August 7, 2018 6628?201 7 BEFORE THE w? w, GAMING CONTROL BOARD In Sonic Services, I Complaint for HA. Docket 66282017 Revocation REPORT AND RECOMMENDATION NOTE: This document may contain information deemed con?dential by the Race Horse Development and Gaming Act, 4 1101 et. seq., and is subject to the non-disclosure requirements of the Act. PROCEDURAL HISTORY On December 21, 2017, the Gaming Control Board?s (Board) Of?ce of Enforcement Counsel (OEC) ?led a Petition to revoke the Gaming Service Provider Registration (Registration) of Sonic Services, Inc (Sonic Services). In its Petition, OEC alleged that Sonic Services is no longer suitable to hold a Registration due to Sonic Services? sole owner, Michael Giammarino?s associations with reputed organized crime members. On January 12, 2018, Sonic Services ?led a request for an extension of time to ?le an Answer which was granted by Order dated January 12, 2018. On February 26, 2018, Sonic Services ?led an Answer, Objection and New Matter to the Complaint for Revocation. By Hearing Notice dated March 13, 2018, OHA informed the Respondent and OEC that a hearing on the matter would be held on April 19, 2018. On March 28, 2018, OEC ?led an Amended Complaint. On April 6, 2018, the Respondent and OEC ?led a joint motion for a continuance which was granted and OHA rescheduled the hearing for May 15, 2018. OEC appeared at the hearing and presented video, documentary and testimonial evidence. Michael Giammarino, represented by counsel, appeared on behalf of Sonics Services and presented documentary and testimonial evidence. Upon receipt of the transcript, the undersigned issued a brie?ng Order which required Sonic Services and OEC to file their respective briefs with OHA on or before July 2, 2018. On June 26, 2018, Sonic Services ?led a request for an extension of time to ?le its brief. By Order dated June 27, 2018, an extension of time to tile briefs was granted and both parties were ordered to ?le their briefs on or before July 9, 2018. On July 9, 2018, OEC and the Respondent filed their respective briefs. The record is closed and the matter is ready for adjudication. FINDINGS OF FACT 1. Sonic Services was incorporated in in 1988 and is the holder of a Board issued Gaming Service Provider Registration. OHA Exhibit No. 1 (Paragraphs 1 of Complaint and Sonic Services? Answer)?; Tr. pp. 44, 46. 2. Michael Giammarino owns 100 percent of the stock of Sonic Services. OHA Exhibit 1; (Paragraphs 73 of Sonic Services? Answer and Amended Complaint). 3. Prior to entering the pizzeria business in 1998, Michael Giammarino, through Sonic Services, provided installation, service and consulting for electronic services that included security, intercom, telephone and music systems. Tr. pp. 177?178. 4. In 1998, Michael Giammarino opened a Lombardi?s pizzeria in Philadelphia which he Operated until 2005. (Paragraph 49 of Sonic Services Answer and Paragraph 75 of Amended Complaint); Tr. pp. 175, 177. In the citations, Complaint refers to original Complaint. Sonic Services Answer refers to Sonic Service?s Answer, Objection and New Matter and Amended Complaint refers to Amended Complaint and Response to New Matter. 5. Lombardi?s pizzeria in New York City has some cache as being the oldest pizzeria in the .United States. DECExhibitNon 1. . . 6. Lombardi?s pizzeria in New York City ?rst opened in 1905 and then closed in the 19805. Tr. p. 175. 7. In 1996, Joan Volpe, Michael Giammarino?s mother, married John Brescio. Tr. p. 213. 8. Joan Volpe and John Brescio with the permission of the Lombardi family, whom Joan Volpe was friends with, reopened Lombardi?s pizzeria on Spring Street in New York City. Tr. p. 175. 9. Due to John Breseio?s heart issues, his mother tiring of the operation and considering that he was going to lose the space where he operated Lombardi?s in Philadelphia, in 2004, Michael Giammarino began managing Lombardi?s in New York City. Tr. pp. 175, 178. 10. Pizza of 32 Spring Street, Inc. is the owner of Lombardi?s in New York City; Michael Giammarino is the President of Pizza of 32 Spring Street, Inc. Tr. p. 51, 118. 11. The sole shareholder of Pizza of 32 Spring Street, Inc. is the JBJV Ultra Trust (JBJV Trust). Tr. pp. 164?165. 12. Prior to her death in 2011, Joan Volpe was the sole shareholder of Pizza of 32 Spring Street. Tr. pp. 165?166. 13. Since Joan Volpe did not have a will when she passed away, her stock in Pizza of 32 Spring Street passed to John Brescio. Tr. p. 166. 14. To effectuate the wishes of Joan Volpe that Michael Giammarino would be the bene?ciary of the pizza business, in 2012, John Brescio transferred his stock in Pizza of 32 Spring Street to the JBJV Ultra Trust (JBJV Trust) making John Brescio the settlor of that Trust. Tr. p. 166. 15. Michael Giammarino is the sole bene?ciary of the BJ Trust. OHA Exhibit No. 1 (Paragraphs 23 of Complaint and Sonic Services Answer). 16. As settlor of the JBJV Trust, John Brescio could name additional bene?ciaries of that Trust and appoint the Trust Protector.2 Tr. p. 152?153. 17. John Brescio has not exercised control over or bene?ted from the JBJV Trust. Tr. pp. 166?167. 18. The sole Trustee of the JBJV Trust is a Certi?ed Public Account employed by HBK and who has been Michael Giammarino?s long time accountant. Tr. pp. 164?165. 19. The Trust Protector can remove the Trustee, with or without cause; the Trust Protector must approve any distribution above $15,000.00 and can veto any decision made by the Trustee. Tr. p. 152. 20. Since at least 2014, Sonic Services received payments from Pizza of 32 Spring Street for managerial services in the sum of $5,750 a month from 2014 until February of 2017 and then in March and April of 2017, Sonic Services received approximately $10,000 a month.3 Tr. p. 150. 21. When Michael Giammarino became manager of Lombardi?s in New York in 2004, he instituted workplace policies and procedures, developed and implemented new recipes and developed private label products. Tr. pp. 179?1 81. 3 John Brescio has since revoked those powers. See Findings of Fact Nos. 84, 85. 3 This Finding of Fact is based on the testimony ofa B113 employed forensic accountant and apparently was based upon the three years of ?nancial records requested by 81E for Sonic Services. See Finding of Fact N0. 74. 22. Michael Giammarino had a 1988 conviction for possession of a controlled substance. QEQ Exhibit No. 4; Sonic ServicesExhibit Tr. pp. 2.01?203- . . 23. That conviction resulted from Michael Giammarino?s intimate involvement in a drug distribution operation. OEC Exhibit No. 5; Tr. pp. 48?50, 202. 24. Michael Giammarino was 19 or 20 years old when he was arrested. Tr. pp. 201? 202. 25. Michael Giammarino ?rst became involved with the drug distribution operation?s leader, a businessman and contractor who also owned retail stores, when he began doing legitimate odd jobs for him in high school. Tr. p. 201. 26. Michael Giammarino dealt drugs to a close network of customers that the leader of the operation had established and which consisted of professionals such as doctors, attorneys, accountants, and city employees. Tr. p. 202. 27. Michael Giammarino cooperated with the police after his arrest and felt remorse for his actions. Tr. pp. 202?203. 28. John Brescio is a reputed4 capo5 in the Genovese crime family. Tr. pp. 122?123. 29. John Brescio?s criminal history includes the following: a 1977 conviction for petit larceny; an October 1978 conviction for promoting gambling; a December 1979 conviction for possession of a gambling device; a January 1979 conviction for possession of a gambling device; a November 1978 conviction for two counts of forgery; an October 1979 conviction for possession of a gambling device; August 1986 convictions for the federal charges of conspiring to distribute heroin near a school and unlawfully possessing 4 The undersigned has used the word reputed to re?ect that a law enforcement agency or agencies consider that individual to be a member ofa certain crime family. 5 A Capo in a crime family has a crew ofsoldiers and associates. Tr. p. 123. a ?rearm for which he was sentenced to 10 years in prison. OEC Exhibit Nos. 6, 7; Tr. pp. 48?59. 30. Michael Giammarino knew that his stepfather had a criminal record but denied knowing that he was a member of an organized crime family. Tr. pp. 192-193. 31. John Brescio has publicly held himself out to the media as being the owner of Lombardi?s in New York even after the JBJV Trust became the owner. OEC Exhibit No. 11; Tr. pp. 62?63, 125?126. 32. John Brescio was named as the owner of Pizza of 32 Spring Street, Inc. in a 2006 federal lawsuit ?led on behalf of several Lombardi?s employees. OEC Exhibit No. 10; Tr. pp. 60~62. 33. At the time of BlE?s investigation, John Brescio was signatory of a Pizza of 32 Spring Street, Inc. bank account. OEC Exhibit No. 25; Tr. pp. 153~154. 34. John Brescio had been added as a signatory to the bank account due to the sudden passing away of his wife Joan Volpe but he did not write checks on that account and his name has been removed from it. Tr. p. 125. 35. A May 2, 2017 press release from the Waterfront Commission of New York Harbor indicated that an individual was denied a checker application in part because of his association with John Brescio, a capo or captain of the Genovese crime family. OEC Exhibit No. 19. 36. The May 2, 2107 press release was the only information in the public domain connecting John Brescio to organized crime. Tr. pp. 81?82, 129. 37. John Delutro, also known as Baby John, is the proprietor of Cafe Palermo, a pastry shop, in New York City. Tr. pp. 14, 17, 29?30. 38. John Delutro is a reputed associate of the Gambino crime family. Tr. pp. 126~ 39. John Delutro?s criminal record includes: 1986 convictions for cocaine distribution and conspiracy for which he was sentenced to 20 years in prison and a 2002 federal conviction for withholding information on a crime that involved an attempt to purchase a large quantity of illicit drugs. OEC Exhibit Nos. 14, 15, 16, 17; Tr. pp. 70-75. 40. Joseph DeSimone, aka Joe Fudge, is reputedly associated with organized crime.6 41. Joseph DeSimone?s criminal record included the following: four convictions for driving under the in?uence between 1983 and 2007; a 1995 conviction for carrying a ?rearm without a license, carrying a ?rearm in a public place and possessing instruments of a crime; a November 2000 conviction in for delivery or possession with intent to deliver controlled substances and criminal conspiracy for which he was sentenced to two years and six months to ?ve years in prison; a 2000 New Jersey conviction for possession with intent to deliver controlled substances and conspiracy for which he was sentenced to four years to be served concurrently to his sentence; a 1977 arrest for robbery and other crimes which were all dismissed.7 OEC Exhibit Nos. 20, 21; 22, 23; Tr. pp.133?l40, 142?145. 6 In support of asseition that Joseph DeSimone was linked to organized crime through the Bruno/Scarfo crime family, OEC presented the testimony of a law enforcement of?cial who testi?ed that he learned Joseph DeSimone went by the street name of Joe Fudge. Tr. pp. 64-66. OEC also offered into evidence a news article based on a mob hitman?s interview in which he indicated that he assaulted a rival mobster named Joe Fudge. OEC Exhibit No. 12. A law enforcement of?cial also testi?ed that he considered Joseph DeSimone?s conviction for conspiracy to distribute drugs as organized crime. Finally, OEC presented evidence that Joseph DeSimone is an associate of Joseph Mazzolli, who at the time of a 1988 conviction, was part ofa crew run by his cousin who was tied to the crime family ofNicky Scarfo. Tr. pp. 146?148. 7 The 2000 New Jersey and convictions were the result ofa joint investigation between and New Jersey law enforcement agencies. 42. Anthony Ricci is the CEO of the Greenwood Racing Organization which is the parent of Parx Casino, a licensed,facility..,Tr. p- 27.. 43. In 2014, perhaps around September, Anthony Ricci, with Parx Officials, Paul Greco, current General Manager, Anthony Faranca, who was General Manager at the time, Mark Doyle, VP of Food and Beverage, and Mike Jaffe, Director of Food and Beverage, met at Parx Casino with Joseph DeSimone and John DeLutro, the owner of Cafe Palermo in New York City. Tr. pp. 12?14, 29. 44. An individual that Paul Greco had worked quite a few years for in Atlantic City introduced Joseph DeSimone to him; Joseph DpeSimone was a regular patron at Parx who Paul Greco would see at Parx once or twice a week. Tr. pp. 14?16, 20. 45. At the time of the meeting between Parx Of?cials and John Delutro, Parx was planning to construct a showroom and Parx Of?cials were interested in adding a couple of restaurants with cache that offered something above and beyond what was found in the area; therefore, they found someone famous from New York to be an intriguing option. Tr. p. 29. 46. At the invitation of John DeLutro, within weeks after the 2014 meeting between John DeLutro and Parx Officials at Parx, the same Parx Officials traveled to New York City to see John DeLutro?s operation at Cafe Palermo where Anthony Ricci found the cannolis to be very good; based upon the experience, the Parx officials decided they would like to bring John Delutro?s pastries to Parx. Tr. pp. 12-14. 47. After leaving Cafe Palermo and walking around a little bit, John DeLutro took the Parx Officials to Lombardi?s, which is two blocks from Cafe Palermo, where John DeLutro introduced the Parx Of?cials to John Brescio8 who showed them around Lpinbardiis for 30.. 48. As the Parx Of?cials liked the pizza, they decided they were also interested in bringing Lombardi?s pizza to Parx which they discussed upon or after leaving New York; Parx Of?cials did not discuss with John Brescio the possibility of Lombardi?s coming to Parx. Tr. pp. 30?31, 35. 49. Anthony Ricci asked John DeLutro if Lombardi?s would be interested in doing something at Parx; John DeLutro subsequently told the Parx Of?cials that they were not interested. Tr. p. 31, 35. 50. John DeLutro had approached Michael Giaminarino to see if he would be interested in sharing space with him at a casino and. other locations which Michael Giammarino declined because, according to Michael Giammarino, he did not like John DeLutro?s business plan; did not want to be brought in to share a space and found John DeLutro to be loud and animated. Tr. pp. 182-183. 51. Including John DeLutro?s overture to Michael Giammarino about sharing space in a casino, Michael Giammarino had no-more than six interactions with John DeLutro which included seeking John DeLutro?s advise concerning placing a coffee and pastry area in Lombardi?s and information about booths at a street fair. Tr. pp. 183?184. 52. After returning from New York City, the Parx Of?cials did a background check on John Delutro; the Parx Of?cialsldiscovered that John Delutro had spent nine years in federal prison on a felony charge and that he had been associated with some unsavory characters at some point; based upon that discovery, Parx Of?cials decided they could not do business with John DeLutro. Tr. pp. 18?19, 30. 3 At that time, the Parx Of?cials only knew the man as John. 53. Some months after the Parx Of?cials? Visit to Cafe Palermo, Joseph DeSimone approached Paul (3mm and informed him that he knewthe owner of Lombardi?s inNew York and that the owner might be interested in coming to the casino. Tr. p. 19. 54. In the summer of 2015: Michael Giammarino was approached by Joseph DeSimone at a pizzeria called Genaro?s Tomato Pie in South Philadelphia that Michael Giammarino was operating at the time; in addition to managing the operations at Genaro?s Tomato Pie9 and Lombardi?s in New York, he was in the process of phasing out a second location in South Philadelphia of Genaro?s Tomato Pie. 173?174. 55. Joseph DeSimone informed Michael Giammarino that he could make some introductions to Parx Of?cials if he (Michael Giammarino) was interested; that was the ?rst time Michael Giammarino met Joseph DeSimone. Tr. p. 173. 56. In or about September of 2015, Joseph DeSimone introduced Michael Giammarino to Paul Greco at the Parx food court. Tr. pp. 19-20, 186. 57. At or around the time of the ?rst meeting between Michael Giammarino and Paul Greco, Joseph DeSimone told Paul Greco that he was looking to be a partner in Lombardi?s pizza. Tr. p. 21. 5 8. After the initial meeting between Michael Giammarino and Paul Greco, Michael Giammarino met with Parx Of?cials on approximately four or ?ve occasions to discuss the scope of the pizzeria project; at one of those early meetings, Michael Giammarino clari?ed that Joseph DeSimone would not be a part of any business transaction that Michael Giammarino would enter into with Parx but he would be amenable to paying Joseph DeSimone a small ?nder?s fee as he had done in the past for current customers who referred additional customers to him. Tr. pp. 22?23, 186?188. 9 The owner ofGenaro?s Tomato Pie was a trust established by Michael Giammarino?s natural father. l0 59. Joseph DeSimone?s only involvement with Sonic Services, Inc. was the initial introduction of MichaelApril 28, 2016, Sonic Services entered into an agreement with Casino Food Services, 1110.10, an af?liate of Parx, to ?perform certain development, pre?opening and consulting activities in connection with the creation and operation of an old?fashioned, Italian?themed full service pizzeria restaurant. . OEC Exhibit No. 4. Pursuant to that agreement, Sonic Services and Parx intended to ?use the well- known regional name ?Lombardi?s? in some form? but acknowledged that it might not be able to do so due to a trademark issue with a Texas company. OEC Exhibit No. 4. 62. Pursuant to the agreement, Sonic Services? responsibilities included: assisting with the concept, name and d?cOr of the restaurant; assisting in the development of a budget for design and construction of the restaurant; developing, creating, and modifying all recipes and beverage items sold at the restaurant; assisting with the recruitment, interviews and selection of Parx?s employees that would work at the restaurant and advising and providing input on the management of the restaurant. OEC Exhibit No. 4. 63. Pursuant to the agreement, Sonic Services was to be paid a ?ve percent royalty fee on a basis and an incentive fee often percent of the restaurant?s net operating income. OEC Exhibit No. 4. 64. Pursuant to the agreement, Parx operated the restaurant. OEC Exhibit No. 4. 65. On May 18, 2016, Sonic Services submitted a Sponsored Gaming Service Provider Registration Form (Form) to the Board; in the form, Michael Giammarino accurately disclosed his criminal record which consisted of the 1988 misdemeanor conviction for drug possession. OEC Exhibit No. 4. '0 Hereinafter referred to as Parx. ll 66. On August 10, 2016, the Board issued Sonic Services a Gaming Service Provider .Registration(Registration). In, p, 46,_ . . 67. Per Anthony Ricci, Michael Giammarino did as he hoped and expected in that he worked tirelessly to open the restaurant, trained the staff, and taught the ?kitchen staff how to make the best pizza in the world? and delivered on all the promises that he made. Tr. p. 37. 68. John Brescio had no interest in Sonic Services and had no interest or involvement in the agreement between Parx and Sonic Services; John Brescio was not involved in any services performed pursuant to that agreement. Tr. pp. 167?168. 69. While Parx General Manager Paul Greco saw Michael Giammarino escort his natural father, aunt and uncle on a visit to the restaurant at Parx, he never saw John Brescio there. Tr. pp. 24?26. 70. In or around late 2016, the Board?s Bureau of Investigations and Enforcement (BIE) received information from a New Jersey law enforcement agency through the State Police that there were possible organized crime ties to Lombardi?s. Tr. p. 47. 71. Based upon that allegation and additional information discovered concerning Michael Giammarino?s prior drug arrest, DEC, in a December 16, 2016 letter, requested that Michael Giammarino submit a Multi?Jurisdictional Personal History Disclosure Form and indicated that an additional investigation into his suitability would be undertaken. Sonic Services Exhibit Tr. p. 48. 72. In the December 16, 2016 letter, OEC indicated that the additional investigation into Michael Giammarino?s continued suitability was based upon additional information 12 obtained concerning his 1988 conviction; the letter did not mention any concerns about MSonic ServicesExhibit 48. 73. As part of the investigation, BIB checked open sources such as Google, performed record researches in New York City and spoke with law enforcement of?cials in New York, New Jersey part of the suitability investigation, between February 15, 2017 and August 1, 2017, BIE sent four separate requestsH for documentation to Michael Giammarino; the documents requested included but was not limited to the following: for the previous three year period, bank statements, check registers, debit memos, credit memos and supporting documentation for all ?nancial accounts and brokerage statements for all investment accounts; for the previous ?ve year period, tax returns and financial statements for all partnerships, corporations, or other business records in which he had a controlling or ownership interest; and for the past three years, ?nancial records for Sonic Services to include balance sheets, all bank account statements including cancelled checks, any and all company credit card accounts and statements; for the past three years, all invoices for work performed by Sonic Services including copies of the deposits along with the details of deposits and copies of checks issued by Sonic Services along with details. Sonic Services Exhibits B, C, D, E. 75. Michael Giammarino substantially complied and cooperated with 8113?s requests for additional information concerning Sonic Services and himself. ?2 OHA Exhibit 1 (Paragraphs 17 of Complaint and Sonic Services Answer). Two ofthe requests were sent to his attorney. ?3 At the hearing, a 8113 investigator testi?ed that Michael Giammarino did not produce certain records with respect to Lombardi?s or Genaro?s Tomato Pie. Tr. pp. 94?95. In a letter dated February l7, 2017, 8113, in part, requested the following: the previous ?ve year period, tax returns and ?nancial statements for 13 76. On October 12, 2017, Michael Giammarino provided sworn testimony to BIE 7 investigator(s) at of?ce during which Michael Giammarino answered all questions posed to him and admitted that Joseph DeSimone set up the initial introduction between Michael Giammarino and a Parx Of?cial. Tr. p. 99, 101. 77. That October 12, 2017 interview was the ?rst time Michael Giammarino became aware BIE had concerns that John Brescio, John DeLutro and Joseph DeSimone may have ties to organized crime. Tr. p. 207. 78. On December 21, 2017, OEC ?led a complaint to revoke Sonic Services Gaming Service Provider Registration. OHA Exhibit No. Complaint). 79. Since the pizza restaurant in Parx had not opened prior to OEC ?ling the Complaint, Sonic Services had not received any money from Parx in accord with the terms of the consulting contract. OEC Exhibit No. 4. 80. On or about December 24, 2017, Parx Of?cials permanently evicted Joseph DeSimone from Parx. OEC Exhibit No. 13. 81. On or about January 18, 2018, Parx and Sonic Services entered into an agreement to terminate the consulting agreement. OEC Exhibit No. 18. 82. . As part of the termination agreement, Parx agreed to pay Sonic Services $155,000 for consulting services performed for the preopening of the restaurant and for the pizza oven that Sonic Services installed at the restaurant. OEC Exhibit No. 18. all partnerships, corporations, or other business ventures in which you have a controlling or ownership interest. Proof of value and proof of ownership need to be provided as well. Please supply information for Lombardi?s and Genaro?s.? Sonic Services Exhibit A. As the evidence established, the JBJV Trust is the owner of Lombardi's and Michael Giammarino credibly testi?ed at the hearing that the owner of Genaro?s was a trust established by Michael Giammarino?s natural father. Tr. p. 212. 14 83. As part of the termination agreement, Parx agreed not to use the name Lombardi?s Wfortherestaurant orclaingmtohe of New York and to return all photographs or images related to Genaro Lombardi or Lombardi?s of New York which were loaned by Sonic Services for use in the restaurant. OEC Exhibit No. 18. 84. By letter dated February 20, 2018, Pizza of 32 Spring Street, lnc. terminated a consulting and marketing agreement with solutions, a John Brescio owned entity; the letter indicated that the agreement for services had been entered into on February 1, 2017. Sonic Services Exhibit F. 85. By signed letter dated March 13, 2018, John Brescio irrevocably renounced, surrendered and relinquished the powers and rights he had with respect to the JBJ Trust, speci?cally, the power to appoint bene?ciaries and the trust protector. Sonic Services Exhibit G. 86. John Brescio does not have any ?nancial interest in Pizza of 32 Spring Street and does not have authority to control Pizza of 32 Spring Street. Tr. p. 167. 87. Sonic Services does not currently provide services to a casino. Tr. p. 21.6. 88. Sonic Services and Michael Giammarino do intend to do business with licensed facilities if the Registration is not revoked. Tr. p. 216. DISCUSSION This matter involves an OEC Complaint to revoke the Sonic Services Gaming Service Provider Registration (Registration). Accordingly, there is one issue presented to 15 the Board for resolution: whether OEC has met its burden of proving by a preponderance Wofthe evidence?that Sonic Servicesno,longer meetsthe suitability, requirements to hold the Registration. Based upon a review of the evidence and the reasonable inferences that could be deduced therefrom, the undersigned is constrained to recommend that OEC has not met its burden and therefore Complaint to revoke Sonic Services? Registration should be denied. The Board?s primary objective under the Race Horse Development and Gaming Act (Act)13 is to ?protect the public through the regulation and policing of all activities involving (4 Pa. C.S. 1102(1)) and thus all other objectives are secondary including providing economic opportunities fer See 4 Pa. C.S. 1102(5). Pursuant to that primary objective, section 1202(b)(15) of the Act expressly provides that the Board, at its discretion, may suspend or revoke a license or permit that may be required by the Board. 4 Pa. C.S. 1202(b)(15). The Act further provides that ?[p]articipation in limited gaming authorized under this part by any licensee or permittee shall be deemed a privilege, conditioned upon the proper and continued qualification of the licensee or permittee. . 4 1102(7). Consistent with those provisions of the Act and in accord with the Board?s specific power to promulgate regulations,?4 the Board promulgated section 4210f its regulations which imposes a continuing duty on the holder of registration issued by the Board to maintain its suitability and eligibility for the registration. 58 Pa. Code Finally, section 1518 of the Act grants the Board the authority to revoke the registration of an individual or entity that violates that regulation. 4 Pa. C.S. 1518(c)(1)(ii). While the Board?s regulations do not define the ?3 4 Pa.C.S.?1101et.scq. '4 4 Pa. cs. ?1202(b)(30). 16 terms suitability and eligibility, section 1202 of the Act requires an individual seeking a registrationto. demonstrate by clearand convincing. evidence ?that he?is a person of good character, honesty and integrity and is a person associations. . .do[es] not pose a threat to the public interest or the effective regulation and control of slot machine or table game operations or the carrying on of the business and ?nancial arrangements incidental thereto.? 4 l202(b)(23). Therefore, if, after being granted a registration, it is revealed that an individual?s criminal record and associations pose a threat to the public interest or effective regulation of gaming, that individual would no longer be suitable to hold a registration and revocation of that registration would be the appropriate remedy.? Section 1517 of the Act grants OEC the authority to ?[i]nitiate, in its ?sole discretion, proceedings for noncriminal violations of this part by ?ling a complaint or other pleading with the board.? 4 Pa. (3.8. alleged in its Complaint that grounds existed which warrant revocation of Sonic Services? Registration, OEC has the burden of producing evidence that those grounds exist and the burden of persuasion, by a preponderance of the evidence, that those grounds warrant revocation of the Registration.16 See Hui v. The City of Philadelphia Parking Authority, 913 A.2d 994 (Pa. melth. 2006); Samuel Lansberzy v. PUC, 578 A.2d 600 (Pa. melth. 1990). ?5 In its brief, Sonic Services concedes that an individual?s associations could make that individual unsuitable for a registration. Sonic Services brief page 10. '6 In its brief, OEC cited subsections 421a.1(h) and 42121.10) of the Board?s regulations in suggesting that Sonic Services has the burden of proving its suitability. Subsection 421a. 101) of the Board?s regulations provides that an applicant has the burden of proving his suitability for a registration which is consistent with subsection 1202(b)(23) ofthe Act. In recognition ofthat burden for applicants, section 1517 of the Act authorizes DEC to ?le recommendations and objections to applications, as opposed to pleadings, thereby keeping the burden on the applicant. 4 Pa. CS. In this matter, OEC has pled that Sonic Services is no longer suitable for the registration, as such, OEC has the burden of proving it. 17 In its brief, OEC maintained that it produced suf?cient evidence to establish the following: that John Brescio, Joseph.DeSimonerand Johny Delutro were members of and/or associated with organized crime families; Sonic Services and Michael Giammarino have associations with those individuals and that those associations render them unsuitable to hold a registration. OEC did prove, and Sonic Services did not dispute, that John Brescio?s, Joseph DeSimone?s, John Delutro?s reputations are such that associating with them could warrant a ?nding of unsuitability.17 Sonic Services does takes exception to assertion that Sonic Services through Michael Giammarino had ?associations? with Joseph DeSimone and John Delutro. In viewing the evidence in a light most favorable to OEC, Michael Giammarino, the owner of Sonic Services, had no more than six contacts with John Delutro, two of which involved asking John Delutro for business advice and one of which involved Michael Giammarino?s declining an overture from John Delutro to do business together at a casino. Based on the evidence presented at the hearing, Michael Giammarino?s contact with Joseph DeSimone consisted of Joseph DeSimone approaching the Respondent and offering to set up a meeting with Parx Of?cials, facilitating and attending that one meeting, and, at the request of Jeseph DeSimone, Michael Giammarino originally agreeing to pay Joseph DeSimone a ?nder?s fee. In In re Boardwalk Regency Casino License Application, 434 A. 2d 1111, (App. Div. 1981), the Appellate Division of the New Jersey Superior Court in its review of a Casino Control Commission decision to require divestiture of two brothers from a casino licensee due to their associations - the Court looked favorably on the Appellants? argument that a guilt adjudication in the context of an individual?s good, character, ?7 Sonic Services did not challenge the reputations ofthose individuals. l8 evidence in the record, that encounter ended Joseph DeLutro?s association with Michael [Giammaringwwithrespect towopeningsarrestaurantin .Parx. One couldspeculate that - perhaps Michael Giammarino knew that they (the ma?a) could not get into Parx given John DeLutro?s notoriety and cooled his heels for a year and then had Joseph DeSimone arrange" the meeting with Parx Of?cials, but that?s all it would be, speculation. It seems more likely that Joseph DeSimone may have known of the Parx Of?cial?s interest in Lombardi?s through interacting with them at Parx, did some homework, tracked down Michael Giammarino, arranged the meeting, not to help the ma?a get a toe hold in the casino, but rather for his own pecuniary bene?t.21 The problem with ma?a in?ltration narrative is that it begins with an allegation that is not supported by the record. In its complaint, OEC alleged and repeated in its brief, that BIE received information that individuals associated with organized crime were attempting to in?ltrate Parx through a pizzeria.22 At the hearing, the BIE investigator testi?ed that BIB received information that there was a possible organized crime tie to Lombardi?s?, which turned out to be true, in that John Brescio was a reputed member of an organized crime family. There was no evidence in the record to suggest that Michael Giammarino is currently involved in criminal activity, is a member of a crime family or committed any criminal activity since his conviction thirty years ago. The 3' OEC noted in its brief that Michael Giammarino admitted he did not do any due diligence on Joseph DeSimone to determine his background and motives. Based on the evidence presented at the hearing, the undersigned is not sure what research he could have done since apparently the only open source documents connecting him to organized crime were two articles that mentioned Joe Fudge. See Footnote 6. Moreover, the undersigned is not sure why Michael Giammarino should have had misgivings about Joseph DeSimone considering that he had such a good relationship with top Parx Of?cials that he could arrange a meeting with them. if anything, the evidence established that Joseph DeSimone had associations with the General Manager of the Parx as opposed to Michael Giammarino. See Finding of Fact No. 44. As for the remuneration, see Findings of Fact 57, 58. 22 Paragraph 14 of Amended Complaint and brief page 3. 33 See Finding ofFact No. 70. 20 honesty and integrity, should not be based solely on unknowing or innocent associations difficulty in defendingone?s reputation if that were thecase. While there is no precedent on this issue, the undersigned would recommend that Board adopt this position, as a matter of fundamental fairness and due process, as opposed to the ?zero tolerance policy?18 advocated by OEC. As such, the undersigned will discuss whether the evidence established that Michael Gimmarino?s associations with the aforementioned individuals were something else but innocent and unknowing. '9 In its brief, OEC essentially argued that considering John Brescio, John Delutro and Joseph DeSimone?s all have prior drug distribution convictions and all are reputed members of or associated with organized crime families none of the ?associations? of Sonic Services and Michael Giammarino with them were innocent and unknowing but were part of a concerted effort by the ma?a to get a toe hold into Parx.20 In support thereof, OEC points out the Parx Officials were only aware of Lombardi?s when John Delutro took them there and introduced them to John Brescio. However, Michael Giammarino was not at that meeting and no overtures were made by John Brescio or Parx Of?cials about developing a restaurant when they were at Lombardi?s. The Parx Officials were the first to inquire, through John Delutro, about the potential of Lombardi?s being involved with Parx, and whose overture Michael Giammarino declined. Based on the '3 briefpage l4. ?9 In its brief, Sonic Services argued that, based on the Merriam Webster?s online dictionary?s and a federal court decision?s de?nition of associate, respectively, ?to join as a partner, ??iend or companion? and ?to join often, in a loose relationship as a partner, fellow worker, colleague, friend, companion or ally?, Michael Giammarino?s limited contacts with Joseph DeSimone and John DeLutro did not make them his associates.(citations omitted) Sonic Services? brief page 11. DEC, on the other hand, adopts a broader de?nition of associate, by arguing that those individuals played a role in Sonic Services eventually entering into an agreement with Parx and thus were associated with the transaction. OEC brief page 10. Arguably, if the evidence established that those individuals worked in concert to achieve a mafia foothold in Parx, they could be considered associates even with limited contacts between each other. Rather than attempting to de?ne the term ?associations? as contained in subsection 1202(b)(23) of the Act, the undersigned focused on the nature ofthose contacts. 30 brief page 14. 19 record also did not contain any evidence which showed that law enforcements of?cials had reason ?to believe Lombardi?s in New York Citywasused to. facilitate criminal activity. With respect to Michael Giammarino, the evidence established that he has been in the business of operating or managing pizza restaurants since 1998 and apparently is good at it considering the testimonial of Anthony Ricci.24 For the above-mentioned reasons, the undersigned ?nds that OEC failed to prove that Michael Giammarino? ?associations? with John Delutro and Joseph DeSimone were anything but innocent and/or unknowing and the undersigned ?nds Michael Giammarino?s testimony to be credible that he ceased communication with Joseph DeSimone upon learning of his background. Michael Giammarino?s association with John Brescio is more problematic. At the hearing, Michael Giammarino testi?ed that while he was aware his stepfather had been in prison, he was unaware that his stepfather was associated with an organized crime family. Based upon that testimony, Sonic Services argues that his association with John Brescio was unknowing. There is evidence in the record that would support his testimony that he was unaware of John Brescio?s ties to organized crime. Michael Giammarino would have been around 26 years old when John Brescio married his mother so it was not like he grew with up him.25 John Brescio has not been convicted or apparently arrested for a crime since 1986. The only mention of John Brescio?s ties to an organized crime family in the public domain is a 2017 press release from the New York Waterfront Commission. Furthermore, if Michael Giammarino was aware of John Brescio?s ties to 34 See Findings of Fact No. 67. 35 See Findings of Fact Nos. 7, 22, 24. 21 organized crime, why would he continue to work on the Parx restaurant after coming under such intensescrutiny by OEC argues that Michael Giammarino clearly knew his stepfather had ties to organized crime because he used Sonic Services as opposed to Pizza of 32 Spring Street, the operator of Lombardi?s in New York, to apply for the Registration. OEC posits that Michael Giamrnarino knew that the application for the Registration submitted by Pizza of 32 Spring Street would have been denied because his stepfather?s association with organized crime would have been discovered. Sonic Service argues that there were legitimate business reasons to use Sonic Services to apply for the Registration and there is evidence in the record to support that position. While Michael Giammarino is the President of Pizza of 32 Spring Street, he does not own it, the JBJV Trust does. Michael Giammarino is the sole owner of Sonic Services, which is registered in where he would be providing consulting services at Parx. Michael Giammarino had been providing services through Sonic Services for years prior to 1998 for electronic installation services and since at least 2014 management services for Lombardi?s in New York, although, as pointed out by OEC, Sonic Services had not been used as a vehicle to open a pizzeria. Pizza of 32 Spring Street owns and operates a pizzeria. Sonic Services was not going to operate a pizzeria, but rather provide consulting services to Parx whereas Parx would operate the pizzeria at Parx. Considering the relationship between Michael Giammarino and John Brescio, one could possibly infer that Michael Giammarino had to have some knowledge of John Brescio?s ties to organized crime. While Sonic Services points to Michael Giammarino?s testimony that he had very little contact with John Brescio after the death of Michael Giammarino?s mother, Michael Giammarino did manage Lombardi?s in New York for seven yearsprior to his mother?sdeath. .Although..Michael Giammarino and John Brescio may not have socialized after his mother?s death as per Michael Giammarino?s testimony, they had to have some contact considering Sonic Services managed Lombardi?s in New York and John Brescio, through his company, had a contract to provide media relations for Lombardi?s in New York. In weighing all the aforementioned evidence, the undersigned cannot find that OEC met its burden of proving by a preponderance of the evidence that Michael Giammarino knew or should have known that John Brescio was associated with organized crime because of the absence of any information in the public domain, aside from the 2017 press release, tying him to organized crime and considering his last criminal conviction occurred in 1986. Similarly, the undersigned cannot ?nd that Michael Giammarino used Sonic Services to intentionally hide his association with John Brescio because of the legitimate business reasons for using Sonic Services as opposed to Pizza of 32 Spring Street to apply for the Registration. Based on the evidence in the record, the undersigned cannot find that John Brescio?s and Michael Giammarino?s relationship was anything but innocent, a familial relationship brought about by virtue of John Brescio marrying Michael Giammarino?s mother and the af?liation with Lombardi?s in New York that resulted from that familial relationship. There is no evidence in the record that established John Brescio has any type of financial interest in or is af?liated with Sonic Services. The undersigned cannot ?nd evidence in the record to prove Michael Giammarino, through Sonic Services, entered into an agreement to provide consulting services for some nefarious reason as opposed to simply pursuing a good business opportunity. While Michael Giammarino put substantial ,sweat..equity.into getting, the restaurant ready. .to..open,. according. to. the agreement between Sonic Services and Parx, Sonic Services? work, after the restaurant opened, appeared to consist mainly of occasional tweaking of the menu and some quality control responsibilities for which Sonic Services would be paid royalty fees, an arrangement that seems more akin to a franchise agreement. Although the undersigned ?nds the evidence failed to establish Michael Giammarino?s association26 with John Brescio involved any unlawful activity, the Board still could consider revoking Sonic Services Registration by relying upon precedent from the New Jersey Casino Control Commission. The Commission refused to grant licensure to principals due in part to a principal?s failure, after being informed of issues concerning his association with an individual of unsavory character and ties to organized crime, to disassociate himself from that individual even though there was no evidence that the association involved any type of criminal activity. See In re Boardwalk, supra. Based on similar reasoning, the Board could ?nd that that Michael Giammarino may be unable or unwilling to disassociate himself from John Brescio due to the nature of the association, thereby making him and Sonic Services unsuitable for the Registration. In support of its position that Michael has disassociated himself from John Brescio, Sonic Services offered evidence that John Brescio has irrevocably revoked the two powers he had retained as settlor of the JBJV Trust, specifically, the power to appoint the trust protector and the power to name additional beneficiaries.27 36 Even under Sonic Service?s proposed definition ofassociation, John Brescio would be considered associated with Michael Giammarino. 27 DEC noted that John Brescio remains as settlor ofthe JBJV Trust. John Brescio retains that title by virtue ofbeing the grantor ofhis ownership in Pizza of32 Spring Street to the JBJV Trust. 24 innocent. If there are suf?cient concerns as to the potential continued association between Sonic Services, Michael Qiammarino and John Brescio through Lombardi?s of New York, the Board could condition?s its ?nding of Sonic Services? continued suitability contingent upon John Brescio?s complete and continuing disassociation from Lombardi?s of New York. CONCLUSION 1. The Board has jurisdiction over the parties and the subject matter of this proceeding. 4 Pa. 08. 1202(b)(15) and 1515(c)(ii). 2. DEC had failed to prove by a preponderance of the evidence that Michael Giammarino?s associations make Sonic Services unsuitable for a Registration 3. Complaint to revoke Sonic Services? Registration should be denied. Date: August 7, 2018 Jay R. Lari/tzy, Hearing Officer 26 Sonic Services also presented evidence that Pizza of 32 Spring Street terminated a media relations contract that it ,hadwwithna company. ownedby John Brescio. Although those documents suggested a degree of disassociation of John Brescio with Lombardi?s of New York and Michael Giammarino, they do not provide a guarantee John Brescio would not play some role at Lombardi?s of New York and as such maintainsome association with Michael Giammarino and Sonic Services, as the provider of managerial services at Lombardi ?s in New York. At the hearing, Michael Giammarino seemed to downplay John Brescio?s role and involvement at Lombardi?s of New York. While Michael Giammarino testi?ed that John Brescio had no role in management since 2004, a federal lawsuit filed by Lombardi?s employees indicated that John Brescio was the owner. John Brescio also held himself out as the owner of Lombardi?s to the media and when Parx Of?cials ?rst went to Lombardi?s, John Brescio provided them a tour of the restaurant and brought them pizza, activities from which one could infer that John Brescio the owner. Michael Giammarino testified that he did not mind John Brescio holding himself out as the owner considering that he and his mother originally opened the pizzeria. That sentiment raises the question as to whether Michael Giammarino would allow John Brescio to be involved in Lombardi?s of New York in some respect, such as maitre de, or in the future receiving remuneration therefrom. Despite those concerns, the undersigned is disinclined to recommend that OEC has met its burden of proving that Sonic Services is no longer suitable to hold a Registration because OEC failed to prove that Michael Giammarino?s associations with John DeLutro, Joseph DeSimone and John Brescio were anything but unknowing and/or 25