UPDATE: As part of a plea deal, casino executive and former state lawmaker John Keeler pleaded guilty this morning to one count of filing a false tax return in connection with a scheme to secretly funnel casino cash to a Marion County Republican Party PAC. Read the latest here.
The trial for casino executive John Keeler, who is accused of illegally funneling campaign contributions to a state senator’s U.S. House campaign, is scheduled to begin today.
The case is more than two years in the making and promises to pull the curtain back on political influence efforts involving one of Indiana’s biggest casino companies. It could also be a bellwether for future prosecutions.
A flurry of recent filings in anticipation of this week’s trial show the FBI’s investigation has extended beyond the scheme for which Keeler was initially indicted.
And Keeler’s role as right-hand man to powerful casino boss Rod Ratcliff has stirred speculation about whether the trial is just an opening salvo in a much broader public corruption investigation.
Here’s what you need to know about the trial — and what to watch for as it unfolds over the next week or more.
The accusations
Keeler, 72, of Indianapolis, is accused of entering into sham contracts with a Maryland political consultant as part of scheme to funnel more than $40,000 in casino cash to the failed congressional campaign of then-state Sen. Brent Waltz, a Greenwood Republican.
At that time, in 2015, Keeler was vice president and general counsel for New Centaur LLC. The company, founded by Ratcliff, owned the state’s two horse track-casinos in Anderson and Shelbyville. Keeler is also a former state lawmaker and a past chairman of the Marion County Republican Party.
After passing through companies owned by the political consultant, Kelley Rogers, prosecutors say the cash from New Centaur was distributed to more than a dozen “straw donors,” mostly family members or associates of Waltz and Rogers. Those donors each contributed the maximum allowable $2,700 to Waltz’s campaign.
The scheme violated federal election law, prosecutors say. Corporations are prohibited from contributing directly to the campaigns of federal candidates and it is illegal to make or receive “conduit” contributions intended to hide the true source of the funds.
A federal grand jury indicted Waltz and Keeler in 2020. Waltz pleaded guilty last week to two felony counts and faces a maximum of 10 years in prison, though prosecutors agreed to recommend a lower sentence as part of a plea agreement. His sentencing has not yet been scheduled.
Keeler faces six counts and a prison sentence of up to 41 years. The charges include conspiracy to make and receive corporate campaign contributions, false statements and to obstruct justice; falsification of a record or document; and two counts of causing the filing of a false tax return.
It remains to be seen if Waltz will take the stand against his former co-defendant. Waltz’s plea deal is silent on the issue of whether he will cooperate with prosecutors or testify against Keeler.
Individual A
In addition to Waltz and Keeler, there is another man who looms large over the trial.
Rod Ratcliff has not been publicly charged with any crime and his name technically doesn’t appear in any court documents. Instead, the indictment against Waltz and Keeler refer to him only as “Individual A.”
But descriptions of his role with New Centaur make it clear the unnamed executive is Ratcliff. If there was any doubt, it was removed during a hearing Thursday, when federal prosecutors referred to him by name as a co-conspirator.
In response to the reference, Ratcliff criticized prosecutors in a statement to IndyStar from his spokesman, Robert Vane.
“Attorney John Taddei, with the Department of Justice’s Public Integrity Section, violated the department’s long-standing policy when he publicly and falsely accused Mr. Rod Ratcliff of being a co-conspirator in this matter,” the statement said. “Mr. Ratcliff has not been charged with any crimes nor has he ever been advised that he is a target of any Grand Jury investigations. Mr. Taddei’s unprofessional statements merit a swift and public apology to Mr. Ratcliff.”
Few people have had more influence in Indiana politics over the past 30 years than Rod Ratcliff.
Until he was permanently banned from Indiana’s gambling industry last year following Keeler’s indictment, Ratcliff was the most powerful casino owner in Indiana. He drove nearly every major expansion of the state’s gaming laws, vaulting Indiana into the ranks of the nation’s top 5 gambling destinations.
His most recent show of influence came in 2019.
He sold New Centaur for $1.7 billion to Caesar’s Entertainment in 2018. Later that year, he and his partners — including Keeler — created a new company, Spectacle Entertainment, and purchased a pair of aging lakeside casinos in Gary. Then they convinced state lawmakers and Gov. Eric Holcomb to allow those licenses to be moved to more lucrative locations in Terre Haute and near an interstate in Gary.
As the company sought approval from regulators and lawmakers, Ratcliff and his partners found ways to benefit elected officials or their companies.
They used Rep. Jerry Torr for title and closing work when they purchased the Gary casinos. They arranged a contract for then-House Speaker Brian Bosma with Vigo County. And they provided $50,000 in private jet flights for Holcomb.
Ratcliff’s companies also spent more than $2 million lobbying state lawmakers over the past five years — more than any other company. And while Indiana law prohibits campaign contributions to state political campaigns, Ratcliff and his companies have contributed heavily to national groups. That includes about $500,000 to the Republican Governor’s Association, which was Holcomb’s largest contributor during his first run for governor. It also includes $100,000 for President Donald Trump’s inauguration.
But Ratcliff’s success came to a screeching halt last year after the allegations against Keeler and Waltz became public. The Indiana Gaming Commission stripped Ratcliff and Keeler of their gaming licenses and forced them to divest their interests in the Spectacle projects.
Previous casino bill coverage:
How the case started
The case against Keeler began when a pair of Maryland political consultants started cooperating with investigators.
Rogers was president of an Annapolis-based Republican political consulting firm called Strategic Campaign Group. He and the company’s vice president, Chip O’Neil, pleaded guilty in an unrelated federal probe of so-called “scam PACs,” or political action committees that purport to raise money on behalf of a candidate or issue, but then spend little on political activity.
O’Neil struck a plea deal with prosecutors in 2020. As part of the deal, he admitted to participating in the alleged straw donor scheme involving New Centaur and Waltz. Since then, he and Rogers have been cooperating with prosecutors on the Indiana case.
The indictment of Keeler and Waltz, as well as Roger’s secret grand jury testimony IndyStar obtained last year, suggest Ratcliff played a key role in the straw donor scheme for which Keeler is charged.
The indictment says the scheme was set in motion during a 2015 meeting at a wine bar at the Indianapolis International Airport between Rogers, the Maryland political consultant, and “Individual A.”
Rogers’ testimony to the grand jury in 2020 provides more details.
“During this meeting, I told Ratcliff that I would create fake invoices to send to New Centaur to provide cover for New Centaur to send money that I would — and I would use to support Waltz’s campaign for United States Congress,” Rogers said. “Rod Ratcliff agreed with me to execute this plan.”
Ratcliff has said the accusation is untrue.
“Kelley Rogers’ unending and disgraceful pattern of cheating and lying is what made him a convicted felon in the first place,” a spokesman for Ratcliff said in an emailed statement last year. “His accusation against Mr. Ratcliff is completely and totally false. Mr. Rogers thinks being untruthful about others will benefit himself and it won’t.”
Other alleged schemes
In addition to the scheme involving Waltz, Rogers told the grand jury he and Keeler participated in a second illegal “conduit scheme” in 2016, this time to funnel money from New Centaur to the Greater Indianapolis Republican Finance Committee, or GIRFCO, a political action committee that supports the Marion County Republican Party.
Rogers said he flew again to the Indianapolis airport to meet Keeler and create what he called another “phony” agreement between New Centaur and one of his companies, Kelley Rogers Racing.
A few weeks later, New Centaur paid Roger’s company $41,000. The next day, Rogers said, he wired three contributions totaling $25,000 to GIRFCO. The rest he kept as a fee for his services, Rogers said.
Court filings in the run-up to this week’s trial also include several other alleged schemes. One involves a limousine company contract.
The judge presiding over Keeler’s case ruled late Friday that evidence of the limousine deal likely won’t be admissible during the trial, in part because it focuses largely on Waltz, who has already pleaded guilty.
Still, the transactions could become relevant if investigators gather more evidence or prosecutors decide to pursue charges against other parties. And even if they never show up in a trial, information about the limousine deal might be of interest to Waltz’s former constituents, who likely didn’t know about this financial ties to a company that benefited from his votes.
A limousine contract
In a filing earlier this month, prosecutors disclosed publicly for the first time that a limousine company owned by Waltz and others had received a generous contract from New Centaur.
One of the limo company’s owners who also served as its bookkeeper told investigators that while Waltz was serving as a state senator, he secured a contract with New Centaur for the company, Five Star Limousine.
“The terms of the contract were that Five Star would have a limousine on standby for New Centaur’s use at all times, for which New Centaur would pay approximately $15,000 to $30,000 per month,” prosecutors said. “This contract was approximately five times more valuable than any other contract that Five Star had during its lifetime. Moreover, during most months, Five Star provided nowhere near $15,000 to $30,000 worth of services to New Centaur.”
Prosecutors said Waltz and his partners later sold the company around 2010 to Ratcliff at a profit of $100,000 to Waltz.
“Mr. Keeler himself told the FBI that New Centaur bought Mr. Waltz’s limousine company and that Mr. Keeler brokered the deal,” said John Taddei, a prosecutor with the U.S. Department of Justice’s Public Integrity Section, during a Thursday hearing.
Keeler’s attorneys, however, argued that sale of the bookkeeper’s shares of the limo company showed a different buyer — not Ratcliff.
Business filings with the Indiana Secretary of State show a project manager for New Centaur had taken over as the company’s president by 2012.
There was a reason for the favorable limo contract, according to prosecutors. In 2004, Ratcliff backed Waltz’s initial state senate campaign in 2004 to unseat fellow Republican Larry Borst, who had opposed an expansion of the state’s gambling laws that Ratcliff was seeking.
In the years that followed, Waltz voted in favor of more permissive gambling laws, including allowing slot machines at horse tracks in 2007 and allowing table games with live dealers at the tracks in 2015. Those measures increased the value of Ratcliff’s holdings.
In court filings, prosecutors described the limo deals as a mechanism for Ratcliff and New Centaur to “influence Waltz and maintain his favor as a State Senator.”
The arrangements, like the alleged straw donations, “were designed to conceal contributions of money from New Centaur to Waltz to curry political favor,” prosecutors said.
What’s next?
The limousine deals show that prosecutors have no shortage of threads they can pursue.
But their inability to get those transactions admitted in the case against Keeler also demonstrates the challenges of pursuing public corruption cases.
Still, big questions are swirling around the halls of power in Indiana. Will any threads lead to more prominent casino executives or elected officials? Does Keeler’s trial represent the conclusion of a year’s long federal investigation? Or is it just the beginning?
Contact IndyStar reporter Tony Cook at 317-444-6081 or [email protected]. Follow him on Twitter: @IndyStarTony.
https://www.indystar.com/story/news/crime/2022/04/18/trial-starts-former-indiana-gop-senator-straw-donor-scheme/7229578001/