2 Accusers of Moriarty Admit Lying in Poker Case

The first week in the trial of Orange County businessman W. Patrick Moriarty and Las Vegas gambling figure Frank J. Sansone appeared to be a strong one for the prosecution, with the two leadoff witnesses deeply incriminating the defendants in the alleged scheme to give City of Commerce officials secret shares in a poker casino.

But defense attorneys also made some strong points as they forced the government witnesses to repeatedly admit that they lied to a Los Angeles Times reporter, FBI agents and grand jurors until the time they made a deal with the government in an effort to keep from going to jail.

Phil C. Jacks, former director of economic development for Commerce, was the first to testify about how city officials hatched the scheme in the summer of 1981 when they met with Sansone at the MGM Grand Hotel in Las Vegas, where he was manager of the card room operation.

Jacks was followed to the witness stand by Horace Kelly Towner, a Broadway department store executive Jacks enlisted as the “front man” for himself and City Councilmen Robert Eula, Arthur Loya and Ricardo Vasquez.

Percentages Split Up

The deal that Jacks had negotiated with Sansone’s Las Vegas group called for Towner to hold 10 points, two for himself and and two each for the four city officials. Jacks testified that he was told by the Las Vegas group that this would “bring us $3,000 per point per month.”

In return for the secret shares, which represented 10% of the total ownership, the city officials agreed to pass a gambling ordinance and issue a license to Sansone’s group for a poker casino that opened as the California Commerce Club in August of 1983.

Under cross-examination by Richard Walton, attorney for Sansone, Jacks admitted that it was his intention “to stonewall and admit to nothing” when questioned a year ago about his role in the scheme, first by Los Angeles Times reporter George Reasons and later by FBI agents.

“All of those lies perpetrated by you (Jacks) were just to make money. Isn’t that correct?,” Moriarty’s lawyer, Jan Lawrence Handzlik, asked when he took over the questioning of Jacks, demanding that he answer “yes” or “no.”

“Yes, sir,” was Jacks’ reply to that question, as it was to Handzlik’s follow-up query, “But now, it’s just not money at stake but your freedom, isn’t that correct?”

Jacks had continued to “stonewall” for several months after he was indicted by a federal grand jury. But in November of last year, he made a deal to plead guilty to one bribery-related count and agreed to testify against Moriarty and Sansone.

According to Jacks, the Sansone group ran into severe money difficulties even before the card club license was granted. The city official said that Moriarty, whose business empire includes the firm that manufactures Red Devil fireworks, was brought into the scheme to finance the poker club. Jacks testified that Moriarty also agreed to give the city officials the secret shares.

But Jacks also testified that the city officials became concerned when, even after the club opened in 1983, Moriarty still had not issued their stock to Towner as the “front man.” Jacks said they were afraid that Moriarty might sell their stock. In his opening statement, chief prosecutor Richard Drooyan told the jury that Moriarty collected $3 million in sales of stock for the card club.

Received Shares

Ultimately, the three councilmen were not given any shares in the club, but Towner testified that he received shares that he believed represented his two points and two points for Jacks.

Even after Reasons began to question them in the spring of 1984 about their involvement with Moriarty, Towner testified, he and the city officials hoped to conceal the scheme.

Towner said Jacks helped him “concoct a cover story” for a prepared statement to be read to Reasons on the telephone. The department store executive indicated that he thought this had “put Mr. Reasons off.” But Towner admitted that it was a May 28, 1984, article by Reasons that caused him “to feel that everything was beginning to unravel.”

He then turned in his stock to the card club without being paid for it, even though it was valued at $400,000 by that time.

Sticks to ‘Story’

But later, when FBI agents questioned him and he was called to testify last July 18 before a federal grand jury, he was still sticking by that “cover story,” which he said Jacks coached him on before the grand jury appearance.

Towner testified that after perjuring himself “numerous times” before the grand jury, he confessed to his attorney, Owen Rafferty, who immediately took him to the U.S. attorney’s office to “make a deal and escape being prosecuted.” Handzlik’s subsequent questioning brought out Towner’s admission that he quickly agreed to tape telephone calls and carry a device to record conversations with the longtime friend who had brought him into the scheme--Jacks.

These recordings were key evidence in the subsequent indictment of Jacks and the three councilmen, all of whom have pleaded guilty and are listed as government witnesses.