03/07/2007 12:00AM

Dakota gambling conviction overturned


A federal appeals court has overturned the conviction on illegal gambling charges of the proprietor of a North Dakota-based account-wagering operation, nearly 18 months into her 27-month sentence.

The United States Court of Appeals for the Eighth District ruled on Tuesday that the government had "insufficient" evidence to convict Susan Bala, who founded Racing Services in 1990 in North Dakota and turned the company into a major account-wagering center by recruiting high-rolling bettors. She was convicted at a jury trial in 2005 of 12 felony counts of money-laundering and operating an illegal gambling business.

The three-judge appeals court also overturned the lower court's order for Bala to forfeit $99 million in illegal gambling proceeds.

"Obviously, we're delighted," Lizabeth McKibben, Bala's attorney, said Wednesday. "Justice has finally served Susan. She thought all along that she would be exonerated."

Prosecutors in North Dakota had described the case against Bala as being the largest illegal-gambling conviction in the state's history. The prosecution argued that Racing Services had taken in approximately $99 million in wagers during an eight-month period in 2002-03 through an illegal betting site in Fargo, and that the company did not report the wagers to the state. The prosecution also argued that the site did not contribute to a state charity, in violation of statute.

The appeals court heard the case on Sept. 28. In the conclusion of the ruling issued Tuesday, the court ruled that state prosecutors erred when they brought the case to the federal authorities, "who then commenced a federal prosecution based upon flawed interpretations of state law."

"The result was a trial at which the government failed to prove any of the offenses charged," the judges wrote. The ruling also threw out the government's cross appeal.

Bala, 52, has been released from prison, McKibben said, though her plans for the future are uncertain.

"She's been financially wiped out, she's been in prison for a year and a half, and she's suffered," McKibben said.

Racing Services was seized by state regulators in 2003 after Bala was charged. The site was officially closed in 2005, and the license to operate account-wagering and offtrack betting in North Dakota was granted to another company, Lien Games.