Mudd, Towe settle civil lawsuit: Pair currently in jail after conviction on charges relating to illegal gambling at VFW post in BG [The Daily News, Bowling Green, Ky.]
Mar. 24--A couple who were convicted of running an illegal gambling operation out of Bowling Green's Veterans of Foreign Wars post, which was later burned down to hide the evidence, will have to pay $227,587 to the organization.
Federal prosecutors have reached a settlement with Donald Mudd, the former commander of Bowling Green's VFW, and his girlfriend, Martha Towe, in a civil case after the couple's conviction on several charges stemming from an arson at the post.
Under the terms of the civil forfeiture settlement reached last month, Towe has agreed to forfeit $227,587 to the federal government and Donald Mudd will give up a 2004 Harley-Davidson motorcycle.
Mudd and Towe were convicted in a jury trial held in U.S. District Court in 2008 of operating an illegal gambling operation, two counts of mail fraud, two counts of structuring transactions and one count of conspiracy to impair or impede the Internal Revenue Service.
Mudd, the former commander of Lt. Harold R. Cornwell VFW Post on Richardsville Road, was also convicted of arson. He is currently serving a 10-year, one-month prison sentence.
The jury acquitted Towe, now serving a prison sentence of six years and 10 months, of aiding and abetting arson.
Restitution in the criminal case was set at $531,148, with part going to the insurance company that paid for damages and part going to the VFW post. Towe was responsible for paying $259,988 of that total in addition to the recent civil settlement.
The couple were accused of running an illegal gambling operation at the post since at least 2000 and laundering the money from the operation to hide the profits.
Witnesses testified to spending hundreds of dollars each week at the VFW on illegal video gaming machines and a former VFW trustee said that only a third of the proceeds from pull-tab sales were reported.
The post was destroyed by fire Aug. 13, 2003, five days before state gaming officials were to conduct an audit of financial records.
The civil settlement enabled Towe, through family and friends, to buy back the 600 Fairway St. home where she and Mudd lived and re-mortgage it as part of the payment of restitution, according to Bowling Green attorney Steve Thornton, who represented Towe in the case.
Also, a 2002 Mercedes-Benz convertible that Towe owned will be released to Sharon French, a friend of Towe's and Edmonson County Circuit clerk, after storage fees on the car are paid to the U.S. Marshals Service.
As of Feb. 2, those fees totaled $3,366.20.
"The government has interest in getting the money and Martha has interest in keeping her car and home, so we were able to reach an accommodation and Martha's family was able to purchase the home and mortgage it for restitution and get the car," Thornton said.
Thornton said it would be likely that much of the forfeited money would make its way back to the VFW.
Malcolm Cherry, quartermaster for the VFW post, said the last few years have been difficult, but the restitution goes a long way toward recovering what the post lost.
"We have not received all (the restitution) yet, but we understand the rest is forthcoming," Cherry said. "We have been struggling along out there and members have been doing everything they can to help raise funds and repair the post."
The post raises funds through several outlets, including bingo nights, which Cherry says are all held under state gaming regulations, and renting out the building to local National Guard and Army Reserve units for meetings.
"We get reimbursed with a little money there and through our canteen, which includes our bar and our snack bar," Cherry said. "Altogether, though, we still run at about a break-even pace."
The post has been able to donate to several community organizations and to individual veterans in need, to the tune of about $20,000 altogether in the past couple of years, according to Cherry.
"We have given back a lot of money to the community, which was never done in the past," Cherry said. "One thing that really irritated a lot of our members was (Mudd) had taken a lot of money ... we're real pleased with being able to make lots of donations."
In the case against Mudd and Towe, federal prosecutors argued that they used the VFW as their personal cash cow for years and that their personal spending during that time far exceeded their annual reported income.
Bowling Green attorney Dennie Hardin, representing Mudd in this case, said the motorcycle was the only item forfeited because it was the only asset that Mudd had.
A companion civil case is pending between Mudd and Towe and Westport Insurance Corporation, the insurer on the former post building.
The insurance company is demanding restitution separate from the criminal case.
Westport and the couple are scheduled to go to trial in December.
"The case was pretty dormant for about a year and a half until about a month or so ago," Hardin said.
Mudd also has filed a motion vacating his sentence, citing ineffective counsel at his criminal trial, where he was represented by Louisville attorney John Caudill.
Hardin said that case is pending.
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Mudd, Towe settle civil lawsuit: Pair currently in jail after conviction on charges relating to illegal gambling at VFW post in BG [The Daily News, Bowling Green, Ky.]
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