Buckner and his associates as the "bank" were carried into the bingo hall for each session by a trusted lieutenant who used the money to make change, pay crews and award prizes to winners. All profits of each bingo session, less the necessary expenses and the small fee to the sponsoring organization for use of the "front" went to Buckner. It should be pointed out that Dr. Koppel did not become aware of Buckner's

28 true identity until he was shown a photograph of Buckner at a private hearing on April 19, 1961. Due to the naivete of the one and the callous disregard of the law on the part of the other, the arrangement between Dr. Koppel and Buckner which started in 1951 continued unchanged after legalization and until March, 1961 (380-390). As a result of the gambler's greed to keep a good thing going, this congregation, though innocent of intentional wrongdoing, was involved in repeated infractions of the bingo licensing and control laws. Prior to commencing the pre-legalization games, which were held once each week, Buckner instructed Dr. Koppel to visit the Inspector of the 7th Division of the New York City Police Department, the officer in charge of gambling enforcement in that area, to obtain permission to operate. Dr. Koppel testified: "Q. Tell us what Mr. McKenzie (Buckner) said to you? A. It was clear that I had to tell the Inspector that the Congregation would run the bingo; that is, nobody else was supposed to be there." (Pr. H. 2509)

Although Dr. Koppel was understandably reluctant to say so, it was also quite clear that any information concerning Buckner's | McKenzie | association with the game was to be withheld from the Police. (Pr. H. 2509-2511). Upon Dr. Koppel's assurance that the Congregation itself would operate the bingo, police permission was obtained. Another front for Buckner was established. That game, like others, sponsored by veterans and religious groups of all de- nominations, operated under a system of benevolent police protection during the 1950's, prior to legalization, disturbed only by intermittent closedowns. When bingo became legal in New York City on January 1, 1959, Buckner had a going and thriving organization. Finances, equipment, trusted and experienced lieutenants, a well-trained cadre of professional bingo workers and a technique of bamboozling law enforcement officials were ready and available. Certain adjustments and changes in operating methods were required to satisfy the newly enacted laws and regulations of legalization,* but the resourceful Buckner was ready. The illegal operations of this professional gambler continued, expanded and prospered in the seemingly sunny climate of legalization.

: See, Schedule I, page 15, supra.

29 C. The Racketeers' Operations in Legalized Kingo Gambling Mass gambling—legal or illegal—like bookmaking, numbers or bingo, to produce a large profit requires a broad population base, steady and uninterrupted service to the clientele and a reputation for high payoffs.* To a professional gambler like Buckner, these basic rules trans- lated into bingo terms meant control of a large capacity hall in a densely populated area, efficient service and maximum prize payoffs.** Most important, it was essential to maintain a steady and uninterrupted day to day program of bingo sessions on which the playing public could rely. It should be repeated that the vast majority of players who patronized large metropolitan area bingo halls have no relation to or interest in the sponsoring organization. Their presence at bingo halls is motivated chiefly by the desire to gamble and win—not by any wish to contribute to civic or charitable causes. The professional gambler and commercial operator, to satisfy this demand and to meet competition, had to set up and maintain what amounted to nothing more or less than a public gambling casino. It should be noted that although Buckner and other professional gamblers paid maximum prizes there was evidence which indicated that games were rigged and a portion of the prize money found its way back to the promoter.

D. The Corporate Cover Immediately upon the legalization of bingo in January, 1959, Buckner retained the services of an attorney, Karl S. Lowenthal of 37 Wall Street, New York City, to form a corporation known as Pub Play Inc. (Pr. H. 2195). Incorporates were dummies, clerical employees in the attorney's office. No official election of officers was ever held, no directors appointed and no stock issued. Buckner paid the legal fee for this service by check in his own handwriting, bearing the signature "J. Bill Cody," a pseudonym frequently used to cover up his tracks (Pr. H. 2196-2198). On January 1, 1959, Buckner through Pub Play, leased the ballroom of the Ansonia Hotel at a rental of $ 1700 per month. Pub Play in similar fashion also acquired the use of the Audubon Ballroom

* See, An Investigation of Law Enforcement in Buffalo, Report by the New York State Commission of Investigation, pages 32 et seq. -"Buckner operated games paid the aggregate sum of 51,000 in prizes per session, the maximum allowed under Section 479, General Municipal Law of the State of New York.

30 and Veterans Hall, 15 Vz Clinton Street, Yonkers, New York for bingo. Leonard Friedman, son of the owner of the Veterans Hall, testified that in 1956 he leased the premises to Pub Play Inc. which was represented by a man who gave as his name and signed the lease "James Cody." He identified a police identification photograph of Buckner as that individual (508-511). Thus Buckner obtained the public halls needed for his operations and protected himself with a corporate mask which was never removed until this Commission commenced the investigation. Conducting a business in the corporate form is a universal practice. Nevertheless, it is a fact of particular significance in this case. An officer of any corporation leasing premises for licensed bingo games is required to certify under oath that all officers and principal stockholders of the lessor corporation are persons of good moral character and have never been convicted of a crime. * Buckner attempted to conceal his criminal record by using such outlandish pseudonyms as "J. Bill Cody," "H. Sebastian Wolzer" and "J. Sebas- tian" as officers of Pub Play on the lessor's statement required by regulation. This awkward and rather crude device proved effective chiefly because those officials whose duty it was to prevent such fraud took no effective action. They proved to be indifferent, inefficient or too readily susceptible to corrupting influences.

E. The Buckner Organization's Bingo Games To meet the demands for reliable, uninterrupted daily operations and at the same time satisfy the legal requirement that no licensed organization hold more than six sessions in a month,** it was necessary for Buckner to have a number of authorized organizations to fill available dates at his bingo halls. The investigation which preceded the public hearing revealed that Buckner controlled and operated or was financially interested in at least fourteen authorized, licensed organizations sponsoring bingo at four separate locations. The principal operation centered in the Ansonia Hotel, where bingo sessions were conducted a bustling six nights a week. As the chart set forth below graphically demonstrates, in addition to the Ansonia Hotel, Buckner branched out into two other locations in Manhattan and one in Yonkers, New York.

* Part III, Rules and Regulations of the State" Lottery Control Commission. ••'•••' Section 487, General Municipal Law of the State of New York.

31 SCHEDULE III WILLIAM P. BUCKNER KNOWN BINGO OPERATIONS* PUBPLAY INC. WILLIAM P. BUCKNER EUGENE F.KEANE 37 WALL ST. N.Y.C.

DAV. *80 FOR POST HOTEL ANSONIA TUESDAY NIGHTS APRIL 60- NOV. 60 (BALLROOM) 73 5S STREET 8 BDWAY N.YC.

CO 10 Conducted At AUDUBQN BALLROOM INC. 560I.I66HST.N.Y.C.

mm ffffiEt ALLIANCE BOULE¥«RO CONK. DM "M V'fJUIAH OF mSHTC« BT IHc CEHTH1 F.ailPOST SEA.IM. KMUr 1KHTS NOIM IICH'S OCT. 99 -NOV. 59 APRIL 59- JAN. 60 ttAY60-S£PT.60 FES. 63- JAN 61 Z& GAMES

* Introduced at the public hearing as Commission's Exhibit 4. The description "Known Bingo Operations" was used because available evidence indicates that his activities were more extensive. The licensed organizations set forth in Schedule III include veterans, educational, civic and religious groups, all brought into the operation by Buckner, whose abilities as a confidence man were established in the "Philippine bond scandal" conviction.* Certain organizations carried over their activities from pre- legalization days. Some well intentioned groups, not having finances, equipment, necessary facilities and know-how, succumbed to the promise of large returns from a bingo venture. Of one or two veterans' groups of small membership and little consequence, it must sadly be said, that Buckner successfully appealed to the greed and lack of integrity of the individual members. Available evidence indicates that at least one authorized licensee was a "paper" organization, organized under Buckner's direction for the sole purpose of obtaining a license and filling an open date at the Ansonia Hotel. The Buckner operation was marked by unlawful diversion of funds, wholesale filing of perjured financial reports and failure to keep proper records—every key provision in the law and regulations was persistently violated. More shocking was the corruption and stultification of bingo licensing and enforcement officials who came into contact with this operation. The activities and experiences of some of the licensed organizations and their officers and members who were part of the Buckner group make for a sad history indeed. 1. The Army-Navy Union, Garrison 94 In January, 1958, one year before bingo was legalized in New York City, John Garcia, a highway foreman employed by the City of New York, was introduced to Buckner by Theodore J. Hular.* * Garcia, a disabled veteran with an honorable war record and an officer of Civil Service Chapter, Disabled American Veterans, was then interested in a project to build a county center for the various chapters of the Disabled American Veterans in Manhattan (hereafter referred to as the D.A.V.). These chapters had joined in a common effort to raise funds for this building program. Hular, who was connected with a Buckner sponsored D.A.V. game in Yonkers, persuaded Garcia to associate with Buckner in a bingo venture to raise money for the project, citing his own experience with Buckner in this field (145-146). Responding to the lure of easy profit, Garcia consented to D.A.V. sponsorship of illegal bingo to be financed and operated by Buckner in return for a trifling 25% of the net profits. The games were

* See page 21 supra. ** Hular, an official of Tuckahoe Post 52, American" Veterans of World War II, and his association with Buckner, is discussed at page 46 infra.

33 conducted both at the Ansonia Hotel and the Empire Rollerdrome in 'Brooklyn, starting in January, 1958 and continuing for about one year ( 150-153). The venture proved to be of substantial profit only toBuckner (154). It is interesting to note that members of the Buckner cadre of lieutenants and bingo workers were at work in this game. Robert Quinn, who carried in and handled the "bank," Theodore Hular, Leo Wolfe, Arthur Semerad, and other paid "pros," all blossomed out in the post-legalization operations (149-150). In April, 1959, three months after legalization in New York City, Buckner again convinced Garcia to get into bingo. At that time Garcia was an official of a veteran's organization, Garrison 94, of the Army and Navy Union of the United States (hereafter referred to as Garrison 94). From April, 1959 to April, 1960, this group sponsored bingo under a deal with Buckner. holding fifty-five weekly sessions from which the veterans realized $5,652.88 as against $29,975 which was illegally "taken off the top" of the bingo game proceeds." As will be shown, the lion's share of the latter sum went to Buckner, in addition to $7.200 which was paid by Garrison 94 as legal rental for the hall. Lacking funds, facilities and equipment, Garcia again permitted Buckner to finance and control the games and agreed on a method of operation in which he committed himself and his group to a course of continued misconduct and violation of the law. Applicable provisions of the law require that rentals for bingo halls may not exceed the sum stated in the license application.** Buckner required Garrison 94 to pay a total of $250 in rent for each bingo occasion. *** But the understanding was that only $100 of that amount was to be reported as rent on license applications. This concealment was itself a violation of law which expressly pro- hibits false statements in such applications (157-158). Some time later, Buckner permitted Garcia to report $150 as rent to ease the bookkeeping problem in covering up such misappropriations. To the "under-the-table" rental must be added an additional $20 a night which was extracted from the bingo proceeds by Buckner. Half of this sum was charged for elevator service, the other, for

* The manner in which these figures were computed is discussed at pages . . infra. See also Schedule V at page infra. ** Sections 488, 495, General Municipal Law of the State of New York. See also Schedule I supra. ***A bingo occasion means a single gathering or session, at which a series of bingo games, both regular and special is played, not to exceed 30 in number. Part I, Rule h, Rules and Regulations of the State Lottery Control Commission.

34 what was euphemistically termed "supplies" (172). Both charges were, of course, illegal additions to the agreed reported rental. To bar commercialization and to promote the community fund- raising spirit, unauthorized transportation of patrons to and from games by licensed organizations and any expense incurred thereby are prohibited. * Shortly after Garrison 94 started bingo, Buckner insisted that he transport customers to the Ansonia from outlying areas by bus at the rate of $3.00 per person. This charge was also to be deducted from the proceeds of the games (172-173). Reluc- tantly, as he did to other Buckner demands, Garcia consented. Recalling that Buckner had only charged him $1.00 per person to transport patrons to the Empire Rollerdrome games in Brooklyn, Garcia complained that the charge of $3.00 was excessive. Buckner replied that he was imposing such a high fee because running buses illegally involved elements of risk (178).** According to Garcia, all arrangements for bus service were made by Buckner, whose personal representative at the game deducted the charge from the bingo proceeds. No one connected with Garrison 94 ever questioned the count on which the charge was based. Garcia testified: "THE CHAIRMAN: Three dollars per person brought in by bus? A. Yes. BY MR. VERGARI: Q. How was the money taken from the bingo proceeds? A. At the end of the night, it was taken from the money that came in. Q. Who counted the people that came out of the buses? A. They did. Q. Who is 'they'? A. I don't know who counted them.

* Part VI, Rule 15, Rules and Regulations of the State Lottery Control Commission. ** Investigation disclosed that patrons were transported to the Ansonia for Garrison 94 and other bingo groups from nearby New Jersey communities by the Fosset Bus Co., a New Jersey corporation. The Commission having no extra- territorial powers of subpoena could not obtain the testimony of Fosset officials under oath or compel the production of books and records in New York. Members of the Commission staff conducted interviews and examined Fosset records in the field. Nothing in these records indicated that Buckner or Pub Play had ever paid Fosset for the bus service. Indeed, Fosset officials maintained that they received payments directly from the patrons themselves (377-378). Little cooperation was received by the Commission from Fosset in this matter. 35 Q. You never caused a count to be made yourself? A. No, never. & £ & % Q. How do you know Mr. Buckner was paying three dollars a head? A. That I don't know. Q. You never bothered to find out? A. No. Q. Do you know the name of the bus company that carried the passengers? A. No." (173-174) As was common to all Buckner operations, persons who worked at the Garrison 94 games were paid for their services, contrary to law,* and as in the case of other illegal charges, the payments were made in cash from bingo proceeds (Pr. H. 339). Buckner encouraged the payment of workers to insure uninterrupted service and well-trained, experienced crews. Wages ran as high as $20 a night per worker, depending upon the services performed. Within fifteen days after a bingo occasion, a licensed group is required to submit a complete and detailed financial report, duly verified, to the Lottery Commission.** Licensees are also required by law to maintain books and records which fully and truly record all transactions connected with the operation of bingo games.*** No organization in the Buckner group, including Garrison 94, kept such records. All of these illegal charges taken out of cash receipts of Garrison 94 games put Garcia in a position of repeatedly filing false and fraudulent financial reports. He testified: "Q. You are required by law to file financial statements of the bingo operations; is that correct? A. Yes. Q. And the law requires you to set forth fully and accurately every aspect of the financial transactions of a bingo game; is that correct? A. Yes.

'•- Section 479-488, General Municipal Law of the State of New York; Part VI, Rule 4, Rules and Regulations of the New York State Lottery Control Commis- sion; see also Schedule I, supra. ** These reports, on special Lottery Commission forms, must fully and accurately set forth all receipts, expenses and profits of the bingo session. Section 491, General Municipal Law of the State of New York. *** Section 495, General Municipal Law of the State of New York.

36 Q. Taking this money off the top, as you were, with these illegal charges imposed by Mr. Buckner, required you to phony up the reports; isn't that so? A. Yes. Q. Would it be fair to state that since these illegal charges continued all the time that you were operating at the Ansonia Hotel, that every single report for that period submitted by your organization or by you was false and fraudulent? A. Yes, I would say yes." (183) The witness explained that the reports were falsified by entering fewer sales of extra game and special cards than were actually made: "Q. In what manner did you falsify the reports? A. In putting down the wrong rent. Q. You had to show less gross receipts than you actually • made; is that correct? A. Yes. We took it off the extra sales, the cards and jackpots and things like that. We never falsified the attendance. Q. In other words, you ran a bingo game at a dollar a head, which is what the law allows to charge for admission? A. Yes. We never falsified that. Q. During the course of a bingo game, you are permitted to sell extra game cards and specials and jackpots. A. Yes. Q. You are telling us, sir, that you reported less of these extra sales than you actually had made? A. Yes. Q. And this practice continued all through the time? A. Yes. Q. Did you receive any instructions with respect to the manner in which these reports could be falsified? A. Well, I think I was told never to touch the attendance, take it from somewhere else. Q. Who told you that? A. I guess it was Mr. Buckner." (186-187) According to Garcia, all cash receipts at the bingo sessions were handled by one of two Buckner lieutenants, Robert Quinn or Joseph

37 O'Neill.* These men brought in the operating "bank," distributed cash to make change, took custody of all receipts from admissions and sales of extra game cards and counted and supervised the dis- tribution of prizes. At the end of each session, one of these Buckner lieutenants made up the payroll for the working crew, deducted the illegal bus charge, the under-the-table rental and other illegal charges and gave the balance, if any, to the licensed organization. On occasions when this method of accounting resulted in a shortage, that shortage was charged to the licensed organization as an indebtedness to Buckner arid deducted from the bingo proceeds at a later date. Garcia testified concerning this system: "THE CHAIRMAN: Did you ever have the feeling that you were being taken? THE WITNESS: I did. BY MR. VERGARI: Q. All right. All these illegal charges that you have been talking about, Mr. Garcia, the $150 over the legal rent, the illegal office charge, the charge for supplies which was illegal, and the substantial amount each week for buses, now, this money was being taken right off the top of the bingo proceeds, was it not? A. Yes, that is correct. Q. In other words, the profits that would come in, either Mr. Quinn or Mr. O'Neill, who were working for Mr. Buckner in that regard, they were taking all the bingo proceeds, taking off all these illegal charges; is that correct? A. Yes. Q. Bringing it to Mr. Buckner; is that correct? A. Yes. Q. And you would get what was left? A. Yes. COMMISSIONER LANE: You didn't get much, did you? THE WITNESS: Not too much." (182)

* O'Neill and Eugene F. Keane, another principal lieutenant of Buckner, are presently awaiting trial on a criminal information filed in the Court of Special Sessions, New York County and based upon evidence which the Commission referred to the District Attorney. A criminal information was not filed against Buckner because of his death from natural causes in September, 1961.

38 Robert Quinn explained that he performed the functions described above under general instructions from Buckner and day- to-day supervision by Eugene F. Keane (302-305), sharing these duties with Joseph O'Neill who alternated with him at various bingo sessions (306). The size of the "bank" varied from $700 to $1,000 depending upon the size of the game. Each night Quinn picked up the "bank" from Keane and returned all of the money, legal rental as well as the substantial illegal charges to him or Buckner (303). In addition to Garrison 94, Qufhn performed similar services at the bingo sessions of Tuckahoe Post 52 American Veterans of World War II, (hereinafter referred to as Amvets), Dunwoodie Post 1508, American Legion, both of Yonkers, New York, Temple B'nai Israel, Major F. H. LaGuardia Chapter 116 D.A.V., Franklin D. Roosevelt Chapter 80 D.A.V., Boulevard Community Center, Glenwood Com- munity Center and Congregation Ernes Wozedek (298-304). Al- though Quinn and O'Neill were Buckner's men and serving his interests in every respect, it is typical of the gambler's ruthless dealings that the licensed organizations were squeezed of another $25 per night to pay their salaries (298). Buckner referred to this illegal payment to his own henchmen as the "office charge" (317). As in the case of other illegal charges, this sum was deducted on the spot from the organizations' bingo receipts. Upon settlement of accounts with the licensed organization after each bingo occasion, Quinn prepared a memorandum worksheet. This was an actual financial record of all receipts, disbursements and cash balances computed in accordance with each organization's agreement with Buckner (304). A copy of these worksheets were delivered with the cash profits and "bank" to Buckner or Keane. They constituted the only true and accurate financial records made of the bingo sessions conducted by the Buckner group. The discovery of a number of these worksheets in Buckner's apartment was a significant aid in the investigation. The Commission staff members, by testimony obtained from reluctant witnesses and by analysis of the worksheets with other documents, were able to relate some of them to specific bingo sessions. Entries on the worksheets enabled Commission accountants to reconstruct financial statements as they should have been submitted according to law. Reconstructed financial statements were compared with the fraudulent statements as they were submitted to the Lottery Commission. The comparison revealed the actual

39 amounts of money misappropriated from bingo profits. The chart appearing on pages 41, 42 and 43 graphically demonstrates the results of this work as it pertains to a typical bingo session of Garrison 94. The document in the chart which is labeled "Actual Financial Accounting as Prepared by Operators" is a reproduction of a worksheet prepared by Robert Quinn for the Garrison 94 bingo session of September 11, 1959 (308).* The callous misappropriation of more than two-thirds of the profits of this game, which should have all been used for veterans' welfare and other similar charitable causes, was a practice which was repeated in the hundreds of bingo sessions conducted as part of the Buckner operation.

2. Major F. H. LaGuardia Chapter 116, D.A.V. "I am sure Mr. LaGuardia would not be happy about his name being attached to that operation." (40) This comment by a witness at the public hearing may be considered the height of understatement in view of the manner in which this group knuckled down to Buckner, yielded to his demands and violated the law through 71 weekly sessions of bingo operations. A shocking $26,270 in illegal charges was taken from the bingo profits of this group. In addition to that sum the organization paid Buckner $11,400 in reported rentals. Left as profits to the organization out of all this money—$1,904. For 71 occasions of admitted illegal operations, sham, fraud, false reports and other violations of the law, this group received, on the average, the munificent sum of $26.50 per session.** The operating agreement between Buckner and D.A.V. Chapter 116 was made by Robert T. Schmidt, an official of that group and was similar in all respects to the Garrison 94 dealings described above. Except for variations in the amounts, the same illegal charges were extracted from Chapter 116's profits in precisely the same manner (201-203). In the latter part of 1961, Schmidt became restive about the large amounts deducted by Quinn and O'Neill for bus transportation (204). Noting that the buses discharged the passengers directly into the entrance of the Ansonia, Schmidt had one of his own men make a number of head counts in an effort to reconcile the $3.00

* The original of this worksheet was received in evidence at the public hearing as Commission's Exhibit 19. ** See Schedule V.

40 SCHEDULE IV

MISAPPROPRIATION OF BINGO PROFITS ANALYSIS OF FINANCIAL OPERATIONS OF A TYPICAL BINGO SESSION N. Y. GARRISON NO. 94, ARMY AND NAVY UNION, U.S.A.-

/ 0 0V o » /*/ /« 0* o o Tie** / »» y<<6 « 0 fo t.tr ?// X,'

o o /? 7T

in Jvg « 0 6 O

v/ O o 3V YO-)$ / 0

*-* /^/V 5"»

>// /<7

•YS% tf>P

ACTUAL FINANCIAL ACCOUNTING AS PREPARED BY OPERATORS

ACTUAL LEGAL PROFIT___»*«.»_ NET PROFIT REPORTED__!?5?-Op_ MISAPPROPRIATED PROFITS^egejp_ (SINGLE SESSION)

; Commission Exhibit 20.

41 SCHEDULE IV—Continued

rn« cifY~OF HCW TOM N.Y.C. LICENSE NUUtd OEMITMEHT OF LICENSES SH M.INS INST8UCTIONS BELOW FINANCIAL STATEMENT N.YA IDENTIFICATION NUMIER N.Y.C LICENSE DOCUMENT NUMtK ^ IFTMII^IWr.tfaM *9lml y?' Jlo - » •> 1 ~ G .'/ . -f OF BINGO OPERATIONS W j / J

n y G*s-:>* #<.-•/ ^,,,( j fj,..^ ;*.;. (,-. .v 11 f u'-i!.*~ -J. to v-c . *"V/""TVA//J-°) • A-.-O,I.'»•"'•"*"•• '"•>• '/»*«.« / -»'»/.•!• o'«<^ n y.f-

TOTAL FROM LAST IfrOtT mis OCCASION (O.t.

0. RECEIPTS - Tot.l „( It.m, I to 5 ' Of/.OJ * n^/v.Jo *3°filS- J« ///-/.»« 1. Adnrnun c.rdi •<'}. if

3. C.rd, For Sp~i.l S__ _ 3ff."> /•7o.^ isty.f*

4. S.I. of S«pl« _ _ 4* oo v.j'. V.j'o

5. O*li.r R«c«iph _ ... 54. «» £• .«« 40.0(9

E. EXPENDITURES — Tol.l 4 (Show orly p«ynwnis «ehMly RMdvL. ... / /' > J'- a o jc) «J>. /"» Jt^iV-ff

1. Prim (Utf in S^h.dJ. I) /eta. ID v/; v?> <» \i, V»l.»!> ««.«• 2. Equipimnl (Urf in Sck^Jul. 2] 6t. to 00. 0 ^ 3J/i> otf 3. R«ll (Sko. in Sch^uU 2) /•0.0d C' vV» . c» a A/ • « 4. Swvic« (Ult in Set.Jul. 2) VVO CM 13.'"0 /a.<« 5. Uunt* FM (Show in Sck.dJ. 2) v?o. jo I/O 3 a

6. Otk.r Eiponu. (LM in Sclndii.) 2) . «*.d« * if 9-/?

F. NET PROFIT OR LOSS ,//.»« W7. r"» .-.;». r«

1. N«t Pn>cMd< E>)»nd (bpl.m in Sdiodul* 3)

2. Un.,p.nd.J hbnc. On Drf. Of Tliit R.oort"_^i^*

6. DEPOSITORY AND ACCOUNT SUPERVISION Th.1. fartJl St.1 a.p«iM «Mi*£«irf.e_^iSs>-=iiK—_. -•^ «•, .4 . /.- .<«. -v t', - -'•< U.Y.;.' ::: ."Ljuu^y- . :. —— , «w A/.y.c^,..,yr/-^;r, R...L ..^^^S2t ..,,.,n.mpi.l trinucKon • ^ »,AL « ^' -.' ^ ' • • ,••— * r^ .r. up.rviud by V1 «i -> V W.'f'c "" . - - S.-0 •? *• *~ *-*" INHIM) IT1I>**I««<^I

H. PERSONS CONDUCTING BINGO GAMES N*»^ •>* Adj™u si f«no« l» Cfc.r^ j M.m. «d Add.ul * C*:W 1 N.i«. .«! A*«v« ot C*nv'< *«(*»•

Jaf.,y. *>'<--.. i %/...,..«. a- -.'v 1 r,*.k.» ci^< V/-(jKc,J ,V «,w.y^ •' - v7^

INSTRUCTIONS: Pf.p.r* r.p«rt In JtJptit.f*. Within IS d.^i *ft.f ..ch oct.tloft. »nd oriam.l M cl*rt of Biunleip4[ity, • e*p» t« St*l« Lottify ConKol Commiivofl. *nd r»l«in • copy (or youffil*.

FALSE FINANCIAL STATEMENT AS SUBMITTED TO THE STATE LOTTERY COMMISSION BY OPERATORS 42 SCHEDULE IV—Continued

THf C"i"Y Of NCW TO«K DEPARTMENT Of LICENSC. SEE FtLING INSTRUCTIONS BflOW FINANCIAL STATEMENT N Y.S. IDENTIFICATION NUM1ER N.Y.C jjCENSt JOCUMENT NUMIt« 60-190'- "oa'-'oTi To' OF BINGO OPERATIONS K 313

{Prepared as Exhibit by Commission of Investiqation)

N.Y. Garrison #94, Army It Navy Union, U.S.A. 238 William St., N.Y.C.

T/tt^ AnsoniTVlotel - 2101-15 B'way, N.Y.C.

TOTAl IIOU LAXI ItfOIT TMKOCCAIIOM TO'AV TOtlAI*

A. NUMIER OF OCCASIONS

1. NUMIER OF GAMES PLAYED 28

C. NUMIER OF PLAYERS 495 $ 1$ * 2,073.10 D. RECEIPTS - Tot. of M«mi 1 lo 5 ...... 495.00 1. Admiuion C.tih »nj Fin.1 Po^uUr C«rtf>

2. Ei*T< RoQiiir 911.25 105.10 (Early Bird) 3. C.rdi For Sp 548.00 13.75 (Late) 4. Sob of Sijpp i*l

5. OtrSor ftouipIt

E. EXPENDITURES — Total of ^wr>t 1 to 6 1,129.00 Show only pcymontt Actually mdjd*) 1 , 004 . 00 1. Pm»i |Lkt in «*«)»). 1) ......

2. bquipm.nl (U 1 in Sck.diJ.2) ...... 100.00 3. R.n> (Show in 15.00 4. Sftrvicoi (Litt n ScMul. 2) ...... 10.00 S. Uc.m. F.. (Sno. in ScMul. 2j ......

0. OtrW .«pof*<« (Ul in Sd^ul. 2)

F. NET PROFIT OR LOSS ...... 944.10

1. NrtProcoodi bp.nd«d |E>pUin in Sck^ulo 3)

2. UnnponoVJ El

6. DEPOSITORY AND ACCOUNT SUPERVISION Tim. f.nd. ... d.po,it.d .1 Ik. Chase Manhattan Bank. Park Ave. i. 60th St., N.Y.C. in .„ .ccount trtW i*.Y. Garrison fW Building Fund .... , ... .. - ...... AB bingo financial tranuctioni «r. iup.rvii>d by John V. Garcia . _ Commander (N.n.1 " ' (T'':. »' .«(.•!

H. PERSONS CONDUCTING SINGO GAMFS

N.-. ..d Add.*.. H IV... .. (>..*. N.n. .^ /^d.,.t .' C.I*. N... ..d Add.... .1 C.I'.' . A....I.M John V. Garcia James Ojuiqier Frank Clark 450 95th St. 450 95th St. 450 95th St. u'klyn 9, N.Y. B'klyn 9, N.Y. B'klyn 9, N.Y.

REVERSE MDE MU! FINANCIAL STATEMENT AS IT SHOULD HAVE BEEN SUBMITTED ACCORDING TO LAW 43 per person charge with the amount being deducted (205). He testified: "Q. When you made a count, did you ever reconcile that three dollar figure with the number of people that were counted by your men? A. No. I think it was just one night after that—after we had been complaining about, there was just one night when we hit it on the head. Most of the time there were ten or fifteen or twenty people less that we saw go on the bus than we were charged for." (205-206)

Schmidt was also upset by the condition of facilities at the Ansonia Hotel: ' "Q. What conditions? A. Well, we were getting complaints that the bathrooms were dirty, that the light was bad, that the boards that were being played with were dirty. I had been complaining about the bus figure. I realized that it was high and I realized as we got into this thing, we had no control as to how much we were

payingaj""&-. Q. Was it in fact dirty and messy and no lights? A. Yes." (204)

Receiving no satisfaction from Buckner's representatives at the games, Schmidt complained directly to the gambler: "Q. Tell us about it. You complained about these things to him? A. Well, I complained about the conditions and I complained about the buses. I told him that I thought that it wouldn't be possible for us to pay for transportation. And he said that our organization is just like any other organization; after he gets them started and they know the business, now they are all smart. And if we didn't like the conditions we could find some other place to run our game. Q. In other words, take it or leave it; is that correct? A. Yes. Q. Take the way he was handing it to you or get out? A. Yes." (207)

Thus this group of honorably discharged, disabled veterans of the United States Armed Forces for the sake of a few easy dollars

44 kept on taking it the way Buckner was "handing it out." Buckner attempted to make this debasement complete, tighten his hold on the group and destroy any thought that the games were being held for charitable purposes by advising Schmidt to squander the little profit which was left to them. Schmidt further testified. "Q. Was there at any time any suggestion made to you by anyone connected with Pub Play to dispose of the profits that you should make? A. Yes.

Q. Who? A. Well, in a telephone conversation with Mr. Buckner, I told him that our outfit was not a paper organization, and it was not a one-man deal. I had seven managers at our game and each one of us knew what was going on, and I voiced the opinion that the boys were not happy with the money that we were making and the expenses that we were paying out. 'Well,' he said, 'the fellows were just like all the veterans organizations. I put them in business and then they get smart and they know it all. If I were you, Bob,' he said, 'I wouldn't keep a penny of it. Whatever you made,' he said, 'run parties and give it all back to them, because they will only kick you out a year or two later after you have raised the money. Don't keep a penny. If they get five they won't be satisfied. If you give them ten they won't be satisfied.' Q. Mr. Buckner was suggesting that you raise the pay of the workers, and with whatever profit you had left to have parties and blowouts and get rid of the money right away? A. Yes.

Q. The idea being, this is a bingo organization rather than a veterans organization; is that correct? A. Well, it may be that Bill Buckner finally saw we were making some money for ourselves. And we had been dealing with a Protestant Church to get away from the Ansonia. We had put in a bid on the building. And he saw that after the 10th of October we made a thousand dollars in November and a thousand dollars in December. And I have a feeling that he knew we were trying to get away from the Ansonia, and it may have been to his benefit if we didn't have this money to be able to get away." (212-213)

45 Frivolous dissipation of the meager profits left after a professional promoter's voracious cut would, of course, constitute the ultimate perversion of the fundamental purpose and spirit of the law that bingo proceeds go to charitable purposes. The Commission was able to obtain proof that this occurred in the case of two veterans' organizations, one in Utica and one in Yonkers, New York. 3. Tuckahop Post 52, American Veterans of World War II The use of bingo profits for the personal pleasures of the members was but one aspect of the shameful conduct of Tuckahoe Post 52 of Yonkers, New York. This organization conducted bingo at Veteran's Hall, Yonkers, New York from April 1959 to January 1961 with Theodore J. Hular as official merqber-in-charge of the games throughout the entire period. Hular was a long-time friend and golfing companion of Buckner (462-463) and associated with him in bingo in Yonkers, New York, prior to legalization (410-413). In 1957, Hular, who was then a member of D.A.V. Chapter 16, urged that group to "sponsor" a Buckner run bingo, meeting on several occasions with Buckner and Peter Pupchyk, a Chapter 16 official, for that purpose. Representing Buckner, Hular outlined the gambler's offer which Pupchyk subsequently accepted. In exchange for D.A.V. sponsorship of the game, Buckner provided a hall, equipment and financing (412). After all expenses, which included payment of a substantial rental of $150 a night to Buckner and salaries for bingo workers, profits were split between Buckner and the organization (412-413). This arrangement continued from April, 1957 up to the eve of legalization in Yonkers. Hular played a prominent role as supervisor of the games and caller of numbers at a salary of $20 a session (416). Toward the end of 1958, anticipating legalization, Buckner pressed Chapter 16 to commit itself to continue the same operation after bingo became legal in Yonkers on January 1, 1959, but at an increased rental of $250 a night (417). In spite of Hular's efforts to keep the group under Buckner's control, Chapter 16 broke with the gambler and went on to set up its own game (417-419). When that falling out occurred, the previously moribund, wholly inactive, penniless and purposeless Tuckahoe Post 52 was brought to its feet, dusted off and embarked on a career of bingo under the guiding hand and management of Hular (438-446). Hular admitted negotiating with Buckner for the conduct of bingo games by Post 52 in November 1958 shortly after the break between the gambler and Chapter 16.

46 When the group filed its application for a bingo license it had "not a dime in its treasury," a disinterested and inactive membership of about sixteen and no record of any activity in the field of veterans' affairs or welfare (442-443). Joseph Kutch, the Post Commander, testified: "COMMISSIONER SARACHAN: Mr. Kutch, how long before you went into this bingo deal had this post been in existence? THE WITNESS: About five years. COMMISSIONER SARACHAN: What did you do during those five years? As I understand your testimony a little while ago, you were primarily concerned—practically all your discussions centered around the bingo. What did you do during the five years before you got into bingo? THE WITNESS: Not very much. COMMISSIONER SARACHAN: You had very few meetings? THE WITNESS: Yes, very few. COMMISSIONER SARACHAN: Did you have any kind of meeting? Did you have officers? THE WITNESS: There were, yes. COMMISSIONER SARACHAN: About how many meetings would you say you had during those five years? THE WITNESS: I couldn't say exactly. I was very inactive. COMMISSIONER SARACHAN: It was practically an inactive post; is that correct? THE WITNESS: At the time, to my knowledge, yes. COMMISSIONER SARACHAN: When bingo came in, it became active, is that right? THE WITNESS: Yes." (444-445). The bingo license application of this group was filed with the Clerk of the City of Yonkers, William H. Gray in January 1959. For some mysterious reason, which no one has been able to explain, Mr. Gray held up his decision on the application some four months until April 1959. At that time he resolved whatever doubts he had in favor of Post 52's application. Gray's personal involvement with

47 Buckner appears to be the only reasonable explanation for the issuance of the license in this case.* Buckner's domination of the games through Hular and the abdi- cation of responsibility for their proper conduct by other members and officers of the Post was complete (442-456). Kutch, as Post Commander, never questioned Hular about disposition of the cash proceeds of the games. Though he was vaguely aware that Robert Quinn was carrying cash in and out, no one in the Post bothered to determine how much. Each week Kutch signed official financial statements as prepared by Hular without question or effort to determine the accuracy of the figures (447-449). Article XII of the Constitution and By-Laws of the American Veterans of World War II provide: "All moneys received by this organization shall be strictly and accurately accounted for, and a report shall be made available annually to all members showing the sources of all such income and the expenditures thereof. All Posts', Departments' and National accounts shall be kept in accordance with the uniform accounting system as established by National Head- quarters."

Kutch's testimony in regard to accounting for bingo proceeds reflects a monumental indifference to this internal obligation, as well as to applicable provisions of law: BY MR. VERGARI: "Q. Did the post have certain bank accounts? A. Yes.

Q. Do you know where those bank accounts were? A. I believe there is one in Ardsley. There is one in Yonkers.

Q. Do you know what banks? A. County Trust, is it?

Q. Did you ever see the bank statements and the pass books? A. No.

* Gray's relationship with Buckner and the circumstances of his resignation from office are discussed at pages 89 to 97 infra.

48 Q. Did you ever ask Mr. Hular to show them to you? A. No. Q. Mr. Hular was the sole signatory on those accounts, was he not? A. Yes. Q. Did you know how much money Mr. Hular was putting into those accounts? A. No. Q. Do you know how much money he was taking out? A. No. Q. Mr. Hular took complete charge of the proceeds of the bingo games, did he not? A. Yes. Q. You didn't know whether Mr. Hular was bringing that money to the bank or keeping it home under his socks, did you? A. No. Q. As of right now, you do not know where that money is, do you, Mr. Kutch? A. Well, I imagine it is in the bank.

Q. You imagine, but you don't know? A. No, I don't know.

Q. But you are the Commander of that post? A. Yes. Q. Did you ever call upon Mr. Hular to account for the funds? A. No. I had no reason to." (449-451)

This so-called Commander admitted that operating bingo was the only Post activity and that no meetings of the membership were held apart from assembling to work at the games (440-441). He testified: "COMMISSIONER SARACHAN: Doesn't your national organization have certain purposes and certain objectives that you exist for? THE WITNESS: I imagine they do, yes.

49 COMMISSIONER SARACHAN: Do you have a constitution? THE WITNESS: Yes.

COMMISSIONER SARACHAN: Are you familiar with it? THE WITNESS: Not too familiar." (441)

Robert Quinn was more explicit concerning the manner in which disposition was made of the profits of Post 52 bingo games. Accord- ing to his usual procedures he carried a "bank" of $700 to $800 in cash from Buckner or Keane to the game (335). Indicating that Hular enjoyed a closer and more confidential relationship with Buckner than members in charge of other Buckner games, he testified that ordinarily Hular took complete charge of finances at Post 52's bingo sessions (335). On rare occasions when a shortage in the work crews occurred and Hular's services were required for other duties, Quinn handled and accounted for cash receipts (340). One of Quinn's accounting worksheets for such an occasion was found in Buckner's apartment which showed that the sum of $164 was deducted for illegal salaries to the working crew.* Since Quinn testified that Hular worked on the floor only when as few as four or five crew members were available, it is apparent that the members of this Post received from $30 to $40 a night in salary for working at the game. A most unusual practice on the part of Hular was related by Quinn who professed no detailed knowledge of the working agreement between Hular and Buckner. He testified that on about three out of every four bingo sessions of Post 52, Hular took a sum of money from bingo proceeds, wrapped it in a sheet of plain paper and dropped it in the "bank" bag for delivery by Quinn to Buckner (338-340). Quinn stated that he never counted this money or was told how much he was delivering. Hular admitted sending cash to Buckner through Quinn, claiming that the money came from a "general fund" rather than bingo proceeds (481). The fact of the matter is that no such "general fund'' existed until Hular created a general account in October, 1960 under highly questionable circumstances. Furthermore, Post 52 had no source of income other than bingo. According to regulations in effect at the time, a licensed organization was required to deposit its bingo profits in a special bingo

* Commission's Exhibit 26. 50 account. All bingo expenses were required to be paid by check and at the close of fiscal periods ending on March 31 and September 30 each year, such funds were to be transferred out of its bingo account into the general fund of the organization. There it might be used for the welfare, civic or charitable purposes of the group.* Hular, of course, up to September 30, 1960, had failed to comply with any of these requirements. Such continuing and obvious violations even friendly or inept authorities could not long overlook. (When bingo proceeds were removed from a bingo account and deposited in general funds, all supervision and control by enforcement authorities ended—laws and regulations being silent on that subject.) Official financial statements submitted by Post 52 pursuant to law reflect that this organization reported as net bingo profits the sum of $2,089 for the period of operation from April, 1959 to Sep- tember 30, 1960 (487). Not a penny of that money was recorded in any book or record of the organization. Nor was it deposited in any account until October 18, 1960 when Hular deposited that exact sum in cash in a "bingo account" in the County Trust Com- pany (488). On the following day, Hular drew a check on the "bingo account" payable to the "general fund"** and by depositing that check, created the required general fund account (494). Hular drew a check to cash against the general fund account on Novem- ber 18, 1960 in the amount of $2,079*** and took custody of that cash himself (494-495). A reluctant and evasive witness, Hular was pressed in an effort to clear up serious questions presented by this extra-ordinary handling of what were presumed to be Post funds. Was $2,089 in cash given to Buckner by Hular during the course of bingo operations by piecemeal deliveries through Quinn? Was that same amount of cash which was used to make the deposits of October 18 and 19th provided by Buckner to set up the required general fund account? Was the cash drawn from the short-lived general fund by Hular on November 18, 1960 returned to Buckner? In light of all the facts known to the Commission regarding Buckner's operations, these constituted reasonable inferences and proper areas for investigation and interrogation. Hular's actions seemed nothing more than crude cover-up book transactions to provide the appearance of compliance

*'Part VIII, Rule 5, Rules and Regulations of the New York State Lottery Commission. ** Commission's Exhibit 33. > *** Commission's Exhibit 31. 51 with law and regulations. When examined regarding the source of the $2,089 cash deposit of October 18, 1960, he testified: BY MR. VERGARI: "Q. The question, Mr. Hular, is where did that money come from? A. Well, that was the net gain we had up until date.

Q. That was Bingo money; is that right? A. Yes.

Q. Where, physically, did you have the money? Where did you get it from to deposit in the bank? A. From myself. I deposited it there.

Q. Where did you have it? A. On my person.

Q. That was a cash deposit, was it not? A. Yes.

Q. Let me read some testimony to you. Maybe it will refresh your recollection. It was given by you at the hearing of March 24, 1960. 'Question: The records of the Bingo account indicate, Mr. Hular, that you deposited $2,089 to that account on October 18, 1960. 'Answer: Yes.

'To your best recollection, where did that money come from? 'That was all bingo money.

'Question: It was money that you had kept on hand? 'Answer: That's right, yes.

'Question: Where did you keep the money? Where did you store it for safekeeping? 'Answer: In my home.

'Question: You kept $2,000 in cash around the house? 'Answer: Sure. I live right near a back yard.'

52 Q. Did you give that testimony? A. Yes, sir.

-i» «t» "i* •)*

Q. Did you have the money in the back yard? A. No, I didn't have it there.

Q. Where did you have it? A. I had it in my home.

Q. Where in your home? A. In my home.

Q. You mean you just kept this Post bingo money in your home until it accumulated to $2,000; is that right? Is that what you are telling us? A. Yes." (489-491)

In weighing the truthfulness of this testimony, one must consider that Hular had been employed by the United States Post Office Department for sixteen years. At the time of these transactions he was an Assistant Superintendent in charge of the South Station Post Office in Yonkers, New York, handling and accounting for Govern- ment funds, stamps and money orders as part of his regular duties (461). This witness, who is presumed to be familiar with proper business practices, admitted giving Buckner some undetermined amount of cash, in the neighborhood of $2700, during the period from April, 1959 to November, 1960 without receipts, records or accounting of any kind (495-496). Hular claimed that over $2400 of this money was due to Buckner for rent of the bingo hall from January, 1959 to April, 1959, a period of time when Post 52 was not licensed and did not hold bingo games in the premises (475). He further claimed that this obligation was incurred by virtue of a verbal agreement between Buckner and himself, binding Post 52 to a high rental, of which agreement the Post apparently had no knowledge and never ratified (473-476). This alleged agreement to pay rent for a hall which the Post was not using was never reduced to any form of writing (478), nor was a record of the exact rental terms ever made (474). Hular admitted that "he gave $600 or so" of the 52,079 withdrawn from the general fund to Buckner in cash on account of

53 the claimed verbal agreement (495). Asked why he paid this item in cash, the witness replied: "THE WITNESS: I needed actual cash to operate with. I needed bills. COMMISSIONER SARACHAN: That does not answer my question. Why didn't you draw a check for S600 [to Buckner]? THE WITNESS: I see what you mean. COMMISSIONER SARACHAN: Yes, that is what I mean. THE WITNESS: No particular reason. COMMISSIONER SARACHAN: \sn't that the normal way in which business people do business? You have an account, you owe somebody money, you draw a check against the account. You don't draw a check for $600 cash and hand him the money. Or is there something that you were trying to hide? THE WITNESS: No, sir. COMMISSIONER SARACHAN: Just a moment. I haven't had an answer to my question. Why did you take that money in cash. MR. BAVE: He said, 'No, sir' in answer to your question. COMMISSIONER SARACHAN: I am asking why he paid in cash, why he didn't pay by check. 'No, sir' is not an answer to that. THE WITNESS: I had no particular reason. COMMISSIONER SARACHAN: In other words, you cannot explain that; is that right? THE WITNESS: That's right." (496-497)

The balance of the general fund cash withdrawal was allegedly retained by the witness for operating expenses. None of it was ever accounted for. The total profits as reported by Post 52 from April, 1959 to Janu- ary 1, 1960 was $2,648, all of which was returned to Buckner in cash. Hular testified: "Q. And the money was paid back to Mr. Buckner in cash? A. Yes.

54 Q. Under an arrangement where you had no record of any lease; is that right? A. No.

Q. No record of any kind of these obligations; is that correct? A. No, sir.

Q. No record of the payments made by you to him; is that correct? A. No, sir.

Q. No receipts from him to you on account of this money; is that correct? A. No, sir.

Q. No records kept by you for your own accounting, for your own recollection, as to the amount of money you sent him? A. No.

Q. All you can tell us is that since you started bingo you have paid or sent to Mr. Buckner a sum close to S2700 in cash; is that correct? A. Yes.

Q. And that just about coincides with the total amount of profit that your organization realized on bingo; is that correct? A. According to those figures, yes.

COMMISSIONER SARACHAN: The figures speak for themselves." (499-500)

Added to this sorry record was the fact that "it was a practice of the Post to have parties at which the workers at the bingo games would be entertained along with their wives" (456). Obviously em- barrassed by giving such testimony in public, it was necessary to read to Post Commander Kutch, testimony elicited from him in private session, to refresh his memory: BY MR. VERGARI: "Q. I want to read testimony given by you at your previous private hearing, starting at page 1279: 'Question: To your knowledge, did^you spend your money

55 realized from the profits of bingo games on any other purpose than these blow-outs and parties? 'Answer: Not to my knowledge, no.

'Question: It was spent for no other purpose? 'Answer: No.

'Question: In other words, you were just satisfied to have a good party once in a while and let it go at that? 'Answer: Yes.'" (458, 459, 460)

The parties were held at expensive restaurants for as many as thir- teen couples, and featured steak and liquor (456-457). The witness was not entirely correct when he stated that the profits of bingo games were not spent for anything other than "blow-outs and parties." From 91 sessions of bingo and $2,648 in reported earnings, $62 was donated to legitimate charities (459). This "bona fide" organization of veterans, which swore in its license application to conduct bingo for welfare purposes, managed to scrape together an average of 68^ from each session for charity.

4. The Paid Workers Detailed description of the operations of other licensed groups which made up the Buckner organization would only be repetitive. However, several incidents disclosed by the investigation and public hearing merit brief discussion. Though relating to the recruiting and payment of workers,* they reflect the total disregard for law which developed in this legalized gambling activity, run by a professional, convicted gambler. Amvets Post 481, whose charter lay unclaimed for years at Amvets headquarters, was brought to life by a process which can best be described as artificial respiration, in order to obtain a bingo license and fill an open date at the Ansonia. The putative Com- mander of this group, William Byman, contacted old bingo "pro" Leo Wolfe (149-150) for assistance. Byman told Wolfe that he had no active members to form a bingo crew and unless Wolfe helped him recruit, he could not get his games started (407-408). Wolfe helped round up a crew who went to work on the promise that they would be paid (409).

* See, Schedule I, provisions 4 and 5 relating to workers at bingo games, p. 15, supra. 56 The fact that a bingo worker was not an active member of the licensed group, as provided by law caused no concern in the Buckner games. Kenneth Gordon, a young man of Irish-Italian extraction and of the Catholic faith, was recruited to work at the bingo games of Congregation Ernes Wozedek (398-399). He was instructed by Buckner's lieutenant, Joseph O'Neill, in the performance of his duties: "Q. Were you also instructed as to what to say to any inspector or anyone else who asked you about your membership in the organization? A. Yes.

Q. What were you told to say? A. That I was a member of the Congregation Ernes Wozedek, I didn't receive pay, and I didn't get tips.

Q. You were told to say that? A. Yes.

Q. In other words, to anyone who was interested and wanted to know, you were of the Jewish faith; is that correct? A. Yes.

COMMISSIONER LANE: Did anybody inquire, any of the inspectors? THE WITNESS: No." (400)

Gordon was "transferred" from the Ernes Wozedek games to work on the bingo crew of D.A.V. Chapter 80 and given a raise in salary to $14 a night (402-403). This young man is not a disabled veteran and never was a member of the D.A.V. An apparent shake-up of bingo crews occurred about the time of Gordon's transfer. He was present at the Audabon Ballroom when Eugene Keane was giving a squad of new bingo recruits the same indoctrination which Gordon had received earlier (404). An interesting sidelight to this complete disregard of the law concerning the composition and payment of crews was provided by the discovery of a bingo worker's identification card, affixed with a photograph of Buckner's son, Andrew Buckner, and bearing the name Andrew Garcia.* John Garcia explained that Buckner put

* Commission's Exhibit 11.

57 the young man to work at the Garrison 94 game to get experience and suggested that the name "Garcia" be used so that the name "Buckner" would not be associated with the operation (165-169).

5. Housewives Claim Their Privilege In summarizing the Commission's findings at the close of the public hearing, the Commission Chairman stated: "Otherwise decent citizens were duped or persuaded to commit fraudulent acts and shameful infractions of the law." (840)

This observation was nowhere more acutely dramatized than in the case of the members in charge of bingo for the Boulevard and Glenwood Community Centers. The two groups sponsored bingo at the Ansonia Hotel in an effort to raise money for children's camps and settlement house projects. These persons are apparently civic-minded housewives and mothers. When questioned about the bingo activities of their groups, they refused to testify on the ground that their answers to questions on this and related subjects would "tend to incriminate them" (282-287, Pr. H. 2727-2729). The Commission, of course, does not question the right of any person to assert his Constitutional privileges. Nevertheless, this sad and wryly amusing anomaly accented the degree in which operation of a legalized gambling enterprise can corrupt and destroy proper community fund raising. ft. Misappropriation of Bingo Profits The work sheets prepared by Quinn and others, found in Buckner's apartment, reflected accurate accountings of financial transactions of certain bingo sessions of seven of the licensed organizations of the Buckner group. Testimony obtained during interrogations and private hearings provided additional proof of the methods and amounts of illegal misappropriation of bingo profits (363). This data enabled Commission accountants to determine the exact amount of money unlawfully diverted from profits of a number of particular bingo sessions. On the basis of these exact figures, a reasonable, accurate and conservative estimate was made of the total misappropriation from the profits of the seven groups covering the period from January 1, 1959 to December 31, 1960. A schedule setting forth this estimate follows:

58 SCHEDULE V STATE OF NEW YORK COMMISSION OF INVESTIGATION ESTIMATED MISAPPROPRIATION OF BINGO PROFITS—WILLIAM P. BUCKNER'S BINGO OPERATION* Based on Available Records and Evidence 1959-1960

Illegal Number Illegal Illegal Payment Illegal Total Reported of Illegal Bus Supply of Office Illegal Reported Rent Organization Sessions Rental Charge Charge Workers Charge Charges Profits Payments

Glenwood Community Center ...... 73 10,950.00 28,470.00 730.00 10,220.00 2,555.00 52,925.00 18,688.12 7,300.00 in Franklin D. Roosevelt Chapter #80— D.A.V...... 44 4,400.00 6,160.00 440.00 9,680.00 1,540.00 22,220.00 11,137.72 5,675.00 Major F. H. LaGuardia Chapter #116 71 3,550.00 13,490.00 710.00 7,455.00 1,065.00 26,270.00 1,904.15 11,400.00 New York Garrison #94 — Army & Navy Union ...... 55 2,750.00 15,400.00 550.00 10,450.00 825.00 29,975.00 5,652.88 7,200.00 Tuckahoe Post #52 Amvets ...... 91 unknown unknown unknown 14,560.00 1,365.00 15,925.00 2,648.00 10.350.00 21,650.00 63,520.00 2,430.00 52,365.00 7,350.00 147,315.00 40,030.87 41.925.00

Men's Club — Temple B'nai Israel Center & Talmud Torah ...... 106 14,840.00 11,660.00 1,060.00 14,840.00 unknown 42,400.00 12,280.55 Temple B'nai Israel & Sheerith Judah Community Center ...... 78 10,140.00 4,524.00 780.00 11,700.00 unknown 27,144.00 11,990.55 46,630.00 79,704.00 4,270.00 78,905.00 7,350.00 216,859.00 64,301.97 41,925.00-

* Commission's Exhibit 28. It should be noted that the total illegal charges were much higher than $216,859. Reliable evidence was obtained which established that misappropriations occurred from the profits of other group:, (364). Since this evidence did not lend itself to analysis by usual accounting procedures, no accurate estimate of the complete and much higher total was possible (367). Of the five items of illegal charges noted on Schedule V, all but payments to workers and the "office charge" salary of Quinn and O'Neill went to Buckner—a total of $130,604. To this figure must be added Buckner's substantial legal rental income. Again, shoddy, unreliable bookkeeping and reporting practices prevented a to-the- penny accounting for Buckner's profits as a landlord. Available figures for the year 1960 indicate that Buckner received $37,350 in reported rents from licensed organizations using the Ansonia and paid $25,700 as Pub Play's rent to the hotel management. Well organized, firmly established and immensely profitable when the Commission's action of January 9, 1961 closed it down, the Buckner operation was expanding and growing. Evidence indicates that the gambler was moving to widen the scope of his activities alone and with other professional promoters both in and out of the state.* It is entirely reasonable to assume that if Buckner and others of his ilk continued unchecked, within a few years professional promoters, with maximum prizes and steady night-to-night gambling casino-type operations, would have gained control of a substantial part of legalized bingo gambling in the state. Small religious and charitable groups operating legitimate games, with limited resources and prizes, could not meet such high powered competition.

* For example, see Pages 532-535 of the record of the public hearing.

60 PROFESSIONAL BINGO IN OTHER AREAS OF THE STATE

A. Utica, New York The abuses, violations and perversion of the law which characterized the Buckner operation were also found in the activities of two professional promoters in Utica, New York. Prior to legalization these promoters operated games in Utica, Rochester, Buffalo, Troy and Sylvan Beach, New York. The pattern was the same; professional gambling backgrounds and substantial bingo operations prior to legalization; financing and control, illegal misappropriation of profits and fraudulent cover-up reporting after legalization.

1. The Michael Wrnii Operation One such operation was run by professional bingo promoter, Michael Wynn, at a commercial hall which he owned at 520 Wash- ington Street, Utica, N. Y. Wynn, who was out of the state during the investigation, had eight licensees conducting games in his premises under the supervision of Helen C. Palaimo, a professional, who had worked bingo for Wynn several years before in Las Vegas (552 ). It was Palaimo's job to "bank" the games with money provided by Wynn, take custody of all proceeds, and make directed deductions. Licensed groups received a flat fee of $65 a session, the balance was paid over to Wynn (Pr. H. 1713, 551). The witness claimed that this practice continued for only a few months and broke down when bingo workers of the various organizations took over during Wynn's absence from Utica for an extended period of time (Pr. H. 1704-1711). Operating in this manner required Palaimo to prepare false financial statements, hiding the true profits by reporting less than the actual number of sales of extra game cards (1709). The fact that this method of operation continued for just a'few months is subject

61 to serious doubt when one considers her testimony concerning an incident which occurred about a year later. She testified that during a bingo session, Wynn came in to her office, picked up a handful of bills from the proceeds of sales of extra game cards lying on her desk and walked off with it (Pr. H. 1718-1720). It took no more than preparing false financial reports to cover up an act tantamount to outright theft of bingo proceeds. Palaimo refused to give an estimate of the amount of money taken. Efforts to get her to expand on the somewhat sketchy account reluctantly given in private session was thwarted at the public hearing by her refusal to give further testimony on the ground that her answers would tend to incriminate her (542).

2. The Milo Merrill Operation Milo Merrill's career as a professional promoter of bingo dates back to 1944 when he was trained by and worked for Michael Wynn, who was running illegal bingo in Utica and other cities in the western part of the state (Pr. H. 1922-1925). By 1947, Merrill set up in business for himself in Utica with a partner, Stanley Philo, conducting illegal bingo under the name P. & M. Amusement Com- pany (Pr. H. 1925-1927). From 1948 to 1956, Merrill occupied the elective office of Assessor of the City of Utica, leaving active operation of the business to Philo (Pr. H. 1928-1929).'However, while serving as an elected official of the City, Merrill continued to draw a salary from this illegal gambling operation. Merrill again resumed an active role in the business in 1956, operating illegal bingo games under the protective cover of a number of veteran groups. The practice of paying a sponsoring organization a small share of the profits for use of the "front" prevailed in Utica as it did in New York City prior to legalization. Inevitably, the system with all its attendant evils and violations of law was carried over into post-legalization games, including those run under a license issued to a group of firemen and policemen of the City of Utica—the John W. Phelan Police and Fire Post 1609, American Legion. In early 1959, Donald C. Houle, a member of the Utica Fire Department* negotiated with Merrill for the conduct of bingo games by Post 1609 (557-558). Merrill, who was known to the group as an "old time bingo operator." proposed to finance and run weekly

* An official department of the City of Utica whose personnel are full-time. paid public employees.

62 bingo sessions under license issued to the Post. In exchange, Post 1609 was to receive a flat $15 per session (561-563). Houle testified: "Q. In other words, you were getting from Mr. Merrill a fixed sum of $15 for your organization each time that the game ran; is that right? A. Yes.

Q. Irrespective of what the profits were? A. Yes.

Q. As a matter of fact, you didn't even know what the profits were ... ? A. No." (562)

Typically, Merrill "suggested" that Post members be paid $5 a night for working at the games (555-556). It will be recalled that payment of wages to bingo workers is a violation of law,::: yet police officer members of the Post, as well as firemen, were paid for their services (564). Houle never received an accounting from Merrill of the actual profits from bingo. Playing the promoter's game, he blindly signed false financial reports which were prepared by Merrill (567, 570). After each session, Houle received an additional $65 from Merrill which he deposited to the Post's bingo account. This money was returned to Merrill by check payable to P. and M. Amusement Company, as landlord, thus establishing a fraudulent pattern of rent payments in a further effort to cover up Merrill's part in the operation (563). One might hope that the meager $15 a session profits realized by this group would be applied to worthy charitable causes, to mitigate in some measure the participation by public officers, policemen and firemen, in this shameful venture. Unfortunately, such was not the case. Apart from one small charitable gift, the bingo profits were used for the personal pleasure of the members of the Post. In this regard, Houle testified: "Q. What generally did you do with your bingo money? A. Made a check out and turned it over to the Phelan Post.

Q. What did they do with it? A. Various things.

* Section 488, General Municipal Law of the State of New York.

63 Q. Apart from giving a present to Phelan's son— That is the son of the man for whom the post is named —that is a deceased fireman in Utica; is that right? A. Yes.

Q. Apart from giving a present to Phelan's son, isn't it fair to state that the monies were used for refreshments and clam- bakes and parties by the post? A. Yes. Yes.

Q. A substantial portion of the bingo profits was also used to send delegates to State conventions, was it not? A. Yes.

Q. Isn't that correct? A. Yes.

Q. The bingo money was used to give your delegates to the State conventions some expense money, pocket money, so that they could enjoy themselves at these conventions; is that right? A. Yes." (570-572)

15. Investigation in Bronx County During the course of the investigation, this Commission consulted with Norman D. Valentine, Executive Officer of the New Jersey Legalized Games of Chance Control Commission, and received valuable assistance in certain phases of the investigation. Information was exchanged in an effort to determine if professional promoters under investigation in one state were active in the other. This help- ful cooperation revealed that one Harold Mayer, a commercial lessor of three bingo halls in New Jersey, also controlled a thriving bingo hall, the New Terrace Gardens, in the Borough of the Bronx. Mayer and his manager, Yale Klein, and their suspected Buckner- type enterprise, came under preliminary investigation by the Com- mission which planned a probe of these subjects in detail after the Buckner phase of the investigation had been completed. However, events which quickly followed the commencement of the open phase of the investigation on January 9, 1961 precipitated immediate and direct action by the Commission staff which resulted in their arrest and indictment for attempted bribery.

64 Alex Drogichen, an investigator on the staff of the New York State Lottery Commission, as a part of his regular duties, inspected bingo sessions at the New Terrace Gardens. On December 9, 1960, Drogichen noted irregularities in money control and reporting which indicated that bingo proceeds were being illegally diverted (583- 584). He called this violation to the attention of the member in charge of the game and advised that it would be reported (584).* Thereupon, the manager, Yale Klein, approached Drogichen who testified: "A. This man, (Klein) approached me on December 9th the first time, on that occasion there had been a bingo occasion, a bingo game held in the hall. I had found violations, made known that I was going to report them. This man, who was the manager for the lessor, approached me and offered to put me in effect on their payroll.

Q. What did he say to you? A. He offered me fifty dollars then and there and said that I would receive fifty dollars a month in advance each month, to become one hundred dollars a month later as business expanded.

Q. Did he say what he wanted you to do for this? A. Yes. Specifically, I was to not count attendance, I was to accept without question reports of receipts given me by the organizations playing bingo, and in general to go easy or be lenient in listing violations. To not come around too often, to let them know when I was coming. And to be generally cooperative." (584-585)

The bribe offer was rejected by Drogichen and reported by him orally to his superior, Chief Inspector Thomas Dorr (585). Asked why the report of the bribe was made orally rather than in writing, Drogichen explained that Dorr told him that putting such reports in writing was "unwise" and "stupid" and "should not occur" (585). No action was taken on the report by Dorr,** who apparently also neglected to relay the report to his own superiors (585-586).

* These bingo violations were reported in writing according to procedures then in effect in the Lottery Commission. One copy of the report was given to Chief Investigator Thomas Dorr and a second to John L. Coffey, Executive Director of the Commission. "# Dorr's association with Buckner and his resignation from office at a private hearing of the Commission are discussed at pages 81 to 86 infra.

65 On December 30, 1960, Drogichen returned to the hall and found the same organization engaged in the same violations that he had noted on December 9, 1960. He noticed a discrepancy of about $211 between the amount of money reported to him as receipts and the amount as he computed it from personally checking the attendance and the number of extra cards sold (587-588). Klein repeated the bribe offer made three weeks before and again Drogichen reported the matter orally to Dorr, who gave no indication that any action would be taken (588-589). Although Drogichen forcefully rejected the attempted bribe. Klein called him at home on January 11, 1961 and told him he had arranged a meeting between Drogichen and Harold Mayer himself (591). This last attempt was reported that day by Drogichen directly to Lottery Commission Chairman Richards W. Hannah, who brought Drogichen to this Commission immediately and directed him to cooperate fully in whatever action was deemed proper (590). Acting under instructions and surveillance by the Commission staff, Drogichen met with Mayer on January 13, 1961 and on two occasions thereafter. At the first meeting he gave Drogichen S200 and at the two subsequent meetings $100 each time. In addition to being "cooperative and lenient" with the promoter's operation, Drogichen was asked to perform an additional service: "... part of my cooperation should take the form of harassing games which competed with those being played in his hall. Q. In other words, he wanted you to give his competitors a hard time? A. Yes, sir." (591)

On March 1. 1961, the occasion of the third meeting, Mayer and Klein were arrested by Special Agents of the Commission, assisted by Detectives of the Bronx District Attorney's office. Shortly thereafter the Grand Jury of Bronx County returned an indictment against both men charging them with attempted bribery. The Commission commended Mr. Drogichen for the excellent manner in which he performed his duties. The ability and qualities he demonstrated in this instance unfortunately were not reflected in the conduct of the Chief Investigator and other members of the Lottery Commission's investigative staff, some of whom all too readily succumbed to corrupting influences. Drogichen's reports of typical bingo violations in that professionally run Bronx operation and its swift disruption by the summary

66 arrest of the operators made further detailed investigation by this Commission of the licensed groups there unnecessary. All licenses to conduct bingo in those premises were revoked. It is interesting to note that in addition to employing similar illegal and fraudulent practices, there was one other characteristic which the Bronx operation had in common with those of Buckner in New York City and Yonkers, and of Merrill in Utica, New York. In each case the reported rentals paid to these promoters as commercial lessors far exceeded the reported profits to the licensed organizations themselves. This fact and certain available financial statistics serve to point up another very serious problem presented by licensed organizations using bingo halls controlled by commercial lessors.

VI COMMERCIAL LESSORS

In spite of the clear intent of the law that profits from bingo be used for charitable, religious and civic causes, available statistics reflect that commercial lessors have become, in effect, partners of licensed organizations which conduct games in leased premises. These statistics take on added significance in light of the history of various commercial operations described in preceding sections of this report. According to figures published by the Lottery Commission for the calendar year 1960, Milo Merrill's P. & M. Amusement Co. of Utica, New York, reported $9,035 in rental receipts as against $3,654.08 total reported profits of all the organizations sponsoring bingo in his hall. Mayer of the Bronx operation received $24,925 in 1960 as a commercial lessor while his licensed groups reported only $14,789.62 in total profits. In the same year, Buckner, as lessor at Ansonia Hotel, realized $37,350 in reported rents, compared to $3,948.17 in profits received by all of his lessee organizations. Sufficiently accurate figures were available for the calendar year 1960 to demonstrate that the rent receipts of a substantial number of other commercial lessors surpassed or equalled the total net profits of the licensed groups conducting bingo in their halls. Analysis of a report of the New York State Lottery Commission, entitled "Financial Statistics for the period January 1, 1960 to December 31, 1960" reveals that during the stated period, licensed bingo organizations were using as many as 40 halls under lease from commercial lessors. 4,849 bingo sessions were held in these premises with a gross play of close to five and one-half million dollars, more than 12% of total play for the year. Total net profits reported by all charitable organizations conducting games in the rented halls was $854,184.54, while reported rentals paid by them during 1960 was $764,242. In 19 of the 40 commercial halls for which statistics are reported, rents substantially exceeded profits of the licensed groups. The total

69 of such excess was $109,767.15 (837). Some typical examples are set forth below: ' Net Profits to Licensed Lessor Rents Organizations

Eagle Enterprises, Syracuse, N. Y. 23,700 10,144.85 Beth Page Bowl, Beth Page, N. Y. 10,160 8,191.97 Vi Cam Corp., Rochester, N. Y. 3,650 2,712.33 Eastern Parkway Arena, Brooklyn, N. Y. 203,080 178,229.57 Hopkinson Manor, Queens, N. Y.* 28,580 8,243.79 Manhattan Towers, New York, N. Y. 11,575 4,655.25 On the occasion of the issuance of a bingo license, Lottery Com- mission regulations call for local licensing authorities to submit a report of its findings and determination on the form "Findings and Determination for Bingo Licenses."** Part of the form includes a finding by the local authority that the rental to be paid by the licensee was reasonable. Nevertheless, the mushrooming rent rolls of commercial operators continued unchecked. No statute or regulation specifically states that unreasonable or excessive rents shall constitute cause for denial or revocation of a license. Being purely a matter of form, the question of rents was treated as such by local authorities. For example, the Department of Licenses of the City of New York merely processed applications, determining little more than that the required papers appeared to be in good order. The highly disturbing fact of commercial lessors, some of the Buckner variety, taking disproportionately high percentages of bingo profits as rents was also a matter of concern to the Executive Director of the New Jersey Games of Chance Control Commission, Norman D. Valentine. Mr. Valentine testified on the subject at the public hearing. He said there are forty-one commercial lessors operating in New Jersey and in a majority of those cases the "lessor does receive more in rent than the organization receives in net profits" (522). Under-the-table rentals and percentage deals have been reported to Mr. Valentine as typical abuses in commercial hall operations (524). He has recommended to the Governor and Legis- lature of his state that the present law which permits bingo to be played in commercial halls be repealed (524, 525).

* Operated by Sidney Franklin, owner of Metro Manufacturing Company, one of the leading rnanufacturers of bingo equipment. Franklin was also a substantial contributor to Buckner's lobby fund (99). ** Part IV, Rules and Regulations of the New York State Lottery Control Commission.

70 VII BREAKDOWN IN THE ENFORCEMENT OF THE BINGO CONTROL LAWS

In 1951 the former New York State Crime Commission conducted an investigation into gambling and vice in the City of Hudson, Columbia County, New York.* In its report that Commis- sion attributed the breakdown of gambling law enforcement there and in other communities in which it had conducted investigations to several factors, including bribery, incompetence and personal friendship of the law enforcement officer with the criminal. In this respect, legalized gambling—bingo—is no different from its older and bigger brother, illegal gambling. The serious breakdown in the enforcement of the bingo control laws, clearly shown in the operations described in preceding sections of this report, had precisely the same root causes. When John Garcia of Garrison 94 testified at the public hearing concerning the bus transportation of players to the Ansonia, he was asked whether he protested this obvious violation to Buckner: "Q. Did you talk to Mr. Buckner about this and say, 'Well, maybe we can deduct fifty or a hundred dollars rent under the table, but how . . . can we hide buses . .. ? A. I did talk about that.

Q. What did he say? A. 'Don't worry about it.'

Q. What did he mean, 'Don't worry about it'? A. He said, 'You won't get into any trouble about it.'

Q. Didn't you say, 'Look, Mr. Buckner, I am the member in charge of this thing. I am the man who signs all these reports and applications. How do you know I am not going to

* See report of the New York State Crime Commission, Leg. Doc. (1953), No. 23, pp. 20-23. s 71 get into trouble? You can't hide two buses with one hundred people in them.' A. I mentioned it a thousand titties.

Q. What did he say? A. 'Don't worry about it.'

Q. Didn't you say, 'Why shouldn't I worry about it'? A. He inferred that he could take care of it."

"THE CHAIRMAN: What connections did he claim he had? THE WITNESS: He said he had connections with the Bingo Commission."

"THE CHAIRMAN: Any other agency? THE WITNESS: He never mentioned any other to me that I can recall." [175-177]

In this case, Buckner demonstrated an uncharacteristic modesty. His "connections" and his ability to "take care of things" included officials and agencies other than the Lottery Commission.

A. The Lottery Commission Investigative Staff Before setting forth a detailed account of instances of corruption and improper conduct on the part of investigators of the Lottery Commission, certain observations are necessary and pertinent. Composition, organization, supervision and salaries of the Lottery Commission investigative staff were on the whole inadequate to discharge the basic statutory duty to "prevent commercialized gambling, prevent participation by criminal and undesirable elements and the diversion of funds.":;: These marked inadequacies demonstrated an unrealistic approach to the problem and an apparent naive and amateurish view of the true nature of legalized bingo as a multi-million dollar attraction to the professional gambler. Also reflected is a lack of understanding of the historic difficulties involved in enforcing any gambling control laws. It is this Commis- sion's view that there was a failure to recognize and separate the

* Chapter 853 of the Laws of 1953, Section 431, the Executive Law of the State of New York. 72 routine and purely regulatory and supervisory functions from the definite law enforcement obligations of the Lottery Commission. It is, of course, obvious that dealing with operators like Buckner, Mayer, Wynn, and Merrill requires well-trained and experienced investigators.

1. Staff Composition anil Organization Prior to May 4, 1961 when certain reorganization measures were put into effect, the Lottery Commission staff of investigators was divided into two separate Districts. District A included the five metropolitan New York City counties, Nassau and Suffolk and 25 counties in the eastern half of the state. Former District B encom- passed 30 counties in central and western New York. Each District had a single Chief Investigator who was characterized by Admin- istrative Director Coffey as a "more or less straw boss"—presumably working in the field with the men. Chief Investigator for District A was Thomas Dorr. His crew included one man for each of the New York City counties,* one for Nassau and Suffolk counties and five for the remaining 25 far-flung counties in the District. Prior to April 1, 1961, investigators were paid about $4,500 a year. They now receive an annual salary of $5,020. Chief Investiga- tors (District Supervisors) are paid at the rate of $6,300 a year. All of the investigators are selected from Civil Service lists and of the several interviewed during the investigation, none was found to have the training or experience to conduct an investigation properly and efficiently. Mr. Coffey himself described the qualifications of his staff: "Q. In your official capacity did it ever come to your attention that there may have been something wrong with the operation of bingo games at the Ansonia Hotel? A. Well, we have been carrying on an intensive investigation on all of these organizations that play in all these rented halls. And from time to time we would send men up and they couldn't get any information. After all, we have fellows that are not trained in investigative experience. All the experience they get is on-the-job training. They are certified by Civil Service as having enough experience to do this particular job. Now, it takes a probationary period of six months; it takes almost six months to teach them how to learn something about

* For the period October 1, 1960 to March 31, 196i, 395 licensed organizations conducted 8,960 bingo sessions in New York City.

73 the operation of a bingo game, itself, let alone going into the background of all the operators of the games themselves." f Pr. H. 601-602 | In short, these men found it difficult to uncover routine bingo violations "let alone" handling investigations of racket type operations. The qualifications and experience of Mr. Coffey, who stated that he was supervisor of field personnel and could be considered director of investigations for the Lottery Commission, are chiefly in administrative work [Pr. H. 587]. Reorganization of the investigative staff on May 4, 1961 into three Districts and adding an extra District Supervisor, while a step in the right direction does not solve the problem of adequacy of personnel in number, effective deployment and investigative competence.* It may, in some measure, improve supervision which before had been virtually non-existent.

2. Staff Siiiierrisioti Supervision and control of Lottery Commission field investigators can best be described as minimal. The fact that field men were scattered all over the State with one man responsible for checking games in as many as seven different counties contributed in some measure to this situation. However, in the City of New York where professional gambler and commercially run operations would be a clearly foreseeable danger—direct, active and forceful supervision was lacking. There, time and distance was not a factor since men assigned to the metropolitan area lived and worked within reasonable distance of the Lottery Commission office at 270 Broadway, New York City. Investigator Alex Drogichen who figured in the attempted bribery arrest of professional bingo promoter Harold Mayer* * was examined at the public hearing regarding training of Lottery Commission investigators: "Q. In any event, did you receive any kind of training in this particular or specialized field of bingo? A. No, sir. Q. What happened after you came on the staff? A. I was turned over to another member of the staff and told to accompany him to a couple of bingo occasions that he

* Dorr's successor, the recently designated Supervisor of District A, the sensi- tive and important greater New York metropolitan area was in the hotel equipment business prior to joining the Lottery Commission at age 54 [Pr. H. 616-617], ** See pages 64 to 67, supra.

74 had to visit, in the course of his regularly scheduled work. That would be Albert Einstein. Q. What did you do when you went out with Mr. Einstein? A. I watched him, discussed with him what he was doing, asked him questions, listened to his instructions and advice, and prepared myself to do the same in the field.

Q. Did you receive any special training or instructions? A. No, sir.

Q. As to what the bingo laws or regulations were? A. I was given a copy of the laws and regulations.

Q. To read them yourself? A. Yes.

Q. Were you given any field manuals or any directives by which you could guide your conduct in the performance of your duties? A. No, sir." (594-595)

Nor did Drogichen or staff members receive specialized instruction in criminal investigative techniques. Queried further with respect to staff supervision in the New York City area he testified:

"Q. You are not answering the question. What kind of supervision did you have? How were you checked on? How was the performance of your duties checked on? Was it checked on at all? A. Not that I know of.

COMMISSIONER SARACHAN: When you found something, you were supposed to report to him, weren't you? THE WITNESS: Yes. I would prepare my report in three copies. I would submit one to Albany, to the Albany office, and one to Mr. Dorr at his home address, by mail, and I retained the third in my file." (596)

"COMMISSIONER SARACHAN: He told you to send it to his home address? THE WITNESS: Yes, sir. .,

75 BY MR. VERGARI: Q. Who made up your work schedule? Who told you what games to go to? Did you receive any directions on that score? A. We make up our own schedules.

Q. You can pick the bingo games that you want to go to? A. Yes.

Q. And the number of games that you want to attend? A. Reasonably, yes, sir.

COMMISSIONER SARACHAN: Is there some rule how often you are supposed to visit each game? THE WITNESS: No. COMMISSIONER SARACHAN: Or instructions, or any regulations? THE WITNESS: No, no specific yardstick or formula or timetable. COMMISSIONER SARACHAN: How do they know that you are working at all? How do they know you are not skating or playing golf? THE WITNESS: The reports that I mail in, sir. BY MR. VERGARI: Q. How do they know that you even attend a game to make the reports? Suppose an inspector would send a report in and say he visited a certain game and found no violations, what checks would be made to determine whether or not such an investigation was made? A. I don't know of any. COMMISSIONER LANE: When did you report in to the New York office? THE WITNESS: For meetings, as scheduled, or when requested to come in. COMMISSIONER LANE: How often would that be? THE WITNESS: During Mr. Dorr's incumbency, two or four times a month. COMMISSIONER LANE: Is that all? THE WITNESS: Yes." (597-599)

76 Investigators were required to phone the office once a day to receive special instructions or assignments, if any. This contact was made with an office clerical employee who merely transmitted messages, not with any person in authority (599-601). Undoubtedly, this system encouraged soldiering on the job. Drogichen, who worked as a replacement in Brooklyn and Staten Island as well as the Bronx, related that bingo workers in a number of places voiced resentment of his practice of staying through an entire session personally checking the conduct of the games. On such accasions he was invited to leave his telephone number and go home as "they would phone . .. the next morning or late that night" and provide "the data needed for [his] report" (601). Drogichen was told that this had been the practice of his predecessors—with "the implication of quid pro quo: you can get home early, and we can operate without anyone watching us" (601-602). Eastern Park- way Arena, where the lessor's rents for 1960 of $203,080.00 exceeded the profits of licensed organizations by $24,850.00, was one place where such an incident occurred (603). John Bartley, an investigator for the Lottery Commission assigned to Westchester County, on his visits to D.A.V. Chapter 16 games in Yonkers, New York, spent the evenings drinking in a nearby bar as a guest of member in charge, Peter Pupchyk (430-431). Bartley admitted this conduct and his resulting failure to conduct proper inspections and file reports (677). Failure to follow up and check on the activities of men in the field contributed to such lax conduct.

3. Corruption of Investigative Staff Members From the spring of 1960 to January, 1961, Buckner's operation at the Ansonia Hotel in Manhattan was riding high at a thriving and most profitable rate. Illegal deals, misappropriation of profits, bus transportation of players, false reporting and the host of infractions of law which had become standard operating procedures continued unabated. During this period, the Lottery Commission investigator assigned to Manhattan was Albert Einstein. His supervisor was Chief Investi- gator Thomas Dorr. In July, 1960, Robert T. Schmidt of D.A.V. Chapter 116, whose agreement with Buckner included payment to the gambler of substantial illegal charges for rent and bus transportation, was asked by Einstein for a "loan" (774). In a surreptitious meeting in Schmidt's car, he received $100 in cash (774-775). "Promises" of repayment by Einstein were met with such rejoinders by Schmidt

77 as "take it easy—there is no rush—hold on to it" (775 ). Two months after the so-called loan was made and during an official inspection of a D.A.V. Chapter 116 bingo session, Einstein again expressed his desire to repay the loan: "... I told him I wanted to make repayment. He (Schmidt) said, 'I decided to let you have it as a gift. You don't have to pay it back.' That was about two months after. •

Q. I take it you never did pay him back? A. No, sir.

Q. As of today (May 2, 1961) you have not paid him back? A. That's right." (775)

A similar "loan" of $100 to Einstein was made in December, 1960 by Arthur Semerad, the member in charge of bingo for D.A.V. Chapter 80, another organization in the Buckner group.* Such "loans" undoubtedly were made to avoid the reporting of obvious and continuing violations. Far more serious acts of corruption occurred in connection with the performance of Einstein's official duties—corruption which shielded the identity and activities of Buckner himself. In September, 1960, Einstein was given an assignment, which, if honestly and vigorously carried out, could have led directly to Buckner. It had been noted that the file of Amvets Post 481 did not contain a copy of its lease for use of the Ansonia Ballroom. Einstein testified: "Commissioner Hannah at that time instructed me to go to 37 Wall Street, which was the address we had for Pubplay, and see whether their name was listed on the information board in the lobby and, if so, where their offices were. I did that.

Q. Can you tell us, if you know, what prompted, or what was the reason for this assignment to check out Pubplay? A. No. This I don't know. I advised Commissioner Hannah that a lease had not been filed, and he asked me to see what Pubplay consisted of." (758)

Pursuant to these instructions, Einstein visited the "offices" of Pubplay at 37 Wall Street on about September 27, 1961 and was

* Semerad declined to answer any questions concerning his bingo activities.

78 directed to Buckner's attorney, Karl S. Lowenthal (759-760). In addition to requesting a copy of Amvets' lease, Einstein asked Low- enthal for the names of the officers of Pubplay (760). Lowenthal promised to mail a copy of the lease but declined to reveal the names of Pubplay's officers. The following day, Einstein returned to the attorney's office. He gave the following account of what happened: "I went to his office. It was at that time that he told me that—he told me those two names, one of which was Mr. Walzer. He also said he is arranging to mail a copy of the lease to the Commission.

Q. Did you say this was the end of September 1960? A. It was about two days, two or three days before the end of September 1960.

Q. Tell us what happened. A. It was at that time Mr. Lowenthal said, 'I didn't know who you were yesterday, but now that I know,' he said, 'I have something for you' and he gave me—he offered me one hundred dollars. At first I would not take it. But he told me that he would give me $100 a month if—and all I would have to do for it was to keep him posted as to whether there were any violations against any games at the Ansonia Hotel. He said that he represented the lessors, and that their job was renting the place to organizations to run bingo, and if any organizations were going to lose their license because of violations, it would be a loss of money to the lessors in rental fees. 'So that is all I ask you to do for this money. It's as simple as all that.'

Q. Did he also say anything to the effect that he wanted you to 'keep us out of trouble,' words to that effect? A. Yes, words to that effect, yes, sir." (762-763)

Einstein, of course, was attempting to place the bribe in its best possible light. His account, given in private session, was somewhat more candid: "He said, 'I will give you $100 a month just to keep me informed as to what is going on; to try to keep us out of trouble, I am not asking you to close your eyes/ And he pushed the money into my pocket. I took it.

79 Q. How much money? A. $100." * * * * Q. You knew right then and there—you accepted the $100 from them, on this nonsense story about—well, just be a good fellow and keep me informed as to what is going on. You knew deep down in your own heart that these fellows wanted to buy your favor, is that it? A. Naturally, anytime they give you money." (Pr. H. 82-83 )

Hard on the heels of the initial bribery payment, Lowenthal offered Einstein an additional $100 to permit Pubplay to run two unlicensed sessions on the evenings of Saturday, October 1, and Sunday, October 2, 1960 (765). Frightened at being handed a "heavy assignment," Einstein sought to extricate himself from the corrupt agreement, offering to return the original payment: "Q. You felt that was too heavy an assignment to handle, Mr. Einstein? A. Yes, sir. I went back to see him on Monday. Q. What happened at that time? A. At that meeting I said to him, 'I am here to return your money. I can see now what kind of things you are going to ask from me.' He told me to keep the money. He realized that I couldn't do anything like that. I was—I didn't have the authority to do anything like that. 'However,' he said, 'keep the money on the same terms we discussed. Just keep me informed of any violations and see me once a month.'" (766-767) Thereafter, Lowenthal gave the investigator $100 on November 1, 1960, $100 on December 1, 1960 and $50 as a "Christmas present" on December 23, 1960 (768-770).* The investigation of Pubplay started in September, 1960 by Einstein was effectively thwarted by this series of bribe payments. However, corruption on the part of the investigator does not account for the failure of the Lottery Com- mission to pursue the investigation beyond the first steps that were

* Lowenthal refused to answer questions at a private hearing regarding his own dealings with Einstein, claiming that a confidential attorney-client privilege between himself and Buckner prevented such disclosure. His conduct in this affair has been referred to the Grievance Committee of the Association of the Bar of the City of New York for appropriate action.

80 taken. The fact that the certificate of incorporation of Pubplay on file in the office of the County Clerk of New York County contained the names of dummies was reported to the Lottery Commission. The fictitious name "Walzer" given by Lowenthal to Einstein as the name of one of the officers was also reported (760-761). No instructions were given to identify, locate and question the true parties in interest behind Pubplay (761). These significant inquiries were left dang- ling in mid-air at a time when the Lottery Commission presumably recognized that operations of commercial lessors were prime investigative targets (614, 758). Buckner's influence with the New York State investigative staff of the Lottery Commission went beyond having Einstein on a monthly payroll. He enjoyed a direct personal relationship with Chief Investigator Thomas Dorr—a relationship which in some measure explains his ability to avoid detection. According to Dorr, who joined the Lottery Commission after some twenty-three years of service in the New York State Police, he met Buckner in January, 1959, shortly after taking office. He claimed that the gambler's name was given to him by some unidenti- fied bartender as a person who operated bingo prior to legalization and wishing to learn how bingo games could be rigged to cheat players, he went to Buckner's home for expert advice (613-616). This experienced policeman characterized as "stupid" going to the gambler's home without making a further check on his background (617). At the first meeting, Buckner explained several methods of rigging bingo and told Dorr that he was the lessor of the bingo facilities at the Ansonia. Dorr asserted that he met with Buckner six times up to January 9, 1961—twice at the gambler's home, twice at downtown luncheon dates and twice in a coffee shop in the Bronx (621-623). His explanations of the purpose of the meetings were incredible. The second meeting was purportedly held to tell Buckner that game prizes must be split to the nearest penny in case of ties: "Q. Is that correct, Mr. Dorr; it is the responsibility of the (licensed) organizations to pay out prizes? A. That is correct.

Q. And they are the ones who should be instructed about splitting the money? A. Yes. They were instructed by the investigators.

81 Q. Mr. Buckner, as the lessor, would have no proper interest in the paying of prizes to the players; is that correct? A. Well, to my way of thinking, he had a proper interest if they could play bingo, if he allowed them or he could put them out if they didn't behave themselves.

Q. You felt it necessary— COMMISSIONER SARACHAN: Just a moment. How many landlords did you do this with? How many landlords did you talk to and say, 'These people won't operate properly,' and 'Put them out'? THE WITNESS: I didn't talk that way. COMMISSIONER SARACHAN: To anybody else except Buckner? THE WITNESS: No. I don't recall any. COMMISSIONER SARACHAN: Out of the hundreds of places where bingo was taking place, you picked on Buckner; is that correct? THE WITNESS: Not necessarily, no. COMMISSIONER SARACHAN: I am trying to figure out why you particularly picked out Buckner. THE WITNESS: / can't tell you that." (624-625) Subsequent meetings, he claimed, were held to obtain information from the gambler: "Q. . . . You have told us the purpose of two visits with Buckner; what were the purpose's of the other four? A. Well, probably as a point of information. It is conversation, and him knowing bingo and having knowledge of the things that I was looking for. I talked to him about different violations.

Q. What points of information were you looking for? A. Well, like to know who ran various halls. We were interested in some names. It leaves me for now. We would like to talk to them and know them.

Q. What information particularly do you recall that he gave you? A. Well, there is one man that some of our men were look-

82 ing for, and I believe his name was Weiss, and from him I learned the fellow wasn't around here at all, he was in Florida. There was another man, Garcia, who was attached to one of these operations that was later expelled from the bingo business. He was brought in on hearings. Q. What did you see Buckner about him for? A. I believe I found a location on him that one of the men served him with a piece of paper. Q. Mr. Garcia was a member in charge of a game; is that correct? A. Yes. When they wanted him they couldn't find him. Q. His name was right on the financial statement and application submitted to your Commission, wasn't it? A. That's right. Q. What did you have to ask Mr. Buckner for to find out where you could find Mr. Garcia? A. When they wanted him they couldn't find him." (626- 627) As a matter of fact, Garcia's name and correct home address appeared on a large number of applications and financial statements which were part of the Lottery Commission files. The examination of Dorr concerning his claimed use of Buckner as an informant continued: "THE CHAIRMAN: Did you have any idea about Buck- ner's background? THE WITNESS: No. THE CHAIRMAN: You never found out? THE WITNESS: Believe me, I was a sucker and idiot for talking to the man, but he served my purpose and I only wanted to use him. BY MR. VERGARI: Q. You claim that you were using him—using him as what? A. Well, as I said, I got information from him. Q. You were using him as a source of information; is that correct? ., A. Yes.

83 Q. You are an investigator with many years of experience; is that correct? A. Yes. Q. Working in the State Police; is that correct? A. Yes. Q. You know it is proper investigative procedure to put down information in writing and report it to your superiors, is that correct? A. Yes, sir." (627-628) In spite of his experience and admitted knowledge of proper procedures in such cases, Dorr submitted no written reports of any kind (629). Indeed, the one single fact of significance admittedly learned during the relationship—Buckner's true connection with Pubplay—was never reported to his superiors in writing or otherwise. At one of the meetings, Buckner complained that Dorr's men were digging a little deeper and asking more questions than suited him. Dorr testified: "Q. What did he ask you to do about it? A. He didn't ask me to do anything about it. He did ask me to do something. I said, 'Yes, okay.' Q. He asked you whether or not you could call these men off and keep them from digging so deeply into his bingo operations. A. I don't think he asked me. He told me about it. Q. Did he ask you whether or not you could call them off? A. Yes, I believe he did. I said, 'I will take care of it.' Q. You agreed to do it? A. Yes, in a—way. But I never did." (Pr. H. 566) The assertion that he "never did" was not borne out by the facts. One of the men digging and asking questions was Investigator Ein- stein after orders by Lottery Commission Chairman Hannah to investigate Pubplay. Buckner's influence with Dorr and the letter's corrupting role in the quick demise of that investigation is reflected in the following testimony of Dorr: "Q. On or about the 28th day of September, 1960, did Mr. Buckner tell you that your inspector. Einstein, had been to the

84 offices of Karl Lowenthal, an attorney at 37 Wall Street, at which time he asked Mr. Lowenthal who the persons were that were interested in Pubplay and the Ansonia Hotel? A. Yes, he did.

Q. Did he also tell you that Inspector Einstein had requested Mr. Lowenthal to turn over copies of Pubplay's leases at the Ansonia Hotel? A. No, I don't remember him telling me about turning over the leases. No.

Q. At the time he gave you this information, did he ask you whether or not you had directed Einstein to make that investigation? A. I don't know, but when I saw Einstein, I told him he ought to stay away from those lawyers.

Q. Did you tell Einstein not to go to Lowenthal's office? A. 'You had better be careful of those lawyers. Watch what you are doing.'

Q. You did tell Einstein not to pursue that investigation any longer? A. I told Einstein that we have copies of those leases. They are available.

Q. You told Einstein to stay away from Lowenthal? A. Yes." (636-637)

Dorr's protective interest in Buckner's operation extended to the Tuckahoe Post 52 games in Yonkers, New York. On May 5, 1960, shortly after Lottery Commission investigator John Bartley was assigned to that area, he received special instructions from Dorr regarding handling of violations at Post 52 sessions. Bartley was told to take up all violations noted by him with the representative of Pubplay on the scene, Robert Quinn or James O'Neill. Dorr told Bartley that one of these men would "make sure that things were straightened out" (659). The investigator considered these instructions "odd" and a marked deviation of usual and proper procedures (660). Chief Investigator Dorr, when examined at private session on January 9, 1961, denied under oath receiving any money or thing of value from Buckner (Pr. H. 42). On January 23, 1961, he was

85 again examined at a private hearing. On the later date he admitted accepting an expensive camera from the gambler during lunch at a downtown restaurant in August, 1960 (Pr. H. 549-552); (637, 640), At the close of that private hearing Dorr executed and signed a letter resigning his position forthwith "for reasons disclosed ... at a private hearing of the State of New York Commission of Investiga- tion." The resignation was submitted at the office of this Commission, and was transmitted to the Chairman of the Lottery Commission. Attempting to corrupt and influence Lottery Commission personnel was a practice not confined to professionally promoted operations of men like Buckner and Mayer. After the independently operated bingo of Yonkers D.A.V. Chapter 16 started in early 1959, their names were inspected by former Lottery Commission Inspec- tor Edward Marrianacci. Peter Pupchyk, member in charge of bingo fo D.A.V. Chapter 16, testified: "Q. At any time, Mr. Pupchyk, did you give any money to State Lottery Commission Inspector Marrianacci? A. Yes, sir.

Q. How many times did you give him money? A. I don't remember whether I gave it to him the first time, but on each occasion after that, I gave it to him.

Q. That would be at least four times? A. Yes, around that.

Q. How much money did you give him? A. Five.

Q. How much? A. Five dollars.

Q. Tell us the circumstances surrounding the giving of that money. Where did you give it to him? How did you give it to him? A. When he came to inspect the game, he would come in before the game actually started, and after — he examined the badges, the license, et cetera. I usually went out for a drink myself. I asked him to come along around intermission time, and he would come with me to the bar. We would have a couple of drinks.

86 Q. I take it you paid for the drinks? A. Yes, sir.

Q. I see. What happened then? A. Well, I would slip a five in his pocket.

THE WITNESS: Yes, he knew what I was doing. Q. What did he say? A. We would be drinking and I would put up a dollar, and a round was about $1.30, or something like that, so I would give him the five and put it in his pocket and I said, 'Buy yourself a couple of drinks later on.'

Q. Then he wouldn't say anything? A. He may have, sir; I don't remember that clearly." (420- 422)

Pupchyk admitted that the Chapter was paying its workers $10 a game, a substantial illegal deduction from bingo proceeds which necessitated filing false reports. His examination continued: "Q. Were you reporting less gross income of some kind? Is that correct? A. Yes, sir.

Q. Fewer sales? A. Fewer sales, yes, sir,

Q. Did you find that, by taking Mr. Marrianacci out for a drink and putting five dollars in his pocket, that he wasn't counting or making any effort to count the number of people and the number of extra boards, that you sold? A. Well, — he never did attempt to count it.

1 Q. He never did? A. No." (424)

Marrianacci was succeeded in Yonkers by John Bartley, who also readily succumbed to Pupchyk's invitations to leave his duties for nearby taverns. Bartley, on the occasion of his two visits to Chapter 16 games received $20 on the first and $10 on the second occasion

87 from Pupchyk. Both men testified the money was returned—the latter sum in January, 1961 after Hartley was questioned at a private hearing of this Commission (675-678; 428-434). It was all too apparent that access to large amounts of gambling cash tended to corrupt bingo workers of all types of licensed groups. These, in turn, resorted to pay-offs to cover up their own acts of dishonesty. Lottery Commission Inspector Drogichen related that on one occasion members of a lay committee running bingo for the benefit of a parochial school reported gross receipts which were less by $200 than the amount he computed after an accurate count of admissions and game cards (576-577). The member in charge of the game, when called on the violation, offered to "put something in an envelope for the investigator" (578). Drogichen, who had been on the job for about a month, reported the violations and the bribe offer in writing. The quality of Dorr's leadership and its serious, adverse effects on the entire investigative staff of the Lottery Com- mission is revealed by Dorr's stinging reprimand of Drogichen. This brand new man was told that it was "foolish and indiscreet and stupid to put such things in writing" and was further instructed "not to put such things in writing again" (580). Another form of improper payments of money to Lottery Com- mission investigators was revealed by the testimony of Bartley, who admitted receiving commissions from Virga, Inc., a bingo equipment manufacturer, for sales of supplies and equipment to licensed organizations whose bingo sessions it was his duty to inspect (678- 690).

B. Local Licensing and Enforcement The Legislature of the State of New York imposed the duty to "exercise control and supervision" of bingo games on the governments of all municipalities which issue licenses.* Every such community was enjoined to enforce the regulatory laws within its own jurisdiction, a clear obligation and mandate to exercise its police, as well as its licensing powers. The Lottery Commission in its Second Annual Report, dated March 31, 1960 commented on the quality of local enforcement. Noted was the fact that during the period April 1, 1959 to March 31, 1960 only four municipalities in the entire State reported the detection of violations. This included the City of New York, where

: Section 484, General Municipal Law of the State of New York

88 during the same period, the local authorities reported but one violation. The Lottery Commission observed: "... there can be little room for argument that in the great majority of cases local municipal enforcement is lax or lacking, and that the burden of policing the games is being left to the State by the local municipalities." In the conclusion of the Lottery Commission report it was stated: "A great number of the local municipalities do not inspect the running of the games, and many of those which do inspect the games are not demanding compliance with the law and the regulations. This is unfortunate since many people feel that bingo should be enforced on a purely local basis by the local authorities. Certainly local enforcement is more desirable if it is undertaken and competently carried out. The stark reality is that there is a decided reluctance on the part of local officers to enforce the laws regulating bingo when local organizations and local citizens are concerned." These assessments of the manner in which municipalities discharged their important responsibilities seem completely justified in light of certain pertinent facts disclosed by this Commission's investigation. 1. The City Clerk of Yonkers, New York The licensing officer for the City of Yonkers, site of Buckner's Post 52 operation, was William H. Gray, the City Clerk. This individual, already occupied with routine duties and the task of issuing various licenses required by local ordinances, found himself charged with the responsibility of administering and enforcing the bingo licensing and control laws in the fifth largest city in the State. According to Gray, local ordinances enacted with regard to bingo control required the Clerk, who had no investigative background or facilities, to conduct pre-licensing investigations. The purely min- isterial task of issuing the license itself was left to the Commissioner of Public Safety, the head of the Police Department (Pr. H. 362). Indeed, this wholly unrealistic division of duties extended to post- licensing investigation of the manner in which games were conducted. No function in bingo supervision and control was exercised by the Police Department of the City of Yonkers. For a period of one year after legalization in Yonkers, on November 4, 1958, Gray carried on without assistance from the police or any other source. As a consequence, the enforcement obligation of the government

89 of Yonkers was not being properly discharged. Gray stated that he was "definitely hampered" in his work (Pr. H. 360).* In 1959, the City of Yonkers hired a part-time bingo inspector, Mrs. Frances Bagain, who had no prior investigative experience or training of any kind. The degree of training she received after her appointment is described in her testimony: BY MR. VERGARI: "Q. Mrs. Bagain, did you receive any instructions or training . . . prior to starting out to conduct bingo investigations? A. No. I don't think I did. Q. Have you ever read the rules and regulations of the State Lottery Commission? A. I probably read them but at the time just ran through them, you might say. Q. Was that the only time that you read them, ran through them once? A. I couldn't be truthful to say whether it was or not. Q. Do you know what sections of the law govern the operations of bingo games? A. I should know but— Q. Did you ever read those sections of the law? A. I don't know. Q. You don't know? A. No, I couldn't say. Q. Were you ever instructed by Mr. Gray, or any other person, as to which sections of the law applied to bingo? A. I may have. Q. You don't know? A. No. Q. You don't know whether you have ever read those sections or not? A. No. I say it is possible that I read them and at the same time I couldn't say I did.

* In Utica, New York, the important pre-licensing investigation was also left to the City Clerk. The Police Department of Utica occasionally checked operations of the games themselves.

90 Q. Do you know what particular section of the law applies to bingo, whether it is the penal law that covers bingo? A. Well, no. I can't say definitely that I do, but I assume that it did. Q. Do you know whether or not any sections of the executive law govern bingo? A. I would assume so. Q. You would assume so? A. Yes. Q. You don't know? A. No. Q. Are there any other sections of the law that might cover bingo? A. I can't say. Q. You used the expression 'minor violations.' What did you consider to be a major violation? A. Well, the reason I use the word minor, that is the way it would come down from the state, these minor violations.

Q. I see. Do you know what the major violations are? A. I only know what I read in the paper. Q. You mean in the newspapers? A. That is right." (Pr. H. 430-432)

Mrs. Bagain described her duties as "making routine visits" and "checking minor violations." Included in her routine visits were the bingo sessions of Tuckahoe Post 52, a Buckner operation. Her examination continued: "Q. Were you ever instructed by anyone that... if the operators of any games were inclined to do something wrong in the sense of taking money out of games, they weren't authorized to take, the best way to do it would be to report fewer extra cards sold than were actually sold? A. No. Q. You were never instructed that this is something to watch for? A. No.

91 Q. Did it ever occur to you that if operators of games were going to do something wrong, that this would be an area where phonying the figures would be easy? A. No. To be honest with you, / don't think that anybody would ever dream of doing anything like that. I felt when they sent in their statement to me that it would be the gospel truth. I didn't think they would have any occasion to do anything crooked." (Pr. H. 424)

It is not the Commission's purpose to belittle Mrs. Bagain or to ridicule her honest efforts. However, responsibility for the total ineffectiveness revealed by her testimony rests with the government of the municipality. Demonstrated was a complete lack of understanding by the government of the City of Yonkers of its statutory obligation to "supervise and control" bingo and of the abuses inher- ent in this gambling activity.

2. The City Clerk's Personal Relationship with Bnckner In view of Gray's duties to approve licenses and inspect games of Tuckahoe Post 52, he was examined concerning any association he had with Buckner. At first Gray stated under oath that he "may have heard his (Buckner's) name bandied about" but emphatically denied knowing him or ever speaking to him (Pr. H. 366-367). He repeated this assertion several times before stating that he recalled being introduced to him once in a restaurant and "passing him on the street a couple of times" (Pr. H. 372). In response to questions seeking to determine if Buckner or Keane ever visited his office at City Hall in Yonkers, his answers ran the gamut from "no" to "I don't remember" to "it is possible" to a final, reluctant "yes." Thus Gray tried to evade the consequences of full and honest disclosure by leaping from falsehood to falsehood and half-truth to half-truth during his appearance at private sessions. s 1 Certain facts did emerge from this examination which forcefully indicated that Buckner enjoyed a close and improper relationship with the City Clerk and the ability to exert undue influence on that public official in the performance of his duties. At the public hearing it was necessary to read testimony obtained in private session to Gray, who claimed to be suffering from lapses of memory caused by illness (717-718).

92 BY MR. VERGARI: "Q. Were you asked these questions on January 13, 1961, and did you make these answers, at page 386 of the record: 'Q. As a matter of fact, didn't both Buckner and Keane deliver license applications to your office? A. Yes, that's right. Q. These were filled out applications; is that correct? A. Yes, that is correct. Q. Applications which were ready for you to act upon; is that correct? A. Yes. Q. These applications bore the names and the signatures of persons who were members of the organizations who were getting the licenses? A. Yes. Correct. Q. You knew that Buckner was not a member of these organizations; is that correct? A. Yes. Q. You knew that he was in fact the landlord, he was Pubplay, Inc.; is that correct? A. Yes, that is correct. Q. You knew that in the normal course of events the landlord's only proper interest should be the renting of the hall and the obtaining of the rent? A. Yes. Q. And the obligation to obtain the license and see that it is filled out properly is upon the members of the organization themselves who run the games; is that correct? A. Yes, that is correct. Q. Did that strike you as a suspicious circumstance? A. Correct. Q. Did you ever ask Buckner and Keane why they were bringing in the applications to you, why they, the members of the organizations, were not doing anything? s A. At this time, I don't know.

93 Q. You never put that question to them? A. No, I don't think I did.' Were you asked these questions, and— A. I don't think I was answering those questions. I don't mean to be fresh to you." (719-721)

The testimony was read from an official record transcribed by a certified stenographic reporter. Gray later admitted the truth of the testimony and claimed that the unusual circumstances of a lessor trying to push through a license of a lessee organization did not alert him to the distinct possibility of impropriety in Buckner's interest in Post 52 games. After denying that Buckner had offered, and he had accepted any money or thing of value, Gray testified that the gambler offered to give him $250 a month (729). The examination continued: "THE CHAIRMAN: He said, 'I will give you $250 a month'? THE WITNESS: That's right. THE CHAIRMAN: Nothing more? THE WITNESS: That is all I remember.

COMMISSIONER SARACHAN: Didn't he ask you to do something for the $250 a month? THE WITNESS: No.

* * :|: * COMMISSIONER LANE: Wasn't there some implied understanding that you were to do something for that? THE WITNESS: No. MR. VERGARI: Perhaps I can refresh the witness's recollection on this question. THE CHAIRMAN: Go ahead.

BY MR. VERGARI: "Q. Reading from page 394 of the hearing of January 13, 1961, were you asked these questions and did you make these answers: 'Q. Did he suggest what service you could give him for this money? A. No, he didn't.

94 Q. Did he suggest that you could possibly speed up the issuance of licenses and make things easier for him? A. No, he didn't. Q. Actually, he had been after you to do that, hadn't he? A. Yes.' A. That's right." "Q. 'Q. When he came down to the office on these two occasions he would try to get you to push the license? A. Yes, sir, correct. Q. This offer of money, that is, this offer came out just about that time; is that correct? A. Yes, that is correct. Q. Did he indicate to you then that he would appreciate this fast service and he would be willing to pay for it? A. That is correct. Q. Did you agree to his proposition? A. I did not. I didn't accept it.'" (729-730); (730-732)

Gray's assertion that he rejected the offer was meaningless in view of a subsequent admission that he, himself, asked the gambler for $500: "Q. You asked for five hundred? A. Yes. Q. After you asked him for $500, he said 'meet me in River- dale'; is that correct? A. Yes, Riverdale Avenue. Q. Where? A. In Yonkers. Q. Did you meet him at the appointed place? A. I think, yes, I did. COMMISSIONER LANE: The same day? THE WITNESS: I think it was the same day, Commissioner. COMMISSIONER LANE: What happened then when you got there? THE WITNESS: He didn't have anything. He didn't have the money.

95 BY MR. VERGARI: Q. What did you say to him, and what did he say to you about it? A. Oh, all he said was he didn't have the money. So I said, 'Okay.' Q. You had to leave your office and go down to this place; isn't that correct? A. That is correct.

Q. Didn't you say, 'What did you bring me down for? Why didn't you tell me over the phone that you didn't have the money?' • A. I didn't say that. Q. Did you take $500 from him on that occasion? A. I didn't." (738-739)

On April 10, 1961, Gray appeared for private hearing and refused to be examined under oath—stating no reason for this conduct and asserting no privilege or right. At that time, during an informal discussion off the record he admitted to three members of the Commis- sion staff that he received $500 from Buckner (754-755). He refused to amplify this admission or state it on the record. On April 19, 1961, Gray again appeared for private hearing and was examined briefly with respect to the admission made nine days before: By MR. VERGARI: "Q. Do you remember being here on Friday, March 10, 1961? A. I could have.

Q. Do you remember telling Mr. Kenneally and myself and Mr. Skinner that you received $500 from Mr. Buckner? A. I could have.

Q. Do you remember telling that to Mr. Skinner, Mr. Ken- neally, and to me? A. I don't remember.

Q. You don't remember; is that your answer? A. Yes.

96 Q. Did you ever get $500 from William Buckner? A. Not that I know of now.

Q. You are saying now that you do not deny that you told Special Agent Skinner and Special Agent Kenneally and me that you received $500 from William Buckner; is that right? A. I don't deny, but I don't remember the—thing." (2620- 2625)

As these excerpts from the record so clearly reflect, Gray's atti- tude throughout was obstructive and evasive, resisting at every turn this Commission's efforts to ascertain the truth. Assessment of his conduct lead to but one fair conclusion. Bingo control laws were not being enforced in Yonkers during Gray's tenure. At a Special Meeting of the Common Council of the City of Yonkers held on May 4, 1961, a Committee of the Council was appointed for the purpose of "requesting Mr. Gray to appear before it for questioning and explanation of his part in the Bingo activities in the City of Yonkers." Mr. Gray was requested to appear before that Committee on May 12, 1961. Prior to the hour of the meeting of May 12, 1961, Gray submitted his resignation from office which was duly adopted by the Council on May 23, 1961.*

C. Department of Licenses, City of New York The Administrative Code of the City of New York delegates the statutory licensing, supervision and control responsibilities of the city government to the Department of Licenses.** The duties and functions of the Commissioner of Licenses are prescribed in Section 773 of the New York City Charter, as follows: "§ 773. Powers of commissioner.—a. The commissioner shall have cognizance and control of the granting, issuing, transferring, renewing, revoking, suspending and cancelling of all licenses and permits, except in the cases with respect to which and to the extent to which any of said powers are con- ferred upon any other person by law, but including all licenses heretofore issued by the board of aldermen.

* Resolution #345-1961, Common Council of the City of Yonkers, adopted May 23, 1961. ** Bingo License Law, Administrative Code of the City of New York, Section B 32—274.0 to 294.0.

97 "b. The commissioner shall have power and it shall be his duty to collect all fees for licenses and permits the collection of which by some other person is not authorized by law. The Department is headed by Commissioner Bernard J. O'Con- nell, who was appointed by Mayor Robert F. Wagner in 1955 at an annual salary of $20,000. There are, in addition, two Deputy Com- missioners, Thomas M. O'Neill and Herbert A. Koehler.* Pursuant to its general powers, the Department of Licenses super- vises some eighty different activities in the City, including bingo (Pr. H. 2883). Such diversified business endeavors as motion picture theatres, pawn brokers, news stands and private garbage collection come within the cognizance and control of the Department. In theory, bingo and all other licensed activities are subject to regular inspection by a staff of some forty inspectors maintained by the Department.*'" This number is reduced by illness, vacation and the necessity to transfer inspectors from field to office to handle backlogs of paper work (Pr. H. 2083). This Commission found that prior to bingo the Department exercised its inspection functions, in a somewhat perfunctory manner. The addition of bingo licensing responsibilities in January, 1959 could only cause deterioration of the existing situation. Any chance for proper and effective supervision and control as envisioned by the Legislature was in large measure predestined for the routine and rubber stamp treatment it received in the Department. Prior to January 9, 1961, prelicensing "determinations and findings" were limited to a routine reading of applications and accompanying affidavits by Department clerks. If these documents gave the superficial appearance of proper order, bingo licenses were issued. The Chief Counsel of the Department testified that it was "impossible" to do the type of work-up which would give true mean- ing to the words "determination and findings" (Pr. H. 2884). Reliance was placed on mere representation in applicants' affidavits that bingo would be conducted according to law and regulation. It is claimed "spot" checks were made after licensing into the manner in which games were conducted (Pr. H. 2896). The number, frequency and degree of effectiveness of such spot checks remain as vague as the term itself. The open investigation of Buckner in January, 1961, triggered a sudden awareness on the part of the License Department that

:;: This official and his personal dealings with Buckner is discussed at pages 100 to 102 infra. ** Section 773-a-5.0, Administrative Code of the City of New York.

98 commercial promoters and organizations conducting games in leased halls were potentially the chief sources of difficulty. A list was prepared of such organizations by the Department as a warning flag in the processing of their license applications (Pr. H. 2875).* In an effort to tighten control, approval of these applications was made the responsibility of Department counsel (Pr. H. 2885-2886). Noting that rent rolls of commercial lessors all but devoured bingo profits, the Department claimed that an attempt was made to inquire into reasonableness of rents in prelicensing findings (Pr. H. 2885-2886). Applicants who appeared on the list of commercial lessors were interviewed informally concerning the accuracy and good faith of the amount of rent set forth in their applications. In order to arrive at some workable standard of reasonableness, an analysis was made of all reported rentals in the metropolitan area, revealing that such rentals were generally uniform—all high (Pr. H. 2886). This approach enjoyed little or no success in curbing the excess rental abuse. It resulted in no determination that any rent was unreasonable. The Department's chief counsel complained. "What is meant by 'reasonable? What kind of a law is this where you have the words 'reasonable rent' in a situation like this?" (Pr. H. 2886).

There is some merit to the position that the legal term "reasonable" as it applies to rents is difficult to reconcile with the general intent of the law that bingo be conducted for the benefit of charitable and civic causes. In any event, it is the view of this Commission that no substantial improvement in municipal control and supervision in New York City has materialized since the rubber stamp approach days of 1959 and 1960.

1. Buckner's Influence with the License Department Coupled with described enforcement inadequacies was evidence that the ubiquitous Mr. Buckner had again maneuvered himself into a position of some influence and favored connection with responsible officials. During the early part of 1959, when the gambler was cementing connections with such key officials as Chief Lottery Commission Investigator Thomas Dorr, and Yonkers City Clerk William H. Gray, he also cultivated a relationship with Patrick J. Murphy, then Deputy Commissioner of the Department of Investi-

* The list included all organizations which came under investigation by this Commission. Chief Counsel for the Department testified that the list was prepared in January, 1961 (Pr. H. 2875). One of the processing clerks testified that he had no recollection of such a list prior to March or April, 1961.

99 gation of the City of New York—a relationship which gave Buckner direct personal entree to Deputy Commissioner Herbert A. Koehler of the Department of Licenses. Murphy was examined under oath at both private and public hearings. His testimony revealed in substance that through him Buckner was able to enjoy special and preferential treatment from Deputy Commissioner Koehler. The latter requested and was granted the right to testify publicly by this Commission, which reopened the public hearing for that purpose (845). The examination of the two men, both holding high and important public offices, resulted in direct conflicts in sworn testimony on several material and significant points. Murphy testified that early in 1959, while en route to an appointment with "close personal friend" Commissioner Koehler at License Department offices at 137 Center Street, New York City, he was called into the nearby office of a bail bondsman he knew and introduced by that person to Buckner (795). In the introduction, which Murphy claimed was his first meeting with the gambler, Buckner was described as a lessor of a bingo hall who wished to be introduced to someone in the Department of Licenses in a position to tell him "if certain tenants having a little difficulty would be issued bingo licenses" (796-799). A few minutes later, on the street in front of the License Department, Murphy introduced Buckner to Koehler, who referred him to a "clerk upstairs" who could help him (798). Later, while at lunch with Koehler, Murphy expressed belief that Buckner was a man with a gambling and criminal background and warned Koehler to be careful in any future dealings with him (798-800).* This warning was repeated many times: "Mr. Koehler's answer was that he meets all kinds of char- acters in the business . . . and that he copes with each one as he finds them." (822) Thereafter, in rather clandestine circumstances, Murphy kept appointments with Buckner about fifteen times on the street and at lunch counters in the vicinity of New York City Department of Investigation offices at 50 Pine Street (807-812). Asked to explain these unusual meetings, Murphy replied that generally they "talked

* The files of the Bureau of Criminal Identification of the New York City Police Department contained a request for a criminal record check on Buckner by Deputy Commissioner of Investigation Patrick Murphy dated in 1957. Murphy claimed that this was a routine office request made over his signature, of which he had no knowledge (823).

100 politics" (811). On five or six occasions the subject of discussion was Buckner's bingo operation at the Ansonia: "Q. On these five or six occasions, what was the nature of the conversation? What did he say to you about his bingo games? A. He would just indicate that everything was going all right. I don't recall just what the nature of the conversation was, counsel." (812) The extraordinary circumstances of a high city official leaving his office to meet a man like Buckner, was not satisfactorily explained by accounts of innocuous and meaningless conversations. Murphy did admit that on several occasions he called Koehler on Buckner's behalf; two or three times to obtain "adjournments" of matters pending before the Department of Licenses and once to try to get the problems of two organizations "straightened out" (814-820). He testified : BY MR. VERGARI: "Q. Mr. Murphy, you are a man with many years of law enforcement experience; is that correct?* A. Yes. Q. You knew or had good reason to believe that Mr. Buck- ner had a criminal background; is that correct? A. Yes, sir. Q. And is it not fair to state that you met him on the street, on these number of occasions that you did? A. Yes, sir. Q. On at least three occasions you actively interceded on his behalf with Commissioner Koehler to obtain favors for him; is that correct? A. Yes, sir, that's correct.

COMMISSIONER LANE: For these favors that you had given him, for these favors which you did for Buckner, did he ever give you anything in the way of gifts or gratuity? The Witness : He indicated to me to go to the Virgin Islands and spend a vacation if I wanted to.

* Prior to his appointment as Deputy Commissioner of Investigation of the City of New York, Murphy served three years-with the Federal Bureau of Investigation and six years with the New York City Police Department.

101 COMMISSIONER LANE: That 'is an invitation. Did you accept the invitation? The Witness: No, sir." (822-823) (824-825)

Pressed further for an explanation of his conduct in associating with and doing favors for the gambler, Murphy could only reply: "Had I been using my head, I wouldn't have been roped in." (826)

Deputy Commissioner Koehler asserted that bingo was not discussed at the first meeting and denied that Murphy warned him repeatedly of Buckner's criminal record (856-858). Koehler expressed "surprise" that his "good friend" had so testified. He further denied that Murphy ever called him seeking favors for Buckner but could offer no reason why Murphy should so perjure himself (868-873). He admitted that Buckner called him directly on one occasion and came to his office on another. In both instances, he recalled, Buckner "did ask him for some kind of favor" (867). Although he claimed that the requested favors were not granted, he could not recall what the gambler wanted done (867). He could be no more explicit than use such expressions as "some kind of favor," "some kind of problem—it must have been bingo" (867-871). In this area another serious conflict in testimony occurred as Murphy testified that on at least two occasions Koehler called him back reporting that favors requested by Buckner had been granted (818). Thus, this Commission found that every agency whose function and duty it was to license, investigate, supervise and control the operations of this professional gambler was tainted with some measure of improper influence.

2. Strengthening of Enforcement The weaknesses of enforcement at both the local and state levels revealed by the investigation served to emphasize the need for more forceful and effective discharge of statutory duties by enforcement authorities. Licensing authorities in various municipalities must recognize that issuance of a bingo license is a matter of discretion. Mere asser- tions in applications and accompanying papers do not, in all circumstances, provide proof that games will be conducted according to law. Each licensing official must bring to bear his personal knowledge of the community, its residents, persons connected with the

102 applicant organization and its history and record of service to the community and to charitable and civic causes. Reasonable doubt, founded in fact, that a prospective licensee will conduct his games according to law should be resolved in favor of the community and public interest. The burden of proof of merit is always on the applicant. Routine rubber-stamp approvals as revealed by this Com- mission's investigation was a major factor in the serious violations and abuses that were found. In many cases local licensing authorities are not equipped to carry out detailed and thorough pre-licensing investigations of organizations whose applying papers provide reasonable basis for questioning the merits and good faith of the application. Municipal licensing officials should call upon local police agencies for assistance in conducting investigations in proper cases. No license should be issued to an undeserving group because of failure to conduct a proper investigation. Indeed, all local law enforcement agencies and the state police should be called on to provide assistance in conducting investigations in appropriate cases. All such agencies should be aware of the fact that violations of the bingo control laws are misdemeanors, and, as such, within their cognizance and scope of enforcement duties.

103

VIH

SUBSEQUENT EVENTS

The shocking abuses revealed by the Commission's investigation brought remedial action on several fronts. The most significant and far reaching action was taken by the Governor of the State of New York, Nelson D. Rockefeller. A. Moreland Act Commission Appointed On May 4, 1961, the day following the close of the public hearing, Governor Rockefeller announced his intention to appoint a More- land Act Commission, stating: "The misappropriation of sums that should have gone for charitable purposes, the corruption of public officers and the extensive violations of law which have been disclosed by the Commission of Investigation's proceedings dictate an immediate analysis and review into all aspects of the bingo law and the system of its administration."

On May 17, 1961, the Governor appointed Thomas B. Gilchrist, Jr. as Commissioner under Section 6 of the Executive Law, known as the Moreland Act, to "study, examine and investigate all phases of bingo" in New York State and to make recommendations "for the strengthening and improvement of the laws, practices and procedures relating to the regulation, licensing and supervision of bingo." The full text of the executive order of the Governor appointing the Moreland Act Commission follows: "KNOW YE, That pursuant to Section six of the Executive Law, I have appointed and by these presents do appoint Thomas B. Gilchrist, Jr., as Commissioner, to study, examine and investigate all phases of bingo in the State as provided for by Chapters 853 and 854 of the Laws of 1957, as amended, and all phases of the supervision, licensing and regulation of bingo under such provisions of law; to determine the adequacy and effectiveness of existing laws, practices and procedures

105 with respect to bingo and its licensing and supervision by State and local authorities, as well as with respect to controlling the methods and practices of sponsors and promoters of bingo and with respect to avoiding and eliminating any irregularities, abuses or commercialization that may exist in the sponsoring and promotion of such games; and to make recommendations for action at the State and local levels to correct such irregularities, abuses or commercialization and for the strengthening and improvement of the laws, practices and procedures relating to the regulation, licensing and supervision of bingo. The Commissioner is hereby empowered to subpoena and enforce the attendance of witnesses, to administer oaths and examine witnesses under oath and to require the production of any books, records or papers deemed relevant or material. And I hereby give and grant to the Commissioner all and singular the powers and authorities which may be given or granted to a person appointed by me for such purpose under authority of the Executive Law, as aforesaid. Every State department, division, board, bureau and agency shall provide to the Commissioner every assistance, facility and cooperation which may be proper or desirable for the ac- complishment of the purposes for which the Commissioner is hereby appointed. The mayors or other chief executive officers of all counties, cities, towns and villages, district attorneys for each of the counties in the State, the sheriffs in such counties, the commissioners of police or persons having comparable title or duties exercising supervision of police forces within the State are called upon to cooperate and make available every reasonable facility and assistance to the Commissioner in the performance of his duties."

B. Regulations Promulgated by the New York State Lottery Commission By Directive to all municipal governing bodies and registered organizations, the Lottery Commission promulgated six new regulations and amended two others in an effort to curb abuses and violations highlighted by the investigation.*

* State of New York Lottery Control Commission Directive #12, dated June 21, 1961.

106 Several of the changes put into effect merit brief comment here.* 1. Laws and regulations in existence prior to June 21, 1961, in theory, permitted one authorized organization to hold an unlimited number of bingo games by the device of obtaining separate licenses for so-called auxiliary groups. An example of the manner in which this privilege was abused was found in the case of the Brooklyn Women's Hospital which conducted bingo on a grand scale at the Eastern Parkway Arena, Brooklyn, New York.** The hospital has the following five auxiliaries: Physicians' Wives Group, Ladies League, Women's Division, Hebrew Ladies Maternity Society and Flatbush Group. Subsequent to the enactment of the bingo laws, the Board of Trustees of the hospital set up a bingo committee whose duty it was to see that the various auxiliaries complied with the regulations of the State Lottery Control Commission. This committee also obtained licenses and leases for the auxiliaries, and answered any questions they had concerning bingo. All five auxiliaries and the parent organization, Brooklyn Women's Hospital obtained licenses each month to operate bingo games. Six licenses were thereby issued each month to but one charitable entity. The five auxiliaries and the parent organization signed six leases with the Eastern Parkway Arena in Kings County to operate bingo games. From January 1, 1960 to Decem- ber 31, 1960, Brooklyn Women's Hospital, including its auxiliaries, paid a staggering rental to Eastern Parkway Arena of $125,000.*** The owner of the Eastern Parkway Arena is a Trustee and Vice President of the Brooklyn Women's Hospital (Pr. H. 49). During the same period this group's net profit was $110.00.**** The bingo committee of the hospital purchased supplies for all the auxiliaries (Vol. II, Pr. H. 221) and had a team of auditors to check their books (Vol. II, Pr. H. 33). The Executive Director of the hospital testified that the auditors were necessary because games were getting "so big" (Vol. II, Pr. H. 43). "Getting big" was indeed an understatement. During 1960 gross income from bingo games for this one group was $548,024.90, over half a million dollars.***** A salaried employee of the hospital was in charge of the bingo games for one of the auxiliaries (Vol. II, Pr. H. 67). Women from

* This Commission feels that strict and more comprehensive measures are necessary, as set forth in its recommendations commencing at page 111 of this report. ** See pages 70, and 77 supra. *** State Lottery Control Commission, Financial Statistics concerning organizations conducting bingo in Eastern Parkway Arena, dated April 11, 1961. **** jj

107 one auxiliary were used in another to operate the letter's games (Vol. II, Pr. H. 40). Money was pooled together (Vol. II, Pr. H. 35 ). The hospital staff made out the various bank deposit slips and did the banking for the auxiliary's profits from the bingo games (Vol. II, Pr. H. 87). The five auxiliaries and the parent organization operated 336 games for the year ending 1960, almost one every day. The picture is one of a single charitable entity running bingo on a full- time commercial basis wholly out of keeping with the law's true intent. A new regulation in the Directive limits the number of licenses that may be issued to an authorized group and its auxiliaries to three. (Part II, Rule 9, Rules and Regulations of the New York State Lottery Commission.) 2. The employment of non-members of licensed groups at bingo games was found by this Commission to be a wide-spread practice. To eliminate this abuse each licensee must now maintain up-to-date and complete membership lists which are subject to inspection and filing with municipal authorities. (Part II, Rule 10, Rules and Regu- lations of the New York State Lottery Commission.) 3. It has been shown that professional promoters were able to obtain control of bingo by providing necessary operating funds to paper organizations whose finances and other resources were lacking or inadequate. Each applicant for a license must now prove to the licensing municipality that it has the necessary resources to conduct the games for which the license is requested. This rule, part of the June 21 Directive would tend to eliminate the paper organization which easily falls prey to the professional promoter and his offers of finances and equipment. (Part IV, Rule 9, Rules and Regulations of the New York State Lottery Commission.) 4. Professional gamblers like Buckner kept control of games through assistants such as Robert Quinn and Joseph O'Neill, who worked at various bingo games under the guise of accountants for the licensed groups. Activities of this kind are curtailed by amendment to an existing rule. The amendment limits the service of a bookkeeper or accountant to but one licensee and reduces the pay for such services from $15 to $3 an occasion (Part VI, Rule 4, Rules and Regulations of the New York State Lottery Commission.)::: 5. Abuses and violations visited upon bingo operations by commercial lessors are dealt with in some measure by a new rule which

* It is the view of this Commission that the reduced sum of $3.00 is unrealistic and would make it difficult for licensed organizations to obtain com- petent accounting or bookkeeping services.

108 limits bingo occasions in any hall to three in one week (Part VI Rule 9, Rules and Regulations of the New York State Lottery Commission.* ) 6. Other new rules provide for improved control procedures in the sale and accounting for extra game cards, an area which lent itself to unlawful diversion of funds.

C. Revocation of Licenses The investigation prompted disciplinary action on the part of the local authorities and the Lottery Commission against organizations which were found by this Commission to be involved in violations of the law. 1. The following actions were taken by the Lottery Commission against groups which were connected with the operations of William P. Buckner: Amvets, Post 481, license suspended indefinitely; Army & Navy Union, Chapter 94, license revoked; Glenwood Community Center and Boulevard Community Center, all bingo activity suspended pending further investigation; Major F. H. LaGuardia Chapter 116, D.A.V., license revoked; Franklin D. Roosevelt, Chapter 80, license suspended indefinitely; Amvets Post 52, Yonkers, N. Y., license revoked; Congregation Ernes Wozedek, Audubon Ballroom, New York City, license revoked;

All organizations connected with Buckner at or prior to the investigation have ceased bingo activities. 2. The licenses of all organizations which conducted bingo at the New Terrace Gardens under lease from Harold Mayer and Yale Klein have been suspended. 3. The licenses of the various groups associated with the Brook- lyn Women's Hospital conducting bingo at Eastern Parkway Arena in Brooklyn, New York have been suspended. 4. The licenses of eight groups which conducted bingo in association with Michael Wynn in Utica, New York have all been suspended.

* Enforcement of this rule has been stayed by a temporary injunction against the Lottery Commission granted in the Matter o^Bergami v. Hannah, et al, Supreme Court, Albany County, Albany, N. Y.

109 5. The following actions by the Lottery Commission were taken against groups which conducted bingo under agreement with Milo Merrill in Utica, New York: Ft. Schuyler Post 1290, American Legion, license revoked; Stars and Stripes, Chapter 82, D.A.V., license suspended; John W. Phelan Police and Firemen, Post 1609, American Legion, license revoked. 6. The licenses of D.A.V. Post 16 and its auxiliary which conducted bingo in Yonkers, N. Y. were revoked by both the City of Yonkers and the Lottery Commission.

110 IX RECOMMENDATIONS

The facts set forth in this report clearly demonstrate an urgent need for tightening of laws and regulations and revitalization of enforcement at both the State and local levels to carry out the original intent of the Legislature that bingo games be "rigidly regulated" to prevent commercialized gambling, participation by criminal and undesirable elements, improper diversion of funds and other abuses. Shortly after the public hearing, the New York State Lottery Commission issued certain new regulations which were designed to eliminate the serious abuses and infractions of law exposed by the investigation.* This Commission respectfully submits further recommendations to implement those already promulgated with the same constructive purpose and in the same spirit with which it conducted the investigation and public hearing. A. Licensing 1. Lottery Commission regulations calling for registration with that body prior to the filing of a license application with local authority should be incorporated into law. Issuance of a Lot- tery Commission registration number should constitute a finding that an organization is an "authorized organization" according to law and be a condition precedent to the filing of applications. Under existing regulations a prospective licensed organization is required to apply to the Lottery Commission for registration and an identification number prior to making application to the local licensing authority. Registration was issued only to organizations which the Lottery Commission considered "authorized" to conduct bingo according to law.** The regulation constituted a reasonable and proper check on the type of organization which could apply to

* See pp. 106 to 109 supra. ** "Authorized organization" shall mean and include only bona fide religious, charitable or non-profit organizations of veterans, volunteer firemen and similar non-profit organizations. Section 432, Subd. 4, Executive Law of the State of New York.

Ill local authorities for a bingo liceiise. However, the right of the Lottery Commission to enforce the regulation has been subjected to serious question by court action. Therefore, the regulation should be enacted into law. 2. Members of licensed organizations who assist in conducting bingo games should submit proof of bona fide membership by sworn statement. The bingo licensing law* provides that only bona fide active members of licensed organizations may assist in conducting bingo games. Under existing regulations, names of bingo workers were merely listed on the license applications for identification purposes. Regulations also required that members who worked at games wear identification cards bearing the individual's name and photograph. However, the cards were prepared by the organizations themselves, a practice which permitted professional promoters and paper organizations to use paid non-member workers at the games. Additional regulations should be promulgated requiring all prospective workers of licensed organizations to obtain permits to work at bingo games by individual application to the local licensing authority. Such applications, under oath, containing representations of bona fide active membership, should be submitted on forms provided for that purpose, together with photographs of the applicant. Further, the application should be sworn and carry appropriate liability for false swearing. In order that this procedure does not become unduly burdensome, such applications could be submitted by the organizations as part of its application. Permits, with the photograph of the applicant attached and suitable for identification purposes, should be issued on special forms by the local licensing authority and be worn by the workers at bingo games. Use of a worker at a game who has not been duly licensed should constitute grounds for revocation of the organization's bingo license. 3. Commercial lessors of bingo halls should be separately investigated and licensed. Under existing laws and regulations, lessors of halls in which bingo is conducted are free to operate after submitting lessor's statements** as part of the license application of authorized organizations. In- vestigation disclosed that the factual representations contained in the statements were accepted routinely by local authorities along

* Sections 479 and 488, General Municipal Law of the State of New York. **N. Y. State Lottery Commission, Form LC-3.

112 with the several forms and schedules which comprise a license application. Promoters and gamblers were thus able to avoid any meaningful and strict scrutiny, slipping by in the license of the lessee organization. Statute and regulations should require that lessors of bingo halls be licensed independently after thorough investigation. It is also recommended that a license fee be imposed, divided between the State and municipality, to defray the cost of licensing and investigation. Provision should be made to prohibit the issuance of a lessor's license to any person, firm or corporation who manufactures, sells or distributes bingo equipment or who has any other interest in the operation of licensed games. Pre-licensing investigation should provide information concerning the lessor's background, a determination of the nature of the lessor's interest, and would include an examination of his books, records and profit and loss statements and provide substantial assistance in determining whether rents charged to conduct bingo are reasonable and other pertinent data. 4. Failure of a licensed organization which conducts bingo in a rented hall to realize a reasonable profit should constitute ground for revocation of license. Financial statistics concerning operations in forty commerical halls during the year 1960 reflect that the licensed organizations reported net profits of $854,184.54 against $5,403,393.81 in gross play. Nineteen commercial lessors earned rents which exceeded profits, sometimes substantially.* In a number of cases expenditures for prizes, operating costs and rents completely wiped out profits, turning into mere gambling operations activities which by law were to be civic or charitable fund raising ventures. The bingo licensing law should be amended to provide that where the cumulative financial report of a licensee submitted at the close of any full fiscal period (six months) reflects that total net profits are less than fifteen percent of the gross income, the license of the reporting organization shall be subject to revocation. It should also be provided that such circumstances constitute grounds for denial of an application for renewal of a license/'1 * B. Disposition of Bingo Proceeds Regulations in effect up to July 21, 1961 required licensed organizations to deposit profits in a special "bingo account," pay all ex-

* See page 69 et seq. supra. ** Average profits of organizations conducting birigo in the forty rented halls reported above were approximately 16% of the total income.

113 penses by consecutively numbered checks, and at the close of fiscal periods ending on March 31 and September 30 each year, transfer net profits out of the bingo account into the general fund. From that fund, disbursements would be made for the "lawful purposes" of the organization. However, once bingo proceeds were deposited in general funds, supervision and control by enforcement authorities ended. The investigation and public hearing demonstrated that this lack of supervision led to frivolous dissipation of monies realized from the conduct of bingo games on parties, dinners and traveling expenses of organization members. In one case, absence of supervision permitted a licensed organization to pay over practically its entire bingo profits to a professional gambler. Regulations promulgated on June 21, 1961 by the Lottery Com- mission* provided for tighter supervision and control by requiring a licensed organization to maintain two bingo accounts—a special and a regular account. Under this regulation the special bingo account is administered in the same manner as the former bingo account. After payment of expenses by consecutively numbered checks from the special bingo account, licensed organizations must deposit net profits at the close of each fiscal period into the regular bingo account. "All moneys in this account shall be used for the lawful purposes of the organization as set forth in the license application.** Moneys withdrawn from the regular bingo account must be by consecutively numbered checks, signed by duly authorized persons, made payable to specific payees and not cash. Checks must also carry notations as to the nature of the payment. While this Commission fully endorses the promulgation and strict enforcement of this regulation, it considers further restriction on the deposit of bingo proceeds necessary. 1. Net proceeds of bingo games should be devoted only to those lawful purposes of a licensed organization of a charitable, religious, educational or civic improvement nature. Most veterans, civic, religious and fraternal organizations may accurately cite as "lawful purposes" the social and recreational aspects of their activities. Thus while a veterans group may be devoted to a disabled veterans assistance program, a volunteer fire company to community fire protection and a fraternal order to a scholarship program, all may at the same time carry on active social programs of parties, dinners and the like. These activities

* Directive #12, New York State Lottery Control Commission. *'= Part VIII, Rule 5. Rules and Regulations of the New York State Lottery Control Commission, effective July 1, 1961. 114 should be paid for by funds raised from other sources. Those groups who were found using their bingo proceeds for parties, refreshments and convention travel expenses for members, although violating the spirit and intent of the law, were not guilty of actual infractions. No action, by way of license revocation proceedings or prosecution, could be taken against them on that account. Therefore, this Com- mission recommends the following: (a) The "lawful purposes" for which bingo proceeds may be expended should be clearly denned by regulation. A purpose which can reasonably and logically be shown to result in advancement and benefit to charity, religion, education and civic improvement, as distinguished from a purely internal benefit to the organization and its members, must be the standard. (b) No expenditure should be made from the general bingo account* inconsistent with the purposes set forth in the application or with the "lawful purposes" as defined by the new regulation which would incorporate the above described standards. (c) Expenditures of bingo proceeds from the regular bingo account or in any other manner which is inconsistent with "lawful purposes" as defined by regulation should constitute ground for revocation of license.

C. Municipal Enforcement 1. Local licensing and inspection personnel should be qualified to perform their duties, by proper selection and training. This Commission recognizes that licensing and enforcement needs of communities in the state which license bingo will vary greatly, depending upon the size of the community, the number of licenses issued and the nature of the bingo operations carried on in the community. Nevertheless, in all cases, efforts should be made to achieve the highest possible standards. These steps are considered minimal in that regard: (a) Communities which hire a bingo inspector to assist the clerk on a full or part time basis should make every effort to hire a person whose education and experience will best qualify him to perform his duties. A salary should be paid which will attract a person of competence and ability.

* See Part VIII, Rule 5, Rules and Regulations, New York State Lottery Control Commission. 115 (b) Selection and hiring of licensing and enforcement personnel should be free of politics or political influence. (c) The Lottery Commission should expand and improve its program of training local personnel. More is required than providing instructional booklets and periodic consultations with area Lottery Commission inspectors, themselves inexperienced in many cases. An organized, comprehensive and continuing training program should be undertaken by the Lottery Commission, conducted by a staff member with competence and experience as an investigator.

D. The /Veit' York State Lottery Control (Commission Before making specific recommendations for improvement of enforcement at the State level, it is necessary to make certain preliminary observations. These concern performance by the Lottery Commission of its statutory mandate to "prevent commercialized gambling, prevent participation by criminal and other undesirable elements and the diversion of funds." * Lottery Commission enforcement efforts were directed almost exclusively toward uncovering operating violations of licensed organizations. Its investigative power and strength were dissipated by attempting to cover the entire state with a program of sporadic, routine inspections of bingo games. As was pointed out earlier in the report, the Lottery Commission staff was wholly untrained and inexperienced in law enforcement. The Lottery Commission further handicapped and weakened itself by spreading its manpower thin, allowing untrained, inexperienced and low salaried men to cover vast rural areas or densely populated urban areas alone and without adequate and meaningful supervision. Lack of strong staff guidance led not only to ineffectiveness of performance, but to corruption of staff members as well. 1. The investigative staff of the Lottery Commission should be strengthened and reorganized to improve the caliber, employment and use of personnel. The following suggestions are made to implement the above recommendation: (a) The Lottery Commission should be permitted complete discretion by appropriate State authority to hire special investigative personnel, at salaries which will attract persons of

: Section 431 Executive Law of the State of New York.

116 ability and experience in law enforcement, including accountants with investigative experience. (b) Supervision of the investigative staff should be entrusted to a single chief investigator or director of enforcement who is qualified by virtue of proven ability and experience in the investigative field, to bring a high standard of performance to this position. (c) Selection of all personnel must be free of politics or political considerations. (d) With such specially selected personnel as a nucleus, the Lottery Commission staff should be reorganized to provide a well rounded, cohesive investigative force which could be employed anywhere in the state to conduct investigations in depth of bingo operations. (e) As the quality of local enforcement improves, the Lottery Commission should change its practice of scattering individual investigators over large areas to conduct routine, periodic checks for violations in the conduct of bingo games. With all due speed and as circumstances permit, efforts should be made to bring all investigators under one central office control. This will produce added flexibility in rotating field assignments with several obvious advantages: ( 1) pos- sibilities for corrupting relationships between investigators and operators of games will be reduced; (2) investigators whose identities are known in a particular area will be available for more effective undercover-type investigations; and (3) supervisory personnel will be better able to assess the quality of staff performance by frequent, direct personal contact with staff members. With the improvement of both Lottery Commission and local enforcement capabilities, further changes would be in order. 2. The main thrust and emphasis of Lottery Commission investigative activities should be directed to conducting investigations in depth to uncover commercial and criminal operations. 3. Routine investigations for the detection of violations in the conduct of games should be the primary responsibility of local authorities. 4. An effective program of criminal intelligence as it applies to bingo and gambling should be established and carried out by creating close liaison and information exchange procedures with various law enforcement agencies.

117 E. Miscellaneous 1. Refusal to answer questions, produce books and records or to comply with the provisions of a subpoena in any lawfully conducted investigation of bingo should constitute grounds for summary revocation of licenses. The State Lottery Control Law gives the Lottery Commission the power to examine witnesses under oath, compel their attendance and compel the production of books, records and reports. The power to grant immunity in any investigation relating to bingo is also provided. Nevertheless, under present applicable laws, persons involved in illegal bingo activities could effectively thwart an investigation by refusal to answer questions or to produce records on the ground that such action would tend to incriminate them. The Lottery Commission or any agency lawfully investigating bingo irregularities would then be faced with the necessity of granting immunity to such a recalcitrant person, a step that would not be warranted in many cases. The bingo activities of any person who is not prepared to make full and complete disclosure should be put to an immediate and complete end by the revocation of licenses of any group with which he is connected. The State Lottery Control Law should be amended to provide: (a) Refusal to answer relevant and material questions concerning bingo on the ground that such answers would tend to incriminate him, by any officer, member in charge or member who has had some connection with bingo of any organization licensed to conduct bingo, in any duly conducted investigation of bingo, shall constitute grounds for summary revocation of the bingo license of such group. (b) Refusal to produce books and records, by any person as described above, in any duly conducted investigation of bingo, shall constitute grounds for summary revocation of the bingo license of such group. (c) Refusal to answer questions or produce records, by any individual lessor of premises in which bingo games are conducted, in any duly conducted investigation of bingo, shall constitute grounds for summary revocation of the bingo license of such group.

118 CONCLUSION

In the brief passage of time since January 1, 1958, legalized bingo became easy prey for professional gamblers and commercial operators. The carefully and optimistically conceived system of restrictions, controls and enforcement processes proved, in large measure, to be ineffective safeguards. Legalized bingo was gravely threatened by an ever increasing pattern of abuses, corruption and violations of law. New regulations and actions for correction of abuses followed closely the shocking disclosures of the public hearing. The recommendations for further corrective changes by statute and regulation made here, and those which will undoubtedly be made by others concerned, can be of great value. However, the enactment of new legislation, rules and regulations alone cannot effectively eliminate the problems presented. Vigorous and purposeful enforcement by all responsible agencies of state and municipal governments is required. In the final analysis, the proper conduct of bingo rests primarily in the hands of the thousands of members of licensed organizations conducting bingo and the vast number of persons who attend these games. This great segment of the citizens of the state must be alert to the abuses of a privilege created for their benefit and resolve that they shall not re-occur. Only this can insure the survival of charitable fund raising through legally sanctioned bingo. Respectfully submitted, JACOB GRUMET, MYLES J. LANE, JOHN W. RYAN, JR., GOODMAN A. SARACHAN, Commissioners.

December 1961.

119 APPENDIX A

STATEMENT OF CHAIRMAN, ON BEHALF OF THE NEW YORK STATE COMMISSION OF INVESTIGATION AT THE COMMENCEMENT OF THE PUBLIC HEARING CONCERNING BINGO OPERATIONS IN NEW YORK STATE.

This Commission, among other matters, recently investigated illegal syndicated gambling and endeavored to bring home to the people of this State the many evils and problems incident to that form of organized crime. Today, the Commission turns its attention again to gambling, but in this instance, to a legalized gambling activity known as bingo. This public hearing will probe into conditions which have arisen in the operations of legalized bingo and will inform the public of the facts developed by our investigation. Bingo is a game of chance which prior to January 1, 1958, was deemed illegal in this State. Upon persistent urging by individuals claiming to represent well-known civic, charitable, religious and veterans organizations, a Constitutional Amendment was adopted, and thereafter enabling legislation was enacted by the New York State Legislature, which permitted Bingo to become legal in New York City and in other communities, upon adoption by local option, on January 1, 1959. A study of the history of the legislation which legalized Bingo and of the legislation itself clearly indicates that the law contemplated that only faona fide non-profit religious, charitable, veterans and civic groups be permitted to conduct Bingo for fund raising and that all such funds, short of reasonable and necessary minimum expenses, be devoted to charitable and civic purposes. (I emphasize the words bona fide groups and charitable purposes.) It was in- tended that Bingo be conducted on a community basis, by unpaid active members of such groups themselves, free of the evils of commercialization and the corrupt hand of the professional gambler. Evidence obtained by this Commission during the fall of 1960 indicated that to a large extent such was not the case. Undesirable elements saw an opportunity for ill-gotten gains and soon moved in, as they have a way of doing. It appeared that the laws of this

120 State relating to the conduct of Bingo games were being circum- vented and violated and not effectively enforced. Section 2 of the Act creating this Commission provides, in pertinent part, as follows: "Section 2(1). The Commission shall have the duty and power to conduct investigations in connection with: a. The faithful execution and effective enforcement of the laws of the state * * *, b. The conduct of public officers and public employees * * *; c. Any matter concerning the public peace, public safety and public justice. In accordance with these provisions and on the basis of the information received, the Commission undertook an investigation and held private hearings. The evidence gathered thus far shows that in the short period of a little more than two years since Bingo was legalized in this City and State, many serious abuses, acts of corruption and widespread violations of the law have occurred. The primary object of the law, to make the proceeds of Bingo games available for charitable purposes, has been perverted by professionalism. The profits of commercial operators of Bingo halls in many instances far exceed the profits realized by the charitable organizations themselves. In some cases commercial operators and professional gamblers have managed, by means of improper and corrupt arrangements, to gain control of the Bingo games of a large number of veterans, civic and religious organizations, some of which may be described as "paper" groups, existing only to run Bingo games. This hearing is being held to ascertain the nature and extent of the violations of the statute controlling the conduct of Bingo games in this State; also to ascertain whether violations of other laws have been committed including, but not limited to, the crimes of conspiracy and bribery. We also seek to ascertain the adequacy of the present law, rules, regulations, practices and procedures thereunder pertaining to Bingo, and the extent of the enforcement thereof. It is our aim to hold a constructive hearing which we hope will produce appropriate recommendations and measures to improve present conditions and to insure the achievement of the real purpose of the law.

121 APPENDIX 15

STATEMENT OF CHAIRMAN, ON BEHALF OF THE NEW YORK STATE COMMISSION OF INVESTIGATION, AT THE CONCLUSION OF THE PUBLIC HEARING CONCERNING BINGO OPERATIONS IN NEW YORK STATE.

A little over two years ago, action by the Legislature, various municipal governing bodies and the voters of this State made Bingo legal. For some five days the Commission of Investigation has received evidence of the fruits of this action which was so hopefully taken. It is ironic to note that William P. Buckner, a convicted professional gambler, was a dominant force in the campaign to legalize bingo. Astounding as it may seem, this professional gambler expected that he would enjoy greater profits and greater freedom of action under laws legalizing this form of gambling than he had before. In spite of many reasonable safeguards written into the law and in spite of the clear intent that bingo legalization be based on a concept of public good and the advancement of charitable and civic causes, Buckner and other professional promoters and commercial operators have been able to pervert the law to their private gain. The evidence adduced here has painted a sad spectacle indeed. Every regulatory provision in the law has been violated. Revenues which should have gone to charitable purposes were misappropriated in substantial amounts. In some cases the profits which were left to the licensed organizations were frivolously used for the personal pleasures of organization members. Otherwise decent citizens were duped or persuaded to commit fraudulent acts and shameful infractions of the law. Public officials who were charged with the direct responsibility for supervision of this legalized gaming were corrupted. This shocking array of abuses was not confined to the Buckner operations or to New York City. We need point no further than the situation disclosed in Utica, New York. There, among other substantial violations, a veteran's organization composed of firemen

122 and city policemen, permitted itself to be used as a front by a professional promoter for the mere pittance of $15.00 per game. Apart from these proven violations of the law, other facts should be borne in mind. According to available reported figures, the number of bingo halls controlled by commercial renters has mush- roomed. Without taking into account possible abuses and income siphoned off the top, the rent rolls of these operators generally equals and in many cases exceeds the profits of the charitable organizations themselves. The testimony adduced at both the public and private hearings indicates a woeful weakness in the observance and in the enforcement of the bingo laws. The conditions which have developed in the short time since bingo was legalized in this State cannot be tolerated. We are convinced, as any reasonable person should be, that the matters disclosed here demonstrate a compelling need for corrective action. An immediate analysis and review must be made of existing laws, practices and procedures. The interest of the Com- mission in bingo operations and our study of these problems will not terminate with the close of this public hearing. The Commission's purpose has been to conduct an objective and constructive investigation and hearing to inform the people of this State of this problem. We are hopeful that these hearings will produce beneficial results.

123

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