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Properties across Alabama linked to multi-million dollar federal sports book case

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Several properties that make up Trussville’s downtown entertainment district are listed in a 114-count indictment surrounding what federal prosecutors called an illegal sports betting organization that raked in hundreds of millions in collected gambling debts over several years.

Earlier this month a federal grand jury indicted 11 men – including six from Alabama – on charges that the organization they managed evaded tens of millions of dollars in excise taxes for three years.

The 56-page indictment makes for exciting reading, as prosecutors detailed an elaborate organization for collecting gambling debts and evading detection by authorities.

The feds say Timothy J. Pughsley, 51, of Birmingham, began operating a bookmaking business about 17 years ago, which eventually became known as “Red44.” Bookmaking and betting activities for the organization occurred online through an offshore server located in Costa Rica.

Prosecutors in charging documents say Red44 operated as a multi-level marketing operation. Bettors generally placed bets on credit, with no money exchanged online. The platform tracked everything from odds to earnings to outstanding debts. And bookmakers were charged a “per head” fee for each active bettor account. Most of the action occurred during college football season.

In Pughsley’s indictment, 30 pieces of real estate property are listed at addresses in Trussville, Pelham, Birmingham, and Gulf Shores, as well as Las Vegas, Nev.; Naples, Fla.; Englewood, Colo. and Upton, Mass.

Two properties listed inside the Trussville Entertainment District (TED) are owned by businessman Coby Lake. Jay Smith, Lake’s attorney, said Pughsley was a passive investor without any operating authority over the properties.

“We were surprised to see the properties listed in the indictment,” Smith said. “We’re taking it seriously, but we don’t think it will have any effect on the businesses.”

Trussville Mayor Buddy Choat said the city is monitoring the situation. He said Lake’s participation in the TED was already significant by Jan. 2, 2019, the project’s initiation, while the period covered in the indictment begins later that year.

“We learned about the properties when the indictment was unsealed,” Choat said. “We have several new businesses moving into the district, and we will continue to move forward.”

According to prosecutors, Pughsley conducted training conferences for other members of the group, encouraging them to increase their numbers of bettors, comparing sports gambling to selling marijuana, and acknowledging “that federal law prohibited transferring funds associated with gambling wagers.”

At an August 2019 conference in Chicago, Pughsley told participants during the previous fiscal year, the group had a roster of more than 15,000 bettors, with about 7,800 bettors in one week during football season. The average loss per bettor was $983, according to the indictment.

Prosecutors say, based on those numbers, the Red44 organization earned a gross profit of $14.9 million that year, which would have generated an excise tax of about $6.8 million. A year later, at a conference in Nashville, the organization estimated $300 million in wagers, which would have resulted in about $6 million in excise taxes. By 2021, Red44 brought in about $352 million in wagers, which would have netted $7 million in taxes.

Participants at conferences also got marketing T-shirts, were instructed on how to skirt tax laws when filing, and how to open bank accounts that would evade legal attention. They were told to identify themselves as self-employed.

When using Venmo, they were advised to avoid using phrases like “sports,” “you won this time” and “I can’t pick a winner,” to avoid unwanted attention.

According to the indictment, one defendant told participants that Red44 was “not in the business of breaking kneecaps” to collect debts, but “used intimidation over the phone” to ensure money was paid.

At a December 2021 party for bookmakers in Trussville, one was observed in a restaurant restroom counting a two-inch stack of $100 bills, which were later put in his girlfriend’s purse, according to the indictment.

Pughsley has been charged with 38 counts of tax evasion, one count of conspiring to operate an illegal sports-betting organization, one count of conspiring to commit money laundering, and four counts of money laundering.

Also indicted were:

  • Christopher Burdette, 30, of Chelsea, charged with six counts of tax evasion, one count of conspiring to operate an illegal sports-betting organization, one count of conspiring to commit money laundering, and one count of money laundering.
  • Nathanael Burdette, 36, of Birmingham, charged with six counts of tax evasion, one count of conspiring to operate an illegal sports-betting organization, one count of conspiring to commit money laundering, and two counts of money laundering.
  • Jonathan Lind, 44, of Birmingham, charged with six counts of tax evasion, one count of conspiring to operate an illegal sports-betting organization, one count of conspiring to commit money laundering, and two counts of money laundering.
  • Thomas V. Zito, 57, of Vestavia, charged with six counts of tax evasion, one count of conspiring to operate an illegal sports-betting organization, one count of conspiring to commit money laundering, and one count of money laundering.
  • Christopher Donaldson, 46, of Trussville, charged with one count of conspiring to operate an illegal sport-betting organization and one count of conspiring to commit money laundering.
  • Gary L. Rapp, Jr., 44, of Lakeland, Tenn., charged with six counts of tax evasion, one count of conspiring to operate an illegal sports-betting organization, one count of conspiring to commit money laundering, and two counts of money laundering.
  • Mark Giaquinto, 50, of Upton, Mass., charged with six counts of tax evasion, one count of conspiring to operate an illegal sports-betting organization, one count of conspiring to commit money laundering, and two counts of money laundering.
  • Matthew D. Voorhees, 47, of Englewood, Colo., charged with six counts of tax evasion, one count of conspiring to operate an illegal sports-betting organization, one count of conspiring to commit money laundering, and two counts of money laundering.
  • David Richards, 38, of Las Vegas, Nev., charged with six counts of tax evasion, one count of conspiring to operate an illegal sports-betting organization, one count of conspiring to commit money laundering, and two counts of money laundering.
  • Joshua Gentrup, 36, of Athens, Ga., charged with six counts of tax evasion, one count of conspiring to operate an illegal sports-betting organization, one count of conspiring to commit money laundering, and two counts of money laundering.

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