License To Steal

Nevada'S Gaming Control System In The Megaresort Age

Jeff Burbank

• Publisher: University of Nevada Press
• Year: 2012
• ISBN:
  9780874174724
• Topic: Derecho
• Subtopic: Teoría y práctica del derecho

These seven precedent-setting case studies taken from the files of the Nevada Gaming Control Board and Commission illustrate vital issues addressed in the first decade of Las Vegas' megaresorts.

Chapter One

Cheating and Murder

The American Coin Caper

At 7:50 P.M., on October 1, 1990, Larry Volk, a 49-year-old former computer programmer for the American Coin Machine Company, was working on his car in the covered carport of his modest mobile home at 5514 Petaca Road in northeastern Las Vegas. A bullet from a gun fired from behind a wooden fence in Volk's backyard slammed into the top of his head and exited through the rear of his skull. He collapsed on the lawn next to the driveway. His wife, LaVerne, called for an ambulance, but Volk was mortally wounded. He died before paramedics reached him. Neighbors reported hearing a motorcycle start up and flee immediately after the gunfire, but the shooter left the scene without a trace.¹

To Las Vegas Metropolitan Police detectives and other local observers, Volk's death appeared to be linked to a pending criminal investigation by the Clark County district attorney's office in which Volk was the prime witness. Thirteen months before he was killed, Volk admitted to Nevada State Gaming Control Board agents that he designed cheating, or “gaffed,” programs placed into at least 500 of the 1,106 computerized video poker and keno machines owned by two slot route firms, American Coin Machine Company and American Coin Enterprises, Inc. The machines operated in 93 cocktail lounges and other locations throughout the Las Vegas valley. The programs prevented the award of some jackpots when players bet the maximum number of coins in the machines, a felony cheating crime under Nevada law. Volk said he drew up the cheating programs under the orders of two of American Coin's three partners—Rudolph LaVecchia and LaVecchia's son, Rudolph “Rudy” M. LaVecchia—and feared he would be fired if he did not comply.² The board discovered later that American Coin had used the cheating feature for more than three years without detection. The Gaming Control Board estimated that during 1986 to 1989, the programs blocked from $10 million to $20 million worth of jackpots, money that was instead pocketed by American Coin's partners.³

The American Coin scandal rocked the Nevada gaming industry. Slot and video machines were the most popular gambling games among both tourists and local players. Gaming machines had surpassed table games in 1983 as the state's largest revenue producer. To cynics the scam confirmed the common belief that the machines were unfairly rigged against players. In the American Coin case at least, the cynics were proved right. But even though the Gaming Control Board finally won and learned from the experience, the American Coin debacle called into question Nevada's ability to regulate its gaming industry. The case would later prompt the Gaming Control Board to order each of the 145,000 machines in the state to be tested for cheating devices.⁴

The true story about what happened the night of Volk's assassination would not come out until more than seven years after the slaying. The confessed shooter of Volk revealed it was a murder-for-hire involving him and two others, including a close friend of Rudolph LaVecchia and LaVecchia's wife. But the damage was done. The Clark County district attorney's office had prepared a case with the potential of hundreds of felony cheating at gaming charges against Rudolph and Rudy LaVecchia—one count per gaffed machine—before a grand jury. However, with the key witness dead, the office decided to drop all the cheating charges. The Gaming Control Board had videotaped testimony from Volk about the cheating plan, but the district attorney and the Nevada attorney general's office, which could also have prosecuted the criminal case, decided the tape would not be enough to convince a jury to convict the defendants.

“Larry Volk was the only way to prove the case,” said Eric Jorgenson, chief deputy district attorney for Clark County. “I still needed his testimony to prove the case. I didn't figure there was any way to bring it in.”⁵

While felony-cheating litigation arising out of the American Coin caper fizzled, the Gaming Control Board and the Nevada Gaming Commission at last permanently ended an ongoing cheating enterprise throughout Las Vegas. In 1989, the board and the commission revoked the gaming licenses of the American Coin partners and fined them a total of $1 million. The company was forced to shut down and file for bankruptcy.

American Coin was once one of the largest slot route operators in Nevada, operating and servicing machines in the Las Vegas area. For nearly 10 years, the company operated without any reported problems. But even before the Gaming Control Board and the Gaming Commission licensed the company, there were indications the firm might run into trouble someday. Transcripts of board and commission licensing hearings show that Rudolph LaVecchia had a history of poor bookkeeping in his business dealings and did not file his 1978 corporate income tax return until the state required him to do so in 1979 in order to receive a nonrestricted gaming license. Further, the Gaming Control Board found out that as late as 1983, the company's owners were paying themselves by literally grabbing some of the cash won by their slots before the rest was deposited in the bank. Still, with its agendas crowded with applicants for entry into the expanding Las Vegas gaming industry of the 1980s, the board and the commission licensed LaVecchia and his partners each time with little or no discussion before moving along to the next item.

Rudolph LaVecchia launched the American Coin Machine Company in 1979, when he moved from New York to Las Vegas. That year he applied for a nonrestricted license to be a slot machine route operator and 100 percent owner of the company. By then most gaming machine manufacturers had switched from making electromechanical pull slots in favor of computerized reeled slot machines and video poker.

At the Gaming Control Board's meeting on May 9, 1979, LaVecchia was represented by his attorney, Paul Carelli, of the Las Vegas law firm Bilbray & Carelli. Board members asked only a few questions of LaVecchia, who proved to be a man of few words. The board's queries amounted to little more than a mild public scolding, a common occurrence at board hearings. Board member John H. Stratton commented on the fact that the state had required LaVecchia to file amended federal tax returns with the board because of “unsatisfactory” record keeping. “If you are issued a gaming license here, we will expect you to maintain records, adequate records and satisfactory records for our auditors,” Stratton said.⁶

Board chairman Roger Trounday sounded almost paternal. “It's bad enough when people don't keep good business records,” he told LaVecchia, “but when you get into the gaming business, they have to be extra tight, and with the history that you have of not keeping very good business records, we have a concern about how well you are going to keep them now that you are applying for a license.”⁷

Carelli replied that LaVecchia intended to use a certified public accountant “to set up a bookkeeping system and to maintain and oversee control in that area as to the records of this business.”⁸

Board member Richard Bunker asked LaVecchia about what other businesses he was starting, to which LaVecchia simply said, “A vending business, amusements.”

Trounday inquired as to why LaVecchia failed to file corporate tax returns for two companies he owned: House of Tables and American Vending.

“The accountant that was taking care of it, he went back to Minnesota,” LaVecchia explained. “His father had cancer. In '78, he went. The accountant that I have, he filed my personal. Since there was no money made and I did lose money anyway, he said, ‘We will pick it up next year.’ But I did file my '78 personal.”

“Did you file your '78 corporate return?” Trounday asked.

“That's being filed now,” LaVecchia said. “He has records. No.”

“I believe there's been an extension on that, Mr. Chairman,” attorney Carelli said.⁹

With no further questions, board members Trounday, Stratton, and Bunker quickly recommended LaVecchia for what would be his first Nevada gaming license. When the matter came up at the commission hearing on May 17, 1979, Stratton informed commission chairman Harry Reid (later elected to represent Nevada in the U.S. Senate) of the board's recommendation. With LaVecchia and Carelli looking on, the commission approved LaVecchia's license in a matter of seconds without discussion.¹⁰ The nonrestricted license meant sole-owner LaVecchia could own and provide slot machines to cocktail lounges and other business on a slot route. The deals with his customers worked one of two ways: Either he leased space for his machines and collected the winnings, or he installed the machines for free and shared the proceeds with the businesses.

More than two years later, in 1981, Frank Romano, who operated a car rental and leasing company in Las Vegas, entered the picture. Romano had married Rudolph LaVecchia's daughter, and his new father-in-law offered him a piece of the family slot route business. Rudolph LaVecchia asked the board to change American Coin Machine Company from a sole proprietorship to a general partnership, with son-in-law Romano to receive a 5 percent interest.

At the board meeting of November 10, 1981, Romano appeared with LaVecchia's attorney, Carelli, in what would prove to be a brief hearing on Romano's application for a gaming license. Board members questioned Romano about his past association with the late Charles Carol, a one-time hairpiece salesman from Dallas whose criminal activities in that city were investigated by the FBI.

Romano testified he had known Carol “over a period of many years” while Romano sold advertising space for American Hairdresser Magazine, based in New York. Under questioning by board member Stratton, Romano admitted that Carol once loaned him money “in connection with a television show.”¹¹

Romano's association with Carol was treated with little more than the verbal equivalent of waving a finger at the applicant. “Just a point that, of course, when he [Carol] was alive the background of the individual wasn't that of someone which we'd appreciate you associating with,” board member Stratton said.

Speaking for Romano, attorney Carelli said that “for the record I would point out that the first time that Mr. Romano learned of any criminal activity on behalf of Mr. Carol was when he talked to the FBI agents that were investigating Mr. Carol, and that was after any business association occurred between the two of them.”

“Yes,” Stratton said. “He was cooperative. I realize that.”

With that, Romano got his recommendation for a license from the board. On November 19, 1981, the commission questioned him a bit more, again with Carelli by his side. The questions elicited a few minor facts about his association with Carol, but not much else. Chairman Carl Dodge asked Romano whether American Coin was to become a family-type business, but Carelli again interrupted.

“This is contemplated in the future that Mr. [LaVecchia's] son [Rudy], when he reached majority, will also, if he wishes, be involved in the business,” Carelli said.¹²

Romano, responding to questions from Commissioner Richard Avansino, said he had lived in Las Vegas since May 1978. He met Charles Carol in Dallas while working for the hairdresser magazine out of Las Vegas. Romano was then asked about the extent of his association with Carol.

“Primarily business in the area of manufacturing wigs, advertising wigs and selling wigs. Professional beauty industry,” he answered.

Carelli interrupted again. “Mr. Commissioner, there was a time subsequent thereto where a loan did occur, which I believe Mr. Romano has explained to the Control Board, when he was involved in TEV Production in Los Angeles, which was then repaid.”

Addressing Romano, chairman Dodge asked whether he had any type of business or social relationships with Carol “or was he just an acquaintance in the same type of business that you were in?” Again Carelli answered for his client.

“Other than the loan that was made by Mr. Carol when Mr. Romano was involved in the television production, that would have been that, plus the sale of advertising that he has explained would have been the only real type of connection between the two. There was no personal relationship.”

Answering a couple more questions from Avansino, Romano mentioned that he still owned a rental car company in Las Vegas. Apparently satisfied, the commission voted 5 to o to license him.

American Coin came before the Gaming Control Board two years later, this time to make it more of a family affair. Rudolph LaVecchia, his son Rudy, and Romano each applied to hold a 33.3 percent interest in a new company called American Coin Enterprises. The company would serve as a slot route operator, manufacturer, and distributor of slot machines. If licensed, the trio could repair, alter, and even build their own machines, then put them on a route and collect or share the winnings. During that year, 1983, “stepper motors” were introduced, enabling gaming machine makers to directly control the stops of slot reels with computer software. The computerized machines overtook table games in statewide revenues and began to reign over the Nevada gaming industry, from casinos to gas stations.

On October 12, 1983, the board recommended licenses for the three American Coin applicants. Members expressed concern that American Coin had been paying its key employees and owners directly from the “drop”—the hard cash obtained from slot machines. The board, including chairman James Avance and members Richard Hyte and Patricia Becker, voted to place a condition on the company's license requiring that salaries be paid only by check.¹³

The commission considered the applications on October 20, 1983. The executive secretary, Irene Morros, remarked that appearances by Romano and the elder LaVecchia had been waived. Only Rudy M. LaVecchia and attorney Carelli were present. The hearing on the item lasted all of a couple minutes. Commissioners showed little concern about the partners paying themselves from the drop. Commissioner Jack Walsh asked Rudy LaVecchia and Carelli why the company did it that way.

“When it is a small closely held business, that sometimes happens,” Carelli replied for his client.

“Sometimes,” Commissioner Jerry Lockhart responded.

“Jerry, you knew the answer to that question before you asked it,” chairman Paul Bible quipped. “In case you don't know it, Mr. Lockhart spen...