State and federal indictments were made public Thursday against three owners of the land in Everett where Steve Wynn plans to build a resort casino, alleging that the men defrauded Wynn and lied to state regulators by hiding the fact that convicted felon and known Mafia associate Charles Lightbody was one of the partners.
According to the 13-page federal indictment, Lightbody and two other defendants went to elaborate lengths to cover up Lightbody’s interest in the land, fearing that if his presence were known, it would jeopardize Wynn’s chances of getting the sole Eastern Massachusetts casino license.
The state’s gambling law bars criminals from profiting from a gambling facility.
The indictments will have no immediate effect on Wynn’s $1.6 billion proposal, which was approved Sept. 17 by the state’s gambling commission. However, the indictments provide new fodder for casino opponents pushing for repeal of the gambling law on the November ballot.
On Thursday, a federal judge ordered Lightbody held without bail until a hearing next Tuesday, while the other two defendants, Anthony Gattineri and Dustin DeNunzio, were released Thursday after their initial hearings.
All three face federal fraud charges that carry penalties of up to 20 years in jail, as well as state charges that carry a maximum of five years in prison.
No public officials were indicted by either grand jury, nor was a fourth land owner, Paul Lohnes, a former business partner of gambling commission chairman Stephen Crosby.
“We allege that these defendants misled investigators about the ownership of land proposed for a casino,” Attorney General Martha Coakley said in announcing the indictments on Thursday.
A spokeswoman for the gambling commission said the indictments show that the state review process works, pointing out that their investigators reported their suspicion about Lightbody’s secret ownership of the 30-acre parcel to state and federal authorities.
The Globe initially reported Lightbody’s hidden role last November.
“These federal and state indictments send a loud message that the Massachusetts Gaming Commission will take every measure necessary to preserve the integrity of the gaming industry,” commission spokeswoman Elaine Driscoll said.
But critics said the indictments reflect exactly what people fear about bringing casino gambling to Massachusetts: increased crime.
“Today, the corrupt casino culture burst into clear focus, and the voters now have an even clearer choice in 33 days,” said John Ribeiro, chairman of Repeal the Casino Deal. “The barons of Beacon Hill who empowered this new wave of corruption should feel all new shame.”
Mayor Martin J. Walsh of Boston — who had urged the gambling commission to delay issuing a license for the Eastern Massachusetts casino, in part because of controversy over the Everett land — said the commission failed “the people of Boston and of the Commonwealth by allowing, even remotely, the taint of corruption to be associated with this land transaction.”
Through a spokesman, Wynn called the indictments “an example of the rigor and diligence exercised by law enforcement and regulators in the Commonwealth.”
Lightbody’s lawyer, Timothy Flaherty, said the charges against his client are “based on conjecture, speculation, and surmise.”
“All of the evidence points decisively to the position that he has explained repeatedly, that all of his interest [in the land] was transferred prior to the execution of the Wynn option,” Flaherty said.
There is no reason why Lightbody, who was arrested at his vacation home in New Hampshire, should be held without bail, Flaherty said.
“To suggest that Mr. Lightbody is a flight risk is preposterous,” he said. “He’s lived in Revere his entire life and looks forward to presenting a vigorous defense and demonstrating he committed no wrongdoing.”
Thomas Butters, who represents DeNunzio, said he was “very disappointed that the US attorney’s office and the attorney general decided to indict Dustin DeNunzio. He cooperated fully with the gaming commission and has nothing to hide. He did not commit any crimes, federal or state, and he will be exonerated.”
Brad Bailey, who represents Gattineri, said his client “denies each and every allegation in the indictment.”
“We are planning a vigorous defense, and are looking forward to the truth coming out in trial,” Bailey said.
Lightbody, who served time for assault with a dangerous weapon and has pleaded guilty in a massive identity theft ring in New York, was one of the earliest members of the partnership, FBT Everett Realty, but his name did not appear on any official documents when Wynn proposed a casino for the land in fall 2012, prosecutors said.
Since December 2012, Wynn has been paying FBT $100,000 a month to preserve his option to buy the property. Now that Wynn has a license, he plans to purchase the property for $35 million.
The men “knew that, given Lightbody’s criminal history and New England Family of La Cosa Nostra associations, Lightbody’s financial interest in the Everett parcel would adversely impact . . . Wynn’s ability to secure a license,” federal prosecutors wrote.
So the men fabricated and backdated documents “to conceal Lightbody’s financial interest . . . from Wynn and the Massachusetts Gaming Commission” to make it appear as if he was bought out of the deal before Wynn signed the option agreement, they said.
Prosecutors alleged that DeNunzio, a real estate developer educated at Harvard and MIT, worked closely with Lightbody to hide that ownership.
According to the indictment, he met Lightbody at a Dunkin’ Donuts in Everett in July 2013, where Lightbody signed a document fraudulently claiming he had sold his interest to Gattineri more than a year earlier, in August 2012.
Now it appears that, at the time of the Dunkin’ Donuts meeting, Lightbody still owned a piece of the deal, prosecutors said Thursday.
Lightbody, who provided more than $1 million of the $8 million that FBT paid for the Everett land in 2009, did not respond to a subpoena last summer to answer gambling commission questions about his role in the deal.
Gambling commissioners concluded that the owners of FBT had deceived Wynn and that he did not know a criminal was involved in the project until July 2013.
After the Globe reported Lightbody’s suspected ownership of the land last year, Wynn renegotiated the land sale, cutting the purchase price from $75 million to $35 million so there would be much less money to share with secret partners.
The federal indictment also accused Lightbody, DeNunzio, and Gattineri of covering up the interest of another Lightbody associate who was not indicted.
The indictment refers to him only as John Doe, but lawyers involved in the case said he is Jamie Russo, who frequently works with Lightbody.
Prosecutors said the men covered up the fact that John Doe would receive a share of the proceeds if Wynn won the license.
The gambling commission only recently disclosed that Russo would collect 3 percent of the proceeds, or $1 million, as a “consultant slash lobbyist.” Russo, however, is not a registered lobbyist and did not have a contract to provide services of any kind.
The state indictments paint an identical picture of deception by Lightbody, DeNunzio, and Gattineri, charging them with lying to state regulators.
If the three men are convicted of the federal charges, in addition to facing prison, they could lose the money from the sale of the property.
The indictments also gave supporters of the rival casino proposal in Revere that lost to Wynn a chance to second-guess the commission’s decision.
“My focus continues to be on helping the soon-to-be-
displaced workers at Suffolk Downs who continue to suffer as a result of the commission’s recent decision,” said Revere’s mayor, Daniel Rizzo, referring to the planned closing of the money-losing horse track where a Mohegan Sun casino would have gone.
“I believe this casts a very dark cloud over a process that has long been promised to be above board and in the best interest of the Commonwealth and its residents.”