Casinos, Marty Walsh, Taxes and Budget Issues

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IN THE LATEST blow to Boston Mayor Marty Walsh’s war on a proposed casino in Everett, the Massachusetts Gaming Commission dismissed the city’s allegations that investigators for Wynn Resorts improperly gained access to confidential wiretap files in the attorney general’s office.

“The [Investigations and Enforcement Bureau] conducted a preliminary inquiry into the allegations, and has determined that there is no factual basis to support the allegations and that any further regulatory investigation is not warranted,” says a report submitted to the commission on Thursday by Karen Wells, the interim executive director of the gambling commission, who heads the investigative bureau.

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The allegations stem from a case involving three men, including convicted felon Charles Lightbody, charged with trying to conceal Lightbody’s ownership interest in land purchased by Wynn to site the casino. The allegations, which the defendants included in filings in federal and state court and Boston officials included in their suit against the Gaming Commission on the same day, charge that private investigators and former state troopers Joseph Flaherty and Stephen Matthews used their connections to get information in the attorney general’s office about the ownership long before Wynn officials acknowledged knowing about Lightbody’s involvement.

The city’s suit included affidavits from two retired troopers who say they were told that Flaherty and Matthews were hired by Wynn to look into the allegations in 2013 even though the company said they were unaware of the connections until months later.

But Robert Popeo, an attorney with Mintz Levin, which performs legal work for Wynn, says neither was ever hired by Wynn and, in fact, Matthews had done work for a competing casino applicant at Suffolk Downs. Popeo said his firm – without Wynn’s knowledge or approval – hired Flaherty after the allegations about Lightbody first surfaced.

Popeo told the commission Wynn decided against hiring Flaherty at the time but he said he retained him on his own “because we were blindsided” by the Lightbody ownership revelation. “I asked him to see what is the rumble in law enforcement circles,” Popeo said, adding Flaherty worked a total of 12 hours and never went to the attorney general’s office.

Both Flaherty and Matthews also submitted affidavits denying they ever worked for Wynn or went to the wiretap room.

“I do not know where the ‘wire room’ is at the Massachusetts’ Attorney General’s Office is,” wrote Flaherty, who is the son-in-law of former attorney general Frank Bellotti. “I have never reviewed any investigative files relating to any state or federal investigation regarding casinos.”

Wells said the genesis for the allegations was similar to a “children’s game of telephone,” where seeming innocuous and unrelated information was blown out of proportion as it was retold. She said the initial allegations stemmed from ill feelings by other former troopers toward Flaherty and Matthews and then spun out of control.

A spokeswoman for Walsh declined comment, citing the ongoing litigation.

In other business, the commissioners discussed two letters recently sent by the federal Bureau of Indian Affairs regarding the application of the Mashpee Wampanoag to take land into trust in Taunton for the tribe’s proposed casino. The first letter, sent to the Taunton City Council, seemed to indicate a decision would be made by late September, but the second letter backed off that.

John Donnelly, a lawyer representing a group looking to win the Southeast regional license for a casino in Brockton, said the letters show the “uncertainty” around the proposed casino and urged the commission to move forward with the process and take a vote supporting a private casino in the region without waiting for the tribe’s application to be settled one way or the other, which could take years. He said a vote would send a message of stability to potential investors.

The commissioners said no vote could be taken until at least the next meeting when it could be placed on the agenda and garner public comment, but commission chairman Stephen Crosby asked if such a request indicates uncertainty over the Brockton group’s finances. He noted the developer who had initially applied for a license for the region for a waterfront casino in New Bedford pulled out of the competition because investors were reluctant to put money in if a Wampanoag casino is built, which would drain revenues.

“The day this letter comes, your financing, it seems, got a little hinky,” Crosby said.

Donnelly said that was not the case at all. “Financing is not an issue for this group,” Donnelley said emphatically. “There is no wiggle room” in that statement.

The commission, meeting for the first time in its new headquarters on Federal Street in Boston’s Financial District, also expressed concern over a levy by the Executive Office of Administration and Finance on the agency that is assessed to all government departments. The levy of $1.125 million, which comes out of the commission’s budget, is for indirect costs relating to salaries and benefits for agencies that do not receive federal grants. Commission finance officials say their actual indirect costs are just $5,500.

Meet the Author Jack Sullivan Senior Investigative Reporter , CommonWealth About Jack Sullivan Jack Sullivan is now retired. A veteran of the Boston newspaper scene for nearly three decades. Prior to joining CommonWealth, he was editorial page editor of The Patriot Ledger in Quincy, a part of the GateHouse Media chain. Prior to that he was news editor at another GateHouse paper, The Enterprise of Brockton, and also was city edition editor at the Ledger. Jack was an investigative and enterprise reporter and executive city editor at the Boston Herald and a reporter at The Boston Globe. He has reported stories such as the federal investigation into the Teamsters, the workings of the Yawkey Trust and sale of the Red Sox, organized crime, the church sex abuse scandal and the September 11 terrorist attacks. He has covered the State House, state and local politics, K-16 education, courts, crime, and general assignment. Jack received the New England Press Association award for investigative reporting for a series on unused properties owned by the Catholic Archdiocese of Boston, and shared the association's award for business for his reporting on the sale of the Boston Red Sox. As the Ledger editorial page editor, he won second place in 2007 for editorial writing from the Inland Press Association, the nation's oldest national journalism association of nearly 900 newspapers as members. At CommonWealth, Jack and editor Bruce Mohl won first place for In-Depth Reporting from the Association of Capitol Reporters and Editors for a look at special education funding in Massachusetts. The same organization also awarded first place to a unique collaboration between WFXT-TV (FOX25) and CommonWealth for a series of stories on the Boston Redevelopment Authority and city employees getting affordable housing units, written by Jack and Bruce. About Jack Sullivan Jack Sullivan is now retired. A veteran of the Boston newspaper scene for nearly three decades. Prior to joining CommonWealth, he was editorial page editor of The Patriot Ledger in Quincy, a part of the GateHouse Media chain. Prior to that he was news editor at another GateHouse paper, The Enterprise of Brockton, and also was city edition editor at the Ledger. Jack was an investigative and enterprise reporter and executive city editor at the Boston Herald and a reporter at The Boston Globe. He has reported stories such as the federal investigation into the Teamsters, the workings of the Yawkey Trust and sale of the Red Sox, organized crime, the church sex abuse scandal and the September 11 terrorist attacks. He has covered the State House, state and local politics, K-16 education, courts, crime, and general assignment. Jack received the New England Press Association award for investigative reporting for a series on unused properties owned by the Catholic Archdiocese of Boston, and shared the association's award for business for his reporting on the sale of the Boston Red Sox. As the Ledger editorial page editor, he won second place in 2007 for editorial writing from the Inland Press Association, the nation's oldest national journalism association of nearly 900 newspapers as members. At CommonWealth, Jack and editor Bruce Mohl won first place for In-Depth Reporting from the Association of Capitol Reporters and Editors for a look at special education funding in Massachusetts. The same organization also awarded first place to a unique collaboration between WFXT-TV (FOX25) and CommonWealth for a series of stories on the Boston Redevelopment Authority and city employees getting affordable housing units, written by Jack and Bruce.

Crosby said because the commission is funded by licensees, they should not be subject to the charge, which he said could rise to $30 million over time. Crosby said the cost is borne twice by licensees and he asked Administration and Finance officials to review the charge or explain why the commission is subject to it.

“This is real money,” he said.

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