Perjury charges dropped against Pocono casino owner in deal

HARRISBURG - Prosecutors in Dauphin County yesterday agreed to drop perjury charges against a Poconos casino owner in a deal that requires him to turn over the business to his daughter.

The agreement, which had both sides claiming victory, ends a highly public and controversial case against Louis A. DeNaples that involved allegations of mob ties, a priest accused of lying, and a breakdown in the state's embryonic system of investigating casino applicants.

It was brought about in part by evidence that weakened the case against DeNaples and by a change of lawyers at the top of his defense team.

DeNaples, the 68-year-old owner of the Mount Airy Casino Resort, said he was relieved that prosecutors "recognized that the criminal charges against me are baseless."

"I have said from the start that I am innocent, and that's the truth. I have said from the start that I have no connection to organized crime, and that's the truth," he added in a statement.

Under the deal, DeNaples agreed to relinquish any control he has over the Mount Airy resort and to turn over his interest in it to a trust in the name of his daughter, Lisa, who is chief operating officer.

"Our primary goal in this investigation was to remove Mr. DeNaples from the gaming industry," Dauphin County District Attorney Edward Marsico said. "This agreement guarantees that."

The agreement does, however, allow DeNaples - a multimillionaire - to continue as the guarantor of financing for the $412 million casino, though he can not profit from its operations. Removing DeNaples from that role would have caused economic hardship to the business, Marsico said.

DeNaples was charged in January 2008 with four counts of perjury for allegedly lying to gaming investigators during his vetting to win a casino license. Prosecutors alleged that DeNaples intentionally misled regulators about his dealings with two mob figures and two other men caught up in the Philadelphia City Hall corruption case, which broke in 2003.

Charges against a longtime confident of DeNaples', the Rev. Joseph Sica, a Roman Catholic priest, also will be dropped. Sica was accused of lying to a grand jury about his relationship with a mob figure to protect DeNaples.

"I placed my trust in God, the truth, and the system, and I was not let down," Sica said in a statement.

DeNaples is an influential figure in the Scranton region, owning 35,000 acres and controlling nearly 90 businesses.

Mount Airy opened in October 2007 as the state's first freestanding casino.

After DeNaples was charged, the Pennsylvania Gaming Control Board suspending his gaming license, but allowed the casino to continue operating its 2,500 slot machines under a trustee appointed by regulators.

The gaming board would have to approve the proposed transfer of ownership to a trust for DeNaples' daughter, spokesman Richard McGarvey said. The board is expected to consider it April 22.

The turning point that led to the agreement, prosecutors said, came at the end of last year, when DeNaples replaced his Philadelphia lawyer, Richard A. Sprague.

His new lawyer, Joshua Lock of Harrisburg, described the initial defense strategy as "open warfare" with the prosecutors.

"For many months following the charges, litigation in this matter proceeded in a most contentious fashion, and at some point it became apparent to many people that the best interests of Louis DeNaples and Mount Airy were not being served," Lock said in an interview yesterday. "Ultimately, discretion and subtlety proved more effective than mindless contention and flailing."

Lock was amenable to the request of the prosecutors that DeNaples agree to get out of the gambling business for good.

A lawyer in his office said Sprague had no comment.

It was Sprague's strategy to launch a counteroffensive and argue that someone illegally leaked secret information involving the grand jury in the case to reporters.

His tactics greatly delayed the criminal case against DeNaples and, some lawyers say, helped set the stage for the deal.

Yesterday, Dauphin County Court Judge Todd Hoover, who supervised the grand jury, released a previously sealed opinion in which he found that there were no leaks. Despite that opinion, the state Supreme Court has ordered that a special prosecutor review the leak allegations.

Marsico acknowledged that evidence produced by the defense also factored in his decision to strike the deal.

An analysis by a linguistics expert hired by the defense called the questions asked of DeNaples by a gaming board lawyer - the basis of the perjury charges - imprecise and potentially confusing.

The agreement allows DeNaples to advise his daughter on the casino operation.

Fred Murphy, a Temple University business professor and a gambling critic, said he did not see how prosecutors won anything with the agreement. "Do you really think his daughter isn't going to listen to him?" he said. "Come on. It's still all in the family."

In announcing the agreement yesterday, Marsico also stressed that the state needs to change its gaming law to address problems highlighted by the DeNaples matter.

Among other things, Marsico is recommending that law enforcement agencies such as the Attorney General's Office or the state police conduct gambling background investigations, and not the gaming board's own investigators.

State police commanders have said that they suspected DeNaples lied to the gaming board, but did not share those suspicions with investigators before the board approved his license in December 2006. The state police said privacy laws prevented them from doing so.

Thomas "Tad" Decker, who was gaming board chairman from 2004 through 2007, said DeNaples always intended to turn the casino over to his children.

Decker had criticized the investigation from the beginning as a politically motivated ploy by the District Attorney's Office. "I think they should be totally embarrassed," he said. "Does anyone seriously believe that, if this prosecutor had evidence that Mr. DeNaples committed perjury, that he wouldn't have been tried?"