Crime Pays

Steve Mardigan entering federal court on Jan. 8. photo/Troy R. Bennett, courtesy Bangor Daily News

Crime Pays
The Donald Trump of Portland gets a slap on the wrist

by Chris Busby

When one compares the three-decade criminal career of Portland gambling kingpin Steve Mardigan to the 15-month sentence a judge handed him in January, there’s only one reasonable conclusion: crime pays. As Mardigan boasted to a former associate last fall, he’ll “still be a millionaire” when he walks out of prison early next year. This is despite the fact that, by his own admission, he’d been breaking federal laws every day for over 30 years. That’s roughly 11,000 consecutive days of criminal activity, for which he’ll spend maybe 450 nights behind bars.

When Mardigan pleaded guilty last spring to illegal gambling, money laundering and tax evasion charges, the U.S. Attorney’s Office announced that he was facing up to 28 years in prison — effectively a life sentence for the now 62-year-old bookie. But when Assistant U.S. Attorney David Joyce appeared before Judge Jon Levy last month, he said the government was seeking only 21 months. Judge Levy then lopped half a year of prison time off that recommendation.

According to the FBI, which used its Southern Maine Gang Task Force to investigate this case, Mardigan mingled millions of dollars from his criminal enterprise with rent revenue from commercial and residential properties he owned in Portland and surrounding communities. He then used that illicit cash to buy more properties and maintain those he already had. As a result, the feds moved to seize 30 properties with a combined value of over $15 million. Using bank records, agents were able to determine the exact amount of dirty money Mardigan spent on each property over the decades.

In the end, the feds did force Mardigan to forfeit a sizeable portion of his real estate empire, including his posh residence on Baxter Boulevard. But for reasons that remain a state secret they allowed him to keep 10 properties with a combined value of over $3 million, including the property on Forest Avenue leased by Starbucks, which may be paying Mardigan upwards of $10,000 a month these days, if his boasts from years ago can be believed. According to the FBI, Mardigan spent $91,208.96 from his gambling/business account on that property.

This Forest Avenue property, a former Planned Parenthood location, is among those Mardigan was allowed to keep. photo/The Fuge

Last summer, Mardigan and one of his lawyers, Jim Hopkinson of the Portland firm Hopkinson & Abbondanza, created separate limited-liability companies for each property he’s been allowed to keep. Documents on file with the Maine Secretary of State do not indicate who owns the LLCs, and Hopkinson did not respond to a request for comment, but in all likelihood Mardigan is still one of the city’s biggest landlords.

Mardigan also conducted another lucrative real estate deal last summer while awaiting sentencing. He bought a six-bedroom, 3,500-square-foot house on Vista Drive in South Portland for $512,000. It’s believed that one of Mardigan’s accomplices in the gambling ring, longtime girlfriend Patricia Nixon, is now residing there. One of Mardigan’s sisters lives down the street.

Nixon, the daughter of former Portland police detective Chicky Nixon, was caught on FBI wiretaps helping Mardigan calculate wagers. When agents raided the couple’s Baxter Boulevard home in April 2017, she lied regarding the source of the stacks of cash they found inside. There’s no indication in court records that Nixon has been charged with a crime.

The U.S. Attorney’s Office for the District of Maine declined to provide comment on the Mardigan case. A spokesperson noted that communication with the media is among the non-essential tasks that were curtailed during the federal government shutdown.

Another unsolved mystery involves Mardigan’s valuable collection of sports cars and other luxury autos. The bookie parked the cars beneath a bank building he owned on Forest Avenue that’s now the location of a Maine Savings credit union branch. An eyewitness saw Mardigan at the property last year as the vehicles were being loaded onto trucks for transport. The cars were not included on the list of assets seized by the government, and neither the FBI nor the prosecutors have mentioned them.

The FBI’s report on this case indicates there were over half a dozen co-conspirators involved in the gambling ring, including several debt collectors Mardigan paid to threaten bettors. Mardigan’s gambling ring also included corrupt cops. According to the FBI, police officers gambled with Mardigan, tipped him off to the identities of informants, and collected what the feds called “kick back money.” The Bollard contacted the chiefs of police departments in Portland, South Portland, Westbrook and Cape Elizabeth, all of which were tangentially involved in this case. All of them said they have no knowledge of any local cops helping or gambling with Mardigan.

Only one of the co-conspirators, civilian William Flynn, has been charged. Flynn, who’s in his late 70s, pleaded guilty to illegal gambling last summer and was facing a five-year prison term. Instead, Judge Levy imposed two years of probation, including 90 days of home confinement. Flynn also forfeited about $75,000 that agents had seized back in April 2017. Judge Levy cited Flynn’s age and ill health, as well as his role as primary caregiver to a longtime partner, as mitigating factors. But he also called illegal gambling “the type of crime that tears at the fabric of a community,” and a crime that should result in incarceration.

“This is not a victimless offense,” the judge told Flynn, according to press reports. “Many of the people who engage in illegal gambling cannot afford to do so and, in fact, do so because they have addiction and other issues.”

As we reported online last month (“The Donald Trump of Portland Gets 15 Months,” Jan. 8), Mardigan submitted a remarkable letter to Judge Levy prior to his sentencing in which he claimed to be a gambling addict himself. He said he fell into a life of crime essentially by accident. Over 30 years ago, a group of friends gave him money to place bets with his bookie, but Mardigan said he didn’t get the bets in on time. He said it turned out that all those bets would have lost, so he decided to keep his pals’ cash and become a bookie.

“I know this sounds naive,” he wrote to the judge, “but the words ‘money laundering’ never entered my mind. I also never realized you could put gambling winnings on a tax return.”

Judge Levy acknowledged Mardigan’s tearful admission of regret in the courtroom, as well as his regular attendance at Gamblers Anonymous meetings, but he noted that Mardigan only began attending those meetings after the FBI raided his home in the spring of ’17 and seized over $770,000 in cash and luxury watches. Judge Levy said the bookie lived a life of crime while “never demonstrating a recognition that what he was doing was wrong.”

In court last month, Mardigan attorney Bruce Merrill suggested additional reasons for his client’s criminal behavior. He said Mardigan’s father, Ed Mardigan, had been a star baseball player, and his son, who lacked his dad’s athletic ability, self-consciously strove to find other ways to prove himself worthy of his father’s respect. Merrill also cited the Armenian Genocide of 1915-1917. The Mardigans are Armenian, and though Steve was raised in comfort in Cape Elizabeth, Merrill said the cultural memory of the Ottomans’ violence against their people makes Armenians particularly possessive and fearful of losing whatever material things they have.

Judge Levy had a more succinct explanation: “avarice,” a word the Oxford dictionary defines as “extreme greed for wealth or material gain.”


See no evil

Another burning question in the Mardigan case: Why did it take over three decades to bring this notorious crime boss to justice? Mardigan’s cars may have been parked underground, but the man himself was easy to spot, often seen cruising around town in one of his luxury rides. Cape Elizabeth Police Chief Paul Fenton said he doesn’t know anything about Mardigan’s current car collection, but he recalled that when he was a teenager, back in the late ’80s, he and his father would drive to Forest Avenue to admire the Corvettes Mardigan had on display in a parking lot.

Mardigan ran with a loud crowd back then. “Cocaine cowboys” was the term one bar owner used to describe them. Others used less polite language. Several members of his old clique are notable businessmen, real estate brokers and developers these days.

Mardigan wasn’t much interested in development. He was content to let numerous commercial properties he acquired remain vacant and dilapidated for many years, including several on the busy stretch of Forest Avenue between Woodford’s and Morrill’s corners. Some buildings that did have tenants were used to hide illicit gains, according to the FBI. “To launder gambling money, Mardigan leases space for one amount, but changes the lease to show a higher monthly rate, which allows Mardigan to mask some of his gambling income as legitimate income,” agent Patrick Clancy wrote in a report.

A gambler identified as “Cooperating Defendant 1” in the FBI report told authorities that upwards of 70 people were placing bets with Mardigan before he was busted. Agents described a “steady stream” of bettors delivering cash to the bookie “from Tuesday to Thursday every week,” usually in broad daylight, at the small office he maintained at his erstwhile car dealership, Avenue Auto, just west of the busy Woodford’s Corner intersection. At night, Mardigan ran what participants described as a mini-casino on the second floor of the building he owned across the street from Avenue Auto, above the current location of a Sun Tan City franchise. That operation, active as far back as the 1990s, went on for many years, sources said, but is believed to have wound down earlier this decade. There was no mention of it in the FBI report.

One of Mardigan’s suspected gambling dens. photo/The Fuge

In hindsight, it beggars belief that the local police were ignorant of all this criminal activity. Hundreds of people in the community knew about Mardigan’s bookmaking and casino operations over the decades. He cultivated a wise-guy persona and flaunted his riches on the street. He was one of Portland’s largest property owners — in fact, the city’s done business with him for years, paying to rent apartments in buildings he still owns on Chestnut and Oxford streets to house homeless families. Innumerable commuters, residents, real estate brokers and businesspeople in town saw all the vacant, dumpy buildings Mardigan owned on Forest Avenue and wondered what was going on — how could someone afford to maintain and pay taxes on all those empty properties year after year?

Interim Portland Police Chief Vern Malloch has been on the force for 34 years. When it comes to illegal gambling investigations, “we have a difficult time getting people to cooperate,” he said. “It’s a closed network.”

Malloch and other police chiefs I spoke with said illegal gambling cases are rare. Furthermore, local police departments lack the resources to investigate this type of crime, they said, and must bring in state and federal authorities to infiltrate gambling rings. “A local department, for all practical purposes, can’t get a wiretap,” said former Cumberland County Sheriff Mark Dion. “That’s a federal thing. On TV we can do it.”

“You hear about things on the street, but whether or not you can put together the evidence is another matter,” said Dion, who was a Portland cop before becoming sheriff, and went on to serve in the Maine Legislature. “With gambling, you’ve gotta be a player, and police departments don’t have a budget” to support those kinds of sting operations. He described a hypothetical scenario in which a detective approaches his commander and asks, “Can you float me $25,000, $30,000 so I can spread it around and get to know these bookies?

“The commander will look at you and say, ‘I got a bunch of fucking burglaries. Why don’t you take care of those for me? It won’t cost me anything,’” Dion said. Unsolved property crimes generate complaints from victims, but “no one’s going to come in and yell at us if someone’s taking a bet on the Patriots.”

Decades ago, when Dion was part of a tactical enforcement unit working on gambling cases, “we were focused on card games and gambling associated with Asian people,” he said. “There were a number of restaurants where some of the owners were involved in gambling activities. It reached down to Massachusetts and there was concern it involved gang people from Boston. We did surveillance on that. They’d rent a home that was for sale and use it as a casino.” A house in Westbrook used for that purpose “erupted in gunfire” Dion said. “It was a mini war.”

Gambling addiction is often the underlying cause of crimes that do get the attention of law enforcement, including embezzlement, assault and criminal threatening, but officials I spoke with said victims and perpetrators alike seldom admit that’s the real problem. “Gambling is one of those things that people do and are quite comfortable lying about it,” said Dion, an attorney who recently represented someone in an embezzlement case in which gambling was the underlying cause. There’s a widespread perception that illegal gambling is a victimless crime, but “it’s not harmless if you go over that line,” said Dion. And Mardigan, he observed, “brought a lot of people” over the line with him.

The Forest Avenue building where Mardigan kept an office. Gamblers would slip envelopes full of cash through the mail slot. photo/The Fuge

Shoulda bet the under

Reaction in the community among those who know Mardigan falls into two categories: outrage over the light sentence, or a cynicism born of the belief that high-rolling wise guys can always avoid serious punishment by buying or ratting their way out.

Among the former are tenants of Mardigan properties that have been seized by the government — mostly small-business owners, many of whom are immigrants, and all of whom now face an uncertain future. The properties will be put on the market later this year, and in most cases the new owners will be under no obligation to allow the bookie’s old tenants to stay.

Keith Costello, proprietor of The 5 Spot, a sandwich shop on Congress Street, has been the most outspoken of those affected by his landlord’s crimes and negligence. Costello said he signed his lease less than a week after the feds busted Mardigan and formally acted to seize his properties in April 2017, but neither Mardigan nor the feds informed him of any of this. “Our business lives have been in turmoil since,” said Costello, who runs the shop with his wife. The couple often work while their toddler plays or naps behind the counter. “We are scared and uncertain,” he said.

“The government claimed his sole ‘victim’ was the IRS,” Costello added, “which is a slap in the face to all his tenants. His actions turned the lives of many people upside down.”

Costello encountered Nixon, the bookie’s girlfriend, at the courthouse on the day Mardigan was sentenced. “She laughed in my face as to imply that I was a joke,” he said. “This is the arrogance of this crew. The day after he got a puny 15 months, there was a new crew of wolves at the door — [real estate] brokers, gawkers and the U.S. Marshalls serving papers regarding the seizure. We spent the first few months in our new business deflecting questions about him and the building from former associates to old-school mob guys. Now it’s a feeding frenzy for the properties.”

Tenants have been told by the feds that they’ll have the first option to buy their buildings when the properties hit the hot Portland real estate market, but few, if any, have the means to do so. Another tenant I spoke with, who requested anonymity to discuss the precarious situation their business is now in, said they’re considering selling or refinancing their home to try to buy the building their business occupies in hopes of maintaining their livelihood.

Tenants signed new lease agreements with the government that will be in effect until the properties are sold, but those agreements now leave tenants on the hook for expenses the landlord previously covered, like water bills and snow plowing. If the buildings they occupy need any repairs in the coming months, that expense is entirely their responsibility. Oh, and the security deposits they had to fork over to Mardigan when they began renting from him? Gone, never to be repaid.

The most common theory among cynics in the latter camp is that Mardigan cooperated with federal investigators in exchange for leniency. Twenty months passed between the day the bookie was busted and the day he was sentenced, and he remained free the entire time, collecting rent as usual. The evidence of illegal gambling collected during FBI wiretaps and other surveillance seems irrefutable, and indeed, Mardigan admitted to the crime. The evidence of money laundering and tax evasion, though extensive, is also relatively straightforward — Mardigan conducted his gambling and real estate businesses through a single Bank of America account. The government cited all this evidence in a civil forfeiture complaint filed in early October of 2017. So one wonders what sort of negotiations took place over the next 15 months.

Barring an appearance by Mardigan on the witness stand in some future trial, we’ll never know if a deal was struck or not. Neither Merrill nor JP DeGrinney, a local lawyer who also represented Mardigan during sentencing, returned calls seeking comment, and neither the judge nor the prosecution is obligated to reveal whether cooperation was a factor. To the contrary, extensive efforts are made by prosecutors and judges to conceal the existence of any cooperation from the public. For example, federal judges will routinely hold private sidebar conversations in the courtroom with attorneys for both sides, whether cooperation is being discussed or not, in order to dispel any suspicion of cooperation that might arise were those sidebars to be held less frequently. A private sidebar was held in the courtroom at the beginning of Mardigan’s sentencing hearing last month.

Another Forest Avenue property Mardigan was allowed to keep. photo/The Fuge

Among those bothered by this secrecy is federal Judge D. Brock Hornby, who served as the chief judge in the District of Maine from 1996 to 2003. In two essays Judge Hornby recently wrote on this subject for the ABA Journal, a publication of the American Bar Association, he decried the practice and called for reform.

In his first essay, posted on the ABA Journal website last December, Judge Hornby noted that according to 2017 data collected by the U.S. Sentencing Commission, federal prosecutors sought reduced prison time for cooperating defendants in over 10 percent of cases. In Maine, the rate is nearly triple that figure: 28.9 percent. “That is a significant part of the federal sentencing process to disguise or conceal from the public, from victims who want to understand the sentence, and from other defense lawyers who seek proportional sentencing for their clients,” the judge wrote.

In the follow-up piece, Judge Hornby acknowledged that cooperation is kept secret in an effort to shield cooperators from retaliation, and thus also to help convince them to spill the beans in the first place. But he wrote, “We cannot be confident that sealed sidebars or chamber conferences will even solve the prison retaliation issue. It is impossible to eliminate all cooperation information because there are so many other available sources,” including “cooperation implications drawn from recurrent delays in sentencing” or “a reduced charge in a conspiracy” case.

“What the judge can do — must do — is preserve the American public’s trust in the integrity and transparency of the federal judicial system,” Judge Hornby concluded. “Americans are entitled to know the role that cooperation plays in federal criminal law and sentencing.” It’s the job of wardens and other prison administrators, not judges, to keep inmates safe, he argued.

Mardigan is being held at Metropolitan Detention Center Brooklyn, a federal prison described as a “grim, smelly setting” in a 2017 CNBC report about another crook who was sent there, Martin Shkreli, the widely despised “Pharma Bro” convicted of securities fraud. Other than an area on the roof of the towering city building, inmates get little fresh air. And because most prisoners at MDC Brooklyn are there for short sentences or are being held while they await trial, the facility doesn’t offer the types of educational and vocational programs available at other prisons.

Still, Mardigan may feel at home there among the gangsters and white-collars criminals. One of Shkreli’s attorneys, Arthur Aidala, told CNBC that given the lack of other activities for inmates, “there’s a lot of card playing.”

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