A federal investigation into suspicious cash withdrawals from a financial adviser’s personal bank accounts led agents to uncover a large-scale illegal gambling operation in Benton County.
Robert E. Rogers of Rogers was indicted last month in U.S. District Court in Fayetteville on one charge of operating a gambling business and one count of money laundering, Assistant U.S. Attorney Denis Dean in the Western District of Arkansas told Arkansas Business last week.
Rogers’ indictment will remain under seal until his arraignment, which is scheduled for Friday.
The federal government has filed civil lawsuits to take Rogers’ homes in Rogers and Grove, Oklahoma, as well as keep seized jewelry, $217,929 in cash and other items. Rogers’ indictment also seeks forfeiture of the property.
Rogers generated about $1 million in wagers every year between 2012 and 2015, mainly through bookmaking on professional sporting events, according to filings in two civil forfeiture cases. Both are pending in U.S. District Court in Fayetteville. Rogers is also accused of operating casino games at his property.
“There’s some very interesting nuances to this case,” said Rogers’ defense attorney, Kimberly Weber of the Rogers law firm of Matthews Campbell Rhoads McClure & Thompson. She declined to comment further.
The gambling enterprise was uncovered because one of Rogers’ alleged clients, Norris R. “Richie” Roberts Jr., was making withdrawals from his personal bank accounts in a way that made federal agents suspect he was deliberately trying to avoid currency reporting requirements, according to an affidavit filed in the forfeiture case.
Roberts, who works in the northwest Arkansas office of Stephens Inc. as a vice president in the Private Client Group, has not been charged.
Since 2012, Roberts has “structured” withdrawals of more than $560,000, FBI Special Agent Alan Lee said in a Feb. 3 affidavit filed to obtain a search warrant for Rogers’ safe deposit box at Arvest Bank. Structuring is the federal crime of making smaller bank cash withdrawals or deposits in order to sidestep a bank’s requirement to report cash transactions of $10,000 or more. Federal prosecutors can seek a criminal indictment or file a civil forfeiture lawsuit to recover money that agents believe is tied to structuring.
“On multiple occasions, Roberts visited both Arvest Bank and First Bank on the same day to withdraw cash,” Lee said in the affidavit.
Roberts didn’t return a call, and a Stephens spokesman declined to comment.
Dean, the assistant U.S. attorney, said that as of last week no one besides Rogers had been charged in connection with the case. “I can’t talk about future prosecutions or anything like that,” he said.
The court documents, however, give a glimpse into a gambling operation that had about 70 bettors and allegedly dated back more than a decade.
“The scale of this operation definitely caught our attention,” Dean said.
‘Gambling Routes’
Agent Lee’s affidavit didn’t say exactly when Rogers first got involved in gambling and bookmaking in Arkansas. But Rogers told investigators with the FBI and IRS in February that he started gambling and bookmaking during his military service in Vietnam. In 2000, Rogers retired from AT&T Corp. and received a lump-sum buyout of his pension, which he invested with Edward Jones of St. Louis.
Mike Fairhead, whose address wasn’t listed in the documents, told investigators on Feb. 8 that he started working in Rogers’ bookmaking operation sometime between 2004 and 2007. (In 2000, Fairhead was charged in Benton County Circuit Court with the felony of keeping a gambling house for his involvement in a sports betting scheme operating out of a business in Bentonville, according to Lee. He later pleaded guilty to a misdemeanor charge of keeping a gaming device.)
Fairhead’s job included answering Rogers’ phones and jotting down the bets in a book, which was updated weekly, Lee said.
Typically on Tuesdays, Fairhead said, he and Rogers would prepare what they called “gambling routes” by taking money from Rogers’ safe, putting it in envelopes and delivering them to winners.
On Wednesdays, the two also would run the gambling routes to collect and pay winnings and drop off betting spreads. Rogers said he compiled his spreads for NFL and college games using numbers from Las Vegas oddsmakers.
Rogers told investigators that he preferred to deal in cash, but he would take some checks, according to Lee. Some money was kept in safes at his home, and he estimated that he had $200,000 in cash in safe deposit boxes at Arvest Bank and Bank of the Ozarks.
Rogers didn’t seem to hide his gambling operation, either. He told investigators that he knew gambling was illegal in Arkansas “but thought that he would be OK if he paid taxes on his earnings,” Lee said in the filing. Since at least 2010 Rogers has filed monthly tax returns for wagers with the IRS.
“These returns are admissions that Robert E. Rogers is in the gambling business,” Lee said.
Dean, the prosecutor, said paying taxes on income from illegal activity doesn’t make the activity legal.
The business was a winner for Rogers.
In 2007, he bought a $350,000, 1,452-SF lake house in Oklahoma and paid off the mortgage in 2008 with large cash deposits and checks, according to the court filings.
In addition, the total wagers he received were climbing, from $951,200 in 2010 to $981,500 in 2011 to $1.1 million in 2015.
But Rogers’ winning streak wouldn’t last much longer.
Stephens Adviser Snared
In 2016, federal agents received tips that Richie Roberts might be structuring transactions.
Roberts, a 1991 graduate of Harding University at Searcy and a 1995 graduate of the University of Arkansas School of Law in Fayetteville, had been a financial adviser at Merrill Lynch Pierce Fenner & Smith Inc. for about 11 years before joining Stephens in 2014, at least two years after his suspicious withdrawals began. He is not licensed to practice law in Arkansas.
Over a 16-day period in March 2016, Roberts allegedly withdrew a total of $66,000 — all in amounts under $10,000, Lee said.
Federal agents combed through Roberts’ bank accounts and found he had transferred $20,000 to Rogers’ bank account in January 2015 and $27,800 in March 2016, Lee said.
The federal investigators also reviewed Roberts’ phone records and discovered that calls were placed to Rogers shortly after Roberts withdrew money, Lee said.
The federal agents’ attention then zeroed in on Rogers, staking out his 4,855-SF home in Benton County. The five-bedroom, three-bath home was built in 2006, and the Benton County Assessor’s Office lists an appraised value of nearly $775,000.
The agents secretly followed Rogers as he drove around town. On Wednesday, Sept. 21, Rogers stopped at Al McCarty Jewelers on Walnut Street in Rogers at 8:15 a.m. and spoke with two men. One of the men then unlocked the jewelry store and went inside, Lee said. The unidentified man then left the store and returned to Rogers’ vehicle, Lee said.
Last week, A.V. McCarty IV, who answered the phone at the jewelry store, told Arkansas Business that his father, Al McCarty, had known Rogers for “a long time. He was even my all-star baseball coach.”
A.V. McCarty declined to comment when asked if his father placed bets with Rogers.
“But thanks for calling,” he said and ended the call.
The other unidentified man at Rogers’ vehicle went into the office of Shelter Insurance agent Walter Yockey, which was next to Al McCarty’s store, Lee said.
Yockey told Arkansas Business last week that Rogers was his client. He said he didn’t “care what the affidavit says” about the allegations of gambling.
“I need to end this phone call,” Yockey said. “I don’t know what you’re talking about.”
Agent Lee said Fairhead or Rogers’ son, Robert Rogers Jr., would sometimes go with Rogers on the gambling routes.
“This behavior is indicative of the activities of an illegal gambling operation,” Lee said. “Specifically, the behavior indicates that Robert E. Rogers’ gambling operation involves driving around the northwest Arkansas area to distribute gambling winnings, betting information and collect gambling debts.”
Lee said he believes that Rogers’ wife, Lori, and son were involved in the gambling operation, along with Fairhead. In addition, Darryl Schafer, whose address wasn’t listed in the filings, is alleged to be involved in the illegal gambling business because he arrived at Rogers’ house just after 7 a.m. on several days during the surveillance. And Jerry King, whose address also wasn’t listed, is reported to have worked for Rogers, Lee said.
Fairhead, Schafer and King couldn’t be reached for comment.
Slot Machines on View
Another break in the case came in November, after the Rogerses listed their Benton County home for sale with an asking price of $995,500.
The photos posted online to help sell the home and a 2,000-SF metal building on the property showed evidence “of a gambling operation being conducted from the residence,” Lee said.
He said slot machines and a poker table could be seen in the pictures.
In November, an undercover FBI agent went to the house for a viewing and reported seeing safes and a playing card table.
“The owner has a lot of card games,” the real estate agent said during the showing, according to Lee. But Rogers told agents he had not hosted any poker games in about five years, Lee said.
On Feb. 1, the U.S. Attorney’s Office filed a civil lawsuit in U.S. District Court in Fayetteville to pursue a forfeiture of Rogers’ two homes because of the alleged ties to illegal gambling.
Rogers and his wife have challenged the forfeiture of the houses. The proceeding was put on hold because “Robert Rogers is the subject of a related criminal investigation,” Weber, Rogers’ attorney, said in an April 7 filing.
The second forfeiture complaint against Rogers’ property was filed Aug. 2 in U.S. District Court in Fayetteville. That civil lawsuit was regarding Rogers’ cash, jewelry and other items.
As of Wednesday, he had not responded to that lawsuit.
