A former Internal Revenue Service investigator has testified for the first time about an alleged illegal skimming operation at a Carson City, Nev., casino once owned by Sen. Paul Laxalt (R-Nev.), but refused to answer questions Laxalt's attorneys consider crucial to a $250 million libel case.
In a deposition taken here Feb. 17 and 18, investigator Laurence A. Rooker said another IRS investigator and some casino employes told him in 1973 of a scheme, allegedly linked to organized crime, to steal part of the gambling receipts at the Ormsby House Hotel Casino.
Rooker said he passed on the information and later heard that a man with links to organized crime whom he saw at the casino "was flying regular trips back to, I believe, Menomonee Falls [Wis.], that he was carrying, among other things, he was carrying large sums of cash."
Rooker appears to be the first key confidential source to be publicly identified from a 1984 McClatchy Newspapers story on Laxalt and the casino that is the focus of the lawsuit. Attorneys acknowledge his testimony could significantly influence a jury's decision on whether the story, written by Pulitzer Prize-winning reporter Denny Walsh, was accurate or maliciously false and subject to libel damages.
No official investigation of the skimming report was ever made, although the allegations appeared in a California Justice Department report cited by Walsh. Laxalt's attorneys have argued that Rooker's information was mere rumor with no real evidence to back it up and that further questioning of him would reveal that.
Asked in the deposition if he ever witnessed a skim at Ormsby House, Rooker said, "I wouldn't know it if I saw it."
According to papers filed in U.S. District Court here, Rooker has insisted that he cannot divulge much of what he knows under U.S. law and investigative rules because he was at the casino as part of a confidential investigation of another IRS agent. Now serving as a senior investigator in the Los Angeles County district attorney's office, Rooker, 43, said in the deposition he was "absolutely amazed" that his former employer, the IRS, failed to provide a lawyer to represent him at the deposition. Pierce O'Donnell, a local attorney representing Rooker, said he may sue the federal agency.
Laxalt's attorneys have asked the court here to compel Rooker to testify or refer the matter to the federal court in Reno, where Laxalt's suit against C.K. McClatchy, publisher and editor of the Sacramento, Fresno and Modesto Bees, Walsh and others involved with the story is scheduled to be tried. No trial date has been set.
The Rooker deposition, originally sought by McClatchy's attorneys, shows, however, that one experienced investigator did take the skimming report seriously and felt it should have been pursued further than it was.
Attached to the court papers is a transcript of a Jan. 25, 1982, telephone conversation between Walsh and an unnamed "Source no. 2." The unnamed source, whom Laxalt's attorneys say is Rooker, identified himself like Rooker as an investigator who heard of a skimming operation and who left the IRS because he thought his supervisor was incompetent and unwilling to devote enough resources to investigations of organized crime. Rooker's attorney declined to comment.
Asked about the transcript in the deposition, Rooker said it was "not an accurate transcript of any conversation that I had with anyone" and declined to answer questions about it.
Laxalt supporters have now raised $394,000 to finance the libel suit. Seven Democratic senators -- Edward M. Kennedy (Mass.), Christopher J. Dodd (Conn.), Sam Nunn (Ga.), Daniel K. Inouye (Hawaii), Russell B. Long (La.), Thomas F. Eagleton (Mo.) and Dennis DeConcini (Ariz.) -- have contributed to the legal fund.