Pick 6 scam came as no surprise to in-house security

THE BALTIMORE SUN

ELKTON - When the phone call came to his home on a Sunday afternoon informing Paul Berube that some high-payout bets on the Breeders' Cup may have been rigged by thieves armed with computers, he wasn't shocked.

Berube, president of the Thoroughbred Racing Protective Bureau, has watched as the sport burst in a few decades from the confines of racetracks to the nearly ungovernable realm of cyberspace.

A major heist involving the computers that store and sort the wagers seemed, well, inevitable.

"It fit right in with what we had been fearing," said Berube, 62, an ex-Army intelligence officer who retains a military bearing. He has aided investigators in the case and serves on a task force on computer security that the National Thoroughbred Racing Association set up in October in response to the breach.

In fact, the protective bureau, a private detective agency founded 56 years ago by a racetrack trade group called the Thoroughbred Racing Associations, had urged a tightening of computer security for several years. It was a logical outgrowth of the agency's work exposing ringers, investigating grifters and busting up scams.

Founded on Long Island, N.Y., by Spencer Drayton, a former FBI agent and aide to FBI director J. Edgar Hoover, the protective bureau set out to clean up a sport that was at the height of its popularity but sullied by scandal. Jockeys were taking bribes, bookies were taking bets and mobsters were fixing races.

Drayton hired a number of his former colleagues and set up a sprawling force of private gumshoes. "He recreated a little FBI," Berube said.

Among the protective bureau's earliest tasks was eliminating what was then rampant identity fraud involving horses. Swift runners were entered under assumed names - sometimes even disguised with paints and dyes - to trick bettors into thinking the horses were inferior. The fraud artists, or accomplices, would then bet heavily, knowing the ringers would likely win and pay long odds.

The solution: a system in which horses are tattooed with a series of letters and numbers on the insides of their upper lips.

Since the system began in 1947, more than 1 million thoroughbreds have been tattooed. The bureau keeps files on each, including a photograph, physical description, information on pedigree and racing history.

At its zenith, the protective bureau had agents patrolling most of the nation's racetracks and backstretches. Frequently, it would secure the termination of a wayward track employee or the banishment of a cheater. Occasionally, its agents would assemble evidence and turn it over to prosecutors.

In 1975, for example, Berube was an agent assigned to the Maryland tracks. He got a phone tip about suspicious betting by jockeys on Valentine's Day at the now-defunct Bowie Race Course.

A few days of asking questions turned up a scam in which four jockeys went through an intermediary to place a bet that required picking the first three finishers in a race. By slowing their own mounts, the jockeys assured themselves a rich payoff - $33,382 on $108 in wagers.

They were convicted and sentenced to six months in prison and fined $1,000 each. Afterward, prosecutors presented Berube with one of the betting tickets, encased in plastic, which he uses as a paperweight.

"He single-handedly made that case," said Alan Foreman, an attorney who represents the state's horsemen's association and serves on the boards of a number of national racing organizations.

Baltimore attorney Steven A. Allen defended a man implicated by the protective bureau in 1995 of falsifying workout records - and then betting in Las Vegas - on a horse who won at Laurel Park.

"I think the TRPB people do a generally good job. They are very vigilant," said Allen, who represents Derrick Davis of Baltimore, one of three men to plead guilty in the Breeders' Cup case.

The organization's prominence has waned over the past 15 years as the crimes it traditionally investigated - such as bookmaking - have declined. Also, some of its functions have been usurped by state regulatory agencies.

Tracks complained about the cost of the protective bureau, and in 1995 the Thoroughbred Racing Association restructured. Each member track was allowed to either pay to have an agent on site or to provide its own security in a cooperative arrangement.

Many tracks opted out, and, as of the end of last year, the protective bureau had only nine full-time agents assigned to 13 thoroughbred tracks - though they help coordinate security with the other 30 member tracks.

The role of the protective bureau has been "minimized," Foreman said. "The nature of the industry and business have changed and a number of tracks have found it more cost-effective to do that work themselves."

In Maryland, for example, the major thoroughbred tracks employ their own security director, who works with the bureau as needed.

The Maryland Racing Commission, too, has investigators. Said its deputy director, Michael Hopkins, referring to the protective bureau: "They are a good source of information."

Berube has been in charge since 1988. In 1990, the agency's headquarters was lured to the gently rolling countryside of Maryland's Cecil County, along with that of the Thoroughbred Racing Associations, by a $1.3 million state construction loan.

Including a staff of record-keepers and others, the protective bureau has 40 full-time employees. Some are assigned to harness racing under an agreement reached in 1996.

All told, the protective bureau remains the largest in-house security force in sports, Berube said.

It operates a telephone hotline (866-TIP-TRPB) for people to report suspicious activities. It also maintains a virtual library of racing-related chicanery, housed in rows of beige filing cabinets, which can be a gold mine for authorities.

Last year, the protective bureau initiated 546 investigations on thoroughbred racing matters, and helped obtain 33 fines or suspensions and the banishment from member tracks of nearly 1,000 horsemen and patrons. Its investigations resulted in 15 criminal convictions.

Berube acknowledges the business has changed, making it harder to police. About 85 percent of the $14.5 billion in bets on thoroughbred races last year were made somewhere other than where the races were run, placed through off-track betting parlors and companies that take bets via phone, computer or even interactive television.

That's one reason the protective bureau has been spending more time studying the industry's interlocking computer networks and the "tote" companies that run them.

The agency convened a meeting a few years ago to give the totes - who aren't members of the Thoroughbred Racing Associations - a list of "points of vulnerability," including the forgery of betting tickets, a time-honored scam also linked to the Breeders' Cup scandal.

"They all acknowledged the problem, but said it was too expensive to fix," Berube said of the tote companies.

As recently as September, Berube had a conversation with someone regarding the possibility of hackers altering bets after a race had been run - especially on bets that require the gambler to predict in advance the outcome of several races.

The reason: Data on such bets are stored in computers until after most of the races have been run and then are "scanned" and forwarded to a central hub.

"It sent a chill through me," he said, recalling the moment he was told a Baltimore man had won $3 million in a series of suspicious bets on the Oct. 26 Breeders' Cup Ultra Pick Six, in which a gambler tries to pick the winners of six races.

Christopher Harn of Newark, Del., who was a computer programmer for Autotote, the nation's largest tote company, has admitted he used the time delay to alter the bets for his accomplices, Davis and Glen DaSilva of New York.

"If we had a problem, we felt it would be in the scan pools," Berube said. But he was surprised that the crime was committed by an insider, not a hacker.

"Certainly, there was some lax security in place and someone not taking the steps they should have," Berube said.

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