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Mass. gaming panel drops investigator

A former Bally casino executive helping to investigate gambling applicants in Massachusetts, to weed out anyone of questionable character, was himself named in an investigation by New Jersey regulators and accused of making “evasive, equivocal, and incomplete” statements in connection with official inquiries into payments Bally made to a Florida politician.

The New Jersey Division of Gaming Enforcement accused retired FBI agent Bernard Murphy, who became chief compliance officer at the former Bally Entertainment Corp., in 1999 of misleading investigators in a probe of Bally’s payments to Bolley “Bo” Johnson, a former speaker of the Florida House of Representatives. Bally paid Johnson about $240,000 during a mid-1990s push to expand gambling in Florida, according to New Jersey’s investigative report.

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Murphy, who was not accused of a crime, worked for Massachusetts as an agent of Michael & Carroll, a consulting firm hired by the state Gaming Commission in 2012.

Local regulators learned Wednesday of the accusations against Murphy through questions from The Boston Globe. After reviewing documents from New Jersey, “we called Michael & Carroll and told them to terminate Bernie Murphy as a subcontractor to their team,” Massachusetts Gaming Commission chairman Stephen Crosby said in an interview Wednesday afternoon.

“It is quite clear that there is no substantive issue there with Florida law, but we are holding our bidders to a standard that includes appearances and impressions, almost as much as the reality,” Crosby said, explaining his decision to remove Murphy. “We have to hold ourselves to that same standard, so he’s gone.”

The commission has grilled gambling executives for hours over past relationships and business practices that reflect poorly on their companies. Commissioners have been especially rough on industry executives for hiring people with red flags in their background in one of the world’s most tightly regulated businesses.

Murphy participated in the commission’s background checks of six gambling companies in Massachusetts, mostly as an administrator, Crosby said, though he may have conducted some investigative interviews.

Crosby said he is confident in the quality of the background checks. “There are 100 people involved in this effort, and there is no indication of any kind that he was anything other than a rigorous investigator,” he said. “There is no reason to think that there’s been any effect.”

Michael & Carroll was aware Murphy had been involved in the New Jersey controversy, but did not notify the gambling commission. “It was not disclosed to us,” Crosby said. “I think that was a mistake in judgment on their part.”

Guy Michael, a principal of Michael & Carroll, said Murphy has agreed to step away from any work for the Massachusetts commission. Murphy will continue to work for the firm in other matters, Michael said.

Michael said the principals of the company have known Murphy for 35 years, including when he was a highly respected FBI agent, before he joined Bally in 1991.

Murphy could not be reached for comment Wednesday.

Around 1998, New Jersey regulators began investigating Park Place Entertainment, the holder of the former Bally casino licenses after a merger, to determine if the company’s actions in Florida should bring sanctions in New Jersey, according to the state’s Casino Control Commission.

The investigation focused on the company’s hiring of Johnson as a consultant in 1994, which the New Jersey commission concluded was legal under Florida law. At the time, the company was also financing a political action committee to run a petition drive in Florida to legalize casinos.

Murphy helped oversee the petition effort, according to New Jersey investigative reports.

Johnson would later go to prison for trying to hide the Bally payments and others, from the Internal Revenue Service. New Jersey investigators accused Murphy of giving information in depositions and in interviews with gambling enforcement agents “that masked speaker Johnson’s full involvement” with the procasino petition drive and with Bally.

“In short, Mr. Murphy’s statements reflect an effort to dissemble and obfuscate” and would be “a matter of grave concern” if he had not separated from the company a few months before the report was filed in 1999.

After the investigation, New Jersey regulators placed new conditions on the company’s licenses and criticized the company’s chief executive for “mistakes in judgment,” according to a report of the Casino Control Commission.

Mark Arsenault can be reached at mark.arsenault@globe.com.
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