It all started when a confidential informant quietly told his FBI handler that an El Pasoan was running an illegal gambling business out of west El Paso. During the October 1998 meeting, the informant told the FBI that another El Pasoan, with a family history going back to the founding fathers of El Paso would regularly travel to Las Vegas to “lay off” bets for gamblers. In January 1999, agents of the Federal Bureau of Investigation (FBI) and the Internal Revenue Service (IRS) went undercover hunting down El Pasoans running one of the largest illegal gambling operations in the FBI’s history. During the arrests they found a ledger containing the names and addresses of over 200 people placing illegal wagers – some of whom were well-respected El Pasoans.
The undercover investigation would soon reveal three more people “operating a nationwide multimillion-dollar sports gambling operation” in west El Paso. The illegal gambling operation would come to an end after the 2000 Super Bowl, known for the “One Yard Short,” netted over $300,000 in illegal gambling revenues to the ring. A sixth El Pasoan would soon be revealed. The arrests led to several high-profile El Pasoans wondering if they were the next to be arrested after it was revealed that a gambling ledger was in the possession of government officials.
The “McNutt Gambling Operation”
In 1993, five El Pasoans launched an illegal gambling business using mailers and the internet to accept illegal bets from hundreds of people. When federal agents entered the strip mall business on North Mesa, they found what they needed – computers, betting guides, money, wagering slips, and most important, a ledger detailing several people who had placed bets. Among the betting paraphernalia included television sets connected to Direct TV sports channels.
James Howell Donaldson and William R. McNutt established the illegal gambling operation in early 1993 offering sports betting to gamblers. To help reach more gamblers, Donaldson and McNutt purchased a list of gamblers from Albert Malooly, Jr. Malooly had been running his own illegal betting operation which held a list of gamblers. For the list, Malooly was paid 20% of the revenues generated from his clients.
The gambling operation was lucrative. It generated over $2,000 daily. The gambling operation earned $208,480 during its first year of operation. The following year, in 1994, the illegal business made another $367,887 in illicit gambling. It reached a peak in 1997, when the illegal operation netted $772,069 in revenues before it faced its first loss of $64,677 in 1998. Donaldson, the brother of Ruidoso mayor Robert Donaldson, told investigators that his “only source of income” was placing winning bets and the profits for his part in the gambling operation.
To offset future losses, Donaldson and McNutt created Mañana Investments (see note below) in 1998 to make payments for the expenses of the illegal operation that they could then use to offset their losses. Donaldson and McNutt soon recruited Kenneth Michael Koval, Karl Vincent Stockmeyer and Thomas Robertson Suhler to accept bets from people in El Paso and other locations in Arizona, California, Colorado, Illinois, Indiana, New Mexico, Nevada, Utah and other cities in Texas.
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Betters placed bets on baseball, basketball, football and hockey games through an 800-telephone number. The illegal gambling operation would assign a unique number to each gambler. Each gambler was assigned a credit limit based on how the group viewed their “ability and willingness to pay” their bets. As the gambler made wagers, their credit line would be adjusted. The gamblers would use their personal number to place wagers. It was Donaldson’s job to set the point spread for the bets.
Gamblers in El Paso would collect their winnings or pay off their gambling debts at Lloyd’s Pub on North Mesa. Those who lived outside of El Paso would mail their payments to McNutt Co., at 3513 Rosa in east El Paso. Any winnings to those outside of El Paso were mailed to them via Federal Express. In one case, in September 1998, Stockmeyer personally delivered $40,000 in winnings to a gambler he met in Las Vegas.
The Arrests
The federal investigators collected hours of surveillance video, and several cooperating witnesses were used to place bets and payoff gambling losses. By February 2000, the federal investigation had collected enough evidence to collaborate what the informant had reported in late 1998. But officials wanted to know who was illegally gambling and who the other perpetrators of the illegal gambling operation were.
On February 23, 2000, Suhler was arrested when he went to collect $9,300 from a cooperating witness who had placed a losing bet. He immediately told the investigators that it was his two high school buddies Donaldson and McNutt who were the brains behind the operation.
The next day FBI agents arrested five El Pasoans on charges of operating an illegal gambling establishment. FBI and IRS agents arrested Donaldson, Koval, McNutt, Stockmeyer, and Suhler. One of them would go on to become a cooperating witness for the prosecutors, and another name would soon surface. All five bonded out the next day on $10,000 bonds each.
Whispered calls and meetings soon followed within circles of well-known El Pasoans with each asking whether they would be next to be paraded to the courthouse in handcuffs. Federal law meant that not only were the operators of an illegal gambling operation subject to prosecution, but those who knowingly placed illegal bets could be arrested as well. The FBI was playing coy, telling the news media that those placing bets could also be arrested. FBI spokesperson Al Cruz would only say that the “investigation is continuing.”
When the indictment was handed down on March 22, 2000, another name was added to the list of people charged with running the illegal gambling operation, Albert Malooly, Jr. In return for his list of gamblers, Malooly was allowed to continue servicing his gambling clients while collecting 20% of the gambling profits his gamblers generated.
The Outcome
The trial was scheduled for September 5, 2000. However, on February 2, 2001, all six men running the illegal gambling operation plead guilty to the illegal gambling charges. For the FBI, the conviction of the El Paso gambling ring was then “one of the larger gambling operations” they had uncovered. The 280 people named on the ledger recovered during the arrests could not rest easy because the FBI would only say that the investigation of the “betters continues.”
On April 6, 2001, Donaldson and McNutt were sentenced by Harry Lee Hudspeth to one year, plus one day in federal prison and three years of supervised release. Hudspeth also sentenced Suhler to four months in prison, four months of house arrest and three years of supervised release. Koval and Malooly were each sentenced to three months in prison, three months of home detention and two years of supervised release. Stockmeyer, who was helping the investigators, was sentenced to three years’ probation. His family settled in El Paso in the early 1900’s.
The “McNutt Gambling Operation” netted the operators over $2 million in illegal gambling revenues. Over $1 million in assets were seized by the government including two homes, six cars and $325,000. Federal prosecutors never released the names of the 280 gamblers in the ledger and did not prosecute any of them. Whispering among many well-connected El Pasoans were the names of people they believed were on the list, many of whom are well-known today. A leaked list made the rounds online for several months after the perpetrators went to jail but none of the names have been collaborated by independent sources.
Note: Official documents list the company name as “manana,” instead of “mañana” because of limitations in using the ñ in certain computer systems.
The events depicted in this article come from personal interviews, court documents and testimony, and news reports of the time.
I used to be a banker, I would hear of these poker games in town where the city’s top professionals and bankers would attend. Is there a source to see any of the 280 gamblers. I believe these high stakes poker games still exist. Good story, thanks