Illegal Gambling Operator Imprisoned for $2M Theft from US Army

Posted on: March 9, 2023, 03:38h. 

Last updated on: March 10, 2023, 03:19h.

Philip Conneller @casinoorgphilc Read More

Expertise: Gaming Business, Regulation, Tribal Gaming.

An illegal gambling operator from Corpus Christi, Texas, has been sentenced to 27 months in prison for the theft of more than $2 million worth of sensitive military equipment from the US Army.

Nathan Nichols, 46, ran two bars in his hometown, Lady Luck and  Theo’s Bar. Authorities believe they housed illegal sweepstakes machines known as 8-liners.

The machines are so named because of their eight pay lines. They are nominally legal in Texas when they offer tickets that can be redeemed for merchandise as prizes. But Nichols’ customers placed bets before each spin and received winnings in cash, making them illegal, according to prosecutors.

The US Army was also investigating the theft of high-tech gear from its base at Fort Hood, about 200 miles from Corpus Christi. On June 17, 2021, they discovered that locks had been cut on 17 shipping containers at the base. A subsequent audit revealed that 137 items were missing.

When one of the items, a thermal scope, turned up on eBay for $4,500, the trail led straight to the seller, Nichols. The bar owner had other items listed for sale that matched the serial numbers of the stolen equipment.

Equipment Stash

While raids on the two bars turned up the expected gambling machines at Nichol’s residence, investigators found an array of laser range finders, thermal scopes, night-vision scopes, laser aiming devices, and more than 100 night-vision goggles.

The items had been stolen from the base by two army veterans, Jessica Elaintrell Smith and Brandon Dominic Brown, according to reports during the trial. 

Smith pleaded guilty in April 2022 to one count of conspiracy to defraud the US government and was sentenced to 18 months in prison, followed by two years of post-release supervision. She was also ordered to pay the US Army just under $1.3 million in restitution.

Brown also pleaded guilty and was sentenced to three years probation plus a $1.3 million fine. He was less culpable because he only took part in one raid on the shipping containers, whereas Smith was involved in two.

Nichols Confession

Nichols pleaded guilty in March 2022 to conducting an illegal gambling business and conspiring to steal government property.

As part of his guilty plea, he agreed to forfeit a total of $2,185,218.73 and will remain in custody pending transfer to a US Bureau of Prisons facility to be determined in the near future.