Bad Form

The Age

Saturday June 14, 2008

Nick McKenzie - Nick McKenzie is an Age investigative reporter

Underworld figure Tony Mokbel's links with some of the country's best known racing figures helped him launder millions of dollars, Nick McKenzie reveals in an Age special investigation.

IT WAS another day at the races. In the Carioca Bar at Sydney's Warwick Farm, the drinks and the talk were flowing. Punters huddled over their beers and form guides as the TV monitors flashed images and data from racetracks around the country.

The three men gathered in one corner might have been any other race-day hopefuls, but it was the intensity of their demeanour and the constant mobile phone calls that caught the eye of the racing investigator standing nearby. It would prove a fateful observation.

The three were no ordinary punters and the discovery of their assignment at Warwick Farm that day in early October 2004 would allow a glimpse into a network of corruption and questionable conduct centred on one of Australia's most notorious underworld figures and which was permeating Australian racing - from jockeys to trainers to bookies - and raising disturbing questions about the policing of one of Australia's richest sports.

Melbourne bookmaker Frank Hudson had travelled to Sydney the day before. With him were Hass Taiba and Michael Khodr, two Melbourne "commission agents" - men who worked placing bets for others in return for a service fee. Khodr was known to have a knack with numbers. Taiba's Melbourne home was a punter's dream, decked out with several televisions screening races around Australia.

Taiba and Khodr's biggest clients were no ordinary punters, they were members of the Mokbel family - Tony and his brother Horty. Khodr's association with the Mokbels allegedly went further than betting. Two years after his trip to the Carioca bar, he was charged with amphetamine trafficking, a charge for which he is still awaiting trial.

Under Australia's arcane Rules of Racing, commission agents - unlike the bookies who take their bets - do not need a licence and are not required to use specially issued phones that racing officials can monitor. Even if Khodr and Taiba had been required to use such phones, they most likely would have left them in Melbourne. Their goal at the Carioca bar was to stay under the radar.

Racing investigators observing the men had other ideas. After deciding that Hudson, Khodr and Taiba were acting suspiciously, the investigators approached the trio, seized the paper on which they had been scrawling and took them in for questioning.

Three months later, a NSW racing inquiry concluded that Hudson, with Khodr and Taiba punting, had been running a "significant" unlicensed bookmaking operation at the Carioca Bar that involved almost half a million dollars in bets. But the inquiry was limited. While investigators suspected that the "Tony C" for whom many of the bets were laid was in fact Tony Mokbel, the alleged crime boss' name was not mentioned in the inquiry's findings. Media reports of Hudson's $50,000 fine and year-long ban from bookmaking never made it past the sports pages. Khodr was fined a paltry $15,000 and Taiba emerged unscathed.

The 2004 inquiry was not the first time authorities had skimmed the surface of the Mokbels' involvement in racing.

In 2001, when media reported that police phone taps and surveillance of Mokbel had captured his dealings with several jockeys and trainers, chief Victorian steward Des Gleeson publicly played down the potential for the sport he oversaw to have been corrupted. "There has been no inquiry, there is no ongoing inquiry and no plans to hold an inquiry in the future," Gleeson said at the time.

He privately interviewed and warned those he thought had got too close to Mokbel, but, after failing to get access to any police material, he could take no further action. "There is no evidence to suggest any impropriety or breach of the rules of racing," he told the media.

But, as The Age reveals today, Mokbel's racing tentacles were already well entrenched in 2001 and later became even more so - his efforts in enlisting in his network some of the country's best known racing figures, including a leading jockey, trainers and bookmakers, helped him launder millions of dollars earned from his alleged drug trafficking empire.

HORSE owner Doug Laversha took pride in his farm and it showed. The property, Somerset, at Kilmore, north of Melbourne, was impeccably maintained. "It was a beautiful place, some 200 acres with a big brick homestead overlooking a big dam," recalls longtime Mitchell Shire real estate agent Rob Gordon. "Everything Doug did was top quality, including the big solid horse stables."

When the Lavershas decided to sell the farm in the early '90s, it was expected there would be interest from an ambitious horse owner. Several prominent racing figures would later form an association with the property, but not until Laversha sold it via a private sale. The buyer was Tony Mokbel.

Somerset allowed Mokbel to move from punter to player. His first trainer was the Caulfield-based John Salanitri, who trained two horses for Mokbel, Frosty the Snowman and Jacqua. Neither had raced by the time Salanitri dropped Mokbel as a client. "I was only with him for about five minutes. He had the property up at Kilmore and I didn't want to train there," Salanitri says.

There would be no difficulty finding a replacement. Mokbel was cashed up and had begun building relationships with prominent racing figures, including champion jockey Danny Nikolic, who was introduced to Mokbel by Salanitri.

But it was another leading jockey who would be next to take the reins at Somerset. Gruff talking, tough riding Gavan Duffy was widely regarded as Queensland's top jockey when he decided to try his hand at training. When Duffy moved his family down to Somerset in 1996, the farm had fallen into disrepair.

Paid a basic trainer's wage, Duffy got to work, cleaning up the property and attending horse sales. Duffy refused to be interviewed by The Age. "I am not going to discuss this unless I am forced to," he said.

But horse sale records show that during 1996 and early 1997, at least seven Mokbel horses were purchased in Duffy's name - Randy's Rancher, Supposing, Planet D'Or, Perennials, Scotch Gambit, Galatee and Solo Version. Their prices ranged from $3500 to $28,000.

Some of the horses were bought at sales by Duffy with cheques provided by Mokbel, while others were bought by Mokbel himself but using Duffy's name. When Victorian stewards began making inquiries about Mokbel's ownership of horses in 1998, many were found to be registered in the names of Mokbel relatives or friends.

The horse Scotch Gambit, for instance, was owned by his wife, Carmel Mokbel, and Brunswick plumber Paul Howden, a close friend of Mokbel who lived next door to one of Mokbel's many houses. It would be Howden's fall that would shake things up at Somerset.

In February 1997, firemen discovered a blaze at Howden's house that had been caused by spilt chemicals. Further investigation led them to uncover an amphetamine laboratory. Police found a badly burnt Howden in hospital a short time later and charged him with large-scale drug trafficking, a crime for which he would serve four years' jail.

A close associate of Gavan Duffy says that after Howden's arrest in 1997, the jockey-turned-trainer finally twigged. "Before that, he had no inkling of who they were," says Duffy's associate.

Two weeks after detectives raided the Kilmore farm, Duffy bundled his family into a car and headed north, home to Queensland.

Despite the fresh heat from police, Mokbel would again have few problems finding a replacement trainer. Having grown up on a horse stud, the affable Brendan McCarthy had the sport in his blood. In 1998, after Nikolic vouched for the Caulfield-based trainer's skills, McCarthy picked up his first Mokbel horses, Yamemma and Randy's Rancher. Several weeks later, Mokbel was jailed for drug trafficking, a conviction subsequently overturned on appeal.

While Mokbel was in prison, his wife, Carmel, was questioned by stewards about her horse ownership. It quickly became clear she had almost no idea about horses that were listed in her name.

In response to pressure from the stewards, Tony and Carmel Mokbel agreed to give up their ownership of horses. The move served only to push Mokbel's expanding racing interests underground. Conscious of their hollow victory, racing investigators wrote to Victoria Police in 1998 and asked for help.

By now, the danger Mokbel posed to racing - both in terms of corrupting jockeys and laundering money through horse purchases and betting - was increasingly clear. But at a meeting between two senior police and racing officials, the officials were told they would have to go it alone. According to chief Victorian steward Des Gleeson, it was the beginning of a period of deep neglect by the police. "From 1998 to 2005, there was a void there where we didn't get any information (from police) basically at all," says Gleeson.

Despite the growing concerns of racing authorities, trainers and jockeys continued doing business with Mokbel and his tightly knit group of friends, dubbed the tracksuit gang by the media for their preferred trackside attire.

McCarthy trained Randy's Rancher for a further two years and, in 2000, became the newest tenant at Mokbel's farm, paying $500 a week in rent. Before McCarthy, trainer John Nikolic also had a stint at the property.

The progression of racing figures through Mokbel's farm resulted in little official action. The licensing of jockeys, trainers and bookies requires them to respect myriad rules, including a ban on giving out tips "concerning his own or other horses in return for any monetary consideration". Also in the rule book is the potentially powerful obligation to avoid "conduct prejudicial to the image, interests or welfare of racing". But this was never used in respect to anyone with dealings with Mokbel.

The announcement by racing officials of Mokbel's ownership ban on April 16, 1999, also failed to temper his racing activities or the proclivity of jockeys and trainers to associate with him or his friends.

Around two weeks before the April 1999 ban, trainer Jim Conlan purchased a horse called Danislew, sired by champion stallion Danehill, for Mokbel at the Easter yearling sales in Sydney. It cost $100,000. Two Mokbel associates soon took over as owners - Jack Doumani, who was one of Mokbel's oldest and closest friends, and Sydney-based horse owner Mark Kassis.

Around this time, Mokbel also tried his hand at breeding; records show "T Mokbel" as the breeder of two horses, Cyar and Echuca Beauty, in 2000 and 2001. The broodmare was Yamemma, one of the horses Mokbel had earlier been banned from owning.

Conlan is one of several trainers who refused to talk to The Age about his involvement with Mokbel, although it is understood Conlan privately insists he knew little of Mokbel's nefarious activities and that when he did, their association ended. Whether wilfully or in genuine ignorance, the lure of a regular paying client was too great for several trainers, including some who did more than track work for Mokbel.

Several trainers gave tips to Mokbel about their horses, an activity allowed in racing if the tip does not come with the promise of a payment. But Mokbel also gave some trainers a percentage of his winning bets, often amounting to thousands of dollars.

A friend of McCarthy - who also declined to be interviewed - said the trainer tipped only one horse to Mokbel, Regal Star, in 2000. Mokbel won big, but McCarthy never got his promised sling. "Brendan, unlike others, has nothing to worry about," his friend says.

Conlan was one of a number of trainers who tipped to Mokbel and was rewarded with a percentage of the winning bet. Among Mokbel's successful punts was the Conlan-trained Danislew, which, on its first race in September 2000, won at Sandown.

Ten months after Danislew's victory, police swooped again and news of Mokbel's arrest lit up the media. Yet still trainers weren't put off by the Mokbel name.

In 2002, Caulfield trainer Peter Moody began renting some stables previously used by Conlan and owned by Mokbel's brother, Horty. In late 2006, police secretly recorded Moody asking Horty what he should name a horse. Moody had earlier registered the $475,000 horse in the name of his wife and the wife of another Mokbel associate. Last year, police seized the horse, Pillar of Hercules, under proceeds-of-crime legislation, claiming it had been bought by Horty, who was charged in April last year with drug trafficking.

While some in racing play down the seriousness of trainers' links to organised crime figures (even though trainers are barred from giving information about a horse in return for a reward), the ties between jockeys and criminals are viewed with less generosity. Even with today's camera technology, a jockey's ability to affect a race presents a constant risk to the sport's integrity. Mokbel spied only opportunity.

The more inside information about a race, the surer the bet. Under constant pressure to show a legitimate source of income and launder money, Mokbel sought to cultivate jockeys.

During the late '90s and early 2000s, racing stewards became deeply concerned about Danny Nikolic's friendship with Mokbel. During that period, Nikolic rode at least five horses owned by Mokbel or his associates. Stewards were also concerned that champion jockey Damien Oliver was getting too close to Mokbel. Once, a leading trainer called up chief steward Des Gleeson to voice his concern about Oliver's conduct. As with several other jockeys, Oliver was warned to pull his head in. "If you tell them the sky is about to fall in on them, it generally works," says one racing insider. Nikolic, who says he never tipped any horses to Mokbel, agrees. "When I was told by the stewards not to associate with him, I took their advice," he says.

But one jockey in particular failed to heed the warnings. In 2001, Jimmy Cassidy told stewards during a private hearing that Mokbel was a friend. In 2006 he went a step further, telling a sports journalist that he "had nothing but respect" for the man who was then Australia's most wanted fugitive.

A two-time Melbourne Cup winner, Sydney-based Cassidy has been one of Australia's leading riders for two decades. In 1995, Cassidy was rubbed out for 21 months after he and two other jockeys were implicated in the so called "jockey tapes" affair. The scandal broke after it was reported that the Australian Federal Police had recorded suspected drug dealers talking to jockeys in 1993. NSW racing officials later found Cassidy and a second jockey guilty of conduct prejudicial to racing by pretending to alter the outcome of races in return for money, although no races were actually found to have been fixed.

While serving out his ban, Cassidy told a journalist: "Anybody in racing who says a jockey doesn't tip is a liar, and I'm not a liar." And that he wasn't.

After his ban ended in 1997, Cassidy returned to tipping, passing on information about horses he was riding to Tony Mokbel or his associates. In return, Cassidy received bundles of cash. All up, it is believed Cassidy received tens of thousands of dollars from Mokbel. The money and tips - in clear breach of racing rules - were never declared. Cassidy kept on riding and Mokbel kept on punting.

Mokbel was known as a hopeless punter. His passion for a plunge was born nearly two decades ago when Jack Doumani introduced Mokbel to bookie Rick Macciotta in the early '90s. Macciotta is still bitter about the experience. "Another bookie and I were owed half a million and we only got paid a small percentage," he says.

"After that, Mokbel's operations stepped up. He had more to splurge and other bookmakers got a very nice slice of the pie. I think I was the only loser," says Macciotta.

It was not unusual for Mokbel to personally make a $50,000 bet. More often than not, he would lose. But a big win could wipe out a bookie while giving Mokbel what he desperately needed; profits he could claim as legitimately gained through gambling. As police attention increased, Mokbel's betting was increasingly done by commission agents.

Mokbel's key commission agents were Michael Khodr, Hass Taiba and George Soulos. Of the bookies who dealt with them, Frank Hudson and Alan Eskander - who dealt mostly with Soulos and who refused to comment to The Age - were the most prominent.

As commission agents, the men could move millions of dollars in a week and were almost impossible for racing officials to oversee. One commission agent told The Age there never really was any will to do so and that the bookie supervisors simply "didn't know who was who in the zoo".

If police had intelligence about who was betting for Mokbel, it was rarely passed to racing officials, who issued empty threats about forcing commission agents to use registered phones.

The Age has confirmed that law enforcement authorities have uncovered evidence of a number of illegal scams involving Mokbel's betting activities. At least one bookie laundered money for Mokbel by trading bundles of cash for cheques in return for a commission. No bets were even laid. Says one source: "You could say it was the purest form of money laundering."

One bookie ensured Mokbel won by entering his bets after the race had finished. When computerised systems were introduced to prevent this practice, a small number of bookies began to alter the clocks connected to their computers.

Mokbel's betting activities were highlighted publicly when the Herald Sun published a photo of him on its front page in November 2004, while he was on bail for serious offences. The photo depicted Mokbel sharing a private joke on Oaks Day with Frank Hudson after laying bets with several bookies.

"There was bloody shock horror at Racing Victoria because it went to the heart of the integrity of the racing industry," says former Racing Victoria chairman Graham Duff.

For Duff, the image showed Mokbel thumbing his nose at racing's regulators.

But what of Hudson? Only weeks before he was photographed with Mokbel, Hudson had been sprung running an unlicensed bookmaking operation with Khodr and Taiba. Whether Hudson's one-year ban as a result of the Warwick Farm incident tempered the bookies' links to Mokbel is unclear. He refused to speak to The Age about his associations with Mokbel, stating: "I don't care what you write. I couldn't care less."

The Age can also reveal that before he fled overseas last year, Mokbel lived in a Southbank apartment apparently owned by Hudson, although there is no evidence Hudson was ever paid rent. While living there, Mokbel poured more than $100,000 into renovations. While overseas, Mokbel is believed to have attempted to chase up more than $1 million he thought was owed to him from Hudson in connection to the apartment.

Despite the fortune in dirty money Mokbel poured into racing - with or without the connivance of some bookies, trainers and jockeys - no one in the world of racing has ever been disciplined over their relationship with Mokbel.

The challenge racing now faces is how to prevent the next Mokbel from taking hold. Other organised-crime figures still move easily through the sport, including a close associate of the Moran crime family who owns horses with a well-known trainer.

In 2006, laws were changed allowing the Victoria Police Chief Commissioner to ban crime figures from all race tracks. But a gangster does not need to be trackside to do business.

Former NSW and Hong Kong chief steward John Schreck says racing authorities are good at monitoring on-the-track activities such as careless riding, but struggle to tackle issues such as inappropriate relationships between crime figures and jockeys or trainers. Says Schreck: "I think people have been reluctant to admit that racing oversight needs to be reviewed."

Chief steward Des Gleeson agrees, saying reforms, both in Victoria and Australia-wide, are needed to ensure racing officials can work more closely with police agencies. Gleeson welcomes the recent impact of Victoria Police's Purana taskforce on Mokbel's racing activities. But he says reforms must deliver ongoing support from federal and state police.

"We would like to be able to, if not have more powers, to have a constant contact point with the police force to be able to deal with them on a regular basis, on a daily basis if need be," says Gleeson. New laws must be passed, he says, to force commission agents to be licensed across the nation. "There would be no point in only Victoria licensing commission agents. They would all be in NSW," he says.

Until then, for many of the crooks and their hangers-on who make the track a second home, it will just be another day at the races.

Nick McKenzie is an Age investigative reporter.

© 2008 The Age

Back to News Index | Back to Home