Urban League Won’t Get $ 100K Of Seized Funds In ‘Butter And Eggs’ Racket

By Jamie Satterfield, [email protected]

The Knoxville Area Urban League will not receive cash seized from the bank account of a famous Knoxville fashion designer who now admits to having a $ 20 million “butter and eggs” racket of numbers downtown.

Attorney Kenneth Holbrook admitted in a hearing before United States Magistrate Judge Bruce Guyton on Monday that the nonprofit cannot claim the $ 102,024 seized by federal authorities from Marcus Hall’s BB&T account despite the Urban League claim that the cash came from a loan from the empowerment zone.

“We recognize that we do not have an overriding interest,” Holbrook said.

But Assistant U.S. Attorney Anne-Marie Svolto said the nonprofit can recoup the $ 175,000 Empowerment Zone loan from the future sale of real estate firm Growing Properties on Anderson Road, which Hall used as collateral. and the Justice Department will “help” the Urban League if the proceeds from the sale fall short.

Urban League president Phyllis Nichols contested federal authorities’ seizure of the balance in the BB&T account in the name of Hall, owner of raw jeans firm Marc Nelson Denim on Depot Avenue. Hall agreed to lose those funds, another $ 5 million and a large amount of property, except for the denim factory, as part of his deal with authorities to confess that he operated, with two Lonsdale businessmen, an illegal gambling operation and laundered the money through their various businesses. .

Nichols maintained that the Urban League loaned Hall $ 175,000 in empowerment zone funds in April 2015, and used one of the now-seized properties on Anderson Road, which housed his real estate firm, as collateral. He also insisted that the money the IRS Criminal Investigation Division found in the BB&T account when it raided Hall’s business in June 2015 was not gambling proceeds, but money from that loan.

Hall pleaded guilty in US District Court in November to US District Judge Pamela Reeves on charges of owning an illegal gambling operation and conspiracy to commit money laundering. He is free pending a sentencing hearing on April 20. Hall is famous in the fashion world for his novel raw denim designs and has been praised locally by the Knoxville Chamber, including the 2015 award for minority-owned business excellence.

Hall had secretly reached an agreement to cooperate with the IRS Division of Criminal Investigation in its investigation of the gambling operation following a raid in June of both his denim business and his real estate firm, Growing Properties Inc. as well as business at a Lonsdale store. shopping complex. The News Sentinel reported on the revelations contained in the plea agreement in early November, after Assistant United States Attorney Jennifer Kolman filed the paperwork in federal court.

That paperwork uncovered the details of a huge, six-year lottery-based numbers game that was based in a Lonsdale market complex that was built with the help of $ 524,200 in federal empowerment zone money. The market complex included a liquor store, check cashing company, convenience store, and real estate company operated by the father-son team, Clarence McDowell and Maurece McDowell.

Empowerment grants and loans are supposed to target economically disadvantaged areas.

According to court records, Hall and Maurece McDowell ran the day-to-day operations of the gambling operation. The three men funneled the profits through each of their commercial holdings to launder ill-gotten gains. In Hall’s case, he used the real estate firm to launder his share of the dirty money, using the proceeds from the game to buy property and to financially launch and keep his raw denim jeans business afloat.

Hall agreed to lose 18 parcels of property in Knoxville written in his name, with a total value of $ 3.3 million. He gave up four vehicles, including a Porsche Panamera, and the $ 415,000 already seized from his bank accounts. The settlement also includes a $ 5 million judgment that you must pay as a condition of your eventual release from federal supervision.

Marc Nelson Denim is not included in the forfeiture agreement, and Hall issued a statement earlier this year insisting that the business would remain open. That suggests that attorneys Richard Gaines and Robert Kurtz, who represent Hall, have negotiated a deal in which Hall would be stripped of the property through a private sale of the firm. Federal authorities reached a similar settlement with businessman Scott West after he confessed to using his brother’s drug money to buy and restore Market Square properties. Such agreements avoid the lengthy federal seizure process and allow businesses to remain open, ensuring that no jobs or tax revenue are lost.

But records filed in Hall’s case last week show that the Peoples Bank of the South in Lafollette made loans to Hall and McDowell totaling $ 1.7 million, and Hall’s denim factory is among the properties that the bank listed as collateral. The bank, like the Urban League, has filed a claim to recover loan proceeds from the sale of confiscated properties, but Svolto pointed out in court Monday that federal authorities will have no role in any action the bank may do. take with respect to the denim factory.

An “eggs and butter” racket is a type of game that originated a century ago in which participants bet on the prices of raw materials. The game in question in Hall’s case was tied to the Illinois state lottery.

Court records say Hall and the McDowells set up gambling “stores” in separate locations, including two on McCalla Avenue and one on Dinwiddie Street. The vendors, none of whom are identified in court records, operated on those properties.

“Individual players came to those venues and made bets by creating three- or four-digit numbers and selecting a dollar amount to bet on each number,” Kolman wrote.

Players used tickets from what looked like “a restaurant order pad with a second carbon paper page” to record their bets. The sellers took the cash and the originals. The players got the carbon copies.

The brokers would then take those receipts and cash to a portable trailer on Dinwiddie Street or to the Lonsdale Market and Deli. The settlement stated that Maurece McDowell and Hall collected the numbers and the bets. Brokers and sellers received “a quarter of the money raised,” Kolman wrote.

Hall and the McDowells made thousands of dollars in profit each day, according to court records, and federal authorities pegged the total income at $ 20 million over a six-year period.

The McDowells have also pleaded guilty and are awaiting sentencing.

About Jamie Satterfield

Jamie Satterfield is an award-winning journalist specializing in law and crime.

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