Ivy Ong sentenced on two counts of conspiracy

MUSKOGEE, OKLA.–

Sheldon J. Sperling, United States Attorney for the Eastern District of Oklahoma, announced on Tuesday, May 20, that Ivy Kwok Ong, 66, of El Paso, Texas, was sentenced for Conspiracy to Commit Tax Evasion and Conspiracy to Pay and Receive Illegal Gratuities.

Ong was the operator of Carlo Worldwide Operations, LLC, a Nevada corporation active in supplying video gaming machines to tribal casinos.

He was sentenced to 39 months in federal prison, followed by 36 months of supervised release on each count, to run concurrently. Ong was also ordered to pay a sum of $199,610 in restitution to the IRS and a $200 special assessment to the court.

“No fine was imposed based upon the restitution ordered, the defendant’s current financial situation and the uncertainty of his future earning abilities,” stated U.S. Attorney Sperling.

Ong pled guilty to both charges on September 21, 2007, consequently agreeing to forfeit his interest in a gated-community home in Choctaw and a 15-acre horse farm in Lexington, Ky.

“These parcels of real estate were purchased with the proceeds of his criminal activities,” reported U.S. Attorney Sperling. “The properties are estimated to be worth over $1,000,000.”

The court forfeited Ong’s interest in both properties at the sentencing.

The Honorable Ronald A. White, District Judge in the United States District Court for the Eastern District of Oklahoma, in Muskogee, presided over the sentencing, and ordered Ong to begin serving his sentence at noon on June 20, 2008.

Defense counsel David Ogle of Oklahoma City gave the initial arguments in the sentencing hearing. Ong followed, with a brief statement to Judge White.

“I did, in fact, do the things I was indicted for. I apologize to the United States and to the Seminole Nation. I’ll have to live with that. I’m sorry for what happened,” Ong said.

Ong had been the focus of an investigation by the BIA, IRS, United States Department of Interior Inspector General, FBI and the National Indian Gaming Commission.

“In February 2001, BIA officials were approached by local law enforcement officials complaining that a prostitution and drug ring was operating in the parking lot of the Seminole Nation I-40 travel plaza and casino. Federal authorities were already engaged in a lawsuit, later dismissed by the federal court, in an attempt to close the facility for operating illegal Class III slot machines. The government’s position was later vindicated on appeal,” said U.S. Attorney Sperling.

“Our focus then shifted from the parking lot to activities inside the casino and on to the operators and investors financing the Seminole casinos. What the investigators found deeply disturbed us.”

According to his guilty plea, Ong and the Seminole Nation entered into a series of agreements beginning in August 2000.

Ong was to build or update four casinos in Seminole County, and provide video games at each location. Under their agreement, Ong’s company received 40% of the net winnings, and the tribe received the remaining 60%.

“The agreements provided an additional benefit to Ong,” U.S. Attorney Sperling explained. “Because Ong negotiated with the tribe as a machine vendor, rather than a gaming manager, his agreements were not reviewed by the NIGC, and Ong did not undergo a background check.

“A cursory background check of publicly-available records would have revealed a criminal record in California, alleged ties to organized crime in Nevada and an unpaid tax liability to the IRS.”

According to filed information, Ong owed nearly $200,000 to the IRS for taxes unpaid in 1991, 1995, 1997 and 1999-2001.

“Ong used the cash generated from the Seminole casinos to set up various bank accounts and manipulate financial records to hide his assets from the IRS,” explained U.S. Attorney Sperling. “The two pieces of property that he agreed to forfeit were purchased with funds from the scheme and placed in the names of third parties to conceal and disguise Ong’s true ownership.

Tracing of Ong’s finances revealed peculiar payments made to tribal members, and required the investigation of other targets and subjects.

Records of over 70 bank accounts and rooms full of documents have been examined over the past six years.

Funds have been traced going through Ong, Carlo Worldwide and Seminole Nation casinos from multiple states, and several foreign countries.

Each new account generated another list of individuals to be interviewed, and new leads to be followed. Federal agents worked countless hours in their exhaustive investigation.

The case of one conspirator, Rick Deer, a tribal councilor who allegedly received gratuities from Ong is set for trial in mid-July 2008.

According to U.S. Attorney Sperling, information from the investigation refers to at least public officials who requested and received illegal gratuities from Ong

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to advance and protect his gambling with the Seminole Nation.

Person “A” was a member of the General Council and Seminole Nation Development Authority who received at least 16 payments totaling $44,100.

Ong paid a mortgage deficiency and attorney fees in the amount of $7,190.82 for Person “B” who served on the General Council and gaming commission.

Person “C,” also a General Council and SNDA member, received home renovations for which Ong provided $8,607.

Certain individuals under investigation created false documents and doctored business records to conceal such payments from authorities.

“While I will not elaborate on the identities of the unnamed co-conspirators referenced in the Information, I do want to mention three persons who are not implicated,” noted U.S. Attorney Sperling.

“Former Chief Jerry Haney was informed of this investigation in 2001 and was asked to keep his knowledge confidential. He did so over the next two years at great personal and political cost.

“Current Chief Enoch Kelly Haney had also been made aware of the investigation and has been extremely supportive at every turn.

“Finally, Qazi Alam, the former SNDA Director who was initially considered at target of the investigation, has been cleared by Ong. Ong has told prosecutors that he offered a Rolex watch to Mr. Alam and cash bonuses to Alam’s employees, but Mr. Alam refused all offers as unethical and unlawful.”

“Lots of others asked,” said Ong, “but not Qazi.”

“Bottom line? This was a man who should never have been allowed anywhere near an Indian gaming facility,” U.S. Attorney Sperling said following Ong’s plea. “Until we have a method of tracing not only those who manage, but also those who supply or invest in tribal casinos, Indian Country remains vulnerable to infiltration by those like defendant Ong.”

The Seminole Nation, citing its difficulties with the NIGC and the IRS stemming from their involvement with Ong, had previously submitted a victim impact statement requesting several million dollars in restitution.

Losses attributed to the Nation’s involvement with Ong include an $11 million fine levied by the NIGC, $170,000 in IRS penalties and fines and an estimated $8.4 million in lost income while the tribe was forced to close its casinos for a 13-month period in 2003 and 2004.

The court, however, did not grant any restitution to the Seminole Nation at Ong’s sentencing.