Ardent bettors may add embezzling to problems
Theft: Evidence suggests gambling harms businesses, as workers rob their employers to pay for sprees. By Michael Dresser
Sun Staff
Originally published December 28, 2003
NEWARK, Del. - Victoria Long used to play the ponies every once in a while, but she considered slot machines a game for "idiots."
Then a $300 win at the slots at Delaware Park got her started on a gambling addiction that the once-trusted bookkeeper fed with more than $500,000 she stole from her employer. Now 58, she paid for that crime with almost a year behind bars.
"I turned out to be the biggest idiot of all," she said.
As state after state has opened up to legalized slot machine gambling, cases much like hers have followed - as have jail terms for the offenders and millions of dollars in losses for the victims. In some cases, businesses have been pushed to the brink of bankruptcy and forced to lay off workers, suggesting an economic impact that has not
been a big part of the gambling debate in Maryland.
A Wisconsin credit union, for example, went out of business in 1999 after a 64-year-old grandmother stole $289,000 to play the slots. A printing company in Kentucky laid off seven employees after a bookkeeper stole $180,000 to feed slot machines. Long's firm stayed in business but was unable to expand.
FBI figures show that embezzlement has risen nationally since the big gambling expansion of the late 1980s and early 1990s, a period during which most categories of crime decreased. But the figures shed little light on the cause.
The link between gambling and embezzlement is difficult to prove statistically because of variations among states in how they report the crime. Many list it as a theft and don't keep track of whether the crime is motivated by gambling, drugs or garden-variety greed.
The gambling industry says that's the point: Thieves are thieves, and that some are also gamblers is coincidental.
But the anecdotal evidence of a connection is strong. Prosecutors interviewed by The Sun in five states that either have expanded gambling or border ones that have say they have noticed an increase in embezzlements and think slot machines are a factor.
Patrick Youngs, an assistant Rhode Island attorney general who specializes in white-collar crime, says he has noticed a significant increase in gambling-related embezzlements since his state allowed slots in the 1990s.
"When I get cases now, I inevitably suspect gambling is the root," Youngs said, adding that at least 50 percent of the embezzlement cases he sees are related to gambling.
Gov. Robert L. Ehrlich Jr., who is pushing for the legalization of slots in Maryland, insists that the benefits outweigh the risks and contends that slots are no more addictive than other forms of gambling.
The Maryland Chamber of Commerce agrees with him, though some businesses in states where the machines were permitted have come to regret it.
Jack Krantz, who owns the Adventureland amusement park outside Des Moines, Iowa, says he supported the legalization of slots at nearby Prairie Meadows. But, he said, "We really haven't seen any benefit from it.
"We're right next door to a casino, and we've lost four really good employees who never gambled before," he said. All were suspected of stealing from the company to gamble, Krantz says, and two were proved to be embezzlers - one of whom stole $35,000.
In his 30 years of doing business, Krantz says, he never had an embezzlement problem before slot machines came into the neighborhood.
The American Gaming Association, which represents commercial casinos, denies there is any connection. It points to a 1999 study by Jay S. Albanese, then a professor at Virginia Commonwealth University.
The study, which the industry group paid for, concluded that "gambling does not cause white-collar crimes" such as embezzlement, forgery or fraud. It found that forgery and fraud arrests decreased in casino jurisdictions, while embezzlement arrests rose only 1 percent.
That study, however, is based on FBI statistics that other researchers dismissed as flawed by inconsistencies in how local police agencies report crimes.
Melvin Slawik, a gambling addiction counselor who works in the public defender's office in Wilmington, says gambling-related embezzlement "increases every year."
Slawik says there are cases in which the embezzler is basically a crook who just happens to gamble. "The other side is the gambler who violates the law who is basically an honest person - or at least started out that way," he said.
The typical case, Slawik says, is a woman who has been a bookkeeper at her company for many years.
Somebody like Vickie Long.
Always liked gambling
Victoria Webb Long is 58, married for 23 years, a mother and a grandmother. She served 10 months in prison for stealing from Mahaffy & Associates, the Wilmington engineering firm where she kept the books for 13 years.
"I always did like gambling," Long says. "I did grow up in an addicted family - there was gambling, alcohol, all the vices."
For most of her life, gambling was not a problem. She says she would go to Atlantic City maybe once a year or go to the races with friends during the
three-month season at Delaware Park.
Long lives so close to Delaware Park that she can hear the races being called from her back yard, but it wasn't until slots had been at Delaware Park for a year that she visited the new casino.
She won about $300. She liked it.
Soon she was playing the slots once a week. It became a welcome diversion from her troubles at home, including relationship problems and serious illness in the family.
"I can just go there and be totally mesmerized and my brain can stop," she says.
What really got her hooked, Long says, was the time she won $2,500. The next night, she was back and lost it all. But it didn't matter.
"It was never about money," she said. "It was about a hype, a thrill, a rush, and it's a roller-coaster, a definite roller-coaster when you get hooked on it."
Soon Long found herself dropping all of her household money into the slots. But her gambling problems were just starting.
Additional disorders
Frank Fahrenkopf, president of the gaming association, says that 99 percent of Americans can gamble responsibly. He says, and most experts agree, that most pathological gamblers have other disorders as well. "The slot machines are not going to make you a pathological gambler," he said.
The association estimates that 1 percent of the adult population is made up of pathological or compulsive gamblers.
"Those 1 percent are very, very sick people, and they will commit crimes," Fahrenkopf said.
William N. Thompson, a University of Nevada, Las Vegas professor who has studied the gambling industry, agrees that 1 percent is a good estimate for the nationwide percentage of compulsive gamblers. But that number doubles, he says, when a slot machine operation is located within 50 miles.
Diane Kepros, a gambling addiction counselor in Cedar Rapids, Iowa, calls compulsive gambling "a disease of irrational thinking." She says many of her patients have embezzled. "Even the smartest of people, when they get into the peak of this gambling high, can rationalize something that would seem crazy when they're in their right mind,"
she said.
Kepros, who also counsels drug addicts, says that they, too, steal from employers but that even the worst cases don't approach the monetary losses a compulsive gambler can run up.
"There's no addiction that's more expensive than gambling," she said.
Cases from around the country include embezzlements by addicted gamblers from churches, Little Leagues, chambers of commerce, labor unions, local governments, charities and even casinos.
"We've got mothers of Girl Scouts stealing cookie money," said Dennis Labelle, prosecuting attorney in Grand Traverse County, Mich., site of an Indian casino that is two-thirds slots.
Gambling addiction specialists say video slot machines, the type proposed for Maryland, are the most addictive form of gambling. Bob Breen, a gambling addiction counselor at Rhode Island Hospital in Providence, R.I., says compulsive gamblers typically become addicted to video machines in one year, as opposed to three to seven years for
other types of gambling.
Paul Schurick, Ehrlich's communications director, says the governor doesn't believe slot machines are more addictive than the lottery, horse racing or other forms of betting. He says the administration bases that opinion on "our own studies."
A trusted employee
Long says she doesn't recall when slot machines became "the essence of my life."
But about 1998, they did. She maxed out her credit cards and pawned her wedding ring. She became increasingly distant from her family as she spent virtually every evening at Delaware Park, going as soon as she got off work at 5 p.m. and staying until 11 p.m. or later.
Long says she enjoyed her job and got along with her co-workers and bosses. "I was ... thoroughly trusted," she says.
The slots had found Long's weak point. She admits it was not the first time she stole. As a young single mother, she was arrested for petty theft. But after being caught and making restitution, she led a law-abiding life for two decades.
She recalls starting out slowly, taking $50 to $100 at a time. She forged checks and misused the company credit card. But as her stealing increased, so did her gambling. "When I began to embezzle, it totally got out of control," she says. "I convinced myself I didn't care. But it didn't mean I didn't care. I was dying inside."
Unlike many gambling-addicted embezzlers, Long didn't fool herself into thinking she was "borrowing" the money. She knew that what she was doing was wrong, and that at some point she would be caught.
"When I crossed the line, I totally crossed the line," she says. "There was no return when I crossed that line."
Long hid her thefts well, but after about three years of embezzlement, she knew the company was close to discovering the truth. She was tired and on the verge of a breakdown.
One day in 2001, she left for work but just kept driving. By that time, she says, her relationship with her husband was so distant that he didn't realize she was gone for three days.
"I would up staying in a motel for a week somewhere on the road, and I just laid there in a fetal position," she recalls. "I think at that time I may have contemplated suicide."
Long visited her brother in Buffalo, N.Y., and told him what she had done. He told her to get legal help. She called her husband, who said they'd get through it together. She returned to Delaware and turned herself in. "I just wanted it all to be over with. I didn't want to manipulate anymore. I didn't want to steal anymore. I didn't want
to gamble anymore," she says.
Proximity counts
Long says it is unlikely she would have ever reached that point had slots not come to Delaware Park.
"This was convenient to me. It was five minutes away," she says.
One point casino industry experts and gambling addiction counselors agree on is that proximity counts when it comes to attracting gambling customers.
Christiansen Capital Advisors, a respected industry analyst, projected last year that 77 percent of the slots action at Pimlico would come from people who live within 25 miles of the track. That means more than three-quarters of the take would come from Maryland residents.
Earl L. Grinols, professor of economics at the University of Illinois, Urbana-Champaign, says studies have shown that the level of play falls off 30 percent to 35 percent with each doubling of the distance from a gambling establishment.
A study produced for the Maryland racing industry by the Innovation Group of New Orleans projected that the racing industry's proposal last year for 16,500 slots at Pimlico, Laurel, Rosecroft and Timonium would attract 1.4 million Maryland "gamers." Of those, it predicted that 912,172 would be new in-state gambling customers, and 537,761
would be "recaptured" from other states.
Thompson, the Nevada professor and a frequent industry critic, says that roughly 5 percent of gambling customers, as opposed to the population as a whole, become compulsive gamblers. Thus, he says, the industry plan, which Ehrlich reduced to 11,500 machines, would have yielded 45,000 new pathological gamblers in the state.
Thompson says that while few compulsive gamblers turn to violent crime, surveys suggest 40 percent to 60 percent of them end up stealing from their employers. "You're going to get 20,000 new people stealing at work," he estimated. Most compulsive gamblers who turn to theft, he said, do not have a criminal record.
John Warren Kindt, an economist at the University of Illinois, Urbana-Champaign, uses some more conservative assumptions and comes up with another estimate: 18,000 to 45,000 new compulsive gamblers, of whom 6,000 to 15,000 will embezzle.
Slots-embezzling link
Prosecutors from Iowa, Rhode Island, Michigan, Wisconsin and Kentucky say they had noticed a increase in embezzlements since casinos opened in their states or nearby. None reported seeing a similar problem with lotteries or horse racing.
Kentucky doesn't have slots, but prosecutors say it has felt the impact of gambling in Indiana - 10 minutes from Louisville across the Ohio River - since riverboats opened there in the mid-1990s.
Jason Snyder, an assistant commonwealth attorney in Jefferson County, says gambling is behind one in three of the cases his office has handled in which people stole $50,000 or more from their employers.
"A lot of the people that we find embezzle money and take it to the casinos are people with otherwise clean lives," Snyder said. "A lot of the time it's a loyal employee who's been there for years that ended up doing this, and the employers are pretty surprised."
Snyder says the proliferation of such cases is relatively new to his region.
Also, he says, with casino-related embezzlements, it's virtually impossible for employers to recover the large amounts of money that have been lost at casinos. Insurance sometimes covers the losses, he says, but the result is that premiums go up.
Lorenz, whose program treats gamblers from around the country, says she has seen many examples of companies going out of business or having to lay off non-gambling employees because of gambling-related embezzlement.
'She nailed us'
Long says she didn't keep track of the amount she had stolen and thought it was about $100,000.
She was wrong. As part of the investigation of her crimes, police obtained partial records of Long's gambling at Delaware Park over a three-year period. When she finally saw the records showing $380,000 in losses and $57,000 in winnings, she broke down and cried.
In April last year, Long pleaded guilty to theft and forgery charges. That August, she was sentenced to a year in prison. She ended up serving 10 months. Mahaffy, her employer, won a judgment against Long for $536,609.26 but was unable to recover much.
Prosecutors say she used some of the money for other personal expenses; she says everything she stole went into slots.
Long is paying restitution at the rate of $100 a month, all she says she can afford. At that rate, she will have to work more than 400 years to discharge her debt.
Scott Parlow, a partner in the Mahaffy firm, says the firm survived but paid a high cost. Parlow says the company wanted to hire more engineers to take on more work two years ago but couldn't afford to.
"She nailed us just when the opportunity to grow was there," he said. "We never had enough money to expand."
Another victim in a similar case was Russell Printing Co. of Louisville. According to co-owner Richard Russell Jr., a "very efficient, very professional" bookkeeper stole $180,000 from the company and lost most of it in the slots on a riverboat 20 minutes away in Indiana.
Russell said the losses nearly bankrupted the company and forced him to lay off seven of its 30 employees.
"As far as I'm concerned, they can sink the boat," Russell said. "It brought in theft and everything else."
Even worse cases
Long was released from prison June 15. She regularly attends a Gamblers Anonymous meeting and sees a counselor.
Long says the GA meetings have helped her realize she's not the only gambler to have stolen from her employer. "I know of five cases ... exceeding my amounts," she said.
She says that years ago, when the issue of slots was being debated in Delaware, she thought they were a good idea because they would bring revenue to the state. She never imagined the effect they would have on her.
Long says what hurts the most is the knowledge she hurt people who trusted her.
"I live with that betrayal," she said. "Sometimes it's very difficult to live with yourself."
Copyright 2003, The Baltimore Sun
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