01/28/2005 12:00AM

Dakota trial centers on owner

Email

The federal trial involving an alleged illegal gambling operation run by the North Dakota rebate shop Racing Services Inc. has focused so far on whether the owner of the company knew that the operation had failed to pay taxes, according to published accounts of testimony in the trial.

The trial, which opened Jan. 17 and is expected to last another week, has featured testimony from a number of former Racing Services employees, including Raymundo Diaz, a former vice president of Racing Services and the former boyfriend of the owner, Susan Bala. Diaz pleaded guilty at the beginning of the trial to three charges as part of a deal with the prosecution in which he agreed to testify against Bala.

On Tuesday, Diaz said that he had informed Bala that the operation was not paying taxes to the state in March 2003. According to published reports, Diaz said that Bala responded by saying that "she would take care of it."

Bala's attorneys have claimed that she was unaware of the tax issues because of her own health issues and those of a friend. The attorneys have also sought to deflect blame from Bala to managers at Racing Services Inc. who did not inform her about the problems.

Bala is facing 12 charges in the trial. Prosecutors allege that Racing Services set up an illegal gambling site that took in $99 million in bets from October 2002 to April 2003, when FBI and IRS agents raided the operation. The prosecution has alleged that the site did not pay taxes and that the operation was not connected to a North Dakota charity, as required by law.

Racing Services's former chief financial officer, Gary Storm, testified on Thursday that he suspected that the site was illegal, but he did not take his concerns to Bala, the AP reported.

Storm said that he has agreed to plead guilty in the case, the AP said.