The Free Press, Mankato, MN

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June 15, 2010

Deal reached in charitable gambling case

MANKATO — As the first person in Minnesota to face racketeering charges related to charitable gambling, John Allin Lever Jr. was facing the possibility of 20 years in prison.

A plea agreement will likely limit the 61-year-old Mankato businessman’s time behind bars to the day he spent in custody when he was initially arrested nearly 3 years ago.

The agreement, which has been in the works since at least March and was finalized last week, brings an end to a complicated case that accused Lever of creating a charitable organization so he could steal money raised through pull-tab gambling. He pleaded no contest to the felony racketeering charge and guilty to felony charges of theft through false representation and spending gambling funds illegally. A sentencing hearing has been set for July 21.

Lever was arrested in October 2007 by Doug Forsman, an alcohol and drug enforcement agent with the Minnesota Department of Public Safety. Forsman was in Mankato to investigate Minnesota Game and Fish Preservation, a nonprofit organization set up by Lever and others. It was supposed to provide outdoor sporting opportunities to kids.

The organization caught the attention of a Minnesota Gambling Control board investigator, Dave Pherson, in 2004. He found problems with the way charitable gambling proceeds were being spent.

Pherson cited $1,650 per month a business owned by Lever was receiving for auditing the pull-tab boxes sold through Minnesota Game and Fish. He also found the organization was consistently spending more than 55 percent of its gross profits from gambling on operational costs, which is a violation of charitable gambling rules.

More red flags were raised later when four people involved with the organization, including Lever’s brother, resigned, according to investigation records. Treasurer Jerry Freier resigned in September 2004, saying only it was in his “best interest.”

In October 2004, Pam Lepird, who was hired to help manage the organization, resigned citing a “lack of fiduciary responsibility” to Minnesota Game and Fish’s mission and donors. Her written resignation also said she was concerned about “irregularities between the charitable gambling organization and the nonprofit organization.”

Steve Freyberg, another Mankato businessman who was initially involved with the organization, resigned in July 2005. His written resignation said the mission of the organization was not being met, investigation records said. He also said it was best for him to resign because he didn’t understand the gambling portion of Minnesota Game and Fish Preservation. Freyberg later told Forsman that he was concerned Lever and others involved were only using the organization as a “paycheck.”

Scott Lever’s resignation only said it was “effective immediately.”

Forsman’s investigation of the organization’s financial records revealed many questionable transactions. One shifted $43,000 from the organizations gambling fund to other accounts, then back to the gambling fund. Forsman reported that the accounting shifts made it look like excess charitable gambling expenses were being covered by other income.

Other accounting problems showed funds that were illegally shifted from the gambling account to the general fund, including a $69,627 transaction in 2005 and a $16,633 transaction in 2006.

When Lever agreed to meet with Forsman on Oct. 22, 2007, he was eventually arrested after he refused to turn over records. Lever was released later that day after he and two other Minnesota Game and Fish board members, Stephen Weimert and Robert Drengler, were interviewed by Forsman.

Weimert, president of the organization’s board of directors, told Forsman he didn’t know Lever’s gambling manager license had been revoked in 1997. He also said he wanted to resign, but couldn’t because his name was on all of Minnesota Game and Fish’s bank accounts.

Forsman said Drengler acknowledged that Lever “manipulates things” with bookkeeping and took advantage of “gray areas,” but didn’t believe Lever, “manipulated the books with deception in mind.”

Lever’s attorney, Christopher Kennedy, has been negotiating a plea agreement with Mike Hanson, assistant Blue Earth County attorney, since at least March. Lever had been scheduled for a plea hearing in May, but the hearing was delayed because he wasn’t able to return from Arizona. Kennedy said then that emphysema was keeping Lever from returning to Minnesota.

According to the plea agreement, Lever will receive a stay of adjudication for the racketeering charge. His sentence could be stayed for up to 20 years, then the charge would be dismissed if there are no probation violations.

Hanson also agreed to allow Lever to be sentenced at a gross misdemeanor level for the felony theft and illegal use of gambling funds charges.

“The state has agreed that it will not ask the court for jail time, but I understand that it will request a substantial amount of sentence to serve (time),” Lever said in the written plea agreement.

“This was a just resolution for both sides,” Kennedy said Tuesday.

Hanson said he signed off on the plea agreement because there were no victims who suffered a direct financial loss. He pointed out that another aspect of the plea agreement will bar Lever from having oversight of any charitable gambling funds.

“One of our main goals was to be sure Lever could not be involved in gambling in the future,” Hanson said.

Forsman’s investigation also resulted in criminal charges against a Mankato banker. That banker also filed a civil lawsuit in federal court accusing Forsman of false imprisonment and other constitutional violations.

The charges against the local banker were dismissed a year ago by a Blue Earth County District Court judge who cited a lack of evidence. The federal lawsuit against Forsman was dismissed by a United States District Court judge in October.

 

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