Programmer pleads guilty in Pick 6 scheme

The mastermind of a computer bet-rigging scheme that took in more than $3 million pleaded guilty yesterday and acknowledged the previously undisclosed theft of thousands of dollars from gamblers in three states who had not cashed in their winning bets.

Christopher Harn of Newark, Del., pleaded guilty to conspiracy to commit computer and wire fraud and to hiding the profits by laundering the money. He could be sentenced to a maximum of 25 years in prison. But he might receive leniency for implicating his co-defendants, Derrick Davis of Baltimore and Glen DaSilva of New York.

"Christopher Harn's guilty plea represents a significant step forward in restoring the confidence that honest people should be able to have in the integrity of the race wagering system," James B. Comey, the U.S. attorney for the southern district of New York, said in a written statement.

The case has badly shaken the sport of thoroughbred racing, which last year handled $14.5 billion in wagering - nearly all of it through computers. An industry trade group announced yesterday further steps to enhance security, including the hiring of former New York Mayor Rudolph W. Giuliani's consulting firm to oversee a technology review.

Yesterday's plea puts pressure on the co-defendants, Harn's former fraternity brothers, who were charged last week with conspiring to alter bets after races were run. Davis stood to gain $3.1 million in winning bets on the Oct. 26 Breeders' Cup, but his payout has been frozen pending the outcome of the case.

In court documents filed yesterday and in a 40-minute hearing in the federal courthouse in White Plains, N.Y., Harn acknowledged stealing through his job as a computer programmer for Autotote, a Newark, Del.-based company that processes wagers for racetracks.

Transmission delay

In the biggest score, involving the Breeders' Cup held this year near Chicago, Harn said he used Davis' telephone-wagering account to place bets on the Ultra Pick Six. That requires players to pick the winners of six consecutive races before the first race is run.

Harn took advantage of a delay in the transmission of the bets to the Illinois track to substitute winners for losers in the first four races after they had been run. Davis bet the field, or all of the horses, in the latter two races.

Harn followed a similar pattern to fix multirace bets on races run earlier in October at tracks in Illinois and New York, with the winnings going to DaSilva's phone-betting account, he said.

Harn told the court that he changed the bets while they were still in the computers of Catskill Off-Track Betting Corp., an Autotote client, before they were transmitted to the hub. He selected Catskill because he had helped set up its phone-betting system and knew it did not have a device to independently record incoming phone wagers.

Harn alleged the three friends agreed to share winnings from the scheme. He said he had DaSilva obtain bank checks totaling $31,500 that Harn used to pay off a mortgage and a car loan. In that way, Harn laundered the money by disguising its origin.

Moreover, Harn said, he used Autotote's computers to generate thousands of bogus tickets, reproducing the betting chits of gamblers who had won but had not cashed their tickets at racetracks that were Autotote's clients. Davis and DaSilva allegedly redeemed the tickets, worth tens of thousands of dollars, at the Aqueduct and Belmont Park racetracks in New York, Monmouth Park and the Meadowlands in New Jersey, and Philadelphia Park in Pennsylvania.

Bettors generally have a year to cash winning tickets. Millions of dollars go unpaid each year to gamblers who lose their tickets or do not know they have won.

Harn was fired Oct. 30 by Autotote after an internal review revealed the bet tampering.

'Deepest apologies'

"This morning, by pleading guilty, Chris has accepted fully the responsibility for the crimes he has committed," Harn's attorney, Daniel Conti, said after the hearing, according to the Associated Press. "He has asked me to express his deepest apologies to everyone who's been affected adversely by his actions."

DaSilva's attorney, Edward Hayes of New York, said he had discussed a guilty plea with prosecutors but his client did not want to testify against Harn, who is married and has a 2-year-old child.

The audit trail in Autotote's computers was insufficient to prove the case, Hayes said. But investigators had uncovered other circumstantial evidence such as phone records that apparently convinced Harn to plead guilty, he said.

"DaSilva couldn't find it within himself to rat out Harn but Harn had no problem ratting out my client," Hayes said, adding that he is not sure whether his client will continue to maintain his innocence in the case.

Steven A. Allen, a Baltimore attorney representing Davis, said, "My client continues to maintain that he did nothing illegal or improper, and it's still our intention to fight the charge."

All three defendants are 29 years old and attended Drexel University in Philadelphia but did not graduate. They pledged the Tau Kappa Epsilon fraternity there in 1992.

The plea - in which the chief culprit turned on his alleged confederates - took some by surprise. "He was the brains behind the whole thing. He set the whole thing up," said Hayes, who believes Harn has agreed to testify against his client.

But Bennett Liebman, director of the racing and wagering law program at Albany Law School, said Harn had the most to lose in the case and faced the most daunting evidence. Had he waited and the other men then agreed to testify, he would have had little to offer prosecutors in exchange for his cooperation.

"It's like a normal run to the DA. You want to be the first one to make a deal," said Liebman, a former commissioner of the New York Racing and Wagering Board.

Harn's testimony, especially if backed by e-mails or other correspondence with his co-defendants, would be hard for the other men to overcome in court. "They will be forced into pleas," Liebman said.

Harn is scheduled to be sentenced Feb. 19. Besides the maximum of 25 years in prison, he could be fined at least $750,000. But U.S. Magistrate Judge Lisa Margaret Smith indicated at yesterday's hearing that prosecutors had reached an understanding to recommend a lighter sentence. Harn agreed to pay restitution.

Assistant U.S. Attorney Bart G. Van De Weghe, a prosecutor in the case, declined to comment on sentencing. But federal sentencing guidelines call for seven to 10 years in a case involving charges such as this, with the possibility of fewer if the defendant cooperates, according to one source who asked not to be identified because of involvement in the case.

If convicted, Davis and DaSilva could each be sentenced to a few years in prison, depending on how the guidelines are applied, the source said.

Walter Dudycz, executive director of the Illinois Racing Board, said Davis' $3.1 million payout remains frozen by an order of the New York court. When the order is lifted, the board will decide whether to pay the money to bettors who correctly picked four or five of the six races. In the meantime, the money is being held in an interest-bearing account.

Consulting firm hired

Yesterday, the National Thoroughbred Racing Association announced the hiring of Giuliani Partners, a consulting firm run by the former mayor, to oversee a technology review that is expected to last up to a year and cost several million dollars.

Among the tasks the firm has been asked to accomplish is a systemic review of large winning wagers over the past year and a random check of older ones. The goal is to determine if a pattern of fraud has been undetected. Information will be turned over to investigators as it is developed.

The consultant will also devise an alert system intended to flag any frauds at the outset.

"This is a business and an industry and a sport that requires the highest degree of integrity, and the NTRA understands that. We need to be able to say to people who are making wagers on horse races that they are being given fair treatment," said Giuliani, who was once a federal prosecutor in New York.