In the decade since South Boston gangster James "Whitey" Bulger fled to avoid federal racketeering charges, the fight over who cashes in on his $1.9 million share of a Massachusetts lottery jackpot has been nearly as intense as the hunt for the fugitive.
The mothers of two women allegedly killed by Bulger unsuccessfully went to court for the windfall. Bulger's brother John and one of his sisters also failed to hit pay dirt in court.
Yesterday, the lottery wrangle was rekindled. A federal judge opened the door to two of Bulger's extortion victims to collect, their lawyers say. But federal officials said most of the lottery payout is already gone and it's too late for anyone to stake a claim.
The judge told the US Marshals Service that the couple have a $28.5 million civil judgment against Bulger -- and thus have a claim on any of his assets being held by the federal government.
Stephen Rakes and his ex-wife, Julie Dammers, allege they were forced at gunpoint to sell their South Boston liquor store to Bulger in 1984. They believe the civil judgment entitles them to the lottery money, as well as any other money seized from Bulger's hidden bank accounts or safe deposit boxes, according to their lawyers.
But the marshals service, which has handled the lottery winnings, said the money has already been distributed, according to asset forfeiture laws, among the various law enforcement agencies that helped make the case against Bulger. Bulger, 75, a longtime FBI informant who fled in January 1995, has since been charged with 19 murders and is on the FBI's Ten Most Wanted list.
Boston attorney Paul Gannon, who represents Dammers and a bankruptcy trustee for Rakes, said he believes the government still has some of Bulger's assets. "We're just seeking what our clients are legally entitled to," he said.
In 1995 federal prosecutors seized Bulger's one-sixth share of a 1991 Mass Millions jackpot totaling $14.3 million, alleging he had paid the real winner $700,000 in cash for his share as part of a money-laundering scheme to give himself a clean source of income.
Bulger collected his annual lottery check of $119,408 for four years until he fled. Since July 1995, the government has been collecting those winnings, which are to be paid out through 2010. Six years of winnings have yet to be paid out.
Dammers and the trustee for Rakes, who has a bankruptcy case pending and owes money to creditors, filed a civil suit against Bulger and a couple of his associates in 2001, alleging he forced them to sell him their newly opened liquor store on Old Colony Avenue.
Rakes has told investigators that in December 1984, Bulger and two associates came to his home, put a gun on the table, and threatened Rakes's two young daughters when he refused to sell. He said Bulger tossed him a bag full of $67,000 in cash and told him, "Now we own the liquor store." Bulger then used the South Boston Liquor Mart as his base of operations.
Rakes was prosecuted on federal perjury charges after denying to grand juries that he was forced to sell. He began cooperating with authorities in 1999 and received probation.
Bulger's longtime FBI handler, former agent John J. Connolly Jr., was warned by Dammers's uncle, a Boston police officer, that Bulger had seized control of the store, but said he didn't take any action or report it to his supervisors because Rakes and Dammers were unwilling to be witnesses or wear recording devices. Connolly was convicted of racketeering and is serving a 10-year prison term.
In January, a federal judge dismissed a $120 million lawsuit that Rakes and Dammers filed against the FBI over Connolly's misdeeds, ruling that they waited too long to file it. The couple are appealing that ruling.
When Bulger failed to show up in court to defend himself against the separate civil suit filed by Rakes and Dammers, Chief US District Judge William G. Young ruled that Bulger was in default, and in June 2003 awarded the couple $28.5 million.
Yesterday, Young issued the order notifying the US Marshals about the default judgment at the request of Rakes's trustee and Dammers. The order doesn't specifically mention the lottery payout, but says the couple have a claim on any of Bulger's assets being held by the government.
Rakes, who wants the windfall so he can pay off his creditors and get out of bankruptcy, made repeated calls to federal officials in a bid to track down the money.
Paul Dunne, a supervisory deputy US marshal in Boston, said yesterday that the government held the lottery money in an escrow account until a final forfeiture order was issued in September 2003, then divided the winnings paid out so far among the Massachusetts State Police, the Internal Revenue Service, and the federal government's Asset Forfeiture Fund.
"If we get an order from the court changing anything, we would rely on the US attorney's office to interpret whatever the court rules," Dunne said.
The US attorney's office declined to comment yesterday.
Several of Bulger's relatives, as well as other victims, earlier challenged the federal government's seizure of the lottery money.
One of Bulger's sisters, Jean Holland, gave up her claim in 2000. A federal appeals court ruled in April 2003 that Olga Davis, Marion Hussey, and John Bulger weren't entitled to a share of the winnings and allowed the government to keep all the money.
Bulger is accused of killing Davis's daughter, Debra Davis, in 1981, and Hussey's daughter, Deborah Hussey, in 1985. Bulger's longtime sidekick, Stephen Flemmi, admitted to his role in those murders and others and is serving a life sentence.