Read Fatal System Error Online
Authors: Joseph Menn
Tags: #Business & Economics, #General, #Computers, #Security, #Viruses & Malware, #Online Safety & Privacy, #Law, #Computer & Internet, #Social Science, #Criminology
Fatal System Error (7 page)
Darren had been around the scene for years. He had been an executive at BetonSports and at publicly traded software company IQ-Ladorum. After he left that firm and started Digital Gaming, IQ-Ladorum sued the new company in Costa Rica’s courts, accusing it of stealing IQ-Ladorum’s code for running casino games. The legal system in Costa Rica worked differently from that in the U.S. One day when Barrett was working in the Prolexic offices, on the third floor of the San Jose building, Darren came running up, yelling that Digital Gaming was being raided on the floor below. More amused than alarmed, Barrett wandered down to see the local equivalent of the FBI standing around with machine guns. They also had great-looking hats. Barrett complimented one of the agents on his, then offered to buy it. The cop was not amused, and Barrett realized the situation wasn’t funny after all.
Those are machine guns,
he thought.
This is real.
The raid stemmed from the IQ-Ladorum suit. But nothing came of the raid or the civil case, and Barrett heard later that some of the government officials had been paid off. After that, a spooked Darren got more involved in Prolexic and less involved in Digital Gaming.
Those are machine guns,
he thought.
This is real.
The raid stemmed from the IQ-Ladorum suit. But nothing came of the raid or the civil case, and Barrett heard later that some of the government officials had been paid off. After that, a spooked Darren got more involved in Prolexic and less involved in Digital Gaming.
Barrett divided his time between countries, working a week or two in San Jose and then a month or more in the U.S. With Mickey’s blessing, Barrett leased office space for Prolexic in Sacramento, where Rachelle was still in school. Barrett thought he got a great deal on the property. Some of his new hires lived in the area, while the others could work remotely. Soon, however, Darren and the others started pressuring Barrett to move the company. They scouted locations in L.A. and in Chicago, where Barrett was speaking at a security conference.
Mickey had introduced Barrett to many of the men atop the offshore gambling fraternity, so it didn’t seem unusual when he asked Barrett to meet one more during a trip to Los Angeles—Ron Sacco, who he said had founded BetCRIS a long time ago. Sacco had a thoroughbred horse ranch outside L.A. and was clearly a big success. Darren set up a dinner for the three of them at a top steak house in Beverly Hills. Barrett, being poorly briefed in more ways than one, showed up wearing his usual flip-flops. The maitre d’ had no intention of letting him inside, until Barrett mentioned whom he was meeting. Then he was ushered to Sacco’s private table in the back.
Sacco was an eccentric with wild, curly white hair, hazel eyes, a gold tooth, and a laugh that came out the side of his mouth. At six foot one and 190 pounds, Sacco was probably an imposing presence a lot of the time. But the oddball way he carried himself reminded Barrett of actor Will Ferrell’s impression of Harry Caray, the old Cubs announcer. Still, Barrett could tell Sacco had something on the ball. He said he had checked Barrett out by calling his nephew, who by an odd coincidence had been Barrett’s college rowing coach. Over their steaks, Sacco said his father had been a San Francisco barber. Now here he was in his sixties, talking about a potential new phase of his entrepreneurial career, opening physical casinos in Costa Rica and Mexico. And then there was the Opus One wine and his personal booth in the steak house: pretty impressive, especially after Darren pointed out Jennifer Aniston at the next table.
Barrett asked how he had happened to hand off BetCRIS to Mickey. Sacco paused for a second, then said he had been jailed for a time over a tax issue. Mickey was running another bookmaking operation, YaBet, at the time, and Sacco asked Mickey to handle BetCRIS in his absence. He had done a great job. Mickey built the operation’s website up from almost nothing to the source of more than half of BetCRIS revenue, and Sacco said he now considered Mickey a son. As the meal wound down, Barrett asked Sacco for some advice about the business world. “Just work hard,” Sacco told him, “and don’t let anyone take it away.” Then he sped off in his Porsche convertible.
As BARRETT HIRED MORE STAFF and bought more machines, the bills started coming in, and he still hadn’t seen any of the $250,000 that Mickey and Brian Green were supposed to be investing. They wired offshore money directly to a few big vendors, but Prolexic needed a bank account of its own in the U.S.
His backers wouldn’t even let Barrett get a corporate credit card. That was a real problem, because Barrett couldn’t get a regular card himself. Years before, a thief had broken into Barrett’s condo and taken checks and other documents. Barrett soon became one of the 9 million U.S. residents victimized by identity theft each year. He filed a police report and negotiated with bill collectors who would learn that Barrett wasn’t responsible for a given debt, then just resell the job to another collector. Having done nothing wrong, Barrett still hadn’t earned his way back to credit-worthy status in the eyes of the rating bureaus. In a rising panic, Barrett asked Mickey again and again for the money to pay Prolexic’s bills.
After hearing Barrett plead poverty one too many times, Mickey gave him a phone number and told him to call a man named Maurice. Barrett didn’t know whether Maurice was a banker, an accountant, or something else, but he called right away. The conversation was a lot shorter than Barrett had anticipated. “Do you know the Good Guys store behind the Serramonte mall, south of San Francisco?” Maurice asked. Barrett said he did. “Meet me in the parking lot at 2 o’clock.”
Barrett agreed, but he didn’t like the feeling he was getting. As Barrett waited in the nearly empty lot, Maurice pulled up in a battered old Lincoln, made sure it was Barrett he was talking to, and handed over a manila envelope with a brick of money inside. Barrett hadn’t imagined getting his business funded more or less directly by gamblers’ losses, and he felt like a rube. He quickly ran through the alternatives to taking the envelope. Barrett had employees to pay and company expenses that rivaled his mortgage. He didn’t know any venture capitalists who could invest.
I’m just some guy in Sacramento with no money and no credit,
he thought.
I owe people and the network is crashing. Besides, how do I say no at this point without getting killed?
I’m just some guy in Sacramento with no money and no credit,
he thought.
I owe people and the network is crashing. Besides, how do I say no at this point without getting killed?
Barrett felt he was in too deep to do anything else. His business was legitimate and doing well, and that’s what he focused on. Barrett still didn’t see that in addition to its potentially profitable work warding off the Russian mob, Prolexic was valuable to Mickey and his crew for a more basic reason: as a means to launder gambling proceeds back into the U.S.
Barrett took the money and went shopping for a safe.
After Darren’s wife lost her purse in an L.A. mugging, his interest in moving Prolexic there evaporated. Chicago didn’t generate much enthusiasm for the gambling crowd either. Instead they urged Barrett to take a look with them in south Florida, where Mickey and Brian had just spent time on the yacht of Sean “Diddy” Combs, who Barrett guessed was a BetCRIS customer. After Barrett objected that the company would struggle to get top-notch job candidates and technology partners in Florida, his patrons decided to show him a good time.
Mickey, Brian, Darren, and Barrett all took thousand-dollar rooms at the trendy five-star Shore Club on Miami’s South Beach in September 2004. In case the layout wasn’t enough to convince Barrett he was on to a good thing, the executives treated him to massages and room service. He had automatic entree into Skybar, the hotel’s hot nightclub, past scores of people lined up to get in. Barrett had to walk through another nightclub filled with models just to get to his room.
Outside by the pool, the group lounged in cabanas with large beds while waitresses served them. One night, Mickey and Brian decided to take the fun further. Both married with children, they went off with $2,000-an-hour prostitutes while Barrett and Darren stayed behind and talked.
Not my kind of people,
Barrett thought again, but the scenery sure was nice. Darren told Barrett that the company was moving to Florida, period. Barrett figured that sooner or later, Darren and Mickey would realize that it was a mistake. But Mickey and his crew were interested in Florida as a way station for flights from Costa Rica. It was perfect for them in other ways too, Barrett later concluded. It had U.S. amenities, but the rules and the women were almost as loose as those in Costa Rica.
Not my kind of people,
Barrett thought again, but the scenery sure was nice. Darren told Barrett that the company was moving to Florida, period. Barrett figured that sooner or later, Darren and Mickey would realize that it was a mistake. But Mickey and his crew were interested in Florida as a way station for flights from Costa Rica. It was perfect for them in other ways too, Barrett later concluded. It had U.S. amenities, but the rules and the women were almost as loose as those in Costa Rica.
Within weeks, Barrett and Darren found an office in Hollywood, Florida, and hired contractors to set it up. Barrett moved Glenn Lebumfacil and Dayton to the new offices, along with his former Sacramento neighbor Joe Daly. Networking specialist Terry Rodery joined later and was amazed that such a small group defended so many companies against ever-growing firepower. That wasn’t by Barrett’s choice: he just couldn’t get Darren to spend what Barrett wanted him to on staff and equipment.
As the months passed in Florida, Barrett had more time to chat with Darren about Brian and Mickey. One day Darren warned Barrett that both of their patrons would likely be jumpy and unpredictable for the next few weeks. When Barrett asked why, Darren explained that Ron Sacco had won permission from the court to return to Costa Rica.
“So what?” Barrett asked. “I thought Sacco had handed off BetCRIS to Mickey?”
“Oh,” Darren replied. “Maybe that’s the official story. But not really.”
Sacco still owned it, Darren explained. That included BetCRIS itself, and whatever it invested in Darren’s Digital Gaming software company—and presumably what it put into Prolexic as well. That fancy party room atop the Hive in Costa Rica? That was Sacco’s office. As a matter of fact, Mickey’s gated mansion, the one where Barrett and Rachelle had celebrated New Year’s Eve, was Sacco’s too.
For all any of them knew, Sacco would come back, kick Mickey out of the house, and fire everyone at BetCRIS. “He could do anything.” Darren said. “He does kooky things.”
Barrett felt queasy. No wonder Sacco wanted to meet him. Now he remembered that Sacco had done multiple stints in jail, for what had been described to him as petty crimes and tax screwups. Even now, though, Barrett didn’t peer too deeply into the mouth of the gift horse. He didn’t so much as conduct a thorough Google search on the man who appeared to have been running the show the whole time. Now that he had gone this far, he just didn’t want to know.
IF HE HAD DONE SOME DIGGING, Barrett might have discovered that the FBI had identified Sacco more than a decade earlier as the largest single bookmaker in the U.S.—and one enjoying the protection of the Gambino crime family, for many years the most powerful and feared of New York’s five major mafia clans.
Sacco was born in 1943, grew up in San Francisco, and attended Balboa High School. Back then, people gambled the old-fashioned way, handing cash to the local bookies in bars, union halls, and barbershops like the one his dad worked in. Sacco’s rap sheet would eventually boast more than a dozen convictions, almost all related to gambling. The arrests stretched back at least as far as 1970.
Known as “The Cigar,” Sacco had no shortage of mob contacts. Sacco’s Los Angeles operation was run for years by Kale Kalustian, who took bets from the likes of Frank Sinatra and movie studio owner Marvin Davis. Kalustian’s less appetizing contacts included a New York mafia transplant indicted in 1978 for the murder of made man Frank Bompensiero. Sacco’s business partners in the Bay Area included Bobby Stapleton, who had multiple ties to the Gambinos back east.
Sacco’s big move came in the early 1980s, when Tony Spilotro, the Chicago mob’s muscle in Las Vegas and the model for Joe Pesci’s bloodthirsty character in the movie
Casino,
was trying to consolidate West Coast bookies. With Spilotro’s apparent blessing, FBI agent Joe Davidson told an informant, “He became THE bookmaker.” Spilotro was later murdered, and Sacco went independent for a time before settling down with the Gambinos, the FBI believes. By 1988 Sacco was handling $1 million in bets a day through offices in Las Vegas and East Los Angeles.
Casino,
was trying to consolidate West Coast bookies. With Spilotro’s apparent blessing, FBI agent Joe Davidson told an informant, “He became THE bookmaker.” Spilotro was later murdered, and Sacco went independent for a time before settling down with the Gambinos, the FBI believes. By 1988 Sacco was handling $1 million in bets a day through offices in Las Vegas and East Los Angeles.
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