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Financial Crimes
06/25/2019

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Northeast Texas family pleads guilty to tax evasion, money laundering proceeds from one of the largest gambling operations in US history

Northeast Texas family pleads guilty to tax evasion, money laundering proceeds from one of the largest gambling operations in US history

BEAUMONT, Texas — A Northeast Texas businessman, his wife and son pleaded guilty Tuesday to tax evasion and money laundering gambling proceeds from one of the largest illegal gambling operations in the United States.

This investigation is being conducted by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), and IRS’s Criminal Investigation Division.

Larry Earnest Tillery (father), 69, Judy Kay Tillery (mother), 62, and Brian Tillery (son), 46, all from Beaumont, Texas, pleaded guilty June 25, for their roles in a massive gambling operation. Larry Tillery pleaded guilty to engaging in monetary transactions in property derived from specified unlawful activity and tax evasion.  Judy Tillery pleaded guilty to structuring financial transactions to evade reporting requirements.  Brian Tillery pleaded guilty to engaging in monetary transactions in property derived from specified unlawful activity.

According to information presented in court, Larry Tillery accepted illegal wagers on sporting events from 1985 through April 2017. During that time, this was his primary occupation. Tillery owned and operated Daylight Motors, a used-car dealership, and Lamar Capital, a holding company for Daylight Motors.  He used these two companies as a front to launder illicit proceeds from his illegal gambling enterprise. Tillery used a website to receive and track wagers from his betting clients, allowing his bettors to place wagers on sporting events, including professional and collegiate basketball, baseball and football games.

Judy Tillery assisted her husband in laundering cash proceeds of his illegal bookmaking activities by depositing cash into her personal bank account at Beaumont (Texas) Community Credit Union, and then writing checks to bank accounts controlled by her husband.  Judy Tillery structured these cash deposits in amounts under $10,000 to evade federal currency transaction-reporting requirements.

Brian Tillery aided the bookmaking enterprise through various actions, such as:

  • collecting money from sports bettors and making payments to bettors on behalf of his father;
  • checking online wagers on a regular basis to keep his father aware of bets placed;
  • accepting illegal gambling funds from his father to make wire transfers to pay illegal gambling debts; and
  • mailing packages of currency in excess of $10,000 that were derived from illegal gambling activities through the U.S. Postal Service at the request of his father. 

Larry Tillery knew that he was violating both Texas state and federal law, and that federal law required him to register as a bookmaker with the IRS and to file monthly excise tax returns to report total wagers he accepted during the month. Tillery also knew that he was required to pay gross wagering excise taxes of 2% on wagers he accepted each month. Tillery failed to report or pay any taxes to the IRS based on the wagers he accepted each month. From September 2016 through November 2016, Tillery accepted at least 450 wagers totaling $5,060,150. These wagers are subject to the 2% federal gross wagering excise tax; he evaded gross excise wagering taxes of $29,717 in September 2016, $34,423 in October 2016, and $37,063 in November 2016 for a three-month total of $101,203.  

Between 2011 and 2016, Larry Tillery accepted at least $52 million in illegal wagers on sporting events.  Tillery did not report these wagers to the IRS or pay gross excise taxes. The gross wagering taxes that resulted from wagers he accepted between 2011 and 2016 total $1,040,000. This tax-due figure includes $101,203 in gross wagering excise taxes for wagers accepted from September 2016 through November 2016.

This investigation traced a total of 125 financial transactions in excess of $10,000 derived from illegal gambling that utilized the U.S. banking system.  These financial transactions totaled more than $32 million between 2010 and 2016. 

As part of the plea agreement, Larry and Judy Tillery agreed to forfeit $1,738,455 in cash seized during this investigation, numerous luxury watches and pieces of jewelry, and several professional sports memorabilia items. They also agreed to a money judgment of $32,758,541,which represents the illegal wagers the Tillery sports gambling enterprise brought in during the relevant time period.

“For more than 30 years this family operated one of the largest illegal sports gambling and money laundering operations in the U.S.,” said Assistant Special Agent in Charge (ASAC) Mary Magness, HSI Houston. “Today’s pleas underscore HSI’s commitment to aggressively investigate financial crimes and bring offenders to justice.”

“The Tillerys ignored state and federal gambling laws, and profited tremendously from a criminal enterprise,” said U.S. Attorney Joseph D. Brown, Eastern District of Texas. “We intend to collect every bit of the money judgment that will be issued against them, and we expect Larry Tillery’s prison sentence to send a message to those who profit from illegal bookmaking.”

“Concealing or transferring assets in an attempt to evade taxes is a crime, and IRS-CI is committed to prosecuting individuals that do so,” said ASAC Rusty Lee, IRS Criminal Investigation Division.

As part of his plea agreement, Brian Tillery agreed to forfeit $241,176 in U.S. currency seized during this investigation and a residence valued at about $600,000 located on Christina Court in Beaumont. He has also agreed to a money judgment of $700,000.

Under federal statutes, Larry Tillery faces up to 10 years in federal prison. Judy Tillery and Brian Tillery each face up to five years in federal prison. The maximum statutory sentences prescribed by Congress are provided here for information purposes; the sentences will be determined by the court based on the advisory sentencing guidelines and other statutory factors. Sentencing hearings will be scheduled after the U.S. Probation Office completes the presentence investigations.

This case is being prosecuted by Assistant U.S. Attorneys Christopher T. Tortorice and Joseph R. Batte, Eastern District of Texas.

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Last Reviewed/Updated: 06/26/2019