Monday, March 17, 2008
According to investigators with the DPS Criminal Intelligence Service, Phillips used his business as a front for an illegal gambling operation. As a result, authorities seized $24,000 from Phillips’ two bank accounts, along with $19,600 in illegal gambling proceeds and 80 gambling devices from The Warehouse. Phillips, who has two prior felony convictions, and two other defendants were indicted in July 2007 after prosecutors from the Texas Attorney General’s office presented the case to a Bastrop County grand jury.
Phillips’ wife and business partner, Melissa Phillips, 52, who pleaded guilty to misdemeanor gambling promotion, agreed to forfeit all illegal proceeds and the eight-liner slot machines. A third defendant, Richard Etheridge, 64, pleaded no contest to misdemeanor gambling promotion. Etheridge, who cooperated with the Attorney General and the DPS, must pay a $4,000 fine. Etheridge earned a percentage of the illegal profits from Phillips’ machines.
Both the state Constitution and Penal Code prohibit gambling in the state of Texas. The eight-liner machines used at Phillips’ business are illegal under Chapter 47 of the Penal Code.
Today’s pleas stem from a months-long undercover investigation by the DPS. During the investigation, which began in the fall of 2006, undercover DPS officers visited The Warehouse to collect evidence that Phillips was operating an illegal gambling parlor. To gain access to Phillips’ business, the officers obtained membership cards that doubled as security access cards. Phillips’ customers had to use access cards to enter the facility. The undercover officers were paid in cash by gambling parlor employees.
After the raid, investigators with the Attorney General’s office and the DPS reviewed Phillips’ bank records. That investigative accounting effort revealed numerous weekly cash deposits in excess of $1,000, all in small-denomination bills. Phillips had no legitimate business income to account for the source of the deposits. The thorough review of Phillips’ accounts enabled the Attorney General to indict and convict Phillips for money laundering.